(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October ~~19, 2017,~~18, 2018, there were ~~35,647,928~~35,734,421 shares of H&E Equipment Services, Inc. common stock, $0.01 par value, outstanding.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words “may”, “could”, “would”, “should”, “believe”, “expect”, “anticipate”, “plan”, “estimate”, “target”, “project”, “intend”, “foresee” and similar expressions. These statements include, among others, statements regarding our expected business outlook, anticipated financial and operating results, our business strategy and means to implement the strategy, our objectives, the amount and timing of capital expenditures, the likelihood of our success in expanding our business, financing plans, budgets, working capital needs and sources of liquidity. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.

Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products, the expansion of product offerings geographically or through new marketing applications, the timing and cost of planned capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Forward-looking statements also involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. In addition, even if our actual results are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, those results may not be indicative of results or developments in subsequent periods. Many of these factors are beyond our ability to control or predict. Such factors include, but are not limited to, the following:

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 (“SEC”), we are under no obligation to publicly update or revise any forward-looking statements after we file this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise. Investors, potential investors 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. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results or performance.

For a more detailed discussion of some of the foregoing risks and uncertainties, see Item 1A — “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, as well as other reports and registration statements filed by us with the SEC. These factors should not be construed as exhaustive and should be read with other cautionary statements in this Quarterly Report on Form 10-Q and our other public filings. All of our annual, quarterly and current reports, and any amendments thereto, filed with or furnished to the SEC are available on our Internet website under the Investor Relations link. For more information about us and the announcements we make from time to time, visit our Internet website at ~~www.he-equipment.com~~.www.he-equipment.com.

	Balances at						Balances at
	September 30, 2017			December 31, 2016			September 30, 2018			December 31, 2017
	(Unaudited)						(Unaudited)
ASSETS
Cash	$	6,184		$	7,683		$	5,088		$	165,878
Receivables, net of allowance for doubtful accounts of $3,541 and $3,769, respectively		152,823			140,037
Inventories, net of reserves for obsolescence of $946 and $900, respectively		83,067			53,909
Receivables, net of allowance for doubtful accounts of $3,692 and $3,774, respectively								191,305			176,081
Inventories, net of reserves for obsolescence of $377 and $947, respectively								113,252			75,004
Prepaid expenses and other assets		9,119			7,513			9,368			9,172
Rental equipment, net of accumulated depreciation of $485,735 and $437,522, respectively		917,075			893,816
Property and equipment, net of accumulated depreciation and amortization of $127,882 and $118,812, respectively		101,172			105,492
Deferred financing costs, net of accumulated amortization of $12,769 and $12,160, respectively		1,576			1,964
Rental equipment, net of accumulated depreciation of $562,647 and $495,940, respectively								1,153,244			904,824
Property and equipment, net of accumulated depreciation and amortization of $142,316 and $131,500, respectively								113,403			101,789
Deferred financing costs, net of accumulated amortization of $13,530 and $12,946, respectively								3,188			3,772
Intangible assets, net								29,285		—
Goodwill		31,197			31,197			105,843			31,197
Total assets	$	1,302,213		$	1,241,611		$	1,723,976		$	1,467,717
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Amounts due on senior secured credit facility	$	77,197		$	162,642		$	219,018		$ —
Accounts payable		81,554			39,432			84,765			89,781
Manufacturer flooring plans payable		23,286			30,780			26,472			22,002
Accrued expenses payable and other liabilities		53,885			56,833			61,591			65,095
Dividends payable		120			67			104			150
Senior unsecured notes, net of unaccreted discount of $10,180 and $952 and deferred financing costs of $1,598 and $1,339, respectively		738,222			627,711
Senior unsecured notes, net of unaccreted discount of $3,287 and $3,644 and deferred financing costs of $2,129 and $2,267, respectively								944,584			944,088
Capital leases payable		1,542			1,704			778			1,486
Deferred income taxes		184,706			177,835			144,288			126,419
Deferred compensation payable		1,886			1,842			1,968			1,903
Total liabilities		1,162,398			1,098,846			1,483,568			1,250,924
Commitments and Contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 25,000,000 shares authorized; no shares issued		—			—			—			—
Common stock, $0.01 par value, 175,000,000 shares authorized; 39,626,433 and 39,496,759 shares issued at September 30, 2017 and December 31, 2016, respectively, and 35,650,211 and 35,554,491 shares outstanding at September 30, 2017 and December 31, 2016, respectively		395			394
Common stock, $0.01 par value, 175,000,000 shares authorized; 39,749,549 and 39,623,773 shares issued at September 30, 2018 and December 31, 2017, respectively, and 35,735,432 and 35,646,585 shares outstanding at September 30, 2018 and December 31, 2017, respectively								396			395
Additional paid-in capital		226,158			223,544			229,958			227,070
Treasury stock at cost, 3,976,222 and 3,942,268 shares of common stock held at September 30, 2017 and December 31, 2016, respectively		(61,720	)		(60,966	)
Accumulated deficit		(25,018	)		(20,207	)
Treasury stock at cost, 4,014,117 and 3,977,188 shares of common stock held at September 30, 2018 and December 31, 2017, respectively								(63,072	)		(61,749	)
Retained earnings								73,126			51,077
Total stockholders’ equity		139,815			142,765			240,408			216,793
Total liabilities and stockholders’ equity	$	1,302,213		$	1,241,611		$	1,723,976		$	1,467,717

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Revenues:
Equipment rentals	$	125,616		$	118,535		$	351,303		$	330,023		$	156,037		$	125,616		$	429,227		$	351,303
New equipment sales		48,940			44,764			128,883			151,836			68,233			48,940			183,265			128,883
Used equipment sales		22,250			20,630			75,219			71,973			30,294			22,250			87,287			75,219
Parts sales		27,763			27,335			81,063			81,958			31,484			29,534			89,916			86,259
Services revenues		16,097			16,076			47,121			49,322			16,426			16,097			48,250			47,121
Other		18,496			17,346			51,764			48,679			19,667			16,725			55,042			46,568
Total revenues		259,162			244,686			735,353			733,791			322,141			259,162			892,987			735,353
Cost of revenues:
Rental depreciation		43,255			41,528			125,996			120,700			55,060			43,255			152,700			125,996
Rental expense		19,988			18,378			58,524			53,162			22,936			19,988			66,281			58,524
New equipment sales		43,609			40,147			114,440			135,152			60,394			43,609			162,465			114,440
Used equipment sales		15,116			14,364			51,979			49,751			20,512			15,116			59,221			51,979
Parts sales		20,125			19,708			58,696			59,184			23,129			21,577			65,677			62,735
Services revenues		5,567			5,445			15,898			16,736			5,628			5,567			16,430			15,898
Other		17,476			16,991			50,782			48,129			19,752			16,024			54,795			46,743
Total cost of revenues		165,136			156,561			476,315			482,814			207,411			165,136			577,569			476,315
Gross profit		94,026			88,125			259,038			250,977			114,730			94,026			315,418			259,038
Selling, general and administrative expenses		55,203			55,962			172,328			172,385			70,346			55,203			205,272			172,328
Merger breakup fee proceeds, net of merger costs		6,506			—			6,506			—
Merger costs (net of merger breakup fee proceeds)														219			(6,506	)		439			(6,506	)
Gain on sales of property and equipment, net		2,325			927			4,431			2,301			1,153			2,325			6,040			4,431
Income from operations		47,654			33,090			97,647			80,893			45,318			47,654			115,747			97,647
Other income (expense):
Interest expense		(15,060	)		(13,469	)		(41,665	)		(40,229	)		(16,715	)		(15,060	)		(47,061	)		(41,665	)
Loss on early extinguishment of debt		(25,363	)		—			(25,363	)		—			—			(25,363	)		—			(25,363	)
Other, net		346			386			1,156			1,505			368			346			1,222			1,156
Total other expense, net		(40,077	)		(13,083	)		(65,872	)		(38,724	)		(16,347	)		(40,077	)		(45,839	)		(65,872	)
Income before provision for income taxes		7,577			20,007			31,775			42,169
Provision (Benefit) for income taxes		(885	)		8,342			8,045			17,427
Income before provision (benefit) for income taxes														28,971			7,577			69,908			31,775
Provision (benefit) for income taxes														7,657			(885	)		18,345			8,045
Net income	$	8,462		$	11,665		$	23,730		$	24,742		$	21,314		$	8,462		$	51,563		$	23,730
Net income per common share:
Basic	$	0.24		$	0.33		$	0.67		$	0.70		$	0.60		$	0.24		$	1.45		$	0.67
Diluted	$	0.24		$	0.33		$	0.67		$	0.70		$	0.59		$	0.24		$	1.44		$	0.67
Weighted average common shares outstanding:
Basic		35,543			35,424			35,494			35,373			35,719			35,543			35,649			35,494
Diluted		35,715			35,504			35,656			35,461			35,926			35,715			35,904			35,656
Dividends declared per common share outstanding	$	0.275		$	0.275		$	0.825		$	0.825		$	0.275		$	0.275		$	0.825		$	0.825

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2018			2017
Cash flows from operating activities:
Net income	$	23,730		$	24,742		$	51,563		$	23,730
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment		18,092			20,321			18,367			18,092
Depreciation of rental equipment		125,996			120,700			152,700			125,996
Amortization of intangible assets								2,415			—
Amortization of deferred financing costs		785			789			819			785
Accretion of note discount, net of premium amortization		239			124			357			239
Provision for losses on accounts receivable		3,048			2,723			2,056			3,048
Provision for inventory obsolescence		151			82			74			151
Change in deferred income taxes		7,752			17,193			17,869			7,752
Stock-based compensation expense		2,614			2,308			2,998			2,614
Loss on early extinguishment of debt		25,363			—			—			25,363
Gain from sales of property and equipment, net		(4,431	)		(2,301	)		(6,040	)		(4,431	)
Gain from sales of rental equipment, net		(22,196	)		(21,450	)		(27,641	)		(22,196	)
Changes in operating assets and liabilities:
Changes in operating assets and liabilities, net of acquisitions:
Receivables		(15,811	)		5,772			(6,825	)		(15,811	)
Inventories		(38,930	)		(15,220	)		(56,355	)		(38,930	)
Prepaid expenses and other assets		(1,606	)		1,160			175			(1,606	)
Accounts payable		42,122			(18,549	)		(10,081	)		42,122
Manufacturer flooring plans payable		(7,494	)		(24,207	)		4,470			(7,494	)
Accrued expenses payable and other liabilities		(3,075	)		(4,436	)		(8,961	)		(3,075	)
Deferred compensation payable		44			(348	)		65			44
Net cash provided by operating activities		156,393			109,403			138,025			156,393
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired								(196,027	)		—
Purchases of property and equipment		(16,002	)		(16,753	)		(27,038	)		(16,002	)
Purchases of rental equipment		(183,754	)		(152,644	)		(350,646	)		(183,754	)
Proceeds from sales of property and equipment		6,765			2,689			7,958			6,765
Proceeds from sales of rental equipment		66,316			62,259			78,947			66,316
Net cash used in investing activities		(126,675	)		(104,449	)		(486,806	)		(126,675	)
Cash flows from financing activities:
Purchases of treasury stock		(753	)		(546	)		(1,323	)		(753	)
Borrowings on senior secured credit facility		732,840			767,550			1,142,811			732,840
Payments on senior secured credit facility		(818,285	)		(742,645	)		(923,793	)		(818,285	)
Dividends paid		(29,369	)		(29,287	)		(29,447	)		(29,369	)
Principal payments on senior unsecured notes due 2022		(630,000	)		—			—			(630,000	)
Costs paid to tender and redeem senior unsecured notes due 2022		(23,336	)		—			—			(23,336	)
Proceeds from issuance of senior unsecured notes due 2025		750,000			—			—			750,000
Payments of deferred financing costs		(12,152	)					(97	)		(12,152	)
Payments of capital lease obligations		(162	)		(151	)		(160	)		(162	)
Net cash used in financing activities		(31,217	)		(5,079	)
Net cash provided by (used in) financing activities								187,991			(31,217	)
Net decrease in cash		(1,499	)		(125	)		(160,790	)		(1,499	)
Cash, beginning of period		7,683			7,159			165,878			7,683
Cash, end of period	$	6,184		$	7,034		$	5,088		$	6,184

	Nine Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2018			2017
Supplemental schedule of noncash investing and financing activities:
Accrued acquisition purchase price consideration							$	3,432		$	—
Noncash asset purchases:
Assets transferred from new and used inventory to rental fleet	$	9,621		$	37,958		$	23,860		$	9,621
Purchases of property and equipment included in accrued expenses payable and other liabilities	$	(127	)	$	(387	)	$	(226	)	$	(127	)
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	50,931		$	50,180		$	59,475		$	50,931
Income taxes paid, net of refunds received	$	453		$	271		$	1,949		$	453

The accompanying notes are an integral part of these condensed consolidated financial statements.

Our condensed consolidated financial statements include the financial position and results of operations of H&E Equipment Services, Inc. and its wholly-owned subsidiaries H&E Finance Corp., GNE Investments, Inc., Great Northern Equipment, Inc., H&E California Holding, Inc., H&E Equipment Services (California), LLC and H&E Equipment Services (Mid-Atlantic), Inc., collectively referred to herein as “we” or “us” or “our” or the “Company.”

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such regulations. In the opinion of management, all adjustments (consisting of all normal and recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine ~~month periods~~months ended September 30, ~~2017~~2018 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017,~~2018, and therefore, the results and trends in these interim condensed consolidated financial statements may not be the same for the entire year. These interim condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, from which the consolidated balance sheet amounts as of December 31, ~~2016~~2017 were derived.

All significant intercompany accounts and transactions have been eliminated in these condensed consolidated financial statements. Business combinations accounted for as purchases are included in the condensed consolidated financial statements from their respective dates of acquisition.

The nature of our business is such that short-term obligations are typically met by cash flows generated from long-term assets. Consequently, and consistent with industry practice, the accompanying condensed consolidated balance sheets are presented on an unclassified basis.

As 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~~services support for four core categories of specialized equipment: (1) hi-lift or aerial work platform equipment; (2) cranes; (3) earthmoving equipment; and (4) industrial lift trucks. By providing equipment rental, sales, on-site parts, repair and maintenance functions under one roof, we are a one-stop provider for our customers’ varied equipment needs. This full service approach provides us with multiple points of customer contact, enables us to maintain a high quality rental fleet, as well as an effective distribution channel for fleet disposal and provides cross‑selling opportunities among our new and used equipment sales, rental, parts sales and services operations.

We describe our significant accounting policies in note 2 of the notes to consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. During the three and nine month ~~period~~periods ended September 30, ~~2017,~~2018, there were no significant changes to those accounting ~~policies.~~policies, other than those policies impacted by the new revenue recognition guidance, which is further described below in “Recent Accounting Pronouncements Adopted in Fiscal 2018”.

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, which requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. These assumptions and estimates could have a material effect on our condensed consolidated financial statements. Actual results may differ materially from those estimates. We review our estimates on an ongoing basis based on information currently available, and changes in facts and circumstances may cause us to revise these estimates.

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which will supersede Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition, and other legacy industry-specific revenue recognition guidance. In August 2015, the FASB deferred the effective date of this new standard by one year. The FASB later issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606) – Principal versus Agent Considerations, in March 2016, ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing, in April 2016, ASU 2016-12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients, in May 2016, and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, in December 2016, all of which further clarified aspects of Topic 606.

Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In doing so, entities will need to use more judgment and make more estimates than under current guidance. These judgments and estimates may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Topic 606 also requires an entity to disclose sufficient qualitative and quantitative information surrounding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Topic 606 permits the use of either a retrospective application to each prior period presented or retrospective application with the cumulative effect of initially applying Topic 606 at the date of adoption. Topic 606 will become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. We will adopt Topic 606 as of January 1, 2018 using a full retrospective application to each prior period presented. Below is our evaluation of the impact from the adoption of Topic 606.

Revenues from equipment rentals accounted for 47.8% of our total revenues for the nine months ended September 30, 2017. Based on our analysis of Topic 606, we have determined that the accounting for equipment rental revenues is outside the scope of Topic 606. Therefore, upon our adoption of the new revenue recognition guidance on January 1, 2018, we will recognize our revenues pursuant to two different accounting standards. Revenues from equipment rentals will continue to be accounted for pursuant to current lease accounting guidance until our adoption of the new lease accounting standard in 2019 (as further discussed below in the Topic 842 pending lease accounting guidance), while revenues from new and used equipment sales, parts and services revenues and other revenues will be subject to Topic 606 upon adoption and are further described below.

Sales of new and used equipment accounted for 27.8% of our total revenues for the nine months ended September 30, 2017. Parts and services revenues comprised 17.4% of our total revenues for the nine months ended September 30, 2017. The primary impact to these revenue streams from the adoption of Topic 606 will relate to the accounting treatment of shipping and handling revenues, which we currently include in other revenues in our consolidated statements of income. Other revenues comprised approximately 7.0% of our total revenues for the nine months ended September 30, 2017. Our other revenues consist primarily of equipment support activities related to our equipment rental and distribution segments, such as hauling charges, parts freight, fuel charges, environmental fees and damage waiver charges. Pursuant to Topic 606, shipping and handling activities that are performed before the customer obtains control of the good are not a separate promised service to the customer. Rather, shipping and handling activities fulfill an entity’s promise to transfer the good. While the timing of our revenue recognition related to our shipping and handling activities, such as hauling revenues related to new and used equipment sales, maintenance and repair services, as well as parts freight, will not change upon adoption of the new guidance, we believe that Topic 606 requires our revenues related to shipping and handling activities to be treated as fulfillment activities as the customer typically obtains control of the good after the shipping and handling activities are performed. As such, shipping and handling revenues will be included and presented within their respective new equipment sales, used equipment sales, parts revenues, and services revenues consolidated statement of income line items rather than in the non-segmented other revenues line item. Related shipping and handling costs included in the non-segmented other costs of revenues line item in our consolidated statements of income should likewise be conformed and presented within their respective segment costs of revenues line items.

While this change will only impact how our shipping and handling activities are presented within our revenues (and costs of revenues) line items within the consolidated statements of income and does not impact total revenues or total costs of revenues, this change will have a slight impact to the calculated gross profit (and gross margin) for new equipment sales, used equipment sales, parts revenues, service revenues and other revenues in comparison to how we have historically calculated those measures. Shipping and handling type revenues related to our new and used equipment sales, parts revenues and service revenues were approximately $6.1 million for the nine month period ended September 30, 2017, or approximately 0.8% of total revenues.

We are in the process of implementing the above changes to our financial reporting processes and related internal controls over financial reporting. We do not expect these changes to result in a material impact to those reporting processes or internal controls.

With respect to shipping and handling activities related to our equipment rental operations, we have determined that such hauling activities are a separate performance obligation as control passes to the customer when the rental equipment leaves our facility. While Topic 606 provides a practical expedient that allows entities to make an accounting policy election to treat the separate performance obligation as a fulfillment activity, we will continue to account for our rental equipment hauling activities as a separate performance obligation, resulting in no change to our historical presentation of hauling activities in other revenues (and other costs of revenues) in our consolidated statements of income.

~~In February 2016, the FASB issued ASU~~ 2016-02, Leases (Topic 842) (“ASU 2016-02”). The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet, with the exception of leases with a term of 12 months or less, which permits a lessee to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities. At inception, lessees must classify leases as either finance or operating based on five criteria. Balance sheet recognition of finance and operating leases is similar, but the pattern of expense recognition in the income statement, as well as the effect on the classification of cash flows within the statement of cash flows, differs depending on the lease classification. Also, certain qualitative and quantitative disclosures are required to enable users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted.

We will adopt ASU 2016-02 as of January 1, 2019. ~~The new standard requires~~Originally, Topic 842 required all entities to use a modified retrospective transition approach that is intended to maximize comparability and be less complex than a full retrospective approach. Under the ~~recognition and measurement~~modified retrospective approach, Topic 842 is effectively implemented as of ~~leases at~~ the beginning of the earliest comparative period presented ~~using a modified retrospective approach, which includes a number of optional practical expedients~~in an entity’s financial statements. ASU 2018-11 amends Topic 842 so that entities may elect not to ~~apply.~~recast their comparative periods in transition and allows entities to change their date of initial application to the beginning of the period of adoption. In doing so, the entity would (1) apply Topic 840 in the comparative periods; (2) provide the disclosures required by Topic 840 for all periods that continue to be presented in accordance with Topic 840; and (3) recognize the effects of applying Topic 842 as a cumulative-effect adjustment to retained earnings as of January 1, 2019. ASU 2018-11 also amends certain narrow-scope aspects of Topic 842.

