HE Equipment Services 2025 Q1 Earnings Misses Targets as Net Income Drops 124%

H&E Equipment Services (HEES) reported its fiscal 2025 Q1 earnings on April 29th, 2025. The results fell short of market expectations, with a significant decline in both revenue and net income compared to the previous year. The company maintained its guidance, focusing on strategic expansion and merger activities to bolster future performance despite current challenges.

Revenue
The first quarter of 2025 saw H&E Equipment Services reporting total revenues of $319.45 million, representing a 14.0% decrease from the $371.36 million reported a year earlier. In detail, the equipment rentals segment recorded $274.03 million, with sales of rental equipment contributing $23.92 million. Sales of new equipment accounted for $7.42 million, and parts, service, and other revenues totaled $14.08 million.

Earnings/Net Income
In Q1 2025, H&E Equipment Services experienced a net loss of $6.21 million, translating to a loss of $0.17 per share. This marks a sharp contrast to the net income of $25.89 million, or $0.72 per share, reported in the same period last year. The EPS results indicate a challenging financial environment for the company.

Price Action
The stock price of H&E Equipment Services has edged up 0.12% during the latest trading day, increased by 0.36% over the past week, but has dropped 6.14% month-to-date.

Post-Earnings Price Action Review
Following the earnings report, H&E Equipment Services (HEES) has experienced a mixed impact on its stock price, with short-to-medium-term gains noted. The backtested data reveals that the stock has a 61.90% win rate both three and ten days post-earnings release, while the 30-day win rate is slightly lower at 47.62%. The highest return observed was 19.29%, occurring 72 days after the earnings release. These results suggest potential opportunities for investors to capitalize on post-earnings price movements, particularly in the short to medium term.

CEO Commentary
H&E Equipment Services, Inc. CEO emphasized that the first quarter faced challenging demand trends, leading to a 7.2% decline in equipment rental revenues. Despite these pressures, the company continues to expand strategically, with planned branch openings aimed at enhancing competitive positioning. The CEO conveyed optimism regarding the merger with Herc Rentals, which is expected to strengthen operational resilience across various markets and customer solutions, particularly as the business navigates slower cycles.

Guidance
The company anticipates that the merger with Herc Rentals will close in mid-2025, which is expected to enhance its operational capabilities and market reach. H&E Equipment Services remains focused on executing its branch expansion strategy, which is designed to capitalize on new business opportunities and improve overall performance despite current market challenges.

Additional News
In recent M&A activity, Herc Holdings has extended its tender offer to acquire all outstanding shares of H&E Equipment Services for $78.75 in cash and 0.1287 shares of Herc common stock per HEES share. This extension is aimed at satisfying remaining conditions, including regulatory approvals, with the offer now set to expire on April 29, 2025. Additionally, H&E Equipment Services declared a regular quarterly cash dividend of $0.275 per share, reflecting their commitment to shareholder returns amid challenging conditions. The strategic merger with Herc Rentals is expected to strengthen H&E's operational capabilities and expand its market presence, providing resilience during slower business cycles.