H&E Equipment Services, Inc. - FORM 8-K - EX-99.1 - SELECTED PORTIONS OF INFORMATION FROM AN OFFERING MEMORANDUM

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8-K - FORM 8-K - H&E Equipment Services, Inc.	d476494d8k.htm
EX-10.1 - AMENDMENT NO. 4 TO THE THIRED AMENDED AND RESTATED CREDIT AGREEMENT - H&E Equipment Services, Inc.	d476494dex101.htm
EX-99.2 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS - H&E Equipment Services, Inc.	d476494dex992.htm
EX-99.3 - UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - H&E Equipment Services, Inc.	d476494dex993.htm

Exhibit 99.1

SUMMARY HISTORICAL FINANCIAL DATA

The following tables set forth, for the periods and dates indicated, our summary historical financial data. The summary historical consolidated financial data for our fiscal years ended December 31, 2009, 2010 and 2011 have been derived from our audited consolidated financial statements. The summary historical financial data for the nine months ended September 30, 2011 and 2012 have been derived from our unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in the opinion of our management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for those periods. The results for any interim period are not necessarily indicative of the results that may be expected for a full year. The historical results included here are not necessarily indicative of future performance or results of operations.

You should read this information in conjunction with “Selected Financial Data” and the accompanying “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2011 and “Financial Statements” and the accompanying “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.


	For the Year, Ended December 31,									For the Nine Months Ended September 30,
	2009			2010			2011			2011			2012
	(Amounts in thousands)									(Unaudited)
Statement of operations data(1):
Revenues:
Equipment rentals	$	191,512		$	177,970		$	228,038		$	165,440		$	207,941
New equipment sales		208,916			167,303			220,211			133,629			154,710
Used equipment sales		86,982			62,286			85,347			65,655			75,100
Parts sales		100,500			86,686			94,511			71,166			74,161
Services revenues		58,730			49,629			53,954			40,072			41,615
Other		33,092			30,280			38,490			27,570			33,671

Total revenues		679,732			574,154			720,551			503,532			587,198

Cost of revenues:
Rental depreciation		87,902			78,583			86,781			64,146			74,727
Rental expense		42,086			40,194			46,599			34,484			36,375
New equipment sales		183,885			150,665			196,152			118,271			136,945
Used equipment sales		70,305			48,269			65,042			50,444			53,426
Parts sales		72,786			63,902			69,222			52,174			53,826
Services revenues		21,825			18,751			21,024			15,499			15,907
Other		35,445			37,851			43,028			31,862			32,183

Total cost of revenues		514,234			438,215			527,848			366,880			403,389

Gross profit (loss):
Equipment rentals		61,524			59,193			94,658			66,810			96,839
New equipment sales		25,031			16,638			24,059			15,358			17,765
Used equipment sales		16,677			14,017			20,305			15,211			21,674
Parts sales		27,714			22,784			25,289			18,992			20,335
Services revenues		36,905			30,878			32,930			24,573			25,708
Other		(2,353	)		(7,571	)		(4,538	)		(4,292	)		1,488

Total gross profit		165,498			135,939			192,703			136,652			183,809

Selling, general and administrative expenses(2)		144,460			148,277			153,354			114,681			124,504
Impairment of goodwill and intangible assets(3)		8,972			—			—			—			—
Gain from sales of property and equipment, net		533			443			793			521			1,478

Income (loss) from operations		12,599			(11,895	)		40,142			22,492			60,783

Other income (expense):
Interest expense(4)		(31,339	)		(29,076	)		(28,727	)		(21,607	)		(23,668	)
Loss on early extinguishment of debt(5)		—			—			—			—			(10,180	)
Other, net		619			591			726			626			751

Total other expense, net		(30,720	)		(28,485	)		(28,001	)		(20,981	)		(33,097	)

Income (loss) before income taxes		(18,121	)		(40,380	)		12,141			1,511			27,686
Income tax provision (benefit)		(6,178	)		(14,920	)		3,215			447			9,554

