H&E Equipment Services, Inc.

Alabama · 7 · Mississippi · 1

Arizona · 4 · Missouri · 4

Arkansas · 3 · Montana · 6

California · 15 · Nevada · 2

Colorado · 6 · New Mexico · 1

Delaware · 1 · North Carolina · 10

Florida · 14 · Ohio · 1

Georgia · 6 · Oklahoma · 2

Idaho · 3 · Oregon · 1

Illinois · 3 · Pennsylvania · 1

Indiana · 3 · South Carolina · 4

Iowa · 1 · Tennessee · 6

Kansas · 1 · Texas · 31

Kentucky · 1 · Utah · 3

Louisiana · 9 · Virginia · 3

Maryland · 3

Each facility location has a branch manager who is responsible for day-to-day operations. In addition, branch operating facilities are typically staffed with approximately 10 to over 50 people, who may include technicians, salespeople, rental operations staff and parts specialists. While facility offices are typically open five days a week, we provide 24 hour, seven day per week service.

Our corporate headquarters employs approximately 400 people. Our corporate headquarters facility is on 3.1 acres of company-owned land where we occupy a total of approximately 42,550 square feet.

• We are subject to competition, which may have a material adverse effect on our business by reducing our ability to increase or maintain revenues or profitability.
• We purchase a significant amount of our equipment from a limited number of manufacturers. Termination of one or more of our relationships with any of those manufacturers could have a material adverse effect on our business, as we may be unable to obtain equipment in an adequate or timely manner.
• Disruptions in our supply chain could result in adverse effects on our results of operations and financial performance.
• The cost of new equipment that we purchase for use in our rental fleet may increase and therefore we may spend more for such equipment. In some cases, we may not be able to procure equipment on a timely basis due to supplier constraints.
• Our rental fleet is subject to residual value risk upon disposition.
• If our rental fleet ages, our operating costs may increase, we may be unable to pass along such costs, and our earnings may decrease. The costs of new equipment we use in our fleet may increase, requiring us to spend more for replacement equipment or preventing us from procuring equipment on a timely basis.
• We incur maintenance and repair costs associated with our rental fleet equipment that could have a material adverse effect on our business in the event these costs are greater than anticipated.
• Labor disputes could disrupt our ability to serve our customers and/or lead to higher labor costs.
• Increases or fluctuations in fuel costs or reduced supplies of fuel could harm our business.
• Climate change, climate change regulations and greenhouse effects may materially adversely impact our operations and markets.
• We may not be able to facilitate our growth strategy by identifying or completing transactions with attractive acquisition candidates, which could limit our revenues and profitability. Future acquisitions may result in significant transaction expenses and may involve significant costs. We may experience integration and consolidation risks associated with future acquisitions.
• We may not be able to facilitate our growth strategy by identifying and opening attractive start-up locations, which could limit our revenues and profitability.
• Unfavorable conditions or disruptions in the capital and credit markets may adversely impact business conditions and the availability of credit.
• Our substantial indebtedness could adversely affect our financial condition.
• We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
• Despite current indebtedness levels, we may still be able to incur more indebtedness, which could further exacerbate the risks described above.
• The agreements governing the Credit Facility and our senior unsecured notes restrict our business and our ability to engage in certain corporate and financial transactions.
• Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.
• Our business could be hurt if we are unable to obtain additional capital as required, resulting in a decrease in our revenues and profitability. In addition, our inability to refinance our indebtedness on favorable terms, or at all, could materially and adversely affect our liquidity and our ongoing results of operations.
• The continued payment of our quarterly dividend is subject to, among other things, the availability of funds and the discretion of our board of directors.
• Governmental Regulation Risks
• We have operations throughout the United States, which exposes us to multiple federal, state and local regulations. Changes in applicable law, regulations or requirements, or our material failure to comply with any of them, can increase our costs and have other negative impacts on our business.
• We could be adversely affected by environmental and safety requirements and regulations, including those regarding climate change, which could subject us to increased operational costs that could materially and adversely impact our liquidity and operating results.
• Our business may be materially affected by changes to fiscal and tax policies. Negative or unexpected tax consequences could adversely affect our results of operations.
• Our business may be materially affected by changes to other policies governing our products, technology and technological development.
• The completion of the Offer and Merger is subject to conditions, some or all of which may not be satisfied or completed on a timely basis, if at all. Failure to complete the Merger could have material adverse effects on the Company.
• The Offer and Merger will involve substantial costs and will require substantial management resources. We may be required to pay a significant fee if the Merger Agreement is terminated.
• The Offer consideration payable to holders of our common stock will not be adjusted for changes in our business, assets liabilities, prospects, outlook, financial condition or results of operations, or in the event of any change in the price of our common stock.
• The Company’s shareholders cannot be sure of the value of the Stock Offer Price they will receive in the Merger, if completed, because the exchange ratio is fixed and the market price of Herc common stock has fluctuated and may continue to fluctuate.
• The Merger Agreement contains provisions that could discourage a potential competing acquirer.
• Review under the HSR Act could prevent or delay the consummation of the Offer and Merger.
• Stockholder litigation could prevent or delay the consummation of the Offer and Merger or otherwise negatively impact our business, operating results and financial condition.
• Our executive officers and directors may have interests in the Offer and the Merger that are different from, or in addition to, those of our stockholders generally.
• While the Offer and Merger is pending, we are subject to business uncertainties and contractual restrictions that could disrupt our business, and the Offer and Merger may impair our ability to attract and retain qualified employees or retain and maintain relationships with our suppliers and other business partners.
• If the Merger is not consummated, we may need to raise additional capital to continue our operations and execute our operating plans.
• Fluctuations in the stock market, as well as general economic and market conditions, may impact the market price of our common stock.
• Security breaches and other disruptions in our information technology systems could limit our capacity to effectively monitor and control our operations, compromise our or our customers’ and suppliers’ confidential information or otherwise adversely affect our operating results or business reputation.
• We are dependent on key personnel. A loss of key personnel could have a material adverse effect on our business, which could result in a decline in our revenues and profitability.
• If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results or prevent fraud.
• We are exposed to various risks related to legal proceedings or claims that could adversely affect our operating results. The nature of our business exposes us to various liability claims, which may exceed the level of our insurance coverage resulting in us not being fully protected.