H&E Equipment Services (HEES) investor relations material

Executive summary

• Revenues for Q1 2025 declined 14.0% year-over-year to $319.5 million, with a net loss of $6.2 million versus net income of $25.9 million in Q1 2024; adjusted net income excluding $9.8 million in merger transaction expenses was $1.2 million.

• Gross profit fell 25.0% to $123.6 million, with gross margin down to 38.7% from 44.4% year-over-year.

• The company entered into a merger agreement with Herc Holdings Inc., expected to close mid-2025, with a mix of cash and stock consideration.

• Cash flow from operations was $97.8 million, up from $83.4 million in Q1 2024; cash at quarter-end was $10.3 million.

• Four new branches opened in Q1 as part of a continued expansion strategy.

Financial highlights

• Equipment rental revenues decreased 7.2% to $274.0 million; sales of rental equipment dropped 50.3% to $23.9 million; new equipment sales declined 28.7% to $7.4 million.

• Gross profit from equipment rentals decreased 18.1% to $104.8 million; gross margin for rentals was 38.2%.

• SG&A expenses decreased 2.4% to $111.6 million, but rose as a percentage of revenue to 34.9%; transaction expenses related to the Herc Merger were $9.8 million.

• Interest expense was $16.0 million, down from $18.4 million year-over-year.

• Adjusted EBITDA decreased 18.9% to $131.2 million, with margins narrowing to 41.1% from 43.6%.

Outlook and guidance

• The Herc Holdings merger is expected to close mid-2025, subject to regulatory and shareholder approvals, and is anticipated to strengthen the business across markets and product lines.

• Management expects to continue regular quarterly dividends, subject to board approval and market conditions.

• The company expects to continue its branch expansion strategy with additional openings in Q2.

• Capital expenditures and fleet management are being adjusted in anticipation of the merger.