Our operating leases under current guidance (Topic 840) include the real estate where all but 1112 of our 7989 branch locations are located as of September 30, ~~2017.~~2018. Additionally, the Company leases ~~numerous~~various types of non-rental equipment. Given the size of our lease portfolio, we expect that the new standard will have a material effect on our consolidated balance sheets as a result of recognizing new right-of-use assets and lease liabilities for our existing operating leases. We have begun accumulating the information related to these leases but have not completed our comprehensive analysis of those leases and are unable to quantify the impact to our consolidated financial statements at this time. We are ~~also~~ concurrently evaluating our internal processes and controls over financial reporting with respect to the impact that the new lease standard will have on our lease administration and financial reporting activities. We are also in the process of implementing a new software tool to help facilitate compliance with the new guidance.

As mentioned in the Topic 606 discussion ~~above,~~below, our equipment rental business involves rental agreements with customers whereby we are the lessor in the transaction and therefore, we believe that such transactions are subject to the pending lessor accounting guidance of Topic 842. Topic 842, as originally issued, required lessors to separate lease and nonlease components in all circumstances. Under this requirement, once separate components are identified, lessors are required to use the relative stand-alone selling price allocation method in Topic 606 to allocate the consideration in the contract to the separated components. ASU 2018-11 also amends Topic 842 to include a practical expedient under which lessors are not required to separate lease and nonlease components. While our evaluation of ~~ASU 2016-02~~Topic 842 is ongoing with respect to our equipment rental activities, we have tentatively concluded that no significant changes are expected to the accounting for our rental equipment revenues, as substantially all of our rental agreements with customers will continue to be treated as operating leases under the new standard. Accordingly, we do not expect material changes to our related rental agreement accounting processes or internal ~~controls.~~controls upon adoption of Topic 842.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This standard adds to U.S. GAAP an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which is intended to result in the more timely recognition of losses. Under the CECL model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications) from the date of initial recognition of the financial instrument. Measurement of expected credit losses are to be based on relevant forecasts that affect collectability. The scope of financial assets within the CECL methodology is broad and includes trade receivables from revenue transactions and certain off-balance sheet credit exposures. Different components of the guidance require modified retrospective or prospective adoption. ASU 2016-13 will be effective for us as of January 1, 2020. While our review is ongoing, we believe ASU 2016-13 will only have applicability to our receivables from revenue transactions, or trade ~~accounts~~ receivables. Under Topic 606, revenue is recognized when, among other criteria, it is probable that the entity will collect the consideration to which it is entitled for goods or services transferred to a customer. At the point that trade receivables are recorded, they become subject to the CECL model and estimates of expected credit losses on trade receivables over their contractual life will be required to be recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts. While we believe that our current methodology for estimating the allowance for doubtful

accounts on our trade accounts receivables is reasonable, we have not concluded whether the application of the CECL model, when compared to our current methodology, will have a material impact to our allowance for doubtful accounts.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which removes Step 2 of the current goodwill impairment test, which was required if there was an indication that an impairment may exist, and the second step required calculating the potential impairment by comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of the goodwill. Under the new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and then recognizing an impairment charge for the amount by which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of the reporting unit’s goodwill. ASU 2017-04 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019, with early adoption permitted and requires prospective adoption. Based upon our review of ASU 2017-04, we do not expect the guidance to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other – Internal-Use Software (Subtopic 350-40). This update aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This update will be effective for us in the first quarter of 2020. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments”, which aims to eliminate the diversity in the presentation of certain cash receipts and cash payments presented and classified in the statement of cash flows. The guidance addresses the following specific cash flow issues: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (6) distributions received from equity method investees, (7) beneficial interests in securitization transitions and (8) separately identifiable cash flows and application of predominance principle. We adopted this guidance effective January 1, 2018 and it had no impact to our condensed consolidated statement of cash flows for the periods presented in this Quarterly Report on Form 10-Q.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). ASU 2017-01 clarifies the definition of a business when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects several areas of accounting, including acquisitions, disposals, goodwill and consolidation. We adopted this guidance effective January 1, 2018 and it had no impact on our condensed consolidated financial statements for the periods presented in this Quarterly Report on Form 10-Q. The future impact of this guidance will depend on the nature of our future activities.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). Under this ASU ~~2017-01~~and subsequently issued amendments, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflect the consideration we expect to be entitled to in exchange for those goods or services. Entities may use a full retrospective approach or report on the cumulative effect as of the date of adoption. We adopted this standard using the full retrospective transition method effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017, and interim periods within those annual periods. Based upon our review of ASU 2017-01, the Company does not expectJanuary 1, 2018.

While the adoption of ~~this guidance to~~the new standard did not have ~~a material impact on its consolidated financial statements.~~

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~ (“ASU 2017-04”), which removes Step 2 of the goodwill impairment test. A goodwill impairment will now be determined by the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2019, with early adoption permitted. Based upon our review of ASU 2017-04, we do not expect the guidance to have a materialan impact on our ~~consolidated financial statements.~~

~~Recent Accounting Pronouncements Adopted~~reported net income for the periods presented in ~~the First Quarter~~this quarterly report on Form 10-Q, approximately $1.8 million and $5.2 million of ~~2017~~

~~In July 2015, the FASB issued ASU 2015-11,~~ ~~Inventory: Simplifying the Measurement of Inventory~~ (“ASU 2015-11”). ASU 2015-11 provides guidance on simplifying the measurement of inventory. The previous standard measured inventory at lower of cost or market; where market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 updated this guidancerevenues that were previously classified in Other Revenues have been reclassified to measure inventory at the lower of cost or net realizable value; where net realizable value is considered to be the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. We adopted ASU 2015-11 on January 1, 2017 on a prospective basis. The adoption of ASU 2015-11 did not result in a material impact on our financial position, results of operations, or cash flowsParts Revenues for the three and nine month periods ended September 30, ~~2017.~~

~~In March 2016, the FASB Issued ASU No. 2016-09,~~ ~~Compensation-Stock Compensation (Topic 718): Improvements~~2018, respectively. These revenues relate to ~~Employee Share-Based Payment Accounting~~ ~~(“ASU 2016-09”). The updated guidance changed how companies previously accounted for certain aspects of stock-based payment awards to employees, including the accounting for~~freight income ~~taxes, forfeitures,~~associated with our parts transactions, and ~~statutory tax withholding requirements, as well as classification of~~ such awards in the statement of cash flows. ASU 2016-09 became effective for us on January 1, 2017. ASU 2016-09 requires that excess tax benefits and deficiencies resulting from the vesting or exercise of stock-based compensation awardsincome was not deemed to be ~~recognized in~~a separate performance obligation under the ~~income statement on a prospective basis. Previously,~~new guidance. Accordingly, we also reclassified $1.5 million and $4.0 million of associated freight costs related to these ~~amounts were recognized in additional paid-in capital. Accordingly, excess tax benefits~~parts transactions from Other Cost of ~~approximately $0.1 million were recognized as a discrete item in~~Revenues to Parts Costs of Revenues for the three and nine months ended September 30, 2018, respectively. We have recast our ~~income tax expense in~~results for the prior year three and nine month periods ended September 30, ~~2017. In addition, ASU 2016-09 requires excess tax benefits~~2017 as shown in the tables below (amounts in thousands).

As further discussed below, upon the adoption of Topic 606 on January 1, 2018, we recognize revenue in accordance with two different accounting standards: 1) Topic 606 and ~~deficiencies~~2) Topic 840 (which addresses lease accounting). As discussed above in “Pronouncements Not Yet Adopted”, Topic 842 will supersede Topic 840 upon our adoption of Topic 842 on January 1, 2019.

Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration we expect to be ~~excluded~~entitled to in exchange for such products or services.

The tables below summarize for the three and nine months ended September 30, 2018 our revenue by type and by the applicable accounting standard (amounts in thousands).

Revenues by reporting segment are presented in note 10 of our condensed consolidated financial statements, using the revenue captions reflected in our condensed consolidated statements of income. We believe that the disaggregation of our revenues from contracts to customers as reflected above, coupled with further discussion below and the reporting segment in note 10, depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors.

As discussed above in “Pending Accounting Pronouncements Not Yet Adopted”, we expect to adopt Topic 842 on January 1, 2019. While our review of the revenue accounting under Topic 842 is ongoing, we have tentatively concluded that no significant changes are expected to our rental revenue accounting upon adoption of Topic 842.

Rental Revenues: Owned equipment rentals represent revenues from renting equipment. We account for these rentals as operating leases. We recognize revenue from equipment rentals in the period earned, regardless of the timing of billing to customers. A rental contract includes rates for daily, weekly or monthly use, and rental revenues are earned on a daily basis as rental contracts remain outstanding. Because the rental contracts can extend across multiple reporting periods, we record unbilled rental revenues and deferred rental revenues at the end of reporting periods so rental revenues earned is appropriately stated for the periods presented.

Other: Other rental revenues primarily represent services performed by us in connection with the rental of equipment to a customer, such as fuel consumption charges and damage waiver insurance. Fuel consumption charges are recognized upon return of the rental equipment when fuel consumption by the customer, if any, can be measured. Income from damage waiver insurance policies is recognized over the period the equipment is rented.

The accounting for the types of revenues accounted for pursuant to Topic 606 are discussed below. Substantially all of our revenues under Topic 606 are recognized at a point-in-time rather than over time.

Rental revenues: These revenues represent revenues for services performed by us in connection with the rental of equipment and are comprised of customer training fees on rented equipment and erection and dismantling services on rental equipment. Revenues for these services are recognized upon completion of such services.

New equipment sales: Revenues from the ~~assumed~~sales of new equipment are recognized at the time of delivery to, or pick-up by, the customer, which is when the customer obtains control of the promised good.

Used equipment sales: Revenues from the sales of used equipment are recognized at the time of delivery to, or pick-up by, the customer, which is when the customer obtains control of the promised good.

Parts sales: Revenues from the sales of equipment parts are recognized at the time of pick-up by the customer for parts counter sales transactions. For parts that are shipped to a customer, we elected to use a practical expedient of Topic 606 and treat such shipping activities as fulfillment costs, thereby recognizing revenues at the time of shipment.

Services revenues: We derive our services primarily from maintenance and repair services to customers for their owned equipment. We recognize services revenues at the time such services are completed, which is when the customer obtains control of the promised service.

Other revenues: Other revenues relate primarily to hauling fees for transporting rental equipment to and from the customer and ancillary charges associated with maintenance and repair services. Such revenues are recognized at the time the services are completed.

We manage credit risk associated with our accounts receivables at the customer level. Because the same customers typically generate the revenues that are accounted for under both Topic 606 and Topic 840, the discussions below on credit risk and our allowances for doubtful accounts address our total revenues from Topic 606 (Topic 605 for 2017) and Topic 840.

We believe concentration of credit risk with respect to our receivables is limited because our customer base is comprised of a large number of geographically diverse customers. Our largest customer accounted for less than one percent of total revenues for the three and nine months ended September 30, 2018, and for each of the last three full years. No single customer accounted for more than 10%

of our revenues on an overall or segment basis for any of the periods presented in this Quarterly Report on Form 10-Q. We manage credit risk through credit approvals, credit limits and other monitoring procedures.

We maintain an allowance for doubtful accounts that reflects our estimate of the amount of our receivables that we will be unable to collect. We develop our estimate of this allowance based on our historical experience with specific customers, our understanding of our current economic circumstances and our own judgment as to the likelihood of ultimate payment. Our largest exposure to doubtful accounts is in our rental operations. We perform credit evaluations of customers and establish credit limits based on reviews of our customers’ current credit information and payment histories. We believe our credit risk is somewhat mitigated by our geographically diverse customer base and our credit evaluation procedures. During the year, we write-off customer account balances when we have exhausted reasonable collection efforts and determined that the likelihood of collection is remote. Such write-offs are charged against our allowance for doubtful accounts. Bad debt expense as a percentage of total revenues for the nine month periods ended September 30, 2018 and 2017 were approximately 0.3% and 0.4%, respectively. The actual rate of future ~~proceeds~~credit losses, however, may not be similar to past experience. Our estimate of doubtful accounts could change based on changing circumstances, including changes in the ~~calculation~~economy or in the particular circumstances of ~~diluted shares. This change~~individual customers. Accordingly, we may be required to increase or decrease our allowance for doubtful accounts.

We do not have material contract assets, impairment losses associated therewith, or material contract liabilities associated with contracts with customers. Our contracts with customers do not generally result in material amounts billed to customers in excess of recognizable revenue. We did not recognize material revenue during the three and nine months ended September 30, 2018 or 2017 that was included in the contract liability balance as of the beginning of such periods.

Most of our Topic 606 revenue is recognized at a point-in-time, rather than over time. Accordingly, in any particular period, we do not generally recognize a significant amount of revenue from performance obligations satisfied (or partially satisfied) in previous periods, and the amount of such revenue recognized during the three and nine months ended September 30, 2018 and 2017 was not material. We also do not expect to recognize material revenue in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2018.

Our Topic 606 revenues do not include material amounts of variable consideration. Our payment terms vary by the type and location of our customer and the products or services offered. The time between invoicing and when payment is due is not significant. Our contracts do not generally include a significant financing component. Our contracts with customers do not generally result in significant obligations associated with returns, refunds or warranties. See above for a discussion of how we manage credit risk.

We do not recognize any assets associated with the incremental costs of obtaining a contract with a customer (for example, a sales commission) that we expect to recover. Most of our revenue is recognized at a point-in-time or over a period of one year or less, and we use the practical expedient that allows us to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less.

Our revenues accounted for under Topic 606 generally do not require significant estimates or judgments as the transaction price is generally fixed and stated on our contracts. Our contracts generally do not include multiple performance obligations, and accordingly do not generally require estimates of the standalone selling price for each performance obligation. Also, our revenues do not include material amounts of variable consideration. Substantially all of our revenues are recognized at a ~~material impact~~point-in-time and the timing of the satisfaction of the applicable performance obligations is readily determinable. As noted above, our Topic 606 revenues are generally recognized at the time of delivery to, or pick-up by, the customer.

On January 1, 2018, we completed the acquisition of CEC, a non-residential construction focused equipment rental company with three branches located in the greater Denver, Colorado area. CEC had approximately 100 employees and approximately $84 million of rental assets at original equipment cost as of December 31, 2017. CEC also had total revenues of approximately $34 million in the year ended December 31, 2017. The acquisition significantly expands our presence in the Denver area and surrounding markets.

The aggregate consideration paid to the ~~calculation~~pre-acquisition owners of ~~weighted average shares outstanding~~CEC was approximately $132.4 million. The acquisition and related fees and expenses were funded through available cash. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. We do not expect any further changes to these assigned values.

The level of goodwill that resulted from the CEC acquisition is primarily reflective of CEC’s going-concern value, the value of CEC’s assembled workforce, new customer relationships expected to arise from the acquisition and expected synergies from combining operations. We currently expect the goodwill recognized to be 100% deductible for income tax purposes.

Total CEC acquisition costs were $0.9 million, of which approximately $0.2 million was incurred in the nine month period ended September 30, 2018.

Total revenues attributable to CEC since the acquisition were $8.9 million and $30.3 million for the three and nine month periods ended September 30 ~~2017.~~

ASU 2016-09 eliminates the prior guidance requirement that allowed under certain circumstances the realization of excess tax benefits prior to recognition of those excess tax benefits. Under prior guidance, companies could not recognize excess tax benefits when an option was exercised or a share vested if the related tax deduction increased a net operating loss carryforward rather than reduced income taxes payable. ASU 2016-09 requires companies to apply this part of the guidance using a modified retrospective transition method and record a cumulative effect adjustment for previously unrecognized excess tax benefits. Accordingly, we recorded a cumulative effect adjustment to accumulated deficit as of January 1, 2017 of approximately $0.9 million for all excess tax benefits that had not been previously recognized because the related tax deduction had not reduced income taxes payable.

ASU 2016-09 also clarifies that an entity should classify excess tax benefits along with other income tax cash flows as an operating activity in the statement of cash flows. This change eliminates the prior practice of grossing up the statement of cash flows for the effect of windfalls, i.e. reporting windfalls as outflows in operating activities and as inflows in financing activities. Under ASU 2016-09, the effect of windfalls will generally be reflected in2018, respectively. Estimated net income from continuing operations under the indirect method. We have adopted this portion of the guidance on a retrospective basis. ASU 2016-09 also clarifies that employee taxes paid when an employer withholds shares of stock for tax withholding purposes be reported as financing activities in the consolidated statements of cash flows, which is how the Company has historically presented such activities in our statement of cash flows.

~~We have elected~~attributable to continue to estimate the number of stock-based awards expected to vest, as permitted by ASU 2016-09, rather than electing to account for forfeitures as they occur. Additional amendments to the accounting for statutory withholding tax requirements had no impact on our consolidated financial statements.

On July 14, 2017, we and Neff Corporation (“Neff”) announced that we had entered into a definitive merger agreement under which we would acquire Neff by way of merger. The merger agreement was subject to customary closing conditions, and also included a “go-shop” period expiring on August 20, 2017, during which Neff could solicit alternative proposals to acquire Neff. On August 13, 2017, Neff notified us that it had determined that an acquisition proposal Neff had received constituted a “Superior Proposal” (as defined in the merger agreement) to acquire Neff and that Neff intended to terminate the merger agreement with us to enter into an agreement for such acquisition proposal, subject to our right to match the proposal under the merger agreement. On

~~August 16, 2017, we announced that we had notified Neff that we did not intend to submit a revised proposal for~~CEC since the acquisition of Neff, , and on August 17, 2017, Neff terminated the merger agreement with us and immediately entered into a definitive agreement with United Rentals, Inc. (“United Rentals”) under which United Rentals would acquire Neff.

~~Pursuant to the terms of the merger agreement between us and Neff, Neff paid a termination fee to us of approximately $13.2~~was $1.2 million, concurrently with Neff’s termination of the merger agreement. We received the $13.2 million termination fee on August 16, 2017. Total estimated transaction costs related to the proposed merger with Neff, including related financing costs, were approximately $6.7 million, resulting in $6.5 million of net proceeds from the Neff transaction. The net breakup fee proceeds of $6.5 million are presented in our statements of incomeor $0.03 per share, for the three and nine months ended September 30, 2017 in the line item, “Merger breakup fee proceeds, net of merger costs”. Included in the $6.7 million estimated transaction costs above are merger costs of $2.2 million that were incurred and previously reflected in our selling, general & administrative expenses for the six month period ended June 30, 2017, and were reclassified to the merger breakup fee proceeds, net of merger costs line item in the three month period ended September 30, ~~2017.~~2018 and $3.9 million, or $0.11 per share, for the nine month period ended September 30, 2018. It should be noted that since our acquisition of CEC, significant amounts of equipment rental fleet have been moved between H&E locations and the acquired CEC locations, the impact of which is included in these CEC operating results above, as it is impractical to report CEC operating results on a pure stand-alone basis post-acquisition.

On April 1, 2018, we completed the acquisition of Rental Inc., a non-residential equipment rental and distribution company with five branches located in Alabama, Florida and Western Georgia. Rental Inc. had approximately 65 employees and approximately $35 million of rental assets at original equipment costs as of March 31, 2018, immediately prior to the acquisition. The acquisition expands our presence in the surrounding market.

The aggregate consideration paid to the owners of Rental Inc. was approximately $68.6 million. The acquisition and related fees and expenses were funded through available cash and from borrowings under our Credit Facility (as defined below). The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the acquisition date. The amounts presented here are preliminary and are subject to change. However, we do not expect material changes to these assigned values.

The level of goodwill that resulted from the Rental Inc. acquisition is primarily reflective of Rental Inc.’s going-concern value, the value of Rental Inc.’s assembled workforce, new customer relationships expected to arise from the acquisition and expected synergies from combining operations. We currently expect the goodwill recognized to be 100% deductible for income tax purposes.

Total Rental Inc. acquisition costs were $0.2 million, substantially all of which was incurred in the nine month period ended September 30, 2018.

