H&E Equipment repays revolver balance, focused on cash, balance sheet

By Jennifer Lanning Drey

Portland, Ore., Nov. 4 - H&E Equipment Services, Inc. has fully repaid its revolving credit facility and begun to build a cash balance after generating strong free cash flow during the third quarter through reduced costs and tightly controlled capital spending, John Engquist, chief executive officer of H&E, said during the company's quarterly earnings call held Wednesday.

"We intend to continue to generate cash, strengthen our balance sheet and position our company to take full advantage of the recovery when it begins," Engquist said.

H&E had $8.7 million of cash at Sept. 30.

The company repaid $42 million outstanding on its revolving credit facility during the third quarter and has since repaid the remaining $3 million, Leslie Magee, chief financial officer of H&E, said during the call.

H&E currently has $312 million available under the line.

The facility includes a springing fixed charge covenant that is only triggered if availability is less than $25 million.

"We are managing our business through extremely challenging times, but we are managing without financial covenant concerns or debt maturities around the corner," Magee said.

The company has $250 million of 8 3/8% unsecured notes due in 2016.

Declining results

During the third quarter, the business environment remained challenging for H&E, leading to lower revenue, EBITDA and net income, both sequentially and year over year, Engquist said during the call.

Third-quarter revenues decreased by 37% to $175.6 million versus $278.6 million in the year-ago period. EBITDA was $29.3 million, down 56.4% from the prior-year third quarter.

The company posted a $2.3 million net loss for the quarter, compared to net income of $17.6 million in the 2008 period.

H&E continues to see softening in non-residential construction and industrial markets, as well as significant contraction in its crane business that is expected to continue through 2010, Engquist said.

H&E is a Baton Rouge, La., equipment services company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.