UPDATE 2-H&E Equipment posts Q3 loss, gives weak outlook

* Q3 loss/shr $0.07 vs est shr $0.00 * Revenue falls 37 pct; sees sequential rev fall

* Says pricing remains weak

* Sees significant fall in new equipment sales

* Shares fall 12.5 pct (Adds conference call details, background)

Nov 4 (Reuters) - H&E Equipment Services (HEES.O) posted third-quarter results below market estimates, hurt by a fall in new equipment sales and equipment rentals, and gave a gloomy outlook, sending its shares down more than 12 percent.

"We expect significant declines in our new equipment sales. Our backlog of cranes is running out and crane demand is expected to be weak well into 2010," Chief Executive John Engquist said in a conference call with analysts.

"We expect the softening in demand to result in significant sequential revenue declines in the near term."

The company, which did not see any seasonal increase in demand in the third quarter, said its fleet utilization has stabilized but at a low level, resulting in weak rental pricing.

About half of H&E's revenue comes from the industrial sector, which includes the energy and mining industries, while the non-residential construction sector brings in 40 percent. The rest comes from residential construction.

"Our customers lack a near-term need for construction equipment based on today's limited visibility of a recovery in our end-markets," CEO Engquist said in a statement earlier.

Weak demand for construction equipment is creating excess capacity of equipment in the market, hurting pricing. Weak pricing will continue until the excess capacity flushes out and utilization levels increase, Engquist said.

For the latest third quarter, the company reported a loss of $2.3 million or 7 cents a share, compared with a profit of $17.6 million or 50 cents a share a year ago.

H&E said total revenue fell 37 percent to $175.6 million, while new equipment sales fell 50 percent to $48.7 million.

Analysts on average had expected a breakeven for the quarter, before special items, on revenue of $176.8 million, according to Thomson Reuters I/B/E/S.

The company, which sells and rents out cranes, earthmoving equipment and industrial lift trucks, said it reduced debt under its revolver by $42 million during the quarter.

Shares of the Baton Rouge, Louisiana-based company were down 95 cents at $9.93 in midday trade Wednesday on Nasdaq. They earlier touched a low of $9.52. (Reporting by Divya Sharma in Bangalore; Editing by Gopakumar Warrier)