Total revenues attributable to Rental Inc. since the April 1, 2018 acquisition were $7.0 million and $14.7 million for the three and nine month periods ended September 30 2018, respectively. Estimated net loss attributable to Rental Inc. since the acquisition was $0.8 million, or $0.02 per share, for the three month period ended September 30, 2018 and $0.9 million, or $0.02 per share, for the nine month period ended September 30, 2018. It should be noted that since our acquisition of Rental Inc., significant amounts of rental fleet have been moved between H&E locations and the acquired Rental Inc. locations, the impact of which is included in these Rental Inc. operating results above, as it is impractical to report Rental Inc. operating results on a pure stand-alone basis post-acquisition.

We completed the CEC acquisition on January 1, 2018. Therefore, the operating results of CEC are included in our reported condensed consolidated statements of income for the full three and nine month periods ended September 30, 2018. We completed the Rental Inc. acquisition on April 1, 2018. Therefore, our reported condensed consolidated statements of income for the nine month period ended September 30, 2018 do not include Rental Inc. for the period January 1, 2018 through March 31, 2018.

The pro forma information below gives effect to the CEC and Rental Inc. acquisitions as if they had been completed on January 1, 2017 (the “pro forma acquisition date”). The pro forma information is not necessarily indicative of our results of operations had the acquisitions been completed on the above date, nor is it necessarily indicative of our future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions, nor does it reflect additional revenue opportunities following the acquisition. The pro forma adjustments reflected in the table below are subject to change as additional analysis is performed. The tables below present unaudited pro forma consolidated statements of income information for the three and nine month periods ended September 30, 2017 and the nine month period ended September 30, 2018 as if CEC and Rental Inc. were included in our consolidated results for the entire periods presented.

Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The FASB fair value measurement guidance established a fair value hierarchy that prioritizes the inputs used to measure fair value. The three broad levels of the fair value hierarchy are as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 – Quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly

Level 3 – Unobservable inputs for which little or no market data exists, therefore requiring a company to develop its own assumptions

The carrying value of financial instruments reported in the accompanying condensed consolidated balance sheets for cash, accounts receivable, accounts payable and accrued expenses payable and other liabilities approximate fair value due to the immediate or short-term nature or maturity of these financial instruments. The fair value of our letter of credit is based on fees currently charged for similar agreements. The carrying amounts and fair values of our other financial instruments subject to fair value disclosures as of September 30, ~~2017~~2018 and December 31, ~~2016~~2017 are presented in the table below (amounts in thousands) and have been calculated based upon market quotes and present value calculations based on market rates.

	September 30, 2017				September 30, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Manufacturer flooring plans payable with interest computed at 4.50% (Level 3)	$	23,286	$	19,972	$	26,472	$	22,544
Senior unsecured notes with interest computed at 5.625% (Level 3)		738,222		498,063
Capital leases payable with interest computed at 5.929% to 9.55% (Level 3)		1,542		1,108
Senior unsecured notes with interest computed at 5.625% (Level 1)						950,000		947,625
Capital leases payable with interest computed at 5.929% (Level 3)						778		651
Letter of credit (Level 3)		—		155		—		116

	December 31, 2016				December 31, 2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Manufacturer flooring plans payable with interest computed at 4.50% (Level 3)	$	30,780	$	26,780	$	22,002	$	18,737
Senior unsecured notes with interest computed at 7.0% (Level 1)		627,711		663,075
Senior unsecured notes with interest computed at 5.625% (Level 3)						944,088		619,019
Capital leases payable with interest computed at 5.929% to 9.55% (Level 3)		1,704		1,164		1,486		1,114
Letter of credit (Level 3)		—		155		—		116

At December 31, 2017, the fair value of our senior unsecured notes due 2025 was based on the present value of the notes based on our incremental borrowing rate as these notes were not available (registered) on a bond trading market as of December 31, 2017. At September 30, 2018, the fair value of our senior unsecured notes due 2025 were based on quoted bond trading market prices of those notes.

During the three and nine month periods ended September 30, ~~2017~~2018 and ~~2016,~~2017, there were no transfers of financial assets or liabilities in or out of Level 1, Level 2 or Level 3 of the fair value hierarchy.

The following table summarizes the activity in Stockholders’ Equity for the nine month period ended September 30, ~~2017~~2018 (amounts in thousands, except share data):

Common Stock

Additional

Retained Earnings

Total

Shares
Issued

Amount

Paid-in
Capital

Treasury
Stock

(Accumulated Deficit)

Stockholders’
Equity

Balances at December 31, 2016

39,496,759

$
394

$
223,544

$
(60,966
)

$
(20,207
)

$
142,765

Cumulative effect adjustment for previously unrecognized excess tax benefits pursuant to the adoption of ASU 2016-09 (see note (2))

—

—

—

—

881

881

Stock-based compensation

—

—

2,614

—

—

2,614

Cash dividends declared on common stock ($0.275 per share)

—

—

—

—

(29,422
)

(29,422
)
Issuance of common stock

129,674

1

—

—

—

1

Repurchases of 33,954 shares of restricted common stock

—

—

—

(754
)

—

(754
)
Net income

—

—

—

—

23,730

23,730

Balances at September 30, 2017

39,626,433

395

226,158

(61,720
)

(25,018
)

139,815

	Common Stock				Additional									Total
	Shares Issued		Amount		Paid-in Capital			Treasury Stock			Retained Earnings			Stockholders’ Equity
Balances at December 31, 2017		39,623,773	$	395	$	227,070		$	(61,749	)	$	51,077		$	216,793
Stock-based compensation		—		—		2,998			—			—			2,998
Cash dividends declared on common stock ($0.825 per share)		—		—		—			—			(29,514	)		(29,514	)
Issuance of common stock, net of forfeitures		125,776		1		(110	)		—			—			(109	)
Repurchase of 36,929 shares of restricted common stock		—		—		—			(1,323	)		—			(1,323	)
Net income		—		—		—			—			51,563			51,563
Balances at September 30, 2018		39,749,549		396		229,958			(63,072	)		73,126			240,408

We account for our stock-based compensation plans using the fair value recognition provisions of Accounting Standards Codification (“ASC”) 718, Stock Compensation (“ASC 718”)~~, as further updated by ASU 2016-09.~~. Under the provisions of ASC 718, stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period of the grant). Shares available for future stock-based payment awards under our 2016 Stock-Based Incentive Compensation Plan were ~~1,843,924~~1,733,999 shares as of September 30, ~~2017.~~2018.

The following table summarizes our non-vested stock activity for the nine months ended September 30, ~~2017:~~2018:

	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Non-vested stock at December 31, 2016		400,801		$	18.86
Non-vested stock at December 31, 2017							445,964		$	19.70
Granted		190,134		$	22.94		143,121		$	37.10
Vested		(128,825	)	$	21.89		(178,212	)	$	20.53
Forfeited		(10,504	)	$	19.21		(27,345	)	$	19.39
Non-vested stock at September 30, 2017		451,606		$	19.71
Non-vested stock at September 30, 2018							383,528		$	25.83

As of September 30, ~~2017,~~2018, we had unrecognized compensation expense of approximately ~~$5.8~~$6.6 million related to non-vested stock that we expect to be recognized over a weighted-average period of approximately 2.2 years. The following table summarizes compensation expense related to non-vested stock, which is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income for the three and nine months ended September 30, ~~2017~~2018 and ~~2016~~2017 (amounts in thousands):

At September 30 2017, there is no unrecognized compensation expense as all previously issued and outstanding stock option awards have expired. The following table represents stock option activity for the nine months ended September 30, 2017:

Income per common share for the three and nine months ended September 30, ~~2017~~2018 and ~~2016~~2017 are based on the weighted average number of common shares outstanding during the period. The effects of potentially dilutive securities that are anti-dilutive are not included in the computation of dilutive income per share. We include all common shares granted under our incentive compensation plan which remain unvested (“restricted common shares”) and contain non-forfeitable rights to dividends or dividend equivalents,

whether paid or unpaid (“participating securities”), in the number of shares outstanding in our basic and diluted EPS calculations using the two-class method. All of our restricted common shares are currently participating securities.

Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings allocated to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, distributed and undistributed earnings are allocated to both common shares and restricted common shares based on the total weighted average shares outstanding during the period. The number of restricted common shares outstanding was approximately ~~0.8%~~0.7% of total outstanding shares for each of the three ~~and nine month periods~~months ended September 30, ~~2017~~2018 and ~~2016, respectively,~~2017, and, consequently, was immaterial to the basic and diluted EPS ~~calculations for the periods presented.~~calculations. Therefore, use of the two-class method had no impact on our basic and diluted EPS calculations for the periods presented. The following table sets forth the computation of basic and diluted net income per common share for the three and nine months ended September 30, ~~2017~~2018 and ~~2016~~2017 (amounts in thousands, except per share amounts):

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2017		2016		2017		2016		2018		2017		2018		2017
Basic net income per share:
Net income	$	8,462	$	11,665	$	23,730	$	24,742	$	21,314	$	8,462	$	51,563	$	23,730
Weighted average number of common shares outstanding		35,543		35,424		35,494		35,373		35,719		35,543		35,649		35,494
Net income per share of common stock – basic	$	0.24	$	0.33	$	0.67	$	0.70	$	0.60	$	0.24	$	1.45	$	0.67
Diluted net income per share:
Net income	$	8,462	$	11,665	$	23,730	$	24,742	$	21,314	$	8,462	$	51,563	$	23,730
Weighted average number of common shares outstanding		35,543		35,424		35,494		35,373		35,719		35,543		35,649		35,494
Effect of dilutive securities:
Effect of dilutive stock options		—		—		—		—
Effect of dilutive non-vested restricted stock		172		80		162		88		207		172		255		162
Weighted average number of common shares outstanding – diluted		35,715		35,504		35,656		35,461		35,926		35,715		35,904		35,656
Net income per share of common stock – diluted	$	0.24	$	0.33	$	0.67	$	0.70	$	0.59	$	0.24	$	1.44	$	0.67
Common shares excluded from the denominator as anti-dilutive:
Stock options		—		—		—		5
Non-vested restricted stock		—		1		—		2		21		—		7		—

We recorded income tax expense of $8.0 million for the nine month period ended September 30, 2017 compared to income tax expense of $17.4 million for the nine month period ended September 30, 2016. Our effective income tax rate was 25.3% for the nine month period ended September 30, 2016 compared to 41.3% for the same nine month period last year, a decrease of 16.0%. The decrease in effective tax rate is primarily due to a net $5.3 million discrete tax benefit resulting from a reversal of an unrecognized tax benefit due to expiration of statute of limitations in the third quarter ended September 30, 2017. The gross amount of unrecognized tax benefits as of September 30, 2017 is $0.9 million. Based on available evidence, both positive and negative, we believe it is more likely than not that our federal deferred tax assets at September 30, 2017 are fully realizable through future reversals of existing taxable temporary differences and future taxable income, and are not subject to any limitations; however, for the quarter ended September 30, 2017, we increased our valuation allowance by $0.4 million for certain state net operating losses that may not be utilized.

We and our subsidiaries are parties to a ~~$602.5~~$750.0 million ~~senior secured credit facility (the “Credit Facility”)~~Credit Facility with Wells Fargo Capital Finance, LLC ~~(“Wells Fargo”),~~ as administrative agent, ~~(as successor in such capacity to General Electric Capital Corporation (“GE Capital”)),~~ and the lenders named therein (the ~~“Lenders”~~“Credit Facility”).

On ~~May 21, 2014,~~December 22, 2017, we amended, extended and restated the Credit Facility by entering into the ~~Fourth~~Fifth Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) by and among the Company, Great Northern Equipment, Inc., H&E Equipment Services (California), LLC, the other credit parties named therein, the lenders named therein, GEWells Fargo Capital Finance, LLC, as administrative agent, ~~Bank of America, N.A. as~~the other credit parties named therein, the lenders named therein, and the joint lead arrangers, joint book runners, co-syndication ~~agent~~agents and documentation agent Wells Fargo, as co-syndication agent and Deutsche Bank Securities Inc. as joint lead arranger and joint bookrunner. In March 2016, Wells Fargo succeeded and was substituted for GE Capital as the administrative agent under the Amended and Restated Credit Agreement.named therein.

The Amended and Restated Credit Agreement, among other things, (i) extends the maturity date of the Credit Facility from ~~February 29, 2017 to~~ May 21, 2019 to December 22, 2022, (ii) increases the commitments under the senior secured asset based revolver provided for therein from $602.5 million to $750 million, (iii) increases the uncommitted incremental revolving capacity from ~~$130~~$150 million to ~~$150~~$250 million, ~~(iii) permits a like-kind exchange program under Section 1031 of the Internal Revenue Code of 1986, as amended,~~ (iv) provides that the unused ~~commitment~~line fee margin will be either ~~0.50%,~~ 0.375% or 0.25%, depending on the ~~ratio~~Average Revolver Usage (as defined in the Amended and Restated Credit Agreement) of the average of the daily closing balances of the aggregate revolving loans, swing line loans and letters of credit outstanding during each month to the aggregate commitments for the revolving loans, swing line loans and letters of credit,borrowers, (v) lowers the interest rate (a) in the case of ~~index~~base rate revolving loans, to the ~~index~~base rate plus an applicable margin of ~~0.75%~~0.50% to ~~1.25%~~1.00% depending on the ~~leverage ratio~~Average Availability (as defined in the Amended and Restated Credit Agreement) and (b) in the case of LIBOR revolving loans, to LIBOR (as defined in the Amended and Restated Credit Agreement) plus an applicable margin of ~~1.75%~~1.50% to ~~2.25%~~2.00%, depending on the ~~leverage ratio,~~Average Availability, (vi) lowers the

margin applicable to the letter of credit fee to between ~~1.75%~~1.50% and ~~2.25%~~2.00%, depending on the ~~leverage ratio,~~Average Availability, and (vii) permits, ~~under~~subject to certain conditions, for the payment of dividends and/or stock repurchases or redemptions on the capital stock of the Company of up to $75 million per calendar year and further additionally permits the payment of the special cash dividend of $7.00 per share previously declared by the Company on August 20, 2012 to the holders of outstanding restricted stock of the Company following the declared payment date with such permission not tied to the vesting of such restricted stock (which includes the Company’s payment in June 2014 of all amounts that remained payable to the holders of the restricted stock of the Company with respect to such special dividend that was otherwise payable following the applicable vesting dates in May and July 2014 and 2015).

~~On February 5, 2015, we entered into~~ an ~~amendment of the Credit Facility which, among other things, increased the total~~unlimited amount of ~~revolving loan commitments under~~Permitted Acquisitions, Restricted Payments and prepayments of Indebtedness (in each case, as defined in the Amended and Restated Credit Agreement).

The Amended and Restated Credit Agreement ~~from $402.5~~continues to provide for, among other things, a $30 million ~~to $602.5 million.~~letter of credit sub-facility, and a guaranty by certain of the Company’s subsidiaries of the obligations under the Credit Facility. In addition, the Credit Facility remains secured by substantially all of the assets of the Company and certain of its subsidiaries.

As of September 30, ~~2017,~~2018, we were in compliance with our financial covenants under the Amended and Restated Credit ~~Facility.~~Agreement. At September 30, ~~2017,~~2018, we had $219.0 million of borrowings outstanding under the ~~Company~~Credit Facility and could borrow up to ~~an additional $517.6~~$523.3 million and remain in compliance with the debt covenants under the ~~Company’s~~ Credit Facility.

At September 30, 2017, the interest rate on the Credit Facility was based on a 4.25% U.S. Prime Rate plus 100 basis points and LIBOR plus 200 basis points. The weighted average interest rate at September 30, 2017 was approximately 3.9%. At October ~~19, 2017,~~18, 2018, we had ~~$526.6~~$532.4 million of available borrowings under our Credit Facility, net of a $7.7 million of outstanding ~~letters~~letter of credit.

On August 24, 2017, we completed an offering of $750 million aggregate principal amount of ~~5.625%~~5.6250% senior notes due 2025 (the “New Notes”) and the settlement of a cash tender offer (the “Tender Offer”) with respect to our ~~previously outstanding~~ 7% senior notes due 2022 (the “Old Notes”). The New Notes and related guarantees were offered in a private placement solely to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), or outside the

United States to persons other than “U.S. persons” in compliance with Regulation S under the Securities Act. The New Notes and related guarantees have not been registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements thereunder.

Net proceeds, after deducting $10.3 million of estimated offering expenses, from the sale of the New Notes totaled approximately $739.7 million. We used a portion of the net proceeds from the sale of the New Notes to repurchase $329.7 million of ~~its $630 million~~ aggregate principal amount of the Old Notes in early settlement of the Tender Offer, which wethe Company launched on August 17, 2017. Holders who tendered their Old Notes prior to the early tender deadline received $1,038.90 per $1,000 principal amount of Old Notes tendered, plus accrued and unpaid interest up to, but not including, the payment date of August 24, 2017. Effective as of August 24, 2017, we (i) provided notice of the redemption of all remaining Old Notes that were not validly tendered in the Tender Offer at the expiration time and (ii) satisfied and discharged the indenture governing the Old Notes in accordance with its terms. On September 25, 2017, we redeemed the remaining $300.3 million principal amount outstanding of the Old Notes at a redemption price equal to 103.50% of the principal amount thereof, plus accrued and unpaid interest up to, but not including, the date of redemption.

In connection with the above transactions, we recorded a one-time loss on the early extinguishment of debt of approximately $25.4 million, or approximately $18.9 million after-tax, reflecting payment of $12.8 million of tender premiums and $10.5 million of premiums in accordance with the indenture governing the Old Notes to redeem the Old Notes that remained outstanding following completion of the Tender Offer, combined with the write-off of approximately $2.0 million of unamortized note discount related to the Old Notes. Additional transaction costs incurred in connection with the offering of the New Notes totaled approximately $1.6 million.

The New Notes were issued at par and require semiannual interest payments on March 1st and September 1st of each year, commencing on March 1, 2018. No principal payments are due until maturity (September 1, 2025).

The New Notes are redeemable, in whole or in part, at any time on or after September 1, 2020 at specified redemption prices plus accrued and unpaid interest to the date of redemption. We may redeem up to 40% of the aggregate principal amount of the New Notes before September 1, 2020 with the net cash proceeds from certain equity offerings. We may also redeem the New Notes prior to September 1, 2020 at a specified “make-whole” redemption price plus accrued and unpaid interest to the date of redemption.

The New Notes rank equally in right of payment to all of our existing and future senior indebtedness and rank senior to any of our subordinated indebtedness. The New Notes are unconditionally guaranteed on a senior unsecured basis by all of our current and future significant domestic restricted subsidiaries. In addition, the New Notes are effectively subordinated to all of our and the guarantors’ existing and future secured indebtedness, including the Credit Facility, to the extent of the assets securing such indebtedness, and are structurally subordinated to all of the liabilities and preferred stock of any of our subsidiaries that do not guarantee the New Notes.

If we experience a change of control, we will be required to offer to purchase the New Notes at a repurchase price equal to 101% of the principal amount, plus accrued and unpaid interest to the date of repurchase.

The indenture governing the New Notes contains certain covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: (i) incur additional indebtedness, assume a guarantee or issue preferred stock; (ii) pay dividends or make other equity distributions or payments to or affecting our subsidiaries; (iii) purchase or redeem our capital stock; (iv) make certain investments; (v) create liens; (vi) sell or dispose of assets or engage in mergers or consolidations; (vii) engage in certain transactions with subsidiaries or affiliates; (viii) enter into sale-leaseback transactions; and (ix) engage in certain business activities. Each of the covenants is subject to exceptions and qualifications. As of September 30, ~~2017,~~2018, we were in compliance with these covenants.

On November 22, 2017, we closed on an offering of $200 million aggregate principal amount of 5.625% senior notes due 2025 (the “Add-on Notes”) in an unregistered offering through a private placement. The Add-on Notes were priced at 104.25% of the principal amount. Net proceeds from the offering of the Add-on Notes, including accrued interest from August 24, 2017 totaled approximately $209.2 million. The net proceeds of the offering, was used to repay indebtedness outstanding under the Credit Facility and for the payment of fees and expenses related to the offering. The remainder of the net proceeds will be used for general corporate purposes

and to fund potential acquisitions in connection with our ongoing strategy of acquiring rental companies to complement our existing business and footprint.

The Add-on Notes were issued as additional notes under an indenture dated as of August 24, 2017, pursuant to which we previously issued the New Notes as described above. The Add-on Notes have identical terms to, rank equally with and form a part of a single class of securities with the New Notes.

