The following summary highlights certain information concerning H&E Equipment Service, Inc.’s business, the exchange offer and the new notes and new guarantees, and is qualified in its entirety by more detailed information and consolidated financial statements included elsewhere in this prospectus. Because it is a summary, it does not contain all of the information that you should consider before making any decision whether to participate in this exchange offer. You should read this prospectus carefully, including the section entitled “Risk Factors” and the consolidated financial statements and related notes to such financial statements included elsewhere in this prospectus.

 

Unless we state otherwise, the information in this prospectus gives effect to the reorganization transactions effected in connection with our initial public offering in February 2006 as described in “Certain Relationships and Related Party Transactions — Reorganization Transactions.” Also, except where specifically noted, references in this prospectus to the “Company,” “we,” or “us” mean H&E Equipment Services L.L.C. (“H&E LLC”) and its subsidiaries for periods prior to February 3, 2006, and H&E Equipment Services, Inc. and its subsidiaries for periods on or after February 3, 2006. H&E LLC itself is the result of the merger of ICM Equipment Company LLC and its consolidated subsidiaries, or ICM, and Head & Engquist Equipment, LLC (or Head & Engquist, a wholly-owned subsidiary of Gulf Wide Industries, LLC, or Gulf Wide), with and into Gulf Wide. We refer to the combination of ICM and Head & Engquist into Gulf Wide as the “Gulf Wide transaction,” and the operating results in this prospectus for periods prior to the Gulf Wide transaction reflect the historical results of Head & Engquist. Some of the statements in this summary are forward-looking statements. For more information, see “Forward-Looking Statements.”

 

“EBITDA” and “Adjusted EBITDA” are defined and discussed in note (5) under the caption “— Summary Historical and Pro Forma Financial Data.”

 

Background of the Exchange Offer

 

On August 4, 2006, we completed a private offering of $250,000,000 principal amount of 83/8% Senior Notes due 2016, referred to as the “old notes.” As part of the private offering of the old notes, we entered into a registration rights agreement with the initial purchasers of the old notes in which we agreed to complete an exchange offer for the old notes. We are offering to exchange the old notes for $250,000,000 aggregate principal amount of our new 83/8% Senior Notes due 2016, referred to as the “new notes,” the issuances of which will be registered under the Securities Act. We refer to this offer to exchange new notes for old notes in accordance with the terms set forth in this prospectus and the accompanying letter of transmittal as the “exchange offer.” You are entitled to exchange in the exchange offer your old notes for new notes.

 

You should read the discussion under the headings “— The New Notes” and “Description of Notes” for further information regarding the new notes and the discussion under the headings “— The Exchange Offer” and “The Exchange Offer” for further information regarding the exchange offer and the new notes.

 

In this prospectus we refer to the old notes and the new notes collectively as the “notes.”

 

Our Company

 

We are one of the largest integrated equipment services companies in the United States focused on heavy construction and industrial equipment. We rent, sell and provide parts and service support for four core categories of specialized equipment: (1) hi-lift or aerial platform equipment; (2) cranes; (3) earthmoving equipment; and (4) industrial lift trucks. We engage in five principal business activities in these equipment categories:

 

 

By providing rental, sales, parts, repair and maintenance functions under one roof, we offer our customers a one-stop solution for their equipment needs. This full-service approach provides us with (1) multiple points of customer contact; (2) cross-selling opportunities among our rental, used and new equipment sales, parts sales and services operations; (3) an effective method to manage our rental fleet through efficient maintenance and profitable distribution of used equipment; and (4) a mix of business activities that enables us to operate effectively throughout economic cycles. We believe that the operating experience and extensive infrastructure we have developed throughout our history as an integrated services company provide us with a competitive advantage over rental-focused companies and equipment distributors. In addition, our focus on four core categories of heavy construction and industrial equipment enables us to offer specialized knowledge and support to our customers. For the year ended December 31, 2005, we generated total revenues of approximately $600.2 million. For the six months ended June 30, 2006, our total revenues were approximately $384.7 million. The pie charts below illustrate a breakdown of our revenues and gross profits for the year ended December 31, 2005 by business segment (see notes to our consolidated financial statements):

