CEO: H&E Equipment Services positive about 2008
H&E Equipment Services, Inc. (Nasdaq: HEES) CEO John M. Engquist said the integrated equipment services company’s fourth-quarter earnings were damaged by a higher effective tax rate.
Before Friday’s opening, H&E posted fourth-quarter net income of $17.1 million, or $0.45 per share, down from $20.5 million, or $0.54 per share, a year earlier due to a higher effective income tax rate of 37.6% versus 23.8% a year ago.
Fourth-quarter revenue rose to $289.7 million, up 34.4 % from $215.5 million during the year-ago period. Analysts projected $281.6 million.
Engquist said the Baton Rouge, La.-based company “feels good” about 2008.
“We’ve got some real key drivers of our business like this industrial sector that are going to be exceptionally strong in ’08 and although the growth rate in [non-residential construction] has certainly slowed down, there’s still a lot of activity there,” Engquist said. “We continue to operate in a good environment.”
Gross margin for the quarter was 29.4%, compared with 32.5% during the same period of 2006.
“New equipment sales accounted for a higher percentage of our total revenue than in the past,” Engquist said. “New equipment has a lower overall margin and this has had an impact on our overall gross margin.”
The chief executive said the Florida and southern California markets remain challenging and have “bottomed out.”
“Even though we don’t see same-store growth for these markets, we believe we can improve the financial performance of these regions through aggressive fleet management,” Engquist said.
Gross profit during the three months ended Dec. 31 rose 22% to $85.2 million, from $70.1 million a year earlier. Selling, general and administrative expenses increased to $47.9 million, from $35 million during the prior-year’s quarter.
In midday trading, HEES shares are down 4.49%, or $0.67, at $14.25. Over the last 52 weeks, shares have ranged from $13.25 to $30.59.