Pursuant to a registration rights agreement entered into between ~~the Company,~~us, the guarantors of the New Notes and the initial purchasers of the New Notes, we agreed to make an offer to exchange (the “Exchange Offer”) the New Notes and guarantees for registered, publicly tradable notes and guarantees that have terms identical in all material respects to the New Notes (except that the exchange notes will not contain any transfer restrictions) within a certain period of time following the completion of the offering. On January 17, 2018, the Company filed a registration statement on Form S-4 with respect to an offer to exchange the New and Add-on Notes and guarantees for registered, publicly tradable notes and guarantees that have terms identical in all material respects to the New and Add-on Notes (except that the exchange notes do not contain any transfer restrictions). This exchange offer closed on March 27, 2018.

The following table reconciles our Senior Unsecured Notes to our Condensed Consolidated Balance Sheets (amounts in thousands):

We have identified five reportable segments: equipment rentals, new equipment sales, used equipment sales, parts sales and services revenues. These segments are based upon how management of the Company allocates resources and assesses performance. Non-segmented revenues and non-segmented costs relate to equipment support activities including transportation, hauling, parts freight and damage-waiver charges and are not allocated to the other reportable segments. There were no sales between segments for any of the periods presented. Selling, general and administrative expenses as well as all other income and expense items below gross profit are not generally allocated to reportable segments.

We do not compile discrete financial information by segments other than the information presented below. The following table presents information about our reportable segments (amounts in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016		2017		2016		2018			2017		2018		2017
Segment Revenues:
Equipment rentals	$	125,616	$	118,535	$	351,303	$	330,023	$	156,037		$	125,616	$	429,227	$	351,303
New equipment sales		48,940		44,764		128,883		151,836		68,233			48,940		183,265		128,883
Used equipment sales		22,250		20,630		75,219		71,973		30,294			22,250		87,287		75,219
Parts sales		27,763		27,335		81,063		81,958		31,484			29,534		89,916		86,259
Services revenues		16,097		16,076		47,121		49,322		16,426			16,097		48,250		47,121
Total segmented revenues		240,666		227,340		683,589		685,112		302,474			242,437		837,945		688,785
Non-segmented revenues		18,496		17,346		51,764		48,679		19,667			16,725		55,042		46,568
Total revenues	$	259,162	$	244,686	$	735,353	$	733,791	$	322,141		$	259,162	$	892,987	$	735,353
Segment Gross Profit:
Equipment rentals	$	62,373	$	58,629	$	166,783	$	156,161	$	78,041		$	62,373	$	210,246	$	166,783
New equipment sales		5,331		4,617		14,443		16,684		7,839			5,331		20,800		14,443
Used equipment sales		7,134		6,266		23,240		22,222		9,782			7,134		28,066		23,240
Parts sales		7,638		7,627		22,367		22,774		8,355			7,957		24,239		23,524
Services revenues		10,530		10,631		31,223		32,586		10,798			10,530		31,820		31,223
Total segmented gross profit		93,006		87,770		258,056		250,427		114,815			93,325		315,171		259,213
Non-segmented gross profit		1,020		355		982		550
Non-segmented gross profit (loss)										(85	)		701		247		(175	)
Total gross profit	$	94,026	$	88,125	$	259,038	$	250,977	$	114,730		$	94,026	$	315,418	$	259,038

	Balances at				Balances at
	September 30,		December 31,		September 30,		December 31,
	2017		2016		2018		2017
Segment identified assets:
Equipment sales	$	65,532	$	37,912	$	93,860	$	58,125
Equipment rentals		917,075		893,816		1,153,244		904,824
Parts and services		17,535		15,997		19,392		16,879
Total segment identified assets		1,000,142		947,725		1,266,496		979,828
Non-segment identified assets		302,071		293,886		457,480		487,889
Total assets	$	1,302,213	$	1,241,611	$	1,723,976	$	1,467,717

The Company operates primarily in the United States and our sales to international customers for the three month periods ended September 30, ~~2017~~2018 and ~~2016~~2017 were 0.1% and ~~0.3%~~0.1%, respectively, of total revenues. Our sales to international customers for the nine month periods ended September 30, 2018 and 2017 were 0.2% and ~~2016 were~~ 0.3% ~~and 0.4%~~, ~~respectively, of total revenues.~~respectively. No one customer accounted for more than 10% of our revenues on an overall or segment basis for any of the periods presented.

~~(12)~~(11) Condensed Consolidating Financial Information of Guarantor Subsidiaries

All of the indebtedness of H&E Equipment Services, Inc. is guaranteed by GNE Investments, Inc. and its wholly‑owned subsidiary Great Northern Equipment, Inc., H&E Equipment Services (California), LLC, H&E California Holding, Inc., H&E Equipment Services (Mid-Atlantic), Inc. and H&E Finance Corp. The guarantor subsidiaries are all wholly‑owned and the guarantees, made on a joint and several basis, are full and unconditional (subject to subordination provisions and subject to a standard limitation which provides that the maximum amount guaranteed by each guarantor will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws). There are no restrictions on H&E Equipment Services, Inc.’s ability to obtain funds from the guarantor subsidiaries by dividend or loan.

The consolidating financial statements of H&E Equipment Services, Inc. and its subsidiaries are included below. The financial statements for H&E Finance Corp. ~~and Yellow Iron Merger Co.~~ are not included within the consolidating financial statements because H&E Finance Corp. ~~and Yellow Iron Merger Co.~~ has no assets or operations.

	As of September 30, 2017										As of September 30, 2018
	H&E Equipment Services		Guarantor Subsidiaries			Elimination			Consolidated		H&E Equipment Services		Guarantor Subsidiaries			Elimination			Consolidated
	(Amounts in thousands)										(Amounts in thousands)
Assets:
Cash	$	6,184	$	—		$	—		$	6,184	$	5,088	$	—		$	—		$	5,088
Receivables, net		124,955		27,868			—			152,823		152,395		38,910			—			191,305
Inventories, net		73,599		9,468			—			83,067		97,099		16,153			—			113,252
Prepaid expenses and other assets		8,935		184			—			9,119		9,228		140			—			9,368
Rental equipment, net		766,830		150,245			—			917,075		989,228		164,016			—			1,153,244
Property and equipment, net		91,867		9,305			—			101,172		96,063		17,340			—			113,403
Deferred financing costs, net		1,576		—			—			1,576		3,188		—			—			3,188
Investment in guarantor subsidiaries		220,125		—			(220,125	)		—		259,298		—			(259,298	)		—
Intangible assets, net												29,285		—			—			29,285
Goodwill		1,671		29,526			—			31,197		76,317		29,526			—			105,843
Total assets	$	1,295,742	$	226,596		$	(220,125	)	$	1,302,213	$	1,717,189	$	266,085		$	(259,298	)	$	1,723,976
Liabilities and Stockholders’ Equity:
Amounts due on senior secured credit facility	$	77,197	$	—		$	—		$	77,197	$	219,018	$	—		$	—		$	219,018
Accounts payable		77,858		3,696			—			81,554		77,385		7,380			—			84,765
Manufacturer flooring plans payable		21,703		1,583			—			23,286		25,833		639			—			26,472
Accrued expenses payable and other liabilities		54,190		(305	)		—			53,885		63,550		(1,959	)		—			61,591
Dividends payable		165		(45	)		—			120		155		(51	)		—			104
Senior unsecured notes		738,222		—			—			738,222		944,584		—			—			944,584
Capital leases payable		—		1,542			—			1,542		—		778			—			778
Deferred income taxes		184,706		—			—			184,706		144,288		—			—			144,288
Deferred compensation payable		1,886		—			—			1,886		1,968		—			—			1,968
Total liabilities		1,155,927		6,471			—			1,162,398		1,476,781		6,787			—			1,483,568
Stockholders’ equity		139,815		220,125			(220,125	)		139,815		240,408		259,298			(259,298	)		240,408
Total liabilities and stockholders’ equity	$	1,295,742	$	226,596		$	(220,125	)	$	1,302,213	$	1,717,189	$	266,085		$	(259,298	)	$	1,723,976

	As of December 31, 2016										As of December 31, 2017
	H&E Equipment Services		Guarantor Subsidiaries			Elimination			Consolidated		H&E Equipment Services		Guarantor Subsidiaries			Elimination			Consolidated
	(Amounts in thousands)										(Amounts in thousands)
Assets:
Cash	$	7,683	$	—		$	—		$	7,683	$	165,878	$	—		$	—		$	165,878
Receivables, net		112,758		27,279			—			140,037		138,657		37,424			—			176,081
Inventories, net		49,509		4,400			—			53,909		63,828		11,176			—			75,004
Prepaid expenses and other assets		7,343		170			—			7,513		9,030		142			—			9,172
Rental equipment, net		743,759		150,057			—			893,816		760,972		143,852			—			904,824
Property and equipment, net		93,866		11,626			—			105,492		89,952		11,837			—			101,789
Deferred financing costs, net		1,964		—			—			1,964		3,772		—			—			3,772
Investment in guarantor subsidiaries		220,209		—			(220,209	)		—		222,217		—			(222,217	)		—
Goodwill		1,671		29,526			—			31,197		1,671		29,526			—			31,197
Total assets	$	1,238,762	$	223,058		$	(220,209	)	$	1,241,611	$	1,455,977	$	233,957		$	(222,217	)	$	1,467,717
Liabilities and Stockholders’ Equity:
Amount due on senior secured credit facility	$	162,642	$	—		$	—		$	162,642
Accounts payable		36,188		3,244			—			39,432		78,811		10,970			—			89,781
Manufacturer flooring plans payable		30,899		(119	)		—			30,780		20,300		1,702			—			22,002
Accrued expenses payable and other liabilities		58,774		(1,941	)		—			56,833		67,466		(2,371	)		—			65,095
Dividends payable		106		(39	)		—			67		197		(47	)		—			150
Senior unsecured notes		627,711		—			—			627,711		944,088		—			—			944,088
Capital leases payable		—		1,704			—			1,704		—		1,486			—			1,486
Deferred income taxes		177,835		—			—			177,835		126,419		—			—			126,419
Deferred compensation payable		1,842		—			—			1,842		1,903		—			—			1,903
Total liabilities		1,095,997		2,849			—			1,098,846		1,239,184		11,740			—			1,250,924
Stockholders’ equity		142,765		220,209			(220,209	)		142,765		216,793		222,217			(222,217	)		216,793
Total liabilities and stockholders’ equity	$	1,238,762	$	223,058		$	(220,209	)	$	1,241,611	$	1,455,977	$	233,957		$	(222,217	)	$	1,467,717

	Three Months Ended September 30, 2017												Three Months Ended September 30, 2018
	H&E Equipment Services			Guarantor Subsidiaries			Elimination			Consolidated			H&E Equipment Services			Guarantor Subsidiaries			Elimination			Consolidated
	(Amounts in thousands)												(Amounts in thousands)
Revenues:
Equipment rentals	$	103,618		$	21,998		$	—		$	125,616		$	133,023		$	23,014		$	—		$	156,037
New equipment sales		38,132			10,808			—			48,940			48,861			19,372			—			68,233
Used equipment sales		17,818			4,432			—			22,250			23,868			6,426			—			30,294
Parts sales		23,869			3,894			—			27,763			27,054			4,430			—			31,484
Services revenues		13,559			2,538			—			16,097			14,048			2,378			—			16,426
Other		15,112			3,384			—			18,496			16,494			3,173			—			19,667
Total revenues		212,108			47,054			—			259,162			263,348			58,793			—			322,141
Cost of revenues:
Rental depreciation		35,886			7,369			—			43,255			47,142			7,918			—			55,060
Rental expense		16,630			3,358			—			19,988			19,527			3,409			—			22,936
New equipment sales		33,933			9,676			—			43,609			43,187			17,207			—			60,394
Used equipment sales		12,288			2,828			—			15,116			15,692			4,820			—			20,512
Parts sales		17,410			2,715			—			20,125			20,029			3,100			—			23,129
Services revenues		4,775			792			—			5,567			4,883			745			—			5,628
Other		14,467			3,009			—			17,476			16,570			3,182			—			19,752
Total cost of revenues		135,389			29,747			—			165,136			167,030			40,381			—			207,411
Gross profit:
Gross profit (loss):
Equipment rentals		51,102			11,271			—			62,373			66,354			11,687			—			78,041
New equipment sales		4,199			1,132			—			5,331			5,674			2,165			—			7,839
Used equipment sales		5,530			1,604			—			7,134			8,176			1,606			—			9,782
Parts sales		6,459			1,179			—			7,638			7,025			1,330			—			8,355
Services revenues		8,784			1,746			—			10,530			9,165			1,633			—			10,798
Other		645			375			—			1,020			(76	)		(9	)		—			(85	)
Gross profit		76,719			17,307			—			94,026			96,318			18,412			—			114,730
Selling, general and administrative expenses		44,408			10,795			—			55,203			58,938			11,408			—			70,346
Merger costs (net of merger breakup fee proceeds)														219			—			—			219
Equity in earnings of guarantor subsidiaries		6,160			—			(6,160	)		—			4,535			—			(4,535	)		—
Merger breakup fee proceeds, net of merger costs		6,506			—			—			6,506
Gain on sales of property and equipment, net		342			1,983			—			2,325			1,017			136			—			1,153
Income from operations		45,319			8,495			(6,160	)		47,654			42,713			7,140			(4,535	)		45,318
Other income (expense):
Interest expense		(12,665	)		(2,395	)		—			(15,060	)		(14,073	)		(2,642	)		—			(16,715	)
Loss on early extinguishment of debt		(25,363	)		—			—			(25,363	)
Other, net		286			60			—			346			331			37			—			368
Total other expense, net		(37,742	)		(2,335	)		—			(40,077	)		(13,742	)		(2,605	)		—			(16,347	)
Income before income taxes		7,577			6,160			(6,160	)		7,577			28,971			4,535			(4,535	)		28,971
Income tax benefit		(885	)		—			—			(885	)
Income tax expense														7,657			—			—			7,657
Net income	$	8,462		$	6,160		$	(6,160	)	$	8,462		$	21,314		$	4,535		$	(4,535	)	$	21,314

	Three Months Ended September 30, 2016												Three Months Ended September 30, 2017
	H&E Equipment Services			Guarantor Subsidiaries			Elimination			Consolidated			H&E Equipment Services			Guarantor Subsidiaries			Elimination			Consolidated
	(Amounts in thousands)												(Amounts in thousands)
Revenues:
Equipment rentals	$	96,310		$	22,225		$	—		$	118,535		$	103,618		$	21,998		$	—		$	125,616
New equipment sales		37,110			7,654			—			44,764			38,132			10,808			—			48,940
Used equipment sales		16,778			3,852			—			20,630			17,818			4,432			—			22,250
Parts sales		23,807			3,528			—			27,335			25,356			4,178			—			29,534
Services revenues		13,693			2,383			—			16,076			13,559			2,538			—			16,097
Other		14,072			3,274			—			17,346			13,625			3,100			—			16,725
Total revenues		201,770			42,916			—			244,686			212,108			47,054			—			259,162
Cost of revenues:
Rental depreciation		34,168			7,360			—			41,528			35,886			7,369			—			43,255
Rental expense		15,127			3,251			—			18,378			16,630			3,358			—			19,988
New equipment sales		33,206			6,941			—			40,147			33,933			9,676			—			43,609
Used equipment sales		11,762			2,602			—			14,364			12,288			2,828			—			15,116
Parts sales		17,221			2,487			—			19,708			18,648			2,929			—			21,577
Services revenues		4,686			759			—			5,445			4,775			792			—			5,567
Other		13,716			3,275			—			16,991			13,229			2,795			—			16,024
Total cost of revenues		129,886			26,675			—			156,561			135,389			29,747			—			165,136
Gross profit:
Equipment rentals		47,015			11,614			—			58,629			51,102			11,271			—			62,373
New equipment sales		3,904			713			—			4,617			4,199			1,132			—			5,331
Used equipment sales		5,016			1,250			—			6,266			5,530			1,604			—			7,134
Parts sales		6,586			1,041			—			7,627			6,708			1,249			—			7,957
Services revenues		9,007			1,624			—			10,631			8,784			1,746			—			10,530
Other		356			(1	)		—			355			396			305			—			701
Gross profit		71,884			16,241			—			88,125			76,719			17,307			—			94,026
Selling, general and administrative expenses		45,810			10,152			—			55,962			44,408			10,795			—			55,203
Equity in earnings of guarantor subsidiaries		3,892			—			(3,892	)		—			6,160			—			(6,160	)		—
Merger costs (net of merger breakup fee proceeds)														(6,506	)		—			—			(6,506	)
Gain on sales of property and equipment, net		782			145			—			927			342			1,983			—			2,325
Income from operations		30,748			6,234			(3,892	)		33,090			45,319			8,495			(6,160	)		47,654
Other income (expense):
Interest expense		(11,074	)		(2,395	)		—			(13,469	)		(12,665	)		(2,395	)		—			(15,060	)
Loss on early extinguishment of debt														(25,363	)		—			—			(25,363	)
Other, net		333			53			—			386			286			60			—			346
Total other expense, net		(10,741	)		(2,342	)		—			(13,083	)		(37,742	)		(2,335	)		—			(40,077	)
Income before income taxes		20,007			3,892			(3,892	)		20,007			7,577			6,160			(6,160	)		7,577
Income tax expense		8,342			—			—			8,342
Income tax benefit														(885	)		—			—			(885	)
Net income	$	11,665		$	3,892		$	(3,892	)	$	11,665		$	8,462		$	6,160		$	(6,160	)	$	8,462

	Nine Months Ended September 30, 2017												Nine Months Ended September 30, 2018
	H&E Equipment Services			Guarantor Subsidiaries			Elimination			Consolidated			H&E Equipment Services			Guarantor Subsidiaries			Elimination			Consolidated
	(Amounts in thousands)												(Amounts in thousands)
Revenues:
Equipment rentals	$	288,610		$	62,693		$	—		$	351,303		$	367,314		$	61,913		$	—		$	429,227
New equipment sales		106,626			22,257			—			128,883			144,462			38,803			—			183,265
Used equipment sales		60,292			14,927			—			75,219			70,256			17,031			—			87,287
Parts sales		69,569			11,494			—			81,063			77,488			12,428			—			89,916
Services revenues		39,650			7,471			—			47,121			40,808			7,442			—			48,250
Other		42,352			9,412			—			51,764			46,214			8,828			—			55,042
Total revenues		607,099			128,254			—			735,353			746,542			146,445			—			892,987
Cost of revenues:
Rental depreciation		104,177			21,819			—			125,996			130,650			22,050			—			152,700
Rental expense		48,607			9,917			—			58,524			56,653			9,628			—			66,281
New equipment sales		94,617			19,823			—			114,440			127,982			34,483			—			162,465
Used equipment sales		42,442			9,537			—			51,979			47,084			12,137			—			59,221
Parts sales		50,627			8,069			—			58,696			56,972			8,705			—			65,677
Services revenues		13,464			2,434			—			15,898			14,000			2,430			—			16,430
Other		41,507			9,275			—			50,782			45,815			8,980			—			54,795
Total cost of revenues		395,441			80,874			—			476,315			479,156			98,413			—			577,569
Gross profit (loss):
Equipment rentals		135,826			30,957			—			166,783			180,011			30,235			—			210,246
New equipment sales		12,009			2,434			—			14,443			16,480			4,320			—			20,800
Used equipment sales		17,850			5,390			—			23,240			23,172			4,894			—			28,066
Parts sales		18,942			3,425			—			22,367			20,516			3,723			—			24,239
Services revenues		26,186			5,037			—			31,223			26,808			5,012			—			31,820
Other		845			137			—			982			399			(152	)		—			247
Gross profit		211,658			47,380			—			259,038			267,386			48,032			—			315,418
Selling, general and administrative expenses		140,522			31,806			—			172,328			171,683			33,589			—			205,272
Merger costs (net of merger breakup fee proceeds)														439			—			—			439
Equity in earnings of guarantor subsidiaries		11,141			—			(11,141	)		—			7,482			—			(7,482	)		—
Merger breakup fee proceeds, net of merger costs		6,506			—			—			6,506
Gain on sales of property and equipment, net		1,971			2,460			—			4,431			5,754			286			—			6,040
Income from operations		90,754			18,034			(11,141	)		97,647			108,500			14,729			(7,482	)		115,747
Other income (expense):
Interest expense		(34,522	)		(7,143	)		—			(41,665	)		(39,669	)		(7,392	)		—			(47,061	)
Loss on early extinguishment of debt		(25,363	)		—			—			(25,363	)
Other, net		906			250			—			1,156			1,077			145			—			1,222
Total other expense, net		(58,979	)		(6,893	)		—			(65,872	)		(38,592	)		(7,247	)		—			(45,839	)
Income before income taxes		31,775			11,141			(11,141	)		31,775			69,908			7,482			(7,482	)		69,908
Income tax expense		8,045			—			—			8,045			18,345			—			—			18,345
Net income	$	23,730		$	11,141		$	(11,141	)	$	23,730		$	51,563		$	7,482		$	(7,482	)	$	51,563

