8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 24, 2022

H&E Equipment Services, Inc.

(Exact name of registrant as specified in its charter)

Commission File Number: 000-51759

Delaware	81-0553291
(State or other jurisdiction of	(IRS Employer
incorporation)	Identification No.)

7500 Pecue Lane

Baton Rouge, LA 70809

(Address of principal executive offices, including zip code)

(225) 298-5200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	HEES	Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On February 24, 2022, we issued a press release announcing our financial results for the quarter and year ended December 31, 2021. A copy of the press release is attached as Exhibit 99.1 and is incorporated herein by reference.

The information in this Form 8-K and the attached exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 8.01 Other Events.

Net income (loss) before interest expense, income taxes, depreciation, and amortization (“EBITDA”) and Adjusted EBITDA are non-GAAP measures as defined under the rules of the Securities and Exchange Commission. We define Adjusted EBITDA for the periods presented as EBITDA adjusted for the following: (1) merger and other costs, (2) impairment of goodwill, (3) loss on early extinguishment of debt and (4) gain on sale of discontinued operations.

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 components of our 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 other non-recurring items described above applicable to the particular period. 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, accordingly, should not be considered alternatives to net income, operating income or any other measures derived in accordance with GAAP. Because EBITDA and Adjusted EBITDA may not be calculated in the same manner by all companies, these measures may not be comparable to other similarly titled measures used by other companies.

We use Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Share 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. We define Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Share for the period presented as Income (Loss) from Operations, Net Income (Loss) and Net Income (Loss) per Share, respectively, adjusted for the impairment of goodwill, loss on early extinguishment of debt and gain on sale of discontinued operations. Additionally, we believe Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Share provide useful information concerning future profitability. However, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Share are not measurements of our financial performance under GAAP and, accordingly, should not be considered as alternatives to GAAP Income (Loss) from Operations, Net Income (Loss) and Net Income (Loss) per Share. Because Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Share may not be calculated in the same manner by all companies, these measures may not be comparable to other similarly titled measures used by other companies.

Item 9.01 Financial Statements and Exhibits.

Exhibit 99.1 Press Release, dated February 24, 2022, announcing financial results for the quarter and year ended December 31, 2021.

Exhibit 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 24, 2022	By:	/s/ Leslie S. Magee
		Leslie S. Magee
		Chief Financial Officer

EX-99.1

 

Exhibit 99.1

News Release

Contacts:

Leslie S. Magee

Chief Financial Officer

225-298-5261

lmagee@he-equipment.com

Jeffrey L. Chastain

Vice President of Investor Relations

225-952-2308

Jchastain@he-equipment.com

H&E Equipment Services, Inc. Reports

Fourth Quarter and Full Year 2021 Results

BATON ROUGE, Louisiana -- (February 24, 2022)-- H&E Equipment Services, Inc. (NASDAQ: HEES) (“H&E”, the “Company”) today announced results for the fourth quarter and full year ended December 31, 2021, highlighting the excellent quarter and year-over-year performance as strong business activity and strategic initiatives advanced results. On October 1, 2021, the Company sold its crane business, (the “Crane Sale”). All results and comparisons for the periods reported are presented on a continuing operations basis with the Crane Sale reported as discontinued operations in certain statements and schedules accompanying this report.

FOURTH QUARTER 2021 SUMMARY

•Revenues increased 5.1% in the fourth quarter of 2021 to $281.3 million compared to $267.7 million in the fourth quarter of 2020.

•Net income was $21.7 million in the fourth quarter of 2021 compared to a net loss of $21.3 million in the fourth quarter of 2020, which included a non-recurring pre-tax charge totaling $44.6 million associated with the early extinguishment of debt. Adjusting for the non-recurring item, the Company would have reported net income of $12.3 million in the fourth quarter of 2020. The effective income tax rate was 25.8% in the fourth quarter of 2021 compared to a tax benefit of 26.3% in the fourth quarter of 2020, or an effective tax rate of 21.7% following adjustment for the non-recurring item.

•Adjusted EBITDA increased 18.4% in the fourth quarter of 2021 to $110.4 million compared to $93.3 million in the fourth quarter of 2020, yielding a margin of 39.3% of revenues compared to 34.8% over the same period of comparison.

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H&E Equipment Services Reports Fourth Quarter 2021 Results

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•Total equipment rental revenues for the fourth quarter of 2021 were $203.7 million, an increase of $40.8 million, or 25.1%, compared to $162.9 million in the fourth quarter of 2020.Rental revenues for the fourth quarter of 2021 were $182.0 million, an increase of $36.0 million, or 24.7%, compared to $146.0 million in the fourth quarter of 2020.

