Baton Rouge-based H&E Equipment Services Inc.’s third-quarter profit rose to $15.3 million, or 43 cents per share, compared to $14 million, or 40 cents per share a year ago.
H&E rents and sells construction equipment. Despite the improvement, the company fell short of Wall Street’s expectations. Analysts surveyed by Thomson Reuters had forecast earnings of 46 cents per share on revenue of $293.7 million.
H&E’s revenue also fell short of stock analysts’ projections. H&E reported revenue increased 1.7 percent to $275 million.
H&E’s stock slipped $1.96, or about 5 percent, to $36.85 Thursday.
H&E said its results were affected by a much higher effective income tax rate — 43.6 percent compared to 33.5 percent a year ago — and a double-digit drop in new equipment sales. New equipment sales fell to $80.8 million, down 10.5 percent from the $90.2 million recorded in the third quarter of 2013.
New equipment was the only business segment where revenue declined.
The company’s rental revenue jumped 21 percent to $108.2 million, thanks to a larger fleet, higher utilization and fees. Combined parts and service revenue increased 10.7 percent to $44.6 million.
Chief Executive Officer John Engquist said the third-quarter results are further proof of the commercial construction market’s recovery.
The dip in new equipment sales occurred primarily because the third quarter of 2013 was so strong. New equipment sales jumped by 84 percent a year ago.
The demand for new equipment remains strong, Engquist said. H&E’s outlook for the remainder of the year and 2015 remains positive.
The company will continue to benefit from the anticipated boom in commercial construction, particularly in the Gulf Coast where major chemical, energy and manufacturing projects are reportedly on track.
H&E expects to make additional investments in its equipment fleet during the fourth quarter to handle the anticipated demand from those projects, Engquist said.