	Nine Months Ended September 30, 2016												Nine Months Ended September 30, 2017
	H&E Equipment Services			Guarantor Subsidiaries			Elimination			Consolidated			H&E Equipment Services			Guarantor Subsidiaries			Elimination			Consolidated
	(Amounts in thousands)												(Amounts in thousands)
Revenues:
Equipment rentals	$	270,927		$	59,096		$	—		$	330,023		$	288,610		$	62,693		$	—		$	351,303
New equipment sales		124,450			27,386			—			151,836			106,626			22,257			—			128,883
Used equipment sales		59,515			12,458			—			71,973			60,292			14,927			—			75,219
Parts sales		71,323			10,635			—			81,958			73,955			12,304			—			86,259
Services revenues		42,140			7,182			—			49,322			39,650			7,471			—			47,121
Other		39,619			9,060			—			48,679			37,966			8,602			—			46,568
Total revenues		607,974			125,817			—			733,791			607,099			128,254			—			735,353
Cost of revenues:
Rental depreciation		100,111			20,589			—			120,700			104,177			21,819			—			125,996
Rental expense		44,135			9,027			—			53,162			48,607			9,917			—			58,524
New equipment sales		110,594			24,558			—			135,152			94,617			19,823			—			114,440
Used equipment sales		41,565			8,186			—			49,751			42,442			9,537			—			51,979
Parts sales		51,660			7,524			—			59,184			54,085			8,650			—			62,735
Services revenues		14,470			2,266			—			16,736			13,464			2,434			—			15,898
Other		39,069			9,060			—			48,129			38,049			8,694			—			46,743
Total cost of revenues		401,604			81,210			—			482,814			395,441			80,874			—			476,315
Gross profit:
Gross profit (loss):
Equipment rentals		126,681			29,480			—			156,161			135,826			30,957			—			166,783
New equipment sales		13,856			2,828			—			16,684			12,009			2,434			—			14,443
Used equipment sales		17,950			4,272			—			22,222			17,850			5,390			—			23,240
Parts sales		19,663			3,111			—			22,774			20,099			3,425			—			23,524
Services revenues		27,670			4,916			—			32,586			26,186			5,037			—			31,223
Other		550			—			—			550			(312	)		137			—			(175	)
Gross profit		206,370			44,607			—			250,977			211,658			47,380			—			259,038
Selling, general and administrative expenses		142,402			29,983			—			172,385			140,522			31,806			—			172,328
Equity in earnings of guarantor subsidiaries		8,388			—			(8,388	)		—			11,141			—			(11,141	)		—
Merger costs (net of merger breakup fee proceeds)														(6,506	)		—			—			(6,506	)
Gain on sales of property and equipment, net		1,948			353			—			2,301			1,971			2,460			—			4,431
Income from operations		74,304			14,977			(8,388	)		80,893			90,754			18,034			(11,141	)		97,647
Other income (expense):
Interest expense		(33,460	)		(6,769	)		—			(40,229	)		(34,522	)		(7,143	)		—			(41,665	)
Loss on early extinguishment of debt														(25,363	)		—			—			(25,363	)
Other, net		1,325			180			—			1,505			906			250			—			1,156
Total other expense, net		(32,135	)		(6,589	)		—			(38,724	)		(58,979	)		(6,893	)		—			(65,872	)
Income before income taxes		42,169			8,388			(8,388	)		42,169			31,775			11,141			(11,141	)		31,775
Income tax expense		17,427			—			—			17,427			8,045			—			—			8,045
Net income	$	24,742		$	8,388		$	(8,388	)	$	24,742		$	23,730		$	11,141		$	(11,141	)	$	23,730

	Nine Months Ended September 30, 2017												Nine Months Ended September 30, 2018
	H&E Equipment Services			Guarantor Subsidiaries			Elimination			Consolidated			H&E Equipment Services			Guarantor Subsidiaries			Elimination			Consolidated
	(Amounts in thousands)												(Amounts in thousands)
Cash flows from operating activities:
Net income	$	23,730		$	11,141		$	(11,141	)	$	23,730		$	51,563		$	7,482		$	(7,482	)	$	51,563
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization on property and equipment		15,778			2,314			—			18,092			16,106			2,261			—			18,367
Depreciation of rental equipment		104,177			21,819			—			125,996			130,650			22,050			—			152,700
Amortization of intangible assets														2,415			—			—			2,415
Amortization of deferred financing costs		785			—			—			785			819			—			—			819
Accretion of note discount, net of premium amortization		239			—			—			239			357			—			—			357
Provision for losses on accounts receivable		2,336			712			—			3,048			1,474			582			—			2,056
Provision for inventory obsolescence		151			—			—			151			74			—			—			74
Change in deferred income taxes		7,752			—			—			7,752			17,869			—			—			17,869
Stock-based compensation expense		2,614			—			—			2,614			2,998			—			—			2,998
Loss on early extinguishment of debt		25,363			—			—			25,363
Gain from sales of property and equipment, net		(1,971	)		(2,460	)		—			(4,431	)		(5,754	)		(286	)		—			(6,040	)
Gain from sales of rental equipment, net		(16,852	)		(5,344	)		—			(22,196	)		(23,017	)		(4,624	)		—			(27,641	)
Equity in earnings of guarantor subsidiaries		(11,141	)		—			11,141			—			(7,482	)		—			7,482			—
Changes in operating assets and liabilities:
Receivables		(14,510	)		(1,301	)		—			(15,811	)		(4,757	)		(2,068	)		—			(6,825	)
Inventories		(32,279	)		(6,651	)		—			(38,930	)		(47,356	)		(8,999	)		—			(56,355	)
Prepaid expenses and other assets		(1,592	)		(14	)		—			(1,606	)		173			2			—			175
Accounts payable		41,670			452			—			42,122			(6,491	)		(3,590	)		—			(10,081	)
Manufacturer flooring plans payable		(9,196	)		1,702			—			(7,494	)		5,533			(1,063	)		—			4,470
Accrued expenses payable and other liabilities		(4,711	)		1,636			—			(3,075	)		(8,665	)		(296	)		—			(8,961	)
Deferred compensation payable		44			—			—			44			65	��		—			—			65
Net cash provided by operating activities		132,387			24,006			—			156,393			126,574			11,451			—			138,025
Cash flows from investing activities:
Acquisition of business, net of cash acquired														(196,027	)		—						(196,027	)
Purchases of property and equipment		(14,618	)		(1,384	)		—			(16,002	)		(19,274	)		(7,764	)		—			(27,038	)
Purchases of rental equipment		(154,057	)		(29,697	)		—			(183,754	)		(302,878	)		(47,768	)		—			(350,646	)
Proceeds from sales of property and equipment		2,914			3,851			—			6,765			7,672			286			—			7,958
Proceeds from sales of rental equipment		51,699			14,617			—			66,316			64,747			14,200			—			78,947
Investment in subsidiaries		11,225			—			(11,225	)		—			(29,599	)		—			29,599			—
Net cash used in investing activities.		(102,837	)		(12,613	)		(11,225	)		(126,675	)		(475,359	)		(41,046	)		29,599			(486,806	)
Cash flows from financing activities:
Purchases of treasury stock		(753	)								(753	)		(1,323	)		—			—			(1,323	)
Borrowings on senior secured credit facility		732,840			—			—			732,840			1,142,811			—			—			1,142,811
Payments on senior secured credit facility		(818,285	)		—			—			(818,285	)		(923,793	)		—			—			(923,793	)
Dividends paid		(29,363	)		(6	)		—			(29,369	)		(29,443	)		(4	)		—			(29,447	)
Principal payments on senior unsecured notes due 2022		(630,000	)								(630,000	)
Costs paid to tender and redeem senior unsecured notes due 2022		(23,336	)								(23,336	)
Proceeds from issuance of senior unsecured notes due 2025		750,000									750,000
Payments of deferred financing costs		(12,152	)								(12,152	)
Payment of deferred financing costs														(97	)		—			—			(97	)
Payments on capital lease obligations		—			(162	)		—			(162	)		(160	)		—			—			(160	)
Capital contributions		—			(11,225	)		11,225			—			—			29,599			(29,599	)		—
Net cash used in financing activities		(31,049	)		(11,393	)		11,225			(31,217	)
Net cash provided by financing activities														187,995			29,595			(29,599	)		187,991
Net decrease in cash		(1,499	)		—			—			(1,499	)		(160,790	)		—			—			(160,790	)
Cash, beginning of period		7,683			—			—			7,683			165,878			—			—			165,878
Cash, end of period	$	6,184		$	—		$	—		$	6,184		$	5,088		$	—		$	—		$	5,088

	Nine Months Ended September 30, 2016												Nine Months Ended September 30, 2017
	H&E Equipment Services			Guarantor Subsidiaries			Elimination			Consolidated			H&E Equipment Services			Guarantor Subsidiaries			Elimination			Consolidated
	(Amounts in thousands)												(Amounts in thousands)
Cash flows from operating activities:
Net income	$	24,742		$	8,388		$	(8,388	)	$	24,742		$	23,730		$	11,141		$	(11,141	)	$	23,730
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization on property and equipment		18,022		��	2,299			—			20,321			15,778			2,314			—			18,092
Depreciation of rental equipment		100,111			20,589			—			120,700			104,177			21,819			—			125,996
Amortization of deferred financing costs		789			—			—			789			785			—			—			785
Accretion of note discount, net of premium amortization		124			—			—			124			239			—			—			239
Provision for losses on accounts receivable		2,507			216			—			2,723			2,336			712			—			3,048
Provision for inventory obsolescence		82			—			—			82			151			—			—			151
Change in deferred income taxes		17,193			—			—			17,193			7,752			—			—			7,752
Stock-based compensation expense		2,308			—			—			2,308			2,614			—			—			2,614
Loss on early extinguishment of debt														25,363									25,363
Gain from sales of property and equipment, net		(1,948	)		(353	)		—			(2,301	)		(1,971	)		(2,460	)		—			(4,431	)
Gain from sales of rental equipment, net		(17,219	)		(4,231	)		—			(21,450	)		(16,852	)		(5,344	)		—			(22,196	)
Equity in earnings of guarantor subsidiaries		(8,388	)		—			8,388			—			(11,141	)		—			11,141			—
Changes in operating assets and liabilities:
Receivables		8,759			(2,987	)		—			5,772			(14,510	)		(1,301	)		—			(15,811	)
Inventories		(12,001	)		(3,219	)		—			(15,220	)		(32,279	)		(6,651	)		—			(38,930	)
Prepaid expenses and other assets		1,188			(28	)		—			1,160			(1,592	)		(14	)		—			(1,606	)
Accounts payable		(18,684	)		135			—			(18,549	)		41,670			452			—			42,122
Manufacturer flooring plans payable		(24,377	)		170			—			(24,207	)		(9,196	)		1,702			—			(7,494	)
Accrued expenses payable and other liabilities		(5,275	)		839			—			(4,436	)		(4,711	)		1,636			—			(3,075	)
Deferred compensation payable		(348	)		—			—			(348	)		44			—			—			44
Net cash provided by operating activities		87,585			21,818			—			109,403			132,387			24,006			—			156,393
Cash flows from investing activities:
Purchases of property and equipment		(14,143	)		(2,610	)		—			(16,753	)		(14,618	)		(1,384	)		—			(16,002	)
Purchases of rental equipment		(112,346	)		(40,298	)		—			(152,644	)		(154,057	)		(29,697	)		—			(183,754	)
Proceeds from sales of property and equipment		2,218			471			—			2,689			2,914			3,851			—			6,765
Proceeds from sales of rental equipment		50,528			11,731			—			62,259			51,699			14,617			—			66,316
Investment in subsidiaries		(9,046	)		—			9,046			—			11,225			—			(11,225	)		—
Net cash used in investing activities.		(82,789	)		(30,706	)		9,046			(104,449	)
Net cash used in investing activities														(102,837	)		(12,613	)		(11,225	)		(126,675	)
Cash flows from financing activities:
Purchases of treasury stock		(546	)		—			—			(546	)		(753	)		—			—			(753	)
Borrowings on senior secured credit facility		767,550			—			—			767,550			732,840			—			—			732,840
Payments on senior secured credit facility		(742,645	)		—			—			(742,645	)		(818,285	)		—			—			(818,285	)
Dividends paid		(29,280	)		(7	)		—			(29,287	)		(29,363	)		(6	)		—			(29,369	)
Principal payments on senior unsecured notes due 2022														(630,000	)		—			—			(630,000	)
Costs paid to tender and redeem senior unsecured notes due 2022														(23,336	)		—			—			(23,336	)
Proceeds from issuance of senior unsecured notes due 2025														750,000			—			—			750,000
Payments of deferred financing costs														(12,152	)		—			—			(12,152	)
Payments on capital lease obligations		—			(151	)		—			(151	)		—			(162	)		—			(162	)
Capital contributions		—			9,046			(9,046	)		—			—			(11,225	)		11,225			—
Net cash provided by (used in) financing activities		(4,921	)		8,888			(9,046	)		(5,079	)
Net cash used in financing activities														(31,049	)		(11,393	)		11,225			(31,217	)
Net decrease in cash		(125	)		—			—			(125	)		(1,499	)		—			—			(1,499	)
Cash, beginning of period		7,159			—			—			7,159			7,683			—			—			7,683
Cash, end of period	$	7,034		$	—		$	—		$	7,034		$	6,184		$	—		$	—		$	6,184

ITEM 2. — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion summarizes the financial position of H&E Equipment Services, Inc. and its subsidiaries as of September 30, ~~2017,~~2018, and its results of operations for the three and nine month periods ended September 30, ~~2017,~~2018, and should be read in conjunction with (i) the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and (ii) the audited consolidated financial statements and accompanying notes to our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. The following discussion contains, in addition to historical information, forward-looking statements that include risks and uncertainties (see discussion of “Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q). Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those factors set forth under Item 1A – “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

As 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 services support for four core categories of specialized equipment: (1) hi-lift or aerial work platform equipment; (2) cranes; (3) earthmoving equipment; and (4) industrial lift trucks. By providing equipment rental, sales, on-site parts, repair and maintenance functions under one roof, we are a one-stop provider for our customers’ varied equipment needs. This full service approach provides us with multiple points of customer contact, enables us to maintain a high quality rental fleet, as well as an effective distribution channel for fleet disposal and provides cross-selling opportunities among our new and used equipment sales, rental, parts sales and services operations.

As of October ~~19, 2017,~~18, 2018, we operated 7989 full-service facilities throughout the Intermountain, Southwest, Gulf Coast, West Coast, Southeast and Mid-Atlantic regions of the United States. Our work force includes distinct, focused sales forces for our new and used equipment sales and rental operations, highly skilled service technicians, product specialists and regional managers. We focus our sales and rental activities on, and organize our personnel principally by, our four core equipment categories. We believe this allows us to provide specialized equipment knowledge, improve the effectiveness of our rental and sales force and strengthen our customer relationships. In addition, we have branch managers for each location who are responsible for managing their assets and financial results. We believe this fosters accountability in our business and strengthens our local and regional relationships.

Through our predecessor companies, we have been in the equipment services business for approximately 5657 years. H&E Equipment Services L.L.C. (“H&E LLC”) was formed in June 2002 through the business combination of Head & Engquist Equipment, LLC (“Head & Engquist”), a wholly-owned subsidiary of Gulf Wide Industries, L.L.C. (“Gulf Wide”), and ICM Equipment Company L.L.C. (“ICM”). Head & Engquist, founded in 1961, and ICM, founded in 1971, were two leading regional, integrated equipment service companies operating in contiguous geographic markets. In the June 2002 transaction, Head & Engquist and ICM were merged with and into Gulf Wide, which was renamed H&E LLC. Prior to the combination, Head & Engquist operated 25 facilities in the Gulf Coast region, and ICM operated 16 facilities in the Intermountain region of the United States.

Prior to our initial public offering in February 2006, our business was conducted through H&E LLC. In connection with our initial public offering, we converted H&E LLC into H&E Equipment Services, Inc. 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 wholly-owned subsidiary of H&E Holdings L.L.C. (“H&E Holdings”), and immediately prior to the closing of our initial public offering, on February 3, 2006, H&E LLC and H&E Holdings merged with and into H&E Equipment Services, Inc., which survived the reincorporation merger as the operating company. Effective February 3, 2006, H&E LLC and H&E Holdings no longer existed under operation of law pursuant to the reincorporation merger.

On January 1, 2018, we completed the acquisition of Contractors Equipment Center, an equipment rental company serving the greater Denver, Colorado area with three branches. On April 1. 2018, we completed the acquisition of Rental, LLC (dba “Rental Inc.”), a non-residential equipment rental and distribution company with five branches located in Alabama, Florida and Western Georgia.

Item 7, included in Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, presents the accounting policies and related estimates that we believe are the most critical to understanding our consolidated financial statements, financial condition, and results of operations and cash flows, and which require complex management judgment and assumptions, or involve uncertainties. There have been no significant changes to these critical accounting policies and estimates during the three and nine ~~month period~~

months ended September 30, ~~2017.~~2018, except as disclosed in note 2 related to new revenue recognition guidance adopted on January 1, 2018. These policies include, among others, revenue recognition, the adequacy of the allowance for doubtful accounts, the propriety of our estimated useful life of rental equipment and property and equipment, the potential impairment of long-lived assets including goodwill and intangible assets, obsolescence reserves on inventory, the allocation of purchase price related to business combinations, reserves for claims, including self-insurance reserves, and deferred income taxes, including the valuation of any related deferred tax assets.

Information regarding our other significant accounting policies is included in note 2 to our consolidated financial statements in Item 8 of Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 and in note 2 to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

We have five reportable segments because we derive our revenues from five principal business activities: (1) equipment rentals; (2) new equipment sales; (3) used equipment sales; (4) parts sales; and (5) repair and maintenance services. These segments are based upon how we allocate resources and assess performance. In addition, we also have non-segmented revenues and costs that relate to equipment support activities.

Our non-segmented revenues and costs relate to equipment support activities that we provide, such as transportation, hauling, parts freight and damage waivers, and are not generally allocated to reportable segments.

For additional information about our business segments, see note 1110 to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

We generate all of our total revenues from our five business segments and our non-segmented equipment support activities. Equipment rentals and new equipment sales account for more than half of our total revenues. For the nine month period ended September 30, ~~2017,~~2018, approximately ~~47.8%~~48.1% of our total revenues were attributable to equipment rentals, ~~17.6%~~20.5% of our total revenues were attributable to new equipment sales, ~~10.2%~~9.8% were attributable to used equipment sales, ~~11.0%~~10.1% were attributable to parts sales, ~~6.4%~~5.4% were attributable to our services revenues and ~~7.0%~~6.1% were attributable to non-segmented other revenues.

The equipment that we sell, rent and service is principally used in the construction industry, as well as by companies for commercial and industrial uses such as plant maintenance and turnarounds, as well as in the petrochemical and energy sectors. As a result, our total revenues are affected by several factors including, but not limited to, the demand for and availability of rental equipment, rental rates and other competitive factors, the demand for new and used equipment, the level of construction and industrial activities, spending levels by our customers, adverse weather conditions and general economic conditions. For a discussion of the impact of seasonality on our revenues, see “Seasonality” below.