Net income (loss)	$	(11,943	)	$	(25,460	)	$	8,926		$	1,064		$	18,132


	For the Year, Ended December 31,									For the Nine Months, Ended September 30,
	2009			2010			2011			2011			2012
	(Amounts in thousands, except for ratios)									(Unaudited)
Other financial data:
EBITDA(6)	$	112,511		$	80,962		$	140,266		$	96,911		$	136,144
Adjusted EBITDA(6)		121,483			80,962			140,266			96,911			146,324
Adjusted Net Income (loss)(7)		(11,943	)		(25,460	)		8,926			1,064			24,800
Depreciation and amortization(8)		99,293			92,266			99,398			73,793			84,790
Total capital expenditures (gross)(9)		45,539			107,179			174,024			130,318			266,958
Total capital expenditures (net)(10)		(26,877	)		58,947			109,284			82,018			200,094
Ratio of earnings to fixed charges(11)		—			—			1.4	x		1.1	x		2.0	x


	As of September 30, 2012
	Actual		As Adjusted (13)
	(Amounts in thousands) (Unaudited)
Balance sheet data:
Cash	$	3,250	$	3,250
Rental equipment, net		571,936		571,936
Goodwill(3)		32,560		32,560
Deferred financing costs, net		14,313		15,313
Total assets		940,226		941,226
Total debt(12)		663,212		664,212
Stockholders’ Equity		37,293		37,293


	Twelve Months Ended September 30, 2012
	(Amounts in thousands, except for ratios)
Selected financial data and ratios:
Pro forma interest expense(14)	$	37,980
Pro forma net income(14)		21,118
Adjusted EBITDA(6)		189,679
Ratio of Adjusted EBITDA to pro forma interest expense		5.0	x
Ratio of As Adjusted total debt to Adjusted EBITDA		3.5	x

(1)	See note 17 to the audited consolidated financial statements discussing segment information.

(2)	Stock-based compensation expense included in selling, general and administrative expenses for the years ended December 31, 2011, 2010 and 2009 totaled $1.3 million, $1.0 million and $0.7 million, respectively.

(3)

As more fully described in note 2 to the audited consolidated financial statements, and in connection with our annual impairment test, we recorded in 2009 a non-cash goodwill impairment of approximately $9.0 million, or $5.5 million after tax, related to our Equipment Rentals Component 1 reporting unit.

(4)	Interest expense is comprised of cash-pay interest (interest recorded on debt and other obligations requiring periodic cash payments) and non-cash pay interest comprised of amortization of deferred financing costs and accretion of loan discounts.

(5)	In the third quarter of 2012, we repurchased or redeemed the entire $250 million aggregate principal amount of our senior notes due 2016. In connection with this repurchase and redemption, we recorded a loss on the on the early extinguishment of debt of approximately $10.2 million.

(6)

We define EBITDA as net income (loss) before interest expense, income taxes, depreciation and amortization. We define Adjusted EBITDA for the year ended December 31, 2009 as EBITDA adjusted for the $9.0 million goodwill impairment charge recorded in the fourth quarter of 2009. We define Adjusted EBITDA for the nine month period ended September 30, 2012 as EBITDA adjusted for the $10.2 million loss from early extinguishment of debt incurred in the third quarter ended September 30, 2012. We use EBITDA and Adjusted EBITDA in our business operations to, among other things, evaluate the performance of our business, develop budgets and measure our

performance against those budgets. We also believe that analysts and investors use EBITDA and Adjusted EBITDA as supplemental measures to evaluate a company’s overall operating performance. However, EBITDA and Adjusted EBITDA have material limitations as analytical tools and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. We consider them useful tools to assist us in evaluating performance because they eliminate items related to capital structure, taxes and non-cash charges. The items that we have eliminated in determining EBITDA for the periods presented are interest expense, income taxes, depreciation of fixed assets (which includes rental equipment and property and equipment), and amortization of intangible assets and, in the case of Adjusted EBITDA, any goodwill and intangible asset impairment charges and the other items described above applicable to the particular period and the loss from early extinguishment of debt incurred in the third quarter ended September 30, 2012. However, some of these eliminated items are significant to our business. For example, (i) interest expense is a necessary element of our costs and ability to generate revenue because we incur a significant amount of interest expense related to our outstanding indebtedness; (ii) payment of income taxes is a necessary element of our costs; and (iii) depreciation is a necessary element of our costs and ability to generate revenue because rental equipment is the single largest component of our total assets and we recognize a significant amount of depreciation expense over the estimated useful life of this equipment. Any measure that eliminates components of our capital structure and costs associated with carrying significant amounts of fixed assets on our consolidated balance sheet has material limitations as a performance measure. In light of the foregoing limitations, we do not rely solely on EBITDA and Adjusted EBITDA as performance measures and also consider our GAAP results. EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered alternatives to net income (loss), operating income (loss) or any other measures derived in accordance with GAAP. Because EBITDA and Adjusted EBITDA are not calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies.

