News story

Arnold paid H&E about USD15.7 million

Thursday, 11 March 2010 ( #452 ) - Baton Rouge, LA, United States
It has been confirmed that Arnold Machinery Co paid about USD15.7 million for the US-intermountain Yale-brand assets it acquired on 31 July from H&E Equipment Services Inc. "At the time of the sale, these Yale lift trucks comprised approximately 71% of the total lift trucks in our rental fleet and approximately 3.5% of our total rental fleet assets, based on net book value," H&E says in a securities filing. "The Yale brand accounted for less than 5% of our total revenues in 2009 through the date of the Arnold transaction." Arnold Machinery became the authorised dealer for Yale material handling equipment for all of Colorado, Utah and Wyoming and portions of Nevada, Idaho, Oregon and Arizona ( News #423). In February, H&E relinquished other Yale territories. Papé Material Handling Inc was named to represent the Yale brand in eastern and central Washington, the north west corner of Oregon, northern Idaho and the state of Montana ( News #451), and Deep South Equipment Co was appointed the Yale dealer in the northern portion of Louisiana and an area of east Texas ( News #451). H&E continues to represent makers of aerial work platforms and other materials handling equipment under the JLG, Gehl, Genie, Komatsu and Bobcat brands along with Grove and Manitowoc cranes. H&E's 2009 sales of USD679.7 million represent a 36.4% decrease from the previous year's USD1.069 billion. H&E recorded a loss of USD11.9 million in 2009 versus a profit of USD43.3 million in 2008. As a result of lower demand, H&E rental revenues decreased during 2009 with aerial work platforms down USD64.5 million, earthmoving equipment down USD16.2 million, cranes down USD8.5 million and forklifts down USD7.7 million versus the previous year. The lower demand results from "the decline in construction and industrial activities, the current macroeconomic downturn and unfavourable credit markets affecting end-user access to capital," H&E says in its 5 March filing with the US Securities and Exchange Commission. "We cannot forecast whether, or to what extent, we will continue to experience any further decline, or whether our responses to unfavourable business conditions will be meaningful in mitigating or reversing this decline," H&E says. "Continued weakness or further deterioration in the non-residential construction and industrial sectors could result in continuing declining revenues and gross profits/margins and may have a material adverse effect on our financial position, results of operations and cash flows in the future." H&E continues "to proactively respond" through closing underperforming branches, redeploying rental fleet assets to existing branches with higher demand or to branches in new markets where demand is higher, minimizing capital expenditures, reducing headcount, implementing cost reduction measures and "using some of the excess cash flow resulting from our planned reduction in capital expenditures to repay outstanding debt." Shares of Baton Rouge-based H&E trade on the Nasdaq stock exchange.