H&E Equipment Services(US:HEES)2025-02-21 21:18FORWARD-LOOKING STATEMENTS Forward-looking statements in this report are subject to various risks and uncertainties, including economic conditions and the pending Herc Holdings Inc merger - Forward-looking statements are not guarantees of performance and involve risks and uncertainties related to future events and circumstances1213 - Key risk factors include general economic and geopolitical conditions, ability to forecast trends, global credit and commodity markets, oil and natural gas trends, supply chain disruptions, increased maintenance costs, global pandemics, indebtedness, business expansion risks, competitive pressures, cybersecurity attacks, adverse weather, climate change regulations, and risks associated with the pending transaction with Herc Holdings Inc141516171819202122 PART I Item 1. Business H&E Equipment Services, Inc. is an equipment rental company with 156 branches, focusing on a pure-play model, and has a pending merger with Herc Holdings Inc - H&E Equipment Services, Inc. was founded in 1961 and operates 156 branch facilities in 31 states, focusing on equipment rentals, sales, parts, and services171819 - The company terminated a merger agreement with United Rentals in February 2025 and subsequently entered into an Agreement and Plan of Merger with Herc Holdings Inc. for a cash and stock acquisition valued at approximately $104.89 per share. The transaction is expected to close mid-202520212223 Rental Fleet Overview (as of December 31, 2024) | Metric | Value | | :----- | :---- | | Pieces of Equipment | 63,630 | | Original Acquisition Cost | ~$2.9 billion | | Average Age | 41.7 months | - The company's competitive strengths include an integrated platform, high-quality and multipurpose fleet, diverse customer markets, complementary parts and services, well-developed infrastructure (156 branches, 621 service technicians, 381 sales people), strong supplier relationships, customized IT systems (including CONNECT digital platform), strong customer relationships (42,400 customers), and an experienced management team3738394041424344 - As of December 31, 2024, the company had approximately 2,800 employees, with 29% people of color and 13% female, and a lost time incident rate of 0.15 and total reportable incident rate of 0.95525457 - The company is committed to environmental stewardship, social responsibility, and transparent governance, with 34% of its rental units being battery and electricity powered as of December 31, 20246061 Item 1A. Risk Factors This section details significant risks that could adversely affect the company's business, operations, and financial results, including economic downturns, inflation, and the Herc merger - Operational and competitive risks include declines in construction/industrial activities, economic downturns, heightened inflation, financial/credit market disruptions, changes in U.S. laws/policies (e.g., tariffs), inability to forecast trends, revenue/operating result fluctuations, global pandemics, intense competition (including from AI/machine learning), reliance on limited manufacturers, supply chain disruptions, increasing equipment costs, residual value risk, increased maintenance costs, labor disputes, and fuel cost fluctuations68747677787980818283848687888990919293949596979899100101102103104105 - Strategic risks involve challenges in identifying and completing attractive acquisitions or opening new start-up locations, and potential integration/consolidation risks106107108109110111112113114115116 - Liquidity and capital resource risks include unfavorable capital/credit market conditions, substantial indebtedness ($1.5 billion as of Dec 31, 2024), inability to generate sufficient cash flow to service debt, potential for incurring more debt, restrictive covenants in debt agreements, variable interest rate exposure, and challenges in obtaining additional capital or refinancing debt117118119120121122123124125126127128129130131132133134 - Governmental regulation risks stem from operating in 31 states, exposing the company to diverse federal, state, and local regulations, including environmental and safety laws, climate change regulations, and potential changes to fiscal and tax policies. The recent reversal of the Chevron doctrine adds regulatory uncertainty136137138139140141142143144145146147 - Risks related to the pending transaction with Herc Holdings Inc. include the uncertainty of closing conditions being met, substantial transaction costs, potential termination fees ($145 million to Herc, plus refunding $63.5 million to Herc for the United termination fee), fixed exchange ratio for stock consideration, provisions discouraging competing acquirers, HSR Act review, stockholder litigation, and potential conflicts of interest for executive officers and directors148149150151152153154155156157158159160161162163164165[166](index=166&type=