•Used equipment sales decreased 34.3% in the fourth quarter of 2021 to $29.5 million compared to $44.9 million in the same quarter of 2020. Margins in the fourth quarter improved to 39.3% compared to 31.6% a year ago.

•New equipment sales totaled $22.5 million in the fourth quarter of 2021, a decline of 33.3% when compared to $33.8 million in the fourth quarter of 2020.

•Gross margin improved to 42.0% in the fourth quarter of 2021 compared to 35.2% in the same quarter of 2020.

•Total equipment rental gross margins were 46.3% in the fourth quarter of 2021 compared to 40.7% in the same quarter of 2020. Rental gross margins were 51.7% compared to 45.5% over the same period of comparison.

•Average time utilization (based on original equipment cost) in the fourth quarter of 2021 was 73.1% compared to 65.6% in the same quarter in 2020 and 71.9% in the third quarter of 2021. The Company’s rental fleet based on original acquisition cost ended 2021 at approximately $1.9 billion, representing a 10.0% increase from 2020.

•Average rental rates improved 4.7% in the fourth quarter of 2021 when compared to a year ago and 1.5% when compared to the third quarter of 2021.

•Dollar utilization improved to 39.3% in the fourth quarter of 2021 compared to 34.1% in the fourth quarter of 2020.

•Average rental fleet age on December 31, 2021, was 40.3 months compared to an industry average age of 53.0 months.

•Paid regular quarterly cash dividend of $0.275 per share of common stock.

Commenting on the significant drivers of fourth quarter performance, Brad Barber, Chief Executive Officer of H&E Equipment Services, Inc. stated, “Strong customer demand for our rental fleet persisted well into the final quarter of 2021, resulting in higher average physical utilization and rental rate appreciation. Fourth quarter average physical utilization of 73.1% was exceptional, representing a 750 and 440 basis point improvement when compared to average utilization measures in the same quarters of 2020 and 2019, respectively, while it was 120 basis points above the third quarter of 2021. Accompanying the strong average utilization was an improvement in rental rates of 4.7% when compared to the fourth quarter of 2020, representing a gain of 1.5% on a sequential quarterly basis. With the advances in these critical industry benchmarks, we reported sequential quarterly improvement in rental revenues and adjusted EBITDA while demonstrating excellence throughout the operation.”

Addressing the strong industry dynamics, Mr. Barber noted, “Favorable industry trends remain in place, providing abundant opportunities for growth in 2022. Of note, feedback from our customers suggests elevated equipment rental demand is likely to persist through 2022 with broadening activity in the non-residential construction and industrial end markets. Strong performance in 2021 of key industry measures of future construction activity support the likelihood for further expansion in 2022 of these important end markets. In addition, the recently passed Bipartisan Infrastructure Bill is expected to supplement demand for our fleet as our customers outline growing needs in 2022 ahead of government appropriation. Finally, the planned growth of our equipment rental fleet in 2022 underscores our confidence in a fundamentally robust cycle. Following 2021 gross capital expenditures of $437 million, gross expenditures in 2022 are expected to range from $550 million to $600 million, representing the largest annual gross spend in the Company’s history. The spending increase of near 40% year-over-year is expected to position H&E to meet intensified customer demand in 2022 and beyond.”

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Concluding, Mr. Barber emphasized the success of H&E’s strategic execution, stating, “During 2021, we took important strategic steps to advance the transformation of H&E to a pure play rental business. These steps included continued investment in our rental fleet, which grew 10.0% in 2021, and the steady expansion of our branch network, as we added 10 new locations in regions with promising growth prospects. At the same time, we significantly reduced our exposure to the distribution business, ending the year as a pure play rental operation in 23 of the 24 states where we currently operate. As we enter 2022, successful execution of strategic initiatives has improved H&E’s competitive position in the equipment rental industry. Our young and versatile fleet is growing, and in 2022 we should experience the largest gross investment in our Company’s 60-year history. Also, we expect our geographic footprint to expand in 2022 with our branch count expected to grow by more than 10 locations, including two new branches expected to be added in the first quarter that will provide increased access to new customers in expanding markets. Finally, our consolidated focus on rental operations has positioned the Company for higher and increasingly more stable revenues through the cycle with margin appreciation. Meanwhile, our financial capacity, as evidenced by a conservative balance sheet and excellent liquidity position, provides a strong avenue for strategic growth.”

FINANCIAL DISCUSSION FOR FOURTH QUARTER 2021

Revenue

Total revenues increased 5.1% to $281.3 million in the fourth quarter of 2021 from $267.7 million in the fourth quarter of 2020. Total equipment rental revenues increased 25.1% to $203.7 million compared to $162.9 million in the fourth quarter of 2020. Rental revenues increased 24.7% to $182.0 million compared to $146.0 million in the fourth quarter of 2020. Used equipment sales decreased 34.3% to $29.5 million compared to $44.9 million in the same quarter of 2020. New equipment sales decreased 33.3% to $22.5 million compared to $33.8 million in the same quarter of 2020. Parts sales of $15.7 million were unchanged from the fourth quarter of 2020 while service revenues of $8.3 million decreased 4.6% compared to $8.7 million over the same period of comparison.

