H&E Equipment Reports Net Loss

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On March 4, 2009, H&E Equipment Services (HEES) reported that it swung to a net loss in Q4 FY08, hurt by goodwill and a non cash impairment charge which reduced net income by $0.41 per share. Net loss was $635,000 or $0.02 per share compared to a net income of $17.07 million or $0.45 per share in Q4 FY07. The latest quarterly consensus estimate was a profit of $0.34 per share.

During Q4 FY08, H&E Equipment Services revenue decreased 9.6% to $261.91 million from $289.67 million a year ago. Segment-wise, HEES's Equipment Rental revenues fell 9.5% to $70.77 million compared with $78.20 million in Q4 FY07. New Equipment sales fell 12.5% to $99.93 million from $114.27 million, while Used Equipment sales decreased 16.1% to $32.34 million from $38.55 million. Additionally, Parts sales grew 2.6% to $29.23 million from $28.50 million, while Service revenues slipped marginally to $17.47 million from $17.45 million. Other revenue dropped 4.2% to $12.16 million from $12.70 million a year ago.

At the end of Q4 FY08, the company's rental fleet stood at $785.60 million, a decrease of 2.2% when compared to the $803.20 million result at the end of Q4 FY07. Meanwhile, the company's dollar utilization was 35.6% compared to 39.1% in the year-ago quarter. Similarly, dollar returns decreased, reflecting lower year-over-year average rental rates and lower time utilization. The company plans to reduce its capital expenditures and is monitoring its inventory levels closely. HEES has also staged a workforce reduction and a hiring freeze.

Meanwhile, H&E Equipment Services' total revenues for FY08 increased 6.6% to $1.07 billion from $1.00 billion in the previous year. However, its net income fell sharply by 33.0% to $43.30 million or $1.22 per share from $64.63 million or $1.70 per share on account of goodwill and intangible asset impairment charges, which reduced net income by $0.40 per share.