 

 

We have operated, through our predecessor companies, as an integrated equipment services company for approximately 45 years and have built an extensive infrastructure that includes 47 full-service facilities located throughout the high growth Intermountain, Southwest, Gulf Coast, West Coast and Southeast regions of the United States. Our management, from the corporate level down to the branch store level, has extensive industry experience. We focus our rental and sales activities on, and organize our personnel principally by, our four equipment categories. We believe this allows us to provide specialized equipment knowledge, improve the effectiveness of our rental and sales forces and strengthen our customer relationships. In addition, we operate our day-to-day business on a branch basis which we believe allows us to more closely service our customers, fosters management accountability at local levels, and strengthens our local and regional relationships.

 

Products and Services

 

Equipment Rentals.  We rent our heavy construction and industrial equipment to our customers on a daily, weekly and monthly basis. We have a well-maintained rental fleet that, at June 30, 2006, consisted of approximately 17,597 pieces of equipment having an original acquisition cost (which we define as the cost originally paid to manufacturers or the original amount financed under operating leases) of approximately $614.3 million and an average age of approximately 43.9 months. Our rental business creates cross-selling opportunities for us in sales and services.

 

New Equipment Sales.  We sell new heavy construction and industrial equipment in all four equipment categories, and we are a leading distributor for nationally-recognized suppliers including JLG Industries, Gehl, Genie Industries (Terex), Komatsu, Bobcat and Yale Material Handling. In addition, we are the world’s largest distributor of Grove and Manitowoc crane equipment. Our new equipment sales operation is a source of new customers for our parts sales and service support activities, as well as for used equipment sales.

Used Equipment Sales.  We sell used equipment primarily from our rental fleet, as well as inventoried equipment that we acquire through trade-ins from our equipment customers and selective purchases of high-quality used equipment. Selling used equipment is an effective way for us to manage the size and composition of our rental fleet and provides a profitable distribution channel for disposal of rental equipment. For the year ended December 31, 2005, approximately 78%, of our used equipment sales revenues were derived from sales of rental fleet equipment. Used equipment sales, like new equipment sales, generate parts and service business for us.

 

Parts Sales.  We sell new and used parts to customers and also provide parts to our own rental fleet. We maintain an extensive in-house parts inventory in order to provide timely parts and service support to our customers as well as to our own rental fleet. In addition, our parts operation enables us to maintain a high quality rental fleet and provide additional support to our end users.

 

Service Support.  We provide maintenance and repair services for our customers’ owned equipment and to our own rental fleet. In addition to repair and maintenance on an as-needed or scheduled basis, we provide ongoing preventative maintenance services and warranty repairs for our customers. Over time we have built a full-scale services infrastructure that would be difficult for companies without the requisite resources and lead time to replicate.

 

In addition to our principal business activities mentioned above, we provide ancillary equipment support activities including transportation, hauling, parts shipping and loss damage waivers.

 

Our Competitive Strengths

 

Integrated Platform of Products and Services.  We believe that the operating experience and extensive infrastructure we have developed through years of operating as an integrated equipment services company provide us with a competitive advantage over rental-focused companies and equipment distributors. Key strengths of our integrated equipment services platform include:

 

 

Complementary, High Margin Parts and Service Operations.  Our parts and service businesses allow us to maintain our rental fleet in excellent condition and to offer our customers top quality rental equipment. Our after-market parts and service businesses together provide us with a high-margin revenue source that has proven to be stable throughout a range of economic cycles.

 

Specialized, High Quality Equipment Fleet.  Our focus on four core types of heavy construction and industrial equipment allows us to better provide the specialized knowledge and support that our customers demand when renting and purchasing equipment. These four types of equipment are attractive because they have a long useful life, high residual value and strong industry demand.