Gross Profit

Gross profit increased 25.6% in the fourth quarter of 2021 to $118.2 million compared to $94.1 million in the fourth quarter of 2020. Gross margin of 42.0% for the fourth quarter of 2021 compared to 35.2% for the fourth quarter of 2020. On a segment basis, gross margin on total equipment rentals was 46.3% in the fourth quarter of 2021 compared to 40.7% in the fourth quarter of 2020. Rental margins were 51.7% compared to 45.5% over the same period of comparison. On average, rental rates in the fourth quarter of 2021 were 4.7% better than rates in the fourth quarter of 2020. Time utilization (based on original equipment cost) was 73.1% in the fourth quarter of 2021 compared to 65.6% in the fourth quarter of 2020. Gross margins on used equipment sales were 39.3%, up from 31.6% over the same period of comparison. Gross margins on new equipment sales improved to 14.5% in the fourth quarter of 2021 compared to 10.2% in the fourth quarter of 2020. Gross margins on parts sales and service revenues were 25.8% and 63.5%, respectively, in the fourth quarter of 2021 and compared to gross margins of 25.9% and 67.6%, respectively, over the same period of comparison.

Rental Fleet

At the end of the fourth quarter of 2021, the original acquisition cost of the Company’s rental fleet was approximately $1.9 billion, which represented a 10.0%, or $169.7 million increase from the end of the fourth quarter of 2020. Dollar utilization for the fourth quarter of 2021 improved to 39.3% compared to 34.1% in the fourth quarter of 2020.

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Selling, General and Administrative Expenses

SG&A expenses for the fourth quarter of 2021 were $76.9 million, an increase of $11.4 million, or 17.4%, compared to $65.5 million in the fourth quarter of 2020. The higher expenses were primarily due to a $9.2 million increase in employee salaries, wages, incentive compensation related to increased profitability, payroll taxes and related employee benefits, a $1.4 million increase in facilities and promotional expenses, and a $0.7 million increase in professional fees. These items were partially offset by a $0.5 million decrease in supplies. SG&A expenses in the fourth quarter of 2021 as a percentage of total revenues were 27.3% compared to 24.4% in the fourth quarter of 2020. Approximately $3.7 million of SG&A expenses in the fourth quarter of 2021 were attributable to warm start branches opened since the fourth quarter of 2020.

Income from Operations

Income from operations for the fourth quarter of 2021 was $41.6 million, or 14.8% of revenues, compared to $30.1 million, or 11.2% of revenues.

Interest Expense

Interest expense was $13.5 million for the fourth quarter of 2021, a reduction of 12.0% when compared to $15.3 million for the fourth quarter of 2020.

Net Income

Net income in the fourth quarter of 2021 was $21.7 million, or $0.59 per diluted share, compared to a loss in the fourth quarter of 2020 of $21.3 million, or $0.59 per diluted share. Adjusting for the previously noted non-recurring charge, the Company would have reported net income for the fourth quarter of 2020 of $12.3 million, or $0.34 per diluted share. The effective income tax rate for the fourth quarter of 2021 was 25.8% compared to a tax benefit of 26.3% in the same quarter of 2020, or an effective tax rate of 21.7%, when adjusted for the non-recurring item.

Adjusted EBITDA

Adjusted EBITDA in the fourth quarter of 2021 increased 18.4% to $110.4 million, or 39.3% of revenues compared to $93.3 million, or 34.8% of revenues, in the fourth quarter of 2020.

FINANCIAL DISCUSSION FOR THE YEAR ENDED DECEMBER 31, 2021

Full-year results for 2020 include non-recurring pre-tax charges of $55.7 million, resulting from an interim goodwill impairment charge (first quarter), and $44.6 million associated with the early extinguishment of debt (fourth quarter).

Revenue

Revenues totaled $1.1 billion, an increase of $55.8 million, or 5.5% when compared to $1.0 billion in 2020. Total equipment rental revenues increased 13.2% to $729.7 million compared to $644.4 million in 2020. Rental revenues increased 12.4% to $653.0 million compared to $581.1 million in 2020. Used equipment sales decreased 3.2% to $135.2 million from $139.8 million in the previous year. New equipment sales decreased 18.5% to $92.7 million compared to $113.7 million in the previous year. Parts sales declined modestly to $65.6 million from $65.9 million in 2020 while service revenues decreased 8.2% to $33.0 million from $36.0 million in the previous year.