Equipment Rentals. Our rental operation primarily rents our four core types of construction and industrial equipment. We have a well-maintained rental fleet and our own dedicated sales force, focused by equipment type. We actively manage the size, quality, age and composition of our rental fleet based on our analysis of key measures such as time utilization (which we analyze as equipment usage based on: (1) a percentage of original equipment cost, and (2) the number of rental equipment units available for rent), rental rate trends and targets, rental equipment dollar utilization and maintenance and repair costs, which we closely monitor. We maintain fleet quality through regional quality control managers and our parts and services operations. ~~We recognize revenue from equipment rentals in the period earned on a straight-line basis, over the contract term, regardless of the timing of the billing to customers.~~

New Equipment Sales. We seek to optimize revenues from new equipment sales by selling equipment through a professional in-house retail sales force focused by product type. While sales of new equipment are impacted by the availability of equipment from the manufacturer, we believe our status as a leading distributor for some of our key suppliers improves our ability to obtain equipment. New equipment sales are an important component of our integrated model due to customer interaction and service contact and new equipment sales also lead to future parts and services revenues. We recognize revenue from the sale of new equipment at the time of delivery to, or pick-up by, the customer and when all obligations under the sales contract have been fulfilled and collectibility is reasonably assured.

Used Equipment Sales. We generate the majority of our used equipment sales revenues by selling equipment from our rental fleet. The remainder of our used equipment sales revenues comes from the sale of inventoried equipment that we acquire through trade-ins from our equipment customers and selective purchases of high‑quality used equipment. Our policy is not to offer specified price trade‑in arrangements on equipment for sale. Sales of our rental fleet equipment allow us to manage the size, quality, composition and age of our rental fleet, and provide us with a profitable distribution channel for the disposal of rental equipment. We recognize revenue for the sale of used equipment at the time of delivery to, or pick-up by, the customer and when all obligations under the sales contract have been fulfilled and collectibility is reasonably assured.

Parts Sales. We generate revenues from the sale of new and used parts for equipment that we rent or sell, as well as for other makes of equipment. Our product support sales representatives are instrumental in generating our parts revenues. They are product specialists and receive performance incentives for achieving certain sales levels. Most of our parts sales come from our extensive in-house parts inventory. Our parts sales provide us with a relatively stable revenue stream that is generally less sensitive to the economic cycles that tend to affect our rental and equipment sales operations. We recognize revenues from parts sales at the time of delivery to, or pick-up by, the customer and when all obligations under the sales contract have been fulfilled and collectibility is reasonably assured.

Services. We derive our services revenues from maintenance and repair services to customers for their owned equipment. In addition to repair and maintenance on an as-needed or scheduled basis, we also provide ongoing preventative maintenance services to industrial customers. Our after‑market service provides a high-margin, relatively stable source of revenue through changing economic cycles. ~~We recognize services revenues at the time services are rendered and collectibility is reasonably assured.~~

Our non-segmented other revenues relate to equipment support activities that we provide, such as transportation, hauling, ~~parts freight~~ and damage waivers, and are not generally allocated to reportable segments. ~~We recognize non-segmented other revenues at the time of billing and after the related services have been provided.~~

Our largest expenses are the costs to purchase the new equipment we sell, the costs associated with the used equipment we sell, rental expenses, rental depreciation and costs associated with parts sales and services, all of which are included in cost of revenues. For the nine month period ended September 30, ~~2017,~~2018, our total cost of revenues was ~~$476.3~~$577.6 million. Our operating expenses consist principally of selling, general and administrative expenses. For the nine month period ended September 30, ~~2017,~~2018, our selling, general and administrative expenses were ~~$172.3~~$205.3 million. In addition, we have interest expense related to our debt instruments. Operating expenses and all other income and expense items below the gross profit line of our consolidated statements of income are not generally allocated to our reportable segments.

We are also subject to federal and state income taxes. Future income tax examinations by state and federal agencies could result in additional income tax expense based on probable outcomes of such matters.

Rental Depreciation. Depreciation of rental equipment represents the depreciation costs attributable to rental equipment. Estimated useful lives vary based upon type of equipment. Generally, we depreciate cranes and aerial work platforms over a ten year estimated useful life, earthmoving over a five year estimated useful life with a 25% salvage value, and industrial lift trucks over a seven year estimated useful life. Attachments and other smaller type equipment are depreciated over a three year estimated useful life. We periodically evaluate the appropriateness of remaining depreciable lives assigned to rental equipment.

Rental Expense. Rental expense represents the costs associated with rental equipment, including, among other things, the cost of servicing and maintaining our rental equipment, property taxes on our fleet and other miscellaneous costs of rental equipment.

New Equipment Sales. Cost of new equipment sold primarily consists of the equipment cost of the new equipment that is sold, net of any amount of credit given to the customer towards the equipment for trade-ins.

Used Equipment Sales. Cost of used equipment sold consists of the net book value of rental equipment for used equipment sold from our rental fleet, the equipment costs for used equipment we purchase for sale or the trade-in value of used equipment that we obtain from customers in equipment sales transactions.

Parts Sales. Cost of parts sales represents costs attributable to the sale of parts directly to customers.

Services Support. Cost of services revenues represents costs attributable to service provided for the maintenance and repair of customer-owned equipment and equipment then on-rent by customers.

Non-Segmented Other. These expenses include costs associated with providing transportation, hauling ~~parts freight,~~ and damage waiver including, among other items, drivers’ wages, fuel ~~costs, shipping~~ costs, and our costs related to damage waiver policies.

Our selling, general and administrative (“SG&A”) expenses include sales and marketing expenses, payroll and related benefit costs, insurance expenses, legal and professional fees, rent and other occupancy costs, property and other taxes, administrative overhead, depreciation associated with property and equipment (other than rental equipment) and amortization expense associated with capital leases and software. These expenses are not generally allocated to our reportable segments.

Interest expense for the periods presented represents the interest on our outstanding debt instruments, including aggregate amounts outstanding under our revolving senior secured credit facility (the “Credit Facility”), senior unsecured notes due 2025 and our capital lease ~~obligations.~~obligations, as well as our extinguished senior unsecured notes due 2022 (the “Old Notes”) for the periods during which such Old Notes were outstanding. Interest expense also includes interest on our outstanding manufacturer flooring plans payable which are used to finance inventory and rental equipment purchases. Non-cash interest expense related to the amortization cost of deferred financing costs and ~~accretion (amortization)~~the accretion/amortization of ~~debt discount (premium)~~note discount/premium are also included in interest expense.

We generate cash primarily from our operating activities and, historically, we have used cash flows from operating activities, manufacturer floor plan financings and available borrowings under the Credit Facility as the primary sources of funds to purchase inventory and to fund working capital and capital expenditures, growth and expansion opportunities (see also “Liquidity and Capital Resources” below). Our management of our working capital is closely tied to operating cash flows, as working capital can be significantly impacted by, among other things, our accounts receivable activities, the level of new and used equipment inventories, which may increase or decrease in response to current and expected demand, and the size and timing of our trade accounts payable payment cycles.

A substantial portion of our overall value is in our rental fleet equipment. The net book value of our rental equipment at September 30, ~~2017~~2018 was ~~$917.1 million,~~$1.2 billion, or approximately ~~70.4%~~66.9% of our total assets. Our rental fleet as of September 30, ~~2017~~2018 consisted of ~~31,015~~40,766 units 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 ~~$1.4~~$1.8 billion. As of September 30, ~~2017,~~2018, our rental fleet composition was as follows (dollars in millions):

	Units		% of Total Units			Original Acquisition Cost		% of Original Acquisition Cost			Average Age in Months		Units		% of Total Units			Original Acquisition Cost		% of Original Acquisition Cost			Average Age in Months
Hi-Lift or Aerial Work Platforms		21,438		69.1	%	$	911.3		64.9	%		37.2		27,438		67.3	%	$	1,165.0		66.3	%		36.9
Cranes		293		0.9	%		103.2		7.3	%		51.1		250		0.6	%		88.5		5.0	%		58.3
Earthmoving		3,322		10.7	%		285.9		20.4	%		24.0		4,387		10.8	%		362.0		20.6	%		24.6
Industrial Lift Trucks		977		3.2	%		32.2		2.3	%		26.9		1,244		3.0	%		37.6		2.1	%		26.4
Other		4,985		16.1	%		71.1		5.1	%		28.9		7,447		18.3	%		105.4		6.0	%		28.5
Total		31,015		100.0	%	$	1,403.7		100.0	%		34.3		40,766		99.9	%	$	1,758.5		100.1	%		33.8

Determining the optimal age and mix for our rental fleet equipment is subjective and requires considerable estimates and judgments by management. We constantly evaluate the mix, age and quality of the equipment in our rental fleet in response to current economic and market conditions, competition and customer demand. The mix and age of our rental fleet, as well as our cash flows, are impacted by sales of equipment from the rental fleet, which are influenced by used equipment pricing at the retail and secondary auction market levels, and the capital expenditures to acquire new rental fleet equipment. In making equipment acquisition decisions, we evaluate current economic and market conditions, competition, manufacturers’ availability, pricing and return on investment over the estimated useful life of the specific equipment, among other things. As a result of our in-house service capabilities and extensive maintenance program, we believe our rental fleet is well-maintained.

The original acquisition cost of our gross rental fleet increased by approximately ~~$70.1~~$356.1 million, or ~~5.3%~~25.4%, for the nine month period ended September 30, ~~2017.~~2018, largely reflective of the CEC and Rental Inc. acquired fleets, combined with growth in rental capital expenditures to meet customer demand. The average age of our rental fleet equipment ~~increased~~decreased by approximately ~~1.3~~0.8 months for the nine ~~month period~~months ended September 30, ~~2017.~~2018.

Our average rental rates for the nine month period ended September 30, ~~2017~~2018 were ~~approximately 0.01%~~2.2% higher than in the nine month period ended September 30, ~~2016~~2017 and approximately 0.8% higher than the three month period ended June 30, 2018 (see further discussion on rental rates in “Results of Operations” below) ~~and approximately 1.0% higher than in the three month period ended June 30, 2017. Average~~. Our average rental rates for the ~~three~~nine month period ended September 30, ~~2017 were 0.3% higher than in~~2018 do not include rental rate data for (1) legacy Rental Inc. operations for the ~~three month period ended September 30, 2016.~~second quarter of 2018 and (2) legacy CEC operations for the first quarter of 2018.

The rental equipment mix among our four core product lines for the nine ~~month period~~months ended September 30, ~~2017~~2018 was largely consistent with that of the prior year comparable period as a percentage of ~~total units available for rent and as a percentage of~~ original acquisition cost.

We are subject to a number of external factors that may adversely affect our businesses. These factors, and other factors, are discussed below and under the heading “Forward‑Looking Statements,” and in Item 1A—Risk Factors in this Annual Report on Form 10‑K for the year ended December 31, ~~2016.~~2017.

We believe that our integrated business tempers the effects of downturns in a particular segment. For a discussion of seasonality, see “Seasonality” on page 4250 of this Quarterly Report on Form 10-Q.

The tables included in the period-to-period comparisons below provide summaries of our revenues and gross profits for our business segments and non-segmented revenues for the three and nine months ended September 30, ~~2017~~2018 and ~~2016.~~2017. The period-to-period comparisons of our financial results are not necessarily indicative of future results.

Three Months Ended September 30, ~~2017~~2018 Compared to the Three Months Ended September 30, ~~2016~~2017

	Three Months Ended				Total		Total			Three Months Ended				Total		Total
	September 30,				Dollar		Percentage			September 30,				Dollar		Percentage
	2017		2016		Increase (Decrease)		Increase (Decrease)			2018		2017		Increase		Increase
	(in thousands, except percentages)									(in thousands, except percentages)
Segment Revenues:
Equipment rentals	$	125,616	$	118,535	$	7,081		6.0	%	$	156,037	$	125,616	$	30,421		24.2	%
New equipment sales		48,940		44,764		4,176		9.3	%		68,233		48,940		19,293		39.4	%
Used equipment sales		22,250		20,630		1,620		7.9	%		30,294		22,250		8,044		36.2	%
Parts sales		27,763		27,335		428		1.6	%		31,484		29,534		1,950		6.6	%
Services revenues		16,097		16,076		21		0.1	%		16,426		16,097		329		2.0	%
Non-Segmented revenues		18,496		17,346		1,150		6.6	%		19,667		16,725		2,942		17.6	%
Total revenues	$	259,162	$	244,686	$	14,476		5.9	%	$	322,141	$	259,162	$	62,979		24.3	%

Total Revenues. Our total revenues were approximately $322.1 million for the three month period ended September 30, 2018 compared to $259.2 million for the three month period ended September 30, 2017, ~~compared to $244.7 million for the three month period ended September 30, 2016,~~ an increase of ~~$14.5~~$63.0 million, or ~~5.9%~~24.3%. Revenues for all reportable segments and non-segmented other revenues are further discussed below.

Equipment Rental Revenues. Our revenues from equipment rentals for the three month period ended September 30, ~~2017~~2018 increased ~~$7.1~~approximately $30.4 million, or 24.2%, to ~~$125.6~~$156.0 million from ~~$118.5~~$125.6 million in the three month period ended September 30, ~~2016.~~ 2017. The increase in equipment rental revenues wsa largely due to increased demand and the equipment rental revenues from our CEC and Rental Inc. locations.

Rental revenues from aerial work platform equipment increased ~~$7.4~~$21.6 million while earthmoving equipment rental revenues ~~from other equipment~~ and lift ~~trucks~~truck rental revenues increased ~~$1.3~~$7.2 million and ~~approximately $0.1~~$1.2 million, ~~respectively. These~~respectively, for the three month period ended September 30, 2018. Other equipment rental revenues increased approximately $0.7 million. Partially offsetting these rental revenue increases ~~were partially offset by~~was a ~~$1.7~~$0.3 million decrease in crane rental revenues. Our average rental rates for the three month period ended September 30, ~~2017~~2018 increased ~~0.3%~~2.2% compared to the same three month period last year and increased approximately ~~1.0%~~0.8% from the three month period ended June 30, ~~2017.~~2018.

Rental equipment dollar utilization (annual rental revenues divided by the average original rental fleet equipment costs) for the three month period ended September 30, ~~2017~~2018 was ~~36.0%~~35.9% compared to ~~35.4%~~36.0% in the three month period ended September 30, ~~2016, an increase~~2017, a decrease of ~~0.6%~~0.1%. The ~~increase~~decrease in comparative rental equipment dollar utilization was the net result of anthe increase in equipment rental rates as noted above and a decrease in rental equipment time utilization. Rental equipment time utilization ~~combined with~~as a ~~0.3% increase~~percentage of

original equipment cost was approximately 71.0% for the three month period ended September 30, 2018 compared to 73.3% in ~~average~~the three month period ended September 30, 2017, a decrease of 2.3%. The decrease in rental ~~rates, largely reflective of increased rental equipment demand. Rental~~ equipment time utilization as a percentage of original equipment cost was ~~approximately 73.3% for the three month period ended~~largely due to a $354.8 million increase, or 25.3%, in our equipment rental fleet since September 30, 2017 compared to 72.1% in the three month period ended September 30, 2016, an increase of 1.2%. Our rental equipment time utilization based on the number of rental equipment units available for rent was approximately 71.3% for the three month period ended September 30, 2017, compared to approximately 68.0% in the same period last year, an increase of 3.3%.2017.

New Equipment Sales Revenues. Our new equipment sales for the three month period ended September 30, ~~2017~~2018 increased ~~$4.2~~approximately $19.3 million, or ~~9.3%~~39.4%, to ~~approximately $48.9~~$68.2 million from ~~$44.8~~$48.9 million for the three month period ended September 30, ~~2016. New crane~~2017. This increase, as noted below, was driven primarily by increased sales ~~increased approximately $5.6 million~~of new cranes and earthmoving equipment, and the new ~~other~~ equipment sales ~~increased $1.7 million.~~ revenues from our Rental Inc. locations.

Sales of new cranes increased $12.4 million, resulting from improved crane demand. Sales of new earthmoving equipment and new aerial work platform equipment increased $5.3 million and $2.7 million, respectively, while sales of new lift trucks increased ~~$0.7 million and $0.1 million, respectively. These~~$0.4 million. Sales of new other equipment ~~sales increases were partially offset by a $4.0 million decrease in new earthmoving equipment sales.~~decreased $1.5 million.

Used Equipment Sales Revenues. Our used equipment sales increased ~~$1.6~~$8.0 million, or ~~7.9%~~36.2%, to ~~approximately $22.2~~$30.3 million for the three month period ended September 30, ~~2017,~~2018, from ~~$20.6~~approximately $22.3 million for the same three month period in ~~2016.~~ 2017.

Sales of used cranes increased approximately $1.9 million while sales of used earthmoving equipment and used other equipment each increased $0.6 million. Partially offsetting these used equipment sales increases were a $1.1 million sales decrease in used aerial work platform equipment increased $8.2 million and ~~a $0.3 million decrease in~~sales of used other equipment increased $1.4 million. Sales of used cranes and sales of used lift ~~trucks.~~ trucks each increased approximately $0.2 million. Partially offsetting these increases was a $2.0 million decrease in used earthmoving equipment.

Parts Sales Revenues. Our parts sales revenues for the three month period ended September 30, ~~2017~~2018 increased ~~$0.4~~$2.0 million, or ~~1.6%~~6.6%, to ~~approximately $27.8~~$31.5 million from ~~$27.3~~$29.5 million for the same three month period last year. The increase in parts sales ~~revenues~~ was ~~driven primarily by higher crane~~due in part to the combined parts sales ~~revenues.~~revenues from our CEC and Rental Inc. locations and an increase in earthmoving parts sales.

Services Revenues. Our services revenues for the three month period ended September 30, ~~2017~~2018 increased ~~$21,000 and were approximately~~$0.3 million, or 2.0%, to $16.4 million from $16.1 million ~~in each of~~for the same three month ~~periods ended September 30, 2017~~period last year. This increase in services revenues was substantially due to the services revenues from our CEC and ~~2016.~~Rental Inc. locations.

Non-Segmented Other Revenues. Our non-segmented other revenues consisted primarily of equipment support activities including fuel charges on rented equipment, transportation and hauling ~~parts freight~~charges related to our equipment rental and maintenance and repair services, and damage waiver ~~charges.~~fees on rental equipment. For the three month period ended September 30, ~~2017,~~2018, our other revenues were approximately ~~$18.5~~$19.7 million, an increase of ~~approximately $1.2~~$2.9 million, or ~~6.6%~~17.6%, from ~~$17.3~~approximately $16.7 million in the same three month period in ~~2016. The~~2017. This increase ~~in these revenues~~ was primarily driven by higher hauling revenues ~~fuel charges~~ and damage waiver income associated with our ~~increased~~ equipment rental ~~activity.~~activities, combined with non-segmented other revenues from our CEC and Rental Inc. locations.

	Three Months Ended				Total			Total			Three Months Ended					Total			Total
	September 30,				Dollar			Percentage			September 30,					Dollar			Percentage
	2017		2016		Increase (Decrease)			Increase (Decrease)			2018			2017		Increase (Decrease)			Increase (Decrease)
	(in thousands, except percentages)										(in thousands, except percentages)
Segment Gross Profit:
Equipment rentals	$	62,373	$	58,629	$	3,744			6.4	%	$	78,041		$	62,373	$	15,668			25.1	%
New equipment sales		5,331		4,617		714			15.5	%		7,839			5,331		2,508			47.0	%
Used equipment sales		7,134		6,266		868			13.9	%		9,782			7,134		2,648			37.1	%
Parts sales		7,638		7,627		11			0.1	%		8,355			7,957		398			5.0	%
Services revenues		10,530		10,631		(101	)		(1.0	)%		10,798			10,530		268			2.5	%
Non-Segmented revenues gross profit		1,020		355		665			187.3	%
Non-Segmented revenues gross profit (loss)												(85	)		701		(786	)		(112.1	)%
Total gross profit	$	94,026	$	88,125	$	5,901			6.7	%	$	114,730		$	94,026	$	20,704			22.0	%

Total Gross Profit. Our total gross profit was ~~$94.0~~$114.7 million for the three month period ended September 30, ~~2017~~2018 compared to ~~$88.1~~$94.0 million for the same three month period in ~~2016,~~2017, an increase of ~~$5.9~~$20.7 million, or ~~6.7%~~22.0%. Total gross profit margin for the three month period ended September 30, ~~2017~~2018 was ~~approximately 36.3%~~35.6%, ~~an increase~~a decrease of ~~0.3%~~0.7% from the ~~36.0%~~36.3% gross profit margin for the same three month period in ~~2016.~~2017. The decrease in total gross profit margin was primarily due to revenue mix from a shift to lower margin new equipment sales revenues. Gross profit and gross margin for all reportable segments and non-segmented other revenues are further described below:

Equipment Rentals Gross Profit. Our gross profit from equipment rentals for the three month period ended September 30, ~~2017~~2018 increased ~~$3.7~~$15.7 million, or ~~6.4%~~25.1%, to approximately ~~$62.4~~$78.0 million from ~~$58.6~~$62.4 million in the same three month period in ~~2016.~~ 2017.