Set forth below is a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for the periods presented.


	For the Year Ended December 31,								For the Nine Months Ended September 30,
	2009			2010			2011		2011		2012
	(Amounts in thousands)								(Unaudited)
Net income (loss)	$	(11,943	)	$	(25,460	)	$	8,926	$	1,064	$	18,132
Income tax provision (benefit)		(6,178	)		(14,920	)		3,215		447		9,554
Interest expense		31,339			29,076			28,727		21,607		23,668
Depreciation and amortization(8)		99,293			92,266			99,398		73,793		84,790

EBITDA		112,511			80,962			140,266		96,911		136,144
Impairment of goodwill		8,972			—			—		—		—
Loss on early extinguishment of debt		—			—			—		—		10,180

Adjusted EBITDA	$	121,483		$	80,962		$	140,266	$	96,911	$	146,324

(7)

We define Adjusted Net Income for the nine month period ended September 30, 2012 as Net Income adjusted for the loss from early extinguishment of debt, net of income taxes, incurred in the third quarter ended September 30, 2012. We use Adjusted Net Income in our business operations to, among other things, analyze our financial performance on a comparative period basis without the effects of significant one-time, non-recurring items. Additionally, we believe Adjusted Net Income provides useful information concerning future profitability. However, Adjusted Net Income is not a measure of financial performance under GAAP, and, accordingly, this measure should not be considered as an alternative to GAAP Net Income. Because Adjusted Net Income is not calculated in the same manner by all companies, it may not be comparable to other similarly titled measures used by other companies.

Set forth below is a reconciliation of net income to Adjusted Net Income for the periods presented.


	For the Year Ended
	December 31, 2009								December 31, 2010								December 31, 2011
	(Amounts in thousands)
	As Reported			Adjustment		Adjusted			As Reported			Adjustment		Adjusted			As Reported		Adjustment		Adjusted
Income (loss) before income taxes	$	(18,121	)		—	$	(18,121	)	$	(40,380	)		—	$	(40,380	)	$	12,141		—	$	12,141
Income tax provision (benefit)		(6,178	)		—		(6,178	)		(14,920	)		—		(14,920	)		3,215		—		3,215

Net income (loss)	$	(11,943	)		—	$	(11,943	)	$	(25,460	)		—	$	(25,460	)	$	8,926		—	$	8,926


	For the Nine Months Ended
	September 30, 2011						September 30, 2012
	(Amounts in thousands)
	As Reported		Adjustment		Adjusted		As Reported		Adjustment		Adjusted
Income before income taxes	$	1,511		—	$	1,511	$	27,686	$	10,180	$	37,866
Income tax provision		447		—		447		9,554		3,512		13,066

Net income	$	1,064		—	$	1,064	$	18,132	$	6,668	$	24,800

(8)	Excludes amortization of deferred financing costs and accretion of loan discounts, which are both included in interest expense.

(9)	Total capital expenditures (gross) include rental equipment purchases, assets transferred from new and used inventory to rental fleet and property and equipment purchases.

(10)	Total capital expenditures (net) include rental equipment purchases, assets transferred from new and used inventory to rental fleet and property and equipment purchases less proceeds from the sale of these assets.

(11)	To achieve a coverage ratio of 1:1, we would need additional pre-tax earnings of $17,679 and $40,116 in 2009 and 2010, respectively.

(12)

Total debt (Actual) represents the amounts outstanding, as applicable for the periods presented, under our senior secured credit facility, the Existing Notes, notes payable and capital leases. On September 19, 2012, we paid a special, one-time cash dividend of approximately $244.4 million in the aggregate to our stockholders. This dividend was paid using a portion of the proceeds from the issuance of the Existing Notes.

(13)	The amounts shown in the “As Adjusted” column give pro forma effect to the offering of the New Notes and the use of proceeds therefrom as if such offering and use of proceeds had occurred on September 30, 2012.

(14)	Pro forma interest expense and pro forma net income give effect to the offering of the New Notes and the use of proceeds therefrom as if such offering and use of proceeds had occurred on October 1, 2011.

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