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Gross Profit

Gross profit increased 16.3%, or $58.3 million, to $415.4 million in 2021 from $357.1 million in 2020. Gross margin improved 360 basis points in 2021 to 39.1% compared to 35.5% for 2020. On a segment basis, gross margin on total equipment rentals was 43.3% compared to 40.0% in 2020. Rental margins were 48.4% compared to 44.4% in the previous year. On average, 2021 rental rates increased 0.9% compared to 2020. In 2021, time utilization (based on original equipment cost) was 69.7% compared to 62.9% a year ago. Gross margins on used equipment sales improved to 36.2% compared to 32.2% in the previous year. Gross margins on new equipment sales were 12.8% compared to 10.7% in the previous year. Gross margins on parts sales were 26.3% compared to 26.9% a year ago while gross margins on service revenues were 66.0% in 2021 compared to 68.0% in 2020.

Selling, General and Administrative Expenses

SG&A expenses for 2021 were $290.1 million compared to $265.9 million in 2020, an increase of $24.2 million, or 9.1%. The increase was primarily attributable to a $24.1 million increase in employee salaries, wages, incentive compensation, payroll taxes, and related employee benefits, a $3.1 million increase in facilities expense following the addition of 10 new branches, and a $1.3 million increase in utilities expense. These items were partially offset by a $2.1 million reduction in bad debt expense, and a $1.7 million decline in liability insurance costs. Expenses related to new branch expansion increased $13.2 million compared to a year ago. In 2021, SG&A expenses as a percentage of total revenues were 27.3% compared to 26.4% a year ago.

Income from Operations

Income from operations in 2021 totaled $132.3 million, or 12.5% of revenues, compared $43.4 million, or 4.3% of revenues in 2020. Adjusting for the previously noted non-recurring item relating to the impairment of goodwill, income from operations in 2020 would have been $99.1 million, or 9.8% of revenues.

Interest Expense

Interest expense in 2021 was $53.8 million, a 13.0% decline from $61.8 million in the previous year.

Net Income (Loss)

Net income in 2021 totaled $60.6 million, or $1.66 per diluted share, compared to a net loss in 2020 of $46.4 million, or $1.29 per diluted share. Adjusting for the previously noted non-recurring items, net income in 2020 would have been $31.5 million, or $0.87 per diluted share. The effective income tax rate in 2021 was 25.9% compared to a tax benefit in 2020 of 22.4%, or an effective tax rate of 22.2% when adjusted for the non-recurring items.

Adjusted EBITDA

Adjusted EBITDA for 2021 was $394.3 million compared to $359.4 million in 2020. Adjusted EBITDA in 2021 as a percentage of revenues was 37.1% compared to 35.7% in 2020.

Non-GAAP Financial Measures

This press release contains certain Non-GAAP measures (EBITDA, Adjusted EBITDA, Adjusted Income from Operations, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per share and the disaggregation of equipment rental revenues and cost of sales numbers) detailed below. Please refer to our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 24, 2022, for a description of these measures and of our use of these measures. These measures as calculated by the Company are not necessarily comparable to similarly titled measures reported by other companies. Additionally, these Non-GAAP measures are not a measurement of financial performance or liquidity under GAAP and should not be considered as alternatives to the Company's other financial information determined under GAAP.

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Conference Call

The Company’s management will hold a conference call to discuss fourth quarter 2021 results today, February 24, 2022, at 10:00 a.m. (Eastern Time). To listen to the call, participants should dial 844-887-9400 approximately 10 minutes prior to the start of the call. A telephonic replay will become available after 1:00 p.m. (Eastern Time) on February 24, 2022, and will continue through March 3, 2022, by dialing 877-344-7529 and entering the confirmation code 2971254.

A live broadcast of the Company’s quarterly conference call will be available online at www.he-equipment.com on February 24, 2022, beginning at 10:00 a.m. (Eastern Time) and will remain available for 30 days. Related presentation materials will be posted to the “Investor Relations” section of the Company’s web site at www.he-equipment.com prior to the call. The presentation materials will be in Adobe Acrobat format.

About H&E Equipment Services, Inc.

Founded in 1961, H&E Equipment Services, Inc. is one of the largest rental equipment companies in the nation. The Company’s fleet is among the industry’s youngest and most versatile with a superior equipment mix comprised of aerial work platforms, earthmoving, material handling, and other general and specialty lines. H&E serves a diverse set of end markets in many high-growth geographies including branches throughout the Pacific Northwest, West Coast, Intermountain, Southwest, Gulf Coast States, Southeast, and Mid-Atlantic regions.