The increase in equipment rentals gross profit was the ~~net~~ result of a ~~$7.1~~$30.4 million increase in equipment rental revenues for the three month period ended September 30, 2018 compared to the same period last year, which was partially offset by ~~a $1.7~~an $11.8 million increase in rental equipment depreciation expense and a ~~$1.6~~$2.9 million increase in rental expenses. The increases in both depreciation expense and rental expenses are primarily due to a larger fleet size in 2018 compared to 2017.

Gross profit margin on equipment rentals for the three month period ended September 30, ~~2017~~2018 was approximately ~~49.7%~~50.0% compared to ~~49.5%~~49.7% for the same period in ~~2016,~~2017, an increase of ~~0.2%~~0.3%. As a percentage of equipment rental revenues, rental expenses were 14.7% for the three month period ended September 30, 2018 compared to 15.9% for the same period last year, a decrease of 1.2%, resulting primarily from the increase in equipment rental revenues. Depreciation expense was ~~34.4%~~35.3% of equipment rental revenues for the three month period ended September 30, ~~2017~~2018 compared to ~~35.0%~~34.4% for the same period in ~~2016, a decrease~~2017, an increase of ~~0.6%~~0.9%, primarily as a result of the increase in depreciation expense resulting from the purchase accounting fair value step up adjustments on the CEC and Rental Inc. acquired rental ~~fleet mix. As a percentage~~fleets and the mix of ~~equipment~~ rental revenues, rental expenses were 15.9% for the three month period ended September 30, 2017 compared to 15.5% for the same period last year, an increase of 0.4%, resulting primarily from higher repair costs on rental equipment in the current year period.equipment.

New Equipment Sales Gross Profit. Our new equipment sales gross profit for the three month period ended September 30, ~~2017~~2018 increased ~~approximately $0.7~~$2.5 million, or ~~15.5%~~47.0%, to ~~$5.3~~$7.8 million compared to ~~approximately $4.6~~$5.3 million for the same three month period in ~~2016~~2017 on a total new equipment sales increase of ~~$4.2~~$19.3 million. Gross profit margin on new equipment sales was ~~10.9%~~11.5% for the three month period ended September 30, ~~2017~~2018, compared to ~~10.3%~~10.9% for the same ~~three month~~ period ~~in 2016,~~last year, an increase of 0.6%,. The increase in gross profit margin was primarily ~~driven by the mix~~due to higher gross margins on sales of new aerial work platform equipment ~~sold~~ and ~~higher margins on~~ new ~~crane sales.~~other equipment.

Used Equipment Sales Gross Profit. Our used equipment sales gross profit for the three month period ended September 30, ~~2017~~2018 increased approximately ~~$0.9~~$2.6 million, or ~~13.9%~~37.1%, to ~~$7.1~~$9.8 million from ~~$6.3~~$7.1 million in the same period in ~~2016~~2017 on a used equipment sales increase of ~~$1.6~~$8.0 million.

Gross profit margin on used equipment sales for the three month period ended September 30, ~~2017~~2018 was ~~32.1%~~approximately 32.3%, up ~~1.7%~~0.2% from ~~30.4%~~32.1% for the same three month period in ~~2016,~~2017, primarily as a result of the mix of used equipment ~~sold.~~ sold and higher used cranes and used aerial work platform equipment sales gross margins. These improved gross margins were slightly offset by lower margins on sales of used equipment inventory acquired in the CEC and Rental Inc. acquisitions, reflecting the purchase accounting fair value step up basis adjustment applied to the acquired used equipment inventory and rental equipment.

Our used equipment sales from the rental fleet, which comprised approximately ~~91.2%~~88.4% and ~~86.1%~~91.2% of our used equipment sales for the three month periods ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively, were approximately ~~150.9%~~156.2% and ~~150.8%~~150.9% of net book value for the three month periods ended September 30, 2018 and 2017, ~~and 2016,~~ respectively.

Parts Sales Gross Profit. ~~For~~Our parts sales gross profit for the three month period ended September 30, ~~2017, our~~2018 was approximately $8.4 million, an increase of $0.4 million, or 5.0%, from gross profit of $8.0 million for the same period last year on a parts sales ~~gross profit was approximately $7.6 million in each~~increase of ~~the three month periods ended September 30, 2017 and 2016 on a $0.4 million increase in parts sales revenues.~~$2.0 million. Gross profit margin for the three month period ended September 30, ~~2017~~2018 was ~~27.5%~~26.5%, a decrease of ~~approximately~~ 0.4% from ~~27.9%~~26.9% in the same three month period in ~~2016, resulting from~~2017, as a result of the mix of parts sold.

Services Revenues Gross Profit. For the three month period ended September 30, ~~2017,~~2018, our services revenues gross profit ~~decreased $0.1~~increased $0.3 million, or ~~1.0%~~2.5%, to ~~approximately $10.5~~$10.8 million from ~~$10.6~~$10.5 million for the same three month period in ~~2016.~~2017 on a $0.3 million increase in services revenues. Gross profit margin for the three month period ended September 30, ~~2017~~2018 was 65.7%, an increase of 0.3% from approximately 65.4%~~, a decrease of 0.7% from 66.1%~~ in the same three month period in ~~2016,~~2017, as a result of services revenues mix.

Non-Segmented Other Revenues Gross ~~Profit.~~Profit (Loss). Our non-segmented other revenues gross profit ~~increased~~decreased approximately $0.8 million, from a gross profit of $0.7 ~~million, or 187.3%, to $1.0~~ million for the three month period ended September 30, 2017 ~~compared~~ to a gross ~~profit~~loss of ~~approximately $0.4~~$0.1 million ~~for~~in the ~~same~~three month period ~~in 2016 on a $1.2 million increase in non-segmented other revenues.~~ended September 30, 2018. Gross margin for the three month period ended September 30, ~~2017~~2018 was ~~5.5%~~(0.4)% compared to a gross margin of ~~2.0%~~4.2% in the same three month period last year, ~~an increase~~a decrease of ~~3.5%~~4.6%, primarily reflective of ~~improved~~lower hauling and fuel margins ~~on hauling revenues~~ in the current period.

Selling, General and Administrative Expenses (“SG&A”). SG&A expenses ~~decreased~~increased approximately ~~$0.8~~$15.1 million, or ~~approximately 1.4%~~27.4%, to $70.3 million for the three month period ended September 30, 2018 compared to $55.2 million for the three month period ended September 30, ~~2017 compared to $56.0 million~~2017.

Included in SG&A for the three month period ended September 30, ~~2016. The net decrease in SG&A expenses was attributable to several factors, including~~2017 is the ~~reversal~~reclassification of $2.2 million of merger and acquisition transaction costs related to the termination of our previously proposed acquisition of Neff Corporation (“Neff merger costs”), which we did not ultimately consummate. These Neff merger costs, previously recognized and included in SG&A ~~expenses~~ for the ~~three and~~ six

month ~~periods~~period ended June 30, 2017, ~~and~~were reclassified to “Merger Costs (net of Breakup Fee ~~Proceeds, net of Merger Costs”~~Proceeds)” in the third quarter ended September 30, 2017 (see “Merger Costs (net of Merger Breakup Fee Proceeds)” discussion below for further information). Excluding this $2.2 million favorable impact to SG&A expenses in the three month period ended September 30, 2017, total SG&A expenses ~~would have increased approximately $1.4 million compared to~~for the three month period ended September 30, ~~2016.~~2017 would have been $57.4 million, or 22.2% of total revenues, compared to the current three month period ended September 30, 2018 SG&A expenses of $70.3 million, or 21.8% of total revenues.

Employee salaries, wages, payroll taxes and related employee benefit and other employee expenses increased ~~approximately $2.1 million. Facility expenses increased $0.4 million. Bad debt expense increased $0.4~~$8.9 million, ~~and liability insurance costs increased $0.2 million. Partially offsetting these increases in SG&A expenses were a $1.0 million decrease in depreciation and amortization expense, largely~~primarily as a result of ~~lower software amortization expense,~~our CEC and Rental Inc. acquisitions, a ~~$0.7 million decrease in legal~~larger workforce and higher incentive compensation related to improved profitability. Legal and professional fees ~~(exclusive~~increased approximately $1.5 million. Facility rent expenses and repairs and maintenance costs increased $0.4 million. Our results for the three month period ended September 30, 2018 also include $0.9 million of ~~any~~amortization expense associated with the recognition of intangible assets resulting from the CEC and Rental Inc. purchase price allocations.

~~Branches~~total increase in SG&A expenses was attributable to branches opened since ~~July~~June 1, ~~2016~~2017 (but excluding for this purpose branches acquired as a result of our CEC and Rental Inc. acquisitions) with less than three ~~full~~ months of comparable operations in either or both of the three month periods ended September 30, 2018 and 2017.

Merger Costs (net of Merger Breakup Fee Proceeds). Pursuant to the terms of our terminated 2017 merger agreement with Neff, we received a $13.2 million breakup fee concurrently with Neff’s termination of the merger agreement in the third ~~quarters~~quarter of ~~2016 and 2017 contributed to a $1.1~~2017. Related estimated merger transaction fees totaled $6.7 million, ~~increase~~resulting in ~~our SG&A expenses~~estimated net proceeds of $6.5 million for the three month period ended September 30, 2017. As ~~a percentage~~noted in the above SG&A Expenses discussion, approximately $2.2 million of ~~total revenues,~~the merger costs reflected in this financial statement line items were originally recorded in SG&A ~~expenses~~Expenses in the six month period ended June 30, 2017 and were ~~21.3% for~~subsequently reclassified in the third quarter ended September 30, 2017 to this net merger costs financial statement line item.

Merger costs incurred in the three month period ended September 30, 2017, a decrease of 1.6% from 22.9% for the same three month period in 2016. Excluding the impact of the $2.2 million reclassification of Neff merger costs in the current year period as discussed above, SG&A expenses as a percentage of total revenues2018 were ~~22.1%.~~approximately $0.2 million.

Other Income (Expense). For the three month period ended September 30, ~~2017,~~2018, our net other expenses ~~increased~~decreased approximately ~~$27.0~~$23.7 million to ~~$40.1~~$16.3 million compared to ~~$13.1~~$40.1 million for the same three month period in ~~2016.~~2017. Included in Other Income (Expense) for the three month period ended September 30, 2017 is a $25.4 million loss on the early extinguishment of debt (see ~~discussion immediately below regarding the issuance~~“Loss on Early Extinguishment of ~~the New Notes)~~Debt” below).

Interest expense increased approximately $1.7 million to $16.7 million for the three month period ended September 30, ~~2017 was $15.1 million~~2018 compared to ~~approximately $13.5~~$15.1 million for the same period last ~~year, an increase of $1.6 million.~~year. The increase in interest expense ~~is primarily related~~was due to additional interest costs of $0.7 million associated with the ~~timing~~upsize of ~~the issuance of the New Notes in relation to the redemption of the Old Notes. Our New Notes~~our $950 million 5.625% senior unsecured notes that were issued ~~on August 24, 2017, while approximately $300.3 million of the Old Notes remained outstanding~~

~~until the September 25, 2017 redemption date. Miscellaneous other income was $0.3 million~~ in the ~~three month period ended September 30,~~third and fourth quarters of 2017 compared to ~~$0.4~~our $630 million 7% senior unsecured notes, which were retired in the ~~same~~third quarter of 2017. Also, our interest costs related to theCredit Facility increased $0.9 million due to higher average borrowings in the current year period ~~last year, a decrease of $0.1 million.~~combined with higher interest rate costs.

Loss on Early Extinguishment of Debt. ~~As more fully described in note 10 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, we~~We recorded a one-time loss on the early extinguishment of debt in the three month period ended September 30, 2017 of approximately $25.4 million, reflecting payment of $12.8 million of tender premiums associated with our repurchase of the Old Notes and $10.5 million of premiums in accordance with the indenture governing the Old Notes to redeem the remaining untendered Old Notes, combined with the write off of approximately $2.0 million of unamortized note premium, unaccreted note discount and unamortized deferred financing costs, related to the Old Notes.

Income Taxes. We recorded income tax expense of $7.7 million for the three month period ended September 30, 2018 compared to an income tax benefit of $0.9 million for the three month period ended September 30, 2017. The prior year income tax benefit was primarily due to a $5.7 million discrete tax benefit resulting from the reversal of an unrecognized tax benefit due to expiration of statute of limitations in the three month period ended September 30, 2017. Our effective income tax rate was approximately 26.4% for the three month period ended September 30, 2018 compared to (11.7%) for the same period last year. This effective income tax rate decrease was primarily due to the reduction of favorable permanent differences in the prior year period and the decrease in the federal statutory tax rate from 35% to 21%, resulting from the Tax Cuts and Jobs Act of 2017 (“the Act”), enacted in the fourth quarter of 2017. Our accounting for the income tax effects of the Act has been completed.

Based on available evidence, both positive and negative, we believe it is more likely than not that our federal deferred tax assets at September 30, 2018 are fully realizable through future reversals of existing taxable temporary differences and future taxable income, and are not subject to any limitations.

Nine Months Ended September 30, 2018 Compared to the Nine Months Ended September 30, 2017

Total Revenues. Our total revenues were $893.0 million for the nine month period ended September 30, 2018 compared to $735.4 million for the nine month period ended September 30, 2017, an increase of $157.6 million, or 21.4%. Revenues for all reportable segments and non-segmented other revenues are further discussed below.

Equipment Rental Revenues. Our revenues from equipment rentals for the nine month period ended September 30, 2018 increased approximately $77.9 million, or 22.2%, to $429.2 million from $351.3 million in the nine month period ended September 30, 2017. The increase in equipment rental revenues was largely due to increased demand and the equipment rental revenues from our CEC and Rental Inc. locations.

Rental revenues from aerial work platform equipment increased $44.0 million while earthmoving equipment rental revenues increased $16.4 million. Other equipment rental revenues increased $4.9 million and lift truck rental revenues increased approximately $1.9 million. Partially offsetting these rental revenue increases was a $1.1 million decrease in crane rental revenues. The product line equipment rental revenue fluctuations above do not include the impact of legacy CEC and Rental Inc. equipment rental revenues by product line for the three month periods ended March 31, 2018 and June 30, 2018, respectively.

Our average rental rates for the nine month period ended September 30, 2018 increased 2.2% compared to the same nine month period last year. Our average rental rates for the nine month period ended September 30, 2018 do not include rental rate data for legacy CEC and Rental Inc. for the three month periods ended March 31, 2018 and June 30, 2018, respectively.

Rental equipment dollar utilization (annual rental revenues divided by the average original rental fleet equipment costs) for the nine month period ended September 30, 2018 was 35.4% compared to 34.5% in the nine month period ended September 30, 2017, an increase of 0.9%. The increase in comparative rental equipment dollar utilization was primarily the result of the increase in equipment rental rates, which was partially offset by a decrease in rental equipment time utilization. Rental equipment time utilization as a percentage of original equipment cost was approximately 71.1% for the nine month period ended September 30, 2018 compared to 71.4% in the nine month period ended September 30, 2017, a decrease of 0.3%.

New Equipment Sales Revenues. Our new equipment sales for the nine month period ended September 30, 2018 increased $54.4 million, or 42.2%, to $183.3 million from $128.9 million for the nine month period ended September 30, 2017. This increase, as noted below, was driven primarily by increased sales of new cranes and the new equipment sales revenues from our Rental Inc. locations.

Sales of new cranes increased $42.1 million, resulting from improved crane demand. Sales of new aerial work platform equipment and sales of new earthmoving equipment increased $5.8 million and $5.2 million, respectively. Sales of new lift trucks increased $1.2 million. Partially offsetting these increases was a $2.1 million decrease in new other equipment sales. The product line new equipment sales revenue fluctuations above do not include the impact of legacy CEC and Rental Inc. new equipment sales revenues by product line for the three month periods ended March 31, 2018 and June 30, 2018, respectively.

Used Equipment Sales Revenues. Our used equipment sales increased $12.1 million, or 16.0%, to $87.3 million for the nine month period ended September 30, 2018, from $75.2 million for the same nine month period in 2017.

Sales of used aerial work platform equipment increased $16.9 million, while sales of used cranes and used other equipment increased $0.9 million and $2.0 million, respectively. Partially offsetting these increases were decreases in sales of used earthmoving equipment and used lift trucks of $7.5 million and $0.7 million, respectively. The product line used equipment sales revenue fluctuations above do not include the impact of legacy CEC and Rental Inc. used equipment sales revenues by product line for the three month period ended March 31, 2018 and June 30, 2018, respectively.

Parts Sales Revenues. Our parts sales for the nine month period ended September 30, 2018 increased approximately $3.7 million, or 4.2%, to approximately $89.9 million from $86.3 million for the same nine month period last year. The increase in parts sales was largely attributable to increases in aerial work platform equipment and earthmoving equipment parts sales, combined with parts sales revenues from our CEC and Rental Inc. locations.

Services Revenues. Our services revenues for the nine month period ended September 30, 2018 increased $1.1 million, or 2.4%, to approximately $48.3 million from approximately $47.1 million for the same nine month period last year. The increase in services revenues was primarily due to services revenues from our CEC and Rental Inc. locations and an increase in earthmoving services revenues.

Non-Segmented Other Revenues. Our non-segmented other revenues consisted primarily of equipment support activities including fuel charges on rented equipment, transportation and hauling charges related to our equipment rental and maintenance and repair services, and damage waiver fees on rental equipment. For the nine month period ended September 30, 2018, our other revenues were approximately $55.0 million, an increase of $8.5 million, or 18.2%, from approximately $46.6 million in the same nine month period in 2017. This increase was primarily driven by higher hauling revenues and damage waiver income associated with our equipment rental activities, combined with non-segmented other revenues from our CEC and Rental Inc. locations.

Total Gross Profit. Our total gross profit was $315.4 million for the nine month period ended September 30, 2018 compared to $259.0 million for the same nine month period in 2018, an increase of $56.4 million, or 21.8%. Total gross profit margin for the nine month period ended September 30, 2018 was 35.3%, an increase of 0.1% from the 35.2% gross profit margin for the same nine month period in 2017. Gross profit and gross margin for all reportable segments and non-segmented other revenues are further described below:

Equipment Rentals Gross Profit. Our gross profit from equipment rentals for the nine month period ended September 30, 2018 increased approximately $43.5 million, or 26.1%, to approximately $210.2 million from $166.8 million in the same nine month period in 2017.

The increase in equipment rentals gross profit was the result of a $77.9 million increase in equipment rental revenues for the nine month period ended September 30, 2018 compared to the same period last year, which was partially offset by a $26.7 million increase in rental equipment depreciation expense and a $7.8 million increase in rental expenses. The increases in both depreciation expense and rental expenses are primarily due to a larger fleet size in 2018 compared to 2017.

Gross profit margin on equipment rentals for the nine month period ended September 30, 2018 was approximately 49.0% compared to 47.5% for the same period in 2017, an increase of 1.5%. As a percentage of equipment rental revenues, rental expenses were 15.4% for the nine month period ended September 30, 2018 compared to 16.7% for the same period last year, a decrease of 1.3%, resulting primarily from the increase in equipment rental revenues. Depreciation expense was 35.6% of equipment rental revenues for the nine month period ended September 30, 2018 compared to 35.9% for the same period in 2017, a decrease of 0.3%, primarily as a result of the increase in equipment rental revenues, which was partially offset by the increase in depreciation expense resulting from the purchase accounting fair value step up adjustments on the CEC and Rental Inc. acquired rental fleets and the mix of our equipment rental fleet.

New Equipment Sales Gross Profit. Our new equipment sales gross profit for the nine month period ended September 30, 2018 increased approximately $6.4 million, or 44.0%, to $20.8 million compared to $14.4 million for the same nine month period in 2017 on a total new equipment sales increase of $54.4 million. Gross profit margin on new equipment sales was 11.3% for the nine month period ended September 30, 2018, compared to 11.2% for the same period last year, an increase of 0.1%. The slight increase in gross profit margin was primarily due to the mix of new equipment sold.