 

Well-Developed Infrastructure.  We have built an infrastructure that currently includes a network of 47 full-service facilities, and a workforce that includes a highly-skilled group of over 650 service technicians and an aggregate of approximately 200 sales people in our specialized rental and equipment sales forces. We believe that our well-developed infrastructure helps us to better serve large multi-regional customers than our historically rental-focused competitors and provides an advantage when competing for lucrative fleet and project management business.

 

Leading Distributor for Suppliers.  We are a leading distributor for nationally-recognized equipment suppliers, including JLG Industries, Gehl, Genie Industries (Terex), Komatsu, Bobcat and Yale Material Handling. In addition, we are the world’s largest distributor of Grove and Manitowoc crane equipment. These

relationships improve our ability to negotiate equipment acquisition pricing and allow us to purchase parts at wholesale costs.

 

Customized Information Technology Systems.  Our customized information systems allow us to actively manage our business and our rental fleet. Our customer relationship management system, which is currently being implemented, will provide our sales force with real-time access to customer and sales information.

 

Experienced Management Team.  Our senior management team is led by John M. Engquist, our President and Chief Executive Officer, who has approximately 32 years of industry experience. Our senior and regional managers have an average of approximately 22 years of industry experience. Our branch managers have extensive knowledge and industry experience as well.

 

Our Business Strategy

 

Leverage our Integrated Business Model.  We intend to continue to actively leverage our integrated business model to offer a one-stop solution to our customers’ varied needs with respect to the four categories of heavy construction and industrial equipment on which we focus. We will continue to cross-sell our services to expand and deepen our customer relationships. We believe that our integrated equipment services model provides us with a strong platform for additional growth.

 

Managing the Life Cycle of our Rental Equipment.  We actively manage the size, quality, age and composition of our rental fleet, employing a “cradle through grave” approach. During the life of our rental equipment, we (1) aggressively negotiate on purchase price; (2) use our customized information technology systems to closely monitor and analyze, among other things, time utilization (equipment usage based on customer demand), rental rate trends and targets and equipment demand; (3) continuously adjust our fleet mix and pricing; (4) maintain fleet quality through regional quality control managers and our on-site parts and services support; and (5) dispose of rental equipment through our retail sales force. This allows us to purchase our rental equipment at competitive prices, optimally utilize our fleet, cost-effectively maintain our equipment quality and maximize the value of our equipment at the end of its useful life.

 

Grow our Parts and Service Operations.  Our strong parts and service operations are keystones of our integrated equipment services platform and together provide us with a relatively stable high-margin revenue source. Our parts and services operation helps us develop strong, on-going customer relationships, attract new customers and maintain a high-quality rental fleet. We intend to grow this product support side of our business and further penetrate our customer base.

 

Enter Carefully Selected New Markets.  We intend to continue to strategically expand our network to solidify our presence in the attractive, contiguous regions where we operate. The regions in which we operate are attractive because they are among the highest growth areas in the United States and are minimally impacted by seasonality. We have a proven track record of successfully entering new markets and we look to add locations that offer attractive growth opportunities, high demand for construction and heavy equipment, and contiguity to our existing markets.

 

Make Selective Acquisitions.  The equipment industry is fragmented and consists of a large number of relatively small, independent businesses servicing discrete local markets. Some of these businesses may represent attractive acquisition candidates. We intend to evaluate and pursue acquisitions on an opportunistic basis, with an objective of increasing our revenues, improving our profitability, entering additional attractive markets and strengthening our competitive position.

 

Recent Developments

 