Forward-Looking Statements

Statements contained in this press release that are not historical facts, including statements about H&E’s beliefs and expectations, are “forward-looking statements” within the meaning of the federal securities laws. Statements containing the words “may”, “could”, “would”, “should”, “believe”, “expect”, “anticipate”, “plan”, “estimate”, “target”, “project”, “intend”, “foresee” and similar expressions constitute forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following: (1) risks related to the impact of the COVID-19 global pandemic, such as the scope and duration of the outbreak, government actions and restrictive measures implemented in response to the pandemic, material delays and cancellations of construction or infrastructure projects, labor shortages, supply chain disruptions and other impacts to the business; (2) general economic conditions and construction and industrial activity in the markets where we operate in North America; (3) our ability to forecast trends in our business accurately, and the impact of economic downturns and economic uncertainty in the markets we serve (including as a result of current uncertainty due to COVID-19 and inflation); (4) trends in oil and natural gas could adversely affect the demand for our services and products; (5) the impact of conditions in the global credit and commodity markets (including as a result of current volatility and uncertainty in credit and commodity markets due to COVID-19) and their effect on construction spending and the economy in general; (6) relationships with equipment suppliers; (7) increased maintenance and repair costs as we age our fleet and decreases in our equipment’s residual value; (8) our indebtedness; (9) risks associated with the expansion of our business and any potential acquisitions we may make, including any related capital expenditures, or our inability to consummate such acquisitions; (10) our possible inability to integrate any businesses we acquire; (11) competitive pressures; (12) security breaches and other disruptions in our information technology systems; (13) adverse weather events or natural disasters; (14) compliance with laws and regulations, including those relating to environmental matters, corporate governance matters and tax matters, as well as any future changes to such laws and regulations; and (15) other factors discussed in our public filings, including the risk factors included in the Company’s most recent

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Annual Report on Form 10-K. Investors, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and Exchange Commission, we are under no obligation to publicly update or revise any forward-looking statements after the date of this release, whether as a result of any new information, future events or otherwise. These statements are based on the current beliefs and assumptions of H&E’s management, which in turn are based on currently available information and important, underlying assumptions. Investors, potential investors, security holders and other readers are urged to consider the above-mentioned factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.

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H&E EQUIPMENT SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(Amounts in thousands, except per share amounts)

			Three Months Ended December 31,				Twelve Months Ended December 31,
		2021			2020		2021		2020
Revenues:
Equipment rentals	$	203,686		$	162,882	$	729,700	$	644,445
Used equipment sales		29,499			44,879		135,245		139,769
New equipment sales		22,516			33,751		92,677		113,708
Parts sales		15,684			15,684		65,623		65,881
Service revenues		8,340			8,744		33,034		35,989
Other		1,527			1,780		6,518		7,183
Total revenues		281,252			267,720		1,062,797		1,006,975
Cost of revenues:
Equipment rentals
Rental depreciation		59,467			54,524		227,772		225,424
Rental expense		28,465			25,034		109,365		97,604
Rental other		21,540			17,026		76,934		63,909
		109,472			96,584		414,071		386,937
Used equipment sales		17,897			30,680		86,323		94,799
New equipment sales		19,246			30,303		80,822		101,501
Parts sales		11,631			11,623		48,346		48,131
Service revenues		3,044			2,830		11,237		11,525
Other		1,739			1,583		6,635		7,019
Total cost of revenues		163,029			173,603		647,434		649,912
Gross Profit		118,223			94,117		415,363		357,063
Selling, general, and administrative expenses		76,870			65,452		290,129		265,894
Merger and other		547			195		662		503
Gain on sales of property and equipment, net		(797)			(1,592)		(7,748)		(8,410)
Impairment of goodwill		–			–		–		55,664
Income from Operations		41,603			30,062		132,320		43,412
Interest expense		(13,460)			(15,301)		(53,758)		(61,790)
Other income, net		1,136			928		3,162		3,184
Loss on early extinguishment of debt		–			(44,630)		–		(44,630)
Income (loss) from continuing operations before provision (benefit) for income taxes		29,279			(28,941)		81,724		(59,824)
Provision (benefit) for income taxes		7,549			(7,608)		21,160		(13,428)
Net income (loss) from continuing operations	$	21,730		$	(21,333)	$	60,564	$	(46,396)
Discontinued Operations:
Income from discontinued operations before provision (benefit) for income taxes		41,702			5,729		55,948		18,438
Provision (benefit) for income taxes		10,346			(987)		13,972		4,709
Net income from discontinued operations	$	31,356		$	6,716	$	41,976	$	13,729
Net income (loss)	$	53,086		$	(14,617)	$	102,540	$	(32,667)

