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Acquisition Adds to H&E's Revenue

Once these most recent quarterly results are finalized, they will be run through TheStreet.com Ratings' model and our ratings will be adjusted accordingly. To keep up to date on all of our ratings, visit TheStreet.com Ratings Screener.

H&E Equipment Services' (HEES - Get Report) Q3 FY08 revenue increased 3.0% to $278.65 million from $270.59 million when compared with the year-ago quarter. The latest quarter reflected three months results from the Burress Mid-Atlantic acquisition that added $38.80 million, compared to the prior year's quarter, which reflected only one month that added $10.10 million from the acquisition.

Looking at the company's business segments, equipment rentals revenue ascended 3.4% to $78.18 million from $75.60 million. The $2.60 million increase in total rental revenues is the net result of a $3.00 million increase in earthmoving equipment rentals, a $1.00 million increase in crane rentals, a $0.10 million increase in lift truck rentals and decreases in aerial work platform and other rentals of $1.30 million and $0.20 million, respectively. New equipment sales increased 3.3% to $97.80 million from $94.68 million led by the sales of new cranes and new lift trucks. Used equipment sales fell 10.4% to $39.87 million from $44.50 million a year ago due to a lower demand of used cranes, earth equipment. Parts sales revenues and services revenues increased 15.9% and 8.6% to $30.95 million and $18.33 million respectively due to an increase in customer demand.

During the quarter under review, gross profit margin contracted 64 basis points to 40.30% from 40.94% a year ago. The total cost of revenues climbed 5.1% to $196.15 million from $186.69 million. Selling, general, and administrative expenses augmented 9.5% to $45.56 million from $41.61 million. Hence, operating margin declined by 237 basis points to 13.26% from 15.63%. Interest expense climbed 5.4% to $9.50 million from $9.01 million. Subsequently, the interest coverage ratio descended to 3.89 from 4.70. Finally, net income for the quarter plunged 12.8% to $17.60 million or $0.50 per share from $20.19 million or $0.53 per share in the prior year's quarter.

HEES' cash and cash equivalents multiplied more than 6 times to $13.21 million from $1.92 million a year ago. Income from operations decreased 12.3% to $37.20 million compared to $42.40 million a year ago. Return on assets declined by 81 basis points to 6.12% from 6.93%. Similarly, return on equity fell 300 basis points to 21.00% from 24.00%. Total debt rose 1.1% to $501.94 million from $496.42 million. Stockholders' equity spiked 2.4% to $290.43 million from $283.69 million. Therefore, the debt-to-equity ratio improved marginally to 1.73 from 1.75.

The company repurchased during the nine months 2,843,794 shares for approx $42.40 million under its previously announced repurchase program of $100.00 million.

Looking forward to FY08, the company reiterated its earnings and revenue guidance. The company expects its earnings per share to be in the range of $1.60 to $1.68 and revenues to be in the range of $1.08 billion to $1.09 billion.

A detailed report covering this quarterly release is now available. To purchase the report, click here .

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