IPO and Reorganization Transactions.  We completed our initial public offering of our common stock in February 2006. We used the $207.0 million of net offering proceeds to fund the Eagle acquisition described below, purchase rental equipment under operating leases, pay deferred compensation, repay indebtedness under our senior secured credit facility and for general corporate purposes. We also paid a fee to terminate a management services agreement. In connection with our initial public offering, we converted H&E Equipment Services L.L.C. (“H&E LLC”), a Louisiana limited liability company and the wholly-owned operating

subsidiary of H&E Holdings L.L.C. (“H&E Holdings”) into H&E Equipment Services, Inc., a Delaware corporation. Prior to our initial public offering, our business was conducted through H&E LLC. In order to have an operating Delaware corporation as the issuer for our initial public offering, H&E Equipment Services, Inc., was formed as a Delaware corporation and a wholly-owned subsidiary of H&E Holdings, and immediately prior to the closing of the initial public offering on February 3, 2006, H&E LLC and H&E Holdings merged with and into us (H&E Equipment Services, Inc.), with us surviving the reincorporation merger as the operating company. In these transactions, holders of preferred limited liability company interests and holders of common limited liability company interests in H&E Holdings received shares of our common stock. We refer to these transactions collectively in this prospectus as the “Reorganization Transactions.”

 

Eagle Acquisition.  We completed, effective as of February 28, 2006, the acquisition of all of the capital stock of Eagle High Reach Equipment, Inc. and all of the equity interests of its subsidiary, Eagle High Reach Equipment, LLC (together, “Eagle”), for a formula-based purchase price of approximately $59.9 million, subject to post-closing adjustment, plus assumed indebtedness of approximately $2.0 million. Following the acquisition, we changed the name of Eagle High Reach Equipment, Inc. to H&E California Holding, Inc. and we changed the name of Eagle High Reach Equipment, LLC to H&E Equipment Services (California), LLC. The Eagle purchase price was funded out of the proceeds from our recently completed initial public offering. Prior to the acquisition, Eagle was a privately-held construction and industrial equipment rental company serving the southern California construction and industrial markets out of four locations.

 

Refinancing.  On August 4, 2006, we completed our private offering of $250.0 million aggregate principal amount of our 83/8% senior unsecured notes due 2016 (the “old notes”). The old notes will mature on July 15, 2016 and accrue interest at the rate of 83/8% per year. Interest on the old notes is payable semi-annually in arrears on each January 15 and July 15, commencing on January 15, 2007. In connection with the completion of the offering of the old notes, we consummated our previously announced cash tender offers and consent solicitations (together, the “Tender Offer”) for our 111/8% senior secured notes due 2012 (the “senior secured notes”) and our 121/2% senior subordinated notes due 2013 (the “senior subordinated notes”). We used the net proceeds of the offering of the old notes, together with cash on hand and borrowings under our senior secured credit facility, to purchase $195.5 million in aggregate principal amount of the senior secured notes (representing approximately 97.8% of the previously outstanding senior secured notes), and $53.0 million in aggregate principal amount of the senior subordinated notes (representing 100% of the previously outstanding senior subordinated notes) that were validly tendered. The total principal amount, accrued and unpaid interest, consent fee amounts and premiums paid in connection with the purchase of the senior secured notes was approximately $217.6 million. The total principal amount, accrued and unpaid interest, consent fee amounts and premiums paid in connection with the purchase of the senior subordinated notes was approximately $60.1 million. In connection with the Tender Offer, we amended the indenture under which the senior secured notes were issued. The amendments eliminated substantially all of the restrictive covenants and a number of events of default. The remaining senior secured notes are not redeemable at our option prior to June 15, 2007. Thereafter, the senior secured notes are redeemable at our option, in whole or in part in cash at redemption price percentages that decline to par on or after June 15, 2010, in each case together with accrued and unpaid interest, if any, to the date of redemption.

 

Also on August 4, 2006, we amended and restated our existing senior secured credit facility to, among other things increase the principal amount of availability of the credit facility from $165.0 million to $250.0 million; and extend the maturity date of the facility from February 10, 2009 to August 4, 2011. We refer to all of the foregoing transactions collectively in this prospectus as the “Refinancing.”

 

Company Information

 

Our executive offices are located at 11100 Mead Road, Suite 200, Baton Rouge, Louisiana 70816. Our telephone number is (225) 298-5200. Our common stock is traded on the Nasdaq Global Market under the symbol “HEES”.