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	H&E EQUIPMENT SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (Amounts in thousands, except per share amounts)
				Three Months Ended December 31,				Twelve Months Ended December 31,
			2021			2020		2021		2020
NET INCOME (LOSS) PER SHARE:
From continuing operations per common share:
Basic		$	0.60		$	(0.59)	$	1.67	$	(1.29)
Diluted		$	0.59		$	(0.59)	$	1.66	$	(1.29)
From discontinued operations per common share:
Basic		$	0.86		$	0.19	$	1.16	$	0.38
Diluted		$	0.86		$	0.19	$	1.15	$	0.38
Net income (loss) per common share:
Basic		$	1.46		$	(0.40)	$	2.83	$	(0.91)
Diluted		$	1.45		$	(0.40)	$	2.81	$	(0.91)
Weighted average common shares outstanding:
Basic			36,347			36,161		36,261		36,067
Diluted			36,544			36,161		36,451		36,067
Dividends declared per common share		$	0.275		$	0.275	$	1.10	$	1.10

H&E EQUIPMENT SERVICES, INC.
SELECTED BALANCE SHEET DATA (unaudited)
(Amounts in thousands)
		December 31,		December 31,
		2021		2020
Cash	$	357,296	$	310,882
Rental equipment, net		1,116,456		989,423
Assets held for sale		–		121,455
Total assets		2,080,447		1,980,484
Total debt (1)		1,250,000		1,250,305
Total liabilities		1,777,065		1,742,251
Stockholders’ equity		303,382		238,233
Total liabilities and stockholders’ equity	$	2,080,447	$	1,980,484

(1)Total debt consists of the aggregate amounts on the senior unsecured notes and finance lease obligations.

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February 24, 2022

H&E EQUIPMENT SERVICES, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share amounts)
		Three Months Ended December 31,
		2021					2021
		As Reported		Adjustment			As Adjusted
Gross profit	$	118,223	$	–		$	118,223
Selling, general and administrative expenses		76,870		–			76,870
Impairment of goodwill		–		–			–
Gain on sale of property and equipment, net		(797)		–			(797)
Merger and other		547		–			547
Income from continuing operations		41,603		–			41,603
Interest expense		(13,460)		–			(13,460)
Other income, net		1,136		–			1,136
Income from continuing operations before provision for income taxes		29,279		–			29,279
Provision for income taxes		7,549		–			7,549
Net income from continuing operations	$	21,730	$	–		$	21,730
Income (loss) from discontinued operations before provision (benefit) for income taxes		41,702		(42,072)	(1)		(370)
Provision (benefit) for income taxes		10,346		(10,437)			(91)
Net income (loss) from discontinued operations	$	31,356	$	(31,635)		$	(279)
Net income (loss)	$	53,086	$	(31,635)		$	21,451

(1)Adjustment consists of gain on sale of discontinued operations.

		Three Months Ended December 31,
		2021				2021
		As Reported		Adjustment		As Adjusted
NET INCOME (LOSS) PER SHARE (1)
Basic – Net income from continuing operations per common share:	$	0.60	$	–	$	0.60
Basic – Net income (loss) from discontinued operations per common share:	$	0.86	$	(0.87)	$	(0.01)
Basic – Net income per common share:	$	1.46	$	(0.87)	$	0.59
Basic – Weighted average common shares outstanding:		36,347		36,347		36,347
Diluted – Net income from continuing operations per common share:	$	0.59	$	–	$	0.59
Diluted – Net income (loss) from discontinued operations per common share:	$	0.86	$	(0.87)	$	(0.01)
Diluted – Net income per common share:	$	1.45	$	(0.87)	$	0.59
Diluted – Weighted average common shares outstanding:		36,544		36,544		36,544

(1)Because of the method used in calculating per share data, the summation of the above per share data may not necessarily total to the as adjusted per share data.

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February 24, 2022

H&E EQUIPMENT SERVICES, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share amounts)
		Twelve Months Ended December 31,
		2021					2021
		As Reported		Adjustment			As Adjusted
Gross profit	$	415,363	$	–		$	415,363
Selling, general and administrative expenses		290,129		–			290,129
Impairment of goodwill		–		–			–
Gain on sale of property and equipment, net		(7,748)		–			(7,748)
Merger and other		662		–			662
Income from continuing operations		132,320		–			132,320
Interest expense		(53,758)		–			(53,758)
Other income, net		3,162		–			3,162
Income from continuing operations before provision for income taxes		81,724		–			81,724
Provision for income taxes		21,160		–			21,160
Net income from continuing operations	$	60,564	$	–		$	60,564
Income from discontinued operations before provision for income taxes		55,948		(42,072)	(1)		13,876
Provision for income taxes		13,972		(10,437)			3,535
Net income from discontinued operations	$	41,976	$	(31,635)		$	10,341
Net income	$	102,540	$	(31,635)		$	70,905

(1)Adjustment consists of gain on sale of discontinued operations.

