H&E rental business falls 34% in first quarter

H&E equipment saw total sales fall by 38.4% to US$114.7 million in the first quarter of 2010. Rental revenues were down 34.3% to $36.5 million compared to $55.5 million in the first quarter of 2009.

The company said that its fleet utilisation bottomed in January reaching a low point of less than 48% of units on rent, although utilisation started to climb thereafter and is now at 53%.

Leslie Magee, H&E Equipment Services' chief financial officer, said the company entered 2010 with very weak levels of demand, but that the quarter had seen an improving trend; "With the continuation and acceleration of these positive trends in the utilization of our fleet since the end of the first quarter, we expect sequential improvement in our rental business moving forward."

On average during the quarter, rental rates declined 13.9% as compared to the first quarter of 2009 and time utilisation decreased to 49.7% from 56.1% a year ago.

John Engquist, H&E Equipment Services' president and chief executive officer, said; "As we expected, the first quarter was extremely challenging as a result of the continuous softness in our end markets combined with seasonality and severe weather that occurred across much of our footprint.

"At this point, our expectations for 2010 are unchanged and therefore, we anticipate that segments of our business will continue to see low demand for our products and services. We are, however, encouraged to see improving residual values on used equipment, increased activity in our earthmoving business, which is an early cycle product, and an increase in our on rent levels that are accelerating as we move into the second quarter."

H&E made a net loss of $12.1 million in the quarter (compared to net profits of $2.2 million for the same quarter in 2009), and EBITDA fell from $38.1 million a year ago to $11.0 million.