THE EXCHANGE OFFER

 

Pursuant to the exchange offer, you are entitled to exchange your old notes for new notes. The summary below describes the principal terms of the exchange offer. Certain of the terms and conditions described below are subject to important limitations and exceptions. You should read the discussion in the section of this prospectus entitled “The Exchange Offer” on page 94 for further information regarding the exchange offer and resales of the new notes.

 

The Exchange Offer

 

 

The New Notes

 

The following is a summary of the terms of the new notes. For a more detailed description of the new notes, see the section of this prospectus entitled “Description of Notes.” The terms of the new notes and the old notes are identical in all material respects, except that certain transfer restrictions and registration rights relating to the old notes will not apply to the new notes and the new notes will not bear legends restricting the transfer thereof. The same indenture that governs the old notes will govern the new notes.

 

 

For a more detailed discussion of the new notes, see “Description of Notes.”

 

You should carefully consider the information under “Risk Factors” and all other information in this prospectus before making an investment decision.

 

Ratios of Earnings to Fixed Charges

 

We have computed our ratio of earnings to fixed charges (a) on a historical basis for each of our fiscal years 2001, 2002, 2003, 2004 and 2005 and for the six month period ended June 30, 2006, (b) on an as adjusted basis for the year ended December 31, 2005 and for the six months ended June 30, 2006 to give pro forma effect to the Refinancing and (c) on a pro forma basis for the year ended December 31, 2005 and for the six months ended June 30, 2006 to give pro forma effect to (1) the Eagle acquisition, (2) the Reorganization Transactions and our initial public offering of our common stock, including the application of net proceeds from that offering, and (3) the Refinancing. Our computation of these ratios of earnings to fixed charges is set forth on Exhibit 12.1 to the registration statement of which this prospectus forms a part.

 

Ratio of earnings to fixed charges is calculated by dividing earnings by fixed charges from operations for the periods indicated. For purposes of calculating the ratio of earnings to fixed charges, (a) earnings represents pre-tax income from continuing operations plus fixed charges and (b) fixed charges represents interest expense (including amortized interest and debt discounts) and the portion of rent expense deemed to be the equivalent of interest.

 

You should read the ratio information below in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and the notes thereto included elsewhere in this prospectus.

 

 

 

 

The following tables set forth, for the periods and dates indicated, our summary historical and pro forma financial data. The summary historical consolidated financial data for our fiscal years ended December 31, 2003, 2004 and 2005 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary historical financial data for the six months ended June 30, 2005 and 2006 have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. 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 and elsewhere in this prospectus are not necessarily indicative of future performance or results of operations.

 

The summarized unaudited pro forma financial data for the year ended December 31, 2005 and for the six months ended June 30, 2006 have been prepared to give pro forma effect to (1) the Eagle acquisition, (2) the Reorganization Transactions and our initial public offering of our common stock, including the application of net proceeds from that offering, and (3) the Refinancing, in each case as if they had occurred on January 1, 2005 with respect to statement of operations and other financial data. The summarized unaudited as adjusted balance sheet data as of June 30, 2006 have been prepared to give pro forma effect to the Refinancing as if it had occurred on June 30, 2006. See note 3 of the notes to our unaudited condensed consolidated financial statements for the six months ended June 30, 2006 included elsewhere in this prospectus for additional information on the application of net proceeds from our initial public offering of our common stock. This data is subject, and gives effect, to the assumptions and adjustments described in the notes accompanying the unaudited pro forma condensed consolidated financial statements included elsewhere in this prospectus. The summary unaudited pro forma financial data is presented for informational purposes only and should not be considered indicative of actual results of operations that would have been achieved had the transactions described above been consummated on the dates indicated, and do not purport to be indicative of results of operations for any future period.

 

The summary consolidated financial data presented below represents portions of our financial statements and are not complete. You should read this information in conjunction with “Use of Proceeds,” “Capitalization,” “Selected Historical Condensed Consolidated Financial Data,” “Unaudited Pro Forma Condensed Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes included elsewhere in this prospectus.

 

 

 

 

 

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

 

 

 

Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or when aggregated may not be the arithmetic aggregation of the percentages that precede them.