		Twelve Months Ended December 31,
		2021				2021
		As Reported		Adjustment		As Adjusted
NET INCOME PER SHARE (1)
Basic – Net income from continuing operations per common share:	$	1.67	$	–	$	1.67
Basic – Net income from discontinued operations per common share:	$	1.16	$	(0.87)	$	0.29
Basic – Net income per common share:	$	2.83	$	(0.87)	$	1.96
Basic – Weighted average common shares outstanding:		36,261		36,261		36,261
Diluted – Net income from continuing operations per common share:	$	1.66	$	–	$	1.66
Diluted – Net income from discontinued operations per common share:	$	1.15	$	(0.87)	$	0.28
Diluted – Net income per common share:	$	2.81	$	(0.87)	$	1.95
Diluted – Weighted average common shares outstanding:		36,451		36,451		36,451

(1)Because of the method used in calculating per share data, the summation of the above per share data may not necessarily total to the as adjusted per share data.

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February 24, 2022

H&E EQUIPMENT SERVICES, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share amounts)
		Three Months Ended December 31,
		2020				2020
		As Reported		Adjustment		As Adjusted
Gross profit	$	94,117	$	–	$	94,117
Selling, general and administrative expenses		65,452		–		65,452
Impairment of goodwill		–		–		–
Gain on sale of property and equipment, net		(1,592)		–		(1,592)
Merger and other		195		–		195
Income from continuing operations		30,062		–		30,062
Interest expense		(15,301)		–		(15,301)
Loss on early extinguishment of debt		(44,630)		44,630		–
Other income, net		928		–		928
Income (loss) from continuing operations before provision (benefit) for income taxes		(28,941)		44,630		15,689
Provision (benefit) for income taxes		(7,608)		11,016		3,408
Net income (loss) from continuing operations	$	(21,333)	$	33,614	$	12,281
Income from discontinued operations before provision (benefit) for income taxes		5,729		–		5,729
Provision (benefit) for income taxes		(987)		2,364		1,377
Net income from discontinued operations	$	6,716	$	(2,364)	$	4,352
Net income (loss)	$	(14,617)	$	31,250	$	16,633

		Three Months Ended December 31,
		2020				2020
		As Reported		Adjustment		As Adjusted
NET INCOME (LOSS) PER SHARE (1)
Basic – Net income (loss) from continuing operations per common share:	$	(0.59)	$	0.93	$	0.34
Basic – Net income from discontinued operations per common share:	$	0.19	$	(0.07)	$	0.12
Basic – Net income (loss) per common share:	$	(0.40)	$	0.86	$	0.46
Basic – Weighted average common shares outstanding:		36,161		36,161		36,161
Diluted – Net income (loss) from continuing operations per common share:	$	(0.59)	$	0.93	$	0.34
Diluted – Net income from discontinued operations per common share:	$	0.19	$	(0.07)	$	0.12
Diluted – Net income (loss) per common share:	$	(0.40)	$	0.86	$	0.46
Diluted – Weighted average common shares outstanding:		36,161		36,300		36,300

(1)Because of the method used in calculating per share data, the summation of the above per share data may not necessarily total to the as adjusted per share data.

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February 24, 2022

H&E EQUIPMENT SERVICES, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share amounts)
		Twelve Months Ended December 31,
		2020					2020
		As Reported		Adjustment			As Adjusted
Gross profit	$	357,063	$	–		$	357,063
Selling, general and administrative expenses		265,894		–			265,894
Impairment of goodwill		55,664		(55,664)			–
Gain on sale of property and equipment, net		(8,410)		–			(8,410)
Merger and other		503		–			503
Income from continuing operations		43,412		55,664			99,076
Interest expense		(61,790)		–			(61,790)
Loss on early extinguishment of debt		(44,630)		44,630			–
Other income, net		3,184		–			3,184
Income (loss) from continuing operations before provision (benefit) for income taxes		(59,824)		100,294			40,470
Provision (benefit) for income taxes		(13,428)		22,421			8,993
Net income (loss) from continuing operations	$	(46,396)	$	77,873		$	31,477
Income from discontinued operations before provision for income taxes		18,438		6,330	(1)		24,768
Provision for income taxes		4,709		1,388			6,097
Net income from discontinued operations	$	13,729	$	4,942		$	18,671
Net income (loss)	$	(32,667)	$	82,815		$	50,148

(1)Adjustment consists of impairment of goodwill from discontinued operations.

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February 24, 2022

		Twelve Months Ended December 31,
		2020				2020
		As Reported		Adjustment		As Adjusted
NET INCOME (LOSS) PER SHARE (1)
Basic – Net income (loss) from continuing operations per common share:	$	(1.29)	$	2.16	$	0.87
Basic – Net income from discontinued operations per common share:	$	0.38	$	0.14	$	0.52
Basic – Net income (loss) per common share:	$	(0.91)	$	2.30	$	1.39
Basic – Weighted average common shares outstanding:		36,067		36,067		36,067
Diluted – Net income (loss) from continuing operations per common share:	$	(1.29)	$	2.15	$	0.87
Diluted – Net income from discontinued operations per common share:	$	0.38	$	0.14	$	0.52
Diluted – Net income (loss) per common share:	$	(0.91)	$	2.29	$	1.39
Diluted – Weighted average common shares outstanding:		36,067		36,185		36,185

(1)Because of the method used in calculating per share data, the summation of the above per share data may not necessarily total to the as adjusted per share data.

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February 24, 2022

H&E EQUIPMENT SERVICES, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands)
		Three Months Ended December 31,			Twelve Months Ended December 31,
		2021		2020		2021		2020
Net Income (loss)	$	53,086	$	(14,617)	$	102,540	$	(32,667)
Net income from discontinued operations		31,356		6,716		41,976		13,729
Net income (loss) from continuing operations		21,730		(21,333)		60,564		(46,396)
Interest Expense		13,460		15,301		53,758		61,790
Provision (benefit) for income taxes		7,549		(7,608)		21,160		(13,428)
Depreciation		66,153		61,087		254,158		252,681
Amortization of intangibles		992		991		3,970		3,987
EBITDA from continuing operations	$	109,884	$	48,438	$	393,610	$	258,634
Merger and other		547		195		662		503
Loss on early extinguishment of debt		-		44,630		-		44,630
Impairment of goodwill		-		-		-		55,664
Adjusted EBITDA from continuing operations	$	110,431	$	93,263	$	394,272	$	359,431
Net income from discontinued operations	$	31,356	$	6,716	$	41,976	$	13,729
Provision (benefit) for income taxes		10,346		(987)		13,972		4,709
Depreciation		–		2,609		4,803		10,649
EBITDA from discontinued operations	$	41,702	$	8,338	$	60,751	$	29,087
Merger and other		370		-		2,065		-
Gain from sale of discontinued operations		(42,072)		-		(42,072)		-
Impairment of goodwill		-		-		-		6,330
Adjusted EBITDA from discontinued operations	$	-	$	8,338	$	20,744	$	35,417
Adjusted EBITDA	$	110,431	$	101,601	$	415,016	$	394,848

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February 24, 2022

H&E EQUIPMENT SERVICES, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Amounts in thousands)
		Three Months Ended December 31,					Twelve Months Ended December 31,
		2021		2020		2021			2020
RENTAL
Equipment rentals (1)	$	181,993	$	145,961	$	653,004		$	581,144
Rentals other		21,693		16,921		76,696			63,301
Total equipment rentals		203,686		162,882		729,700			644,445
RENTAL COST OF SALES
Rental depreciation		59,467		54,524		227,772			225,424
Rental expense		28,465		25,034		109,365			97,604
Rental other		21,540		17,026		76,934			63,909
Total rental cost of sales		109,472		96,584		414,071			386,937
RENTAL REVENUES GROSS PROFIT (LOSS)
Equipment rentals		94,061		66,403		315,867			258,116
Rentals other		153		(105)		(238)			(608)
Total rental revenues gross profit	$	94,214	$	66,298	$	315,629		$	257,508
RENTAL REVENUES GROSS MARGIN
Equipment rentals		51.7%		45.5%		48.4%			44.4%
Rentals other		0.7%		-0.6%		-0.3%			-1.0%
Total rental revenues gross margin		46.3%		40.7%		43.3%			40.0%

(1)Pursuant to SEC Regulation S-X, our equipment rental revenues are aggregated and presented in our unaudited consolidated statements of operations in this press release as a single line item, “Equipment Rentals.” The above table disaggregates our equipment rental revenues for discussion and analysis purposes only.

-End-

XML

Document and Entity Information	Feb. 24, 2022
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Feb. 24, 2022
Trading Symbol	HEES
Entity Registrant Name	H&E Equipment Services, Inc.
Entity Central Index Key	0001339605
Entity Emerging Growth Company	false
Entity File Number	000-51759
Entity Tax Identification Number	81-0553291
Entity Address, Address Line One	7500 Pecue Lane
Entity Address, City or Town	Baton Rouge
Entity Address, State or Province	LA
Entity Address, Postal Zip Code	70809
City Area Code	225
Local Phone Number	298-5200
Title of 12(b) Security	Common Stock, par value $0.01 per share
Security Exchange Name	NASDAQ
Entity Incorporation, State or Country Code	DE
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false