Used Equipment Sales Gross Profit. Our used equipment sales gross profit for the nine month period ended September 30, 2018 increased $4.8 million, or 20.8%, to $28.1 million from $23.2 million in the same period in 2017 on a used equipment sales increase of $12.1 million. Gross profit margin on used equipment sales for the nine month period ended September 30, 2018 was approximately 32.2%, up 1.3% from 30.9% for the same nine month period in 2017, primarily as a result of the mix of used equipment sold and higher used equipment margins on used aerial work platform equipment. These improved gross margins were partially offset by lower margins on sales of CEC and Rental Inc. used equipment, reflecting the purchase accounting fair value step up basis adjustment applied to the acquired used equipment inventory and rental equipment.

Our used equipment sales from the rental fleet, which comprised approximately 90.4% and 88.2% of our used equipment sales for the nine month periods ended September 30, 2018 and 2017, respectively, were approximately 153.9% and 150.3% of net book value for the nine month periods ended September 30, 2018 and 2017, respectively.

Parts Sales Gross Profit. Our parts sales gross profit for the nine month period ended September 30, 2018 increased $0.7 million, or 3.0%, to $24.2 million, compared to $23.5 million for the same nine month period last year on a $3.7 million increase in parts sales revenues. Gross profit margin for the nine month period ended September 30, 2018 was 27.0%, a decrease of 0.3% from 27.3% in the same nine month period in 2017, primarily as a result of the mix of parts sold.

Services Revenues Gross Profit. For the nine month period ended September 30, 2018, our services revenues gross profit increased $0.6 million, or 1.9%, to $31.8 million from $31.2 million for the same nine month period in 2017 on a $1.1 million increase in services revenues. Gross profit margin for the nine month period ended September 30, 2018 was 65.9%, a decrease of 0.4% from 66.3% in the same nine month period in 2017, as a result of services revenues mix.

Non-Segmented Other Revenues Gross Profit (Loss). Our non-segmented other revenues gross profit increased $0.4 million, from a gross loss of $0.2 million for the nine month period ended September 30, 2017 to a gross profit of $0.2 million in the nine month period ended September 30, 2018. Gross margin for the nine month period ended September 30, 2018 was 0.4% compared to a gross margin of (0.4)% in the same nine month period last year, an increase of 0.8%, primarily reflective of improved gross margins on hauling and transportation related charges in the current period and improved gross margin on damage waiver income.

Selling, General and Administrative Expenses (“SG&A”). SG&A expenses increased approximately $32.9 million, or approximately 19.1%, to $205.3 million for the nine month period ended September 30, 2018 compared to $172.3 million for the nine month period ended September 30, 2017.

The net increase in SG&A expenses was attributable to several factors. Employee salaries, wages, payroll taxes and related employee benefit and other employee expenses increased $22.7 million, primarily as a result of our CEC and Rental Inc. acquisitions, a larger workforce and higher incentive compensation related to improved profitability. Legal and professional fees increased $2.2

million and liability insurance costs increased $0.6 million. Utilities costs increased $1.4 million and promotional expenses increased $0.7 million. Additionally, our results for the nine month period ended September 30, 2018 also includes $2.4 million of amortization expense associated with the recognition of intangible assets resulting from the CEC and Rental Inc. purchase price allocations.

Approximately $3.0 million of the total increase in SG&A expenses was attributable to branches opened since January 1, 2017 (but excluding for this purpose branches acquired as a result of our CEC and Rental Inc. acquisitions) with less than nine months of comparable operations in either or both of the nine month periods ended September 30, 2018 and 2017.

As a percentage of total revenues, SG&A expenses were 23.0% for the nine month period ended September 30, 2018 compared to 23.4% for the same nine month period last year, a decrease of 0.4%, and is largely reflective of the increase in total revenues and the cost increases noted above.

Merger Costs (net of Merger Breakup Fee ~~Proceeds, net of Merger Costs.~~Proceeds). ~~As more fully described above and in note 3 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, pursuant~~Pursuant to the terms of our terminated 2017 merger agreement with Neff, we received a $13.2 million breakup fee concurrently with Neff’s termination of the merger ~~agreement.~~agreement in the third quarter of 2017. Related estimated merger transaction fees totaled $6.7 million, resulting in estimated net proceeds of $6.5 ~~million.~~million for the nine month period ended September 30, 2017. As noted in the above SG&A Expenses discussion, approximately $2.2 million of the merger costs reflected in this financial statement line items were originally recorded in SG&A Expenses in the six month period ended June 30, 2017 and were subsequently reclassified in the third quarter ended September 30, 2017 to ~~the~~this merger breakup fee line item.

~~Income Taxes.~~ ~~We recorded an income tax benefit of $0.9 million for~~Merger costs incurred in the ~~three~~nine month period ended September 30, ~~2017 compared to income tax expense~~2018 were approximately $0.4 million.

Gain on Sales of ~~$8.3 million for~~Property and Equipment, Net. During the ~~three~~nine month period ended September 30, ~~2016. The income tax benefit is primarily due to~~2018, we sold a ~~$5.7~~parcel of company-owned land and realized a gain of approximately $3.7 million, ~~discrete tax benefit~~ resulting ~~from a reversal~~in total net gains on sales of ~~an unrecognized tax benefit due to expiration~~property and equipment of statute of limitations in the three month period ended September 30, 2017. Based on available evidence, both positive and negative, we believe it is more likely than not that our federal deferred tax assets at September 30, 2017 are fully realizable through future reversals of existing taxable temporary differences and future taxable income, and are not subject to any limitations; however,$6.0 million for the ~~quarter ended September 30, 2017, we increased our valuation allowance by $0.4 million for certain state net operating losses that may not be utilized.~~

~~Nine Months Ended September 30, 2017 Compared~~period, compared to ~~the Nine Months Ended September 30, 2016~~

~~Total Revenues.~~ ~~Our total revenues were $735.4~~$4.4 million for the nine month period ended September 30, 2017, ~~compared to approximately $733.8 million for the nine month period ended September 30, 2016,~~ an increase of $1.6 ~~million, or 0.2%. Revenues for all reportable segments are further discussed below.~~million.

~~Equipment Rental Revenues.~~ Our revenues from equipment rentals for the nine month period ended September 30, 2017 increased $21.3 million, or 6.4%, to $351.3 million from $330.0 million in the nine month period ended September 30, 2016. Rental revenues from aerial work platform equipment increased $19.7 million and earthmoving equipment rental revenues increased $4.4 million. Other equipment rental revenues increased $1.6 million and lift truck rental revenues increased $0.1 million. Partially offsetting these rental revenue increases was a $4.5 million decrease in crane rental revenues. Our average rental rates for the nine month period ended September 30, 2017 increased approximately 0.01% compared to the same nine month period last year.

Rental equipment dollar utilization (annual rental revenues divided by the average original rental fleet equipment costs) for the nine month period ended September 30, 2017 was 34.5% compared to 33.9% in the nine month period ended September 30, 2016, an increase of 0.6%. The increase in comparative rental equipment dollar utilization was primarily the result of an increase in rental

equipment time utilization. Rental equipment time utilization as a percentage of original equipment cost was 71.4% for the nine month period ended September 30, 2016 compared to approximately 69.5% in the same nine month period a year ago, an increase of 1.9%. The increase in equipment rental time utilization based on original equipment cost is largely reflective of increased demand for rental equipment and to a lesser extent, the prior year first quarter negative impact on earthmoving equipment rental activity from heavy rains and associated flooding in our Louisiana, Texas and Arkansas markets. Rental equipment time utilization based on the number of rental equipment units available for rent was 69.1% for the nine month period ended September 30, 2017, compared to approximately 66.8% in the same period last year, an increase of 2.3%.

~~New Equipment Sales Revenues.~~ Our new equipment sales for the nine month period ended September 30, 2017 decreased approximately $23.0 million, or 15.1%, to $128.9 million from $151.8 million for the nine month period ended September 30, 2016, largely driven by a $20.1 million decrease in new earthmoving equipment sales and an $8.0 million decrease in new crane sales. The decrease in new earthmoving equipment sales is primarily the result of higher earthmoving equipment sales in the prior year period resulting from certain manufacturer incentives. The decrease in new crane sales is due primarily to decreased demand for new cranes among the Company’s customers operating in the oil and gas-centric markets that the Company serves. Sales of new lift trucks decreased $0.5 million. Partially offsetting these new equipment sales decreases were a $4.9 million increase in sales of new other equipment and a $0.8 million increase in sales of new aerial work platform equipment.

~~Used Equipment Sales Revenues.~~ Our used equipment sales increased approximately $3.2 million, or 4.5%, to $75.2 million for the nine month period ended September 30, 2017 from $72.0 million for the same nine month period in 2016. Sales of used earthmoving equipment increased $3.8 million, while sales of used cranes increased $2.4 million. Used other equipment sales and used lift truck sales increased $0.5 million and $0.3 million, respectively. Partially offsetting these used equipment sales increases was a $3.8 million decrease in used aerial work platform equipment sales.

~~Parts Sales Revenues.~~ Our parts sales decreased $0.9 million, or 1.1%, to $81.1 million for the nine month period ended September 30, 2017 from approximately $82.0 million for the same nine month period in 2016. The decrease in parts revenues was driven primarily by lower crane parts sales revenues.

~~Services Revenues.~~ Our services revenues for the nine month period ended September 30, 2017 decreased $2.2 million, or 4.5%, to $47.1 million from $49.3 million for the same nine month period last year. The decrease in services revenues was due to lower crane services revenues and lower other equipment services revenues.

~~Non-Segmented Other Revenues.~~ Our non-segmented other revenues consisted primarily of equipment support activities including transportation, hauling, parts freight and damage waiver charges. For the nine month period ended September 30, 2017, our other revenues were $51.8 million, an increase of $3.1 million, or 6.3%, from $48.7 million in the same nine month period in 2016. The increase was primarily due to an increase in hauling revenues, fuel charges and damage waiver income associated with the increase in our equipment rental activity.

~~Total Gross Profit.~~ Our total gross profit was $259.0 million for the nine month period ended September 30, 2017 compared to $251.0 million for the same nine month period in 2016, an increase of approximately $8.1 million, or 3.2%. Total gross profit margin for the nine month period ended September 30, 2017 was 35.2%, an increase of 1.0% from the 34.2% gross profit margin for the same nine month period in 2016. Gross profit and gross margin for all reportable segments and non-segmented other revenues are further described below:

~~Equipment Rentals Gross Profit.~~ Our gross profit from equipment rentals for the nine month period ended September 30, 2017 increased $10.6 million, or 6.8%, to $166.8 million from $156.2 million in the same nine month period in 2016. The increase in equipment rentals gross profit was the net result of a $21.3 million increase in rental revenues for the nine month period ended September 30, 2017 and a $5.4 million increase in rental expenses and a $5.3 million increase in rental equipment depreciation expense. The increase in rental expenses is primarily due to higher repair costs and increased property taxes resulting from a larger rental fleet size. The increase in rental equipment depreciation expense is largely due also to a larger rental fleet size. Gross profit margin on equipment rentals for the nine month period ended September 30, 2017 was approximately 47.5% compared to 47.3% for the same period in 2016, an increase of 0.2%. Depreciation expense was 35.9% of equipment rental revenues for the nine month period ended September 30, 2017 compared to 36.6% for the same period in 2016, a decrease of 0.7%. As a percentage of equipment rental revenues, rental expenses were approximately 16.7% for the nine month period ended September 30, 2017 compared to 16.1% for the same period last year, an increase of 0.6%.

~~New Equipment Sales Gross Profit.~~ Our new equipment sales gross profit for the nine month period ended September 30, 2017 decreased $2.2 million, or 13.4%, to $14.4 million compared to approximately $16.7 million for the same nine month period in 2016 on a total new equipment sales decrease of $23.0 million. Gross profit margin on new equipment sales for the nine month period ended September 30, 2017 was 11.2%, an increase of 0.2% from 11.0% in the same nine month period in 2016, as a result of the mix of new equipment sold and higher margins on new crane sales.

~~Used Equipment Sales Gross Profit.~~ Our used equipment sales gross profit for the nine month period ended September 30, 2017 increased approximately $1.0 million, or 4.6%, to approximately $23.2 million from $22.2 million in the same period in 2016 on a used equipment sales increase of $3.2 million. Gross profit margin on used equipment sales was 30.9% in each of the nine month periods ended September 30, 2017 and 2016. Our used equipment sales from the rental fleet, which comprised approximately 88.2% and 86.5% of our used equipment sales for the nine month periods ended September 30, 2017 and 2016, respectively, were approximately 150.3% and 152.6% of net book value for the nine month periods ended September 30, 2017 and 2016, respectively.

~~Parts Sales Gross Profit.~~ For the nine month period ended September 30, 2017, our parts sales revenue gross profit decreased $0.4 million, or 1.8%, to $22.4 million from $22.8 million during the same nine month period in 2016 on a $0.9 million decrease in parts sales revenues. Gross profit margin for the nine month period ended September 30, 2017 was 27.6%, a decrease of 0.2% from 27.8% in the same nine month period in 2016, as a result of the mix of parts sold.

~~Services Revenues Gross Profit.~~ For the nine month period ended September 30, 2017, our services revenues gross profit decreased $1.4 million, or 4.2%, to $31.2 million from $32.6 million for the same nine month period in 2016 on a $2.2 million decrease in services revenues. Gross profit margin for the nine month period ended September 30, 2017 was 66.3% for the nine month period ended September 30, 2017 compared to 66.1% in the same nine month period last year, an increase of 0.2% due to services revenues mix.

~~Non-Segmented Other Revenues Gross Profit.~~ Our non-segmented other revenues gross profit increased approximately $0.4 million, or 78.5%, to $1.0 million for the nine month period ended September 30, 2017, compared to $0.6 million in gross profit for the same period in 2016, on a $3.1 million increase in non-segmented other revenues. Gross margin for the nine month period ended September 30, 2017 was 1.9% compared to a gross margin of 1.1% in the same nine month period last year, an increase of 0.8%, primarily reflective of improved margins on hauling revenues compared to last year.

~~Selling, General and Administrative Expenses.~~ SG&A expenses decreased $0.1 million to $172.3 million for the nine month period ended September 30, 2017 compared to $172.4 million for the nine month period ended September 30, 2016. Employee salaries, wages, payroll taxes and related employee benefit expenses increased approximately $2.8 million. Facility costs increased $1.0 million, comprised primarily of additional rent expense related to new branches opened since the third quarter of last year. Bad debt expense increased approximately $0.5 million. Offsetting these increases in SG&A expenses were a $2.9 million decrease in depreciation and amortization expense due to lower software amortization costs. Legal and professional fees decreased $0.9 million. General liability insurance costs decreased $0.7 million.

Branches opened since January 1, 2016 with less than nine full months of comparable operations in the first three quarters of 2016 and 2017 contributed to a $2.4 million increase in our SG&A for the nine month period ended September 30, 2017.

~~As a percentage of total revenues, SG&A expenses were approximately 23.4% for each of the nine month periods ended September 30, 2017 and 2016.~~

Other Income (Expense). For the nine month period ended September 30, ~~2017,~~2018, our net other expenses ~~increased $27.2~~decreased approximately $20.1 million to ~~$65.9~~$45.8 million compared to ~~$38.7~~$65.9 million for the same nine month period in ~~2016.~~2017. Included in Other Income (Expense) for the ~~nine~~three month period ended September 30, 2017 is a $25.4 million loss on the early extinguishment of debt (see ~~discussion immediately below~~“Loss on Early Extinguishment of Debt” below).

~~regarding the issuance of the New Notes).~~ Interest expense ~~was~~increased approximately $5.4 million to $47.1 million for the nine month period ended September 30, 2018 compared to $41.7 million for the nine month period ended September 30, 2017. The increase in interest expense was due to additional interest costs of $5.6 million associated with the upsize of our $950 million 5.625% senior unsecured notes that were issued in the third and fourth quarters of 2017 compared to ~~approximately $40.2~~our $630 million 7% senior unsecured notes, which were retired in the third quarter of 2017. Interest costs related to the Credit Facility decreased $0.2 million for the nine month period ended September 30, 2016, an increase of $1.5 million. The increase in interest expense is primarily related to the timing of the issuance of the New Notes in relation to the redemption of the Old Notes. Our New Notes were issued on August 24, 2017, while approximately $300.3 million of the Old Notes remained outstanding until the September 25, 2017 redemption date. Miscellaneous other income was $1.2 million in the nine month period ended September 30, 20172018 compared to ~~$1.5 million in~~ the same period last ~~year, a decrease of $0.3 million.~~year.

Loss on Early Extinguishment of Debt. ~~As more fully described in note 10 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, we~~We recorded a one-time loss on the early extinguishment of debt in the ~~nine~~three month period ended September 30, 2017 of approximately $25.4 million, reflecting payment of $12.8 million of tender premiums associated with our repurchase of the Old Notes and $10.5 million of premiums in accordance with the indenture governing the Old Notes to redeem the remaining untendered Old Notes, combined with the write off of approximately $2.0 million of unamortized note premium, unaccreted note discount and unamortized deferred financing costs, related to the Old Notes.

~~Merger Breakup Fee, net of Merger Costs.~~ As more fully described above and in note 3 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, pursuant to the terms of our merger agreement with Neff, in August, 2017, we received a $13.2 million breakup fee concurrently with Neff’s termination of the merger agreement. Related estimated merger transaction fees totaled $6.7 million, resulting in estimated net proceeds of $6.5 million.

Income Taxes. We recorded income tax expense of $18.3 million for the nine month period ended September 30, 2018 compared to income tax expense of approximately $8.0 million for the nine month period ended September 30, ~~2017 compared to~~2017. Our effective income tax ~~expense of $17.4 million~~rate was approximately 26.2% for the nine month period ended September 30, ~~2016. Our effective income tax rate was 25.3% for the nine month period ended September 30, 2016~~2018 compared to ~~41.3%~~approximately 25.3% for the same nine month period last year, an increase of 0.9%.

We recognized a ~~decrease of 16.0%. The decrease in effective tax rate is primarily due to a net $5.3~~$5.7 million discrete tax benefit in the nine month period ended September 30, 2017, resulting from a reversal of an unrecognized tax benefit due to expiration of statute of ~~limitations in~~limitations. Our effective income tax rate for the ~~third quarter~~nine month period ended September 30, 2018 was 26.2% compared to 25.3% for the same period last year. This effective income tax decrease was primarily due to the decrease in the federal statutory tax rate from 35% to 21%, resulting from the the Act, enacted in the fourth quarter of 2017. Our accounting for the income tax effects of the Act has been completed.

Based on available evidence, both positive and negative, we believe it is more likely than not that our federal deferred tax assets at September 30, ~~2017~~2018 are fully realizable through future reversals of existing taxable temporary differences and future taxable income, and are not subject to any ~~limitations; however, for the quarter ended September 30, 2017, we increased our valuation allowance by $0.4 million for certain state net operating losses that may not be utilized.~~limitations.

Cash flow from operating activities. For the nine month period ended September 30, 2018, the cash provided by our operating activities was $138.0 million. Our reported net income of $51.6 million, when adjusted for non-cash income and expense items, such as depreciation and amortization, deferred income taxes, net amortization (accretion) of note discount (premium), provision for losses on accounts receivable, provision for inventory obsolescence, stock-based compensation expense and net gains on the sale of long-lived assets, provided positive cash flows of $215.5 million. These cash flows from operating activities were also positively impacted by a $4.5 million increase in manufacturing flooring plans payable and a $0.2 million decrease in prepaid expenses and other assets. Partially offsetting these positive cash flows were a $56.4 million increase in inventories, a $10.1 million decrease in accounts payable, a $9.0 million decrease in accrued expenses payable and other liabilities and a $6.8 increase in receivables.

For the nine month period ended September 30, 2017, the net cash provided by our operating activities was $156.4 million. Our reported net income of $23.7 million, when adjusted for non-cash income and expense items, such as depreciation and amortization, deferred income taxes, net amortization (accretion) of note discount (premium), provision for losses on accounts receivable, provision for inventory obsolescence, stock-based compensation expense, loss on early extinguishment of debt, and net gains on the sale of long-lived assets, provided positive cash flows of approximately $181.1 million. These cash flows from operating activities were also positively impacted by a $42.1 million increase in accounts payable. Partially offsetting these positive cash flows were a $38.9 million increase in inventories, a $15.8 million increase in receivables, and a $7.5 million decrease in manufacturing flooring plans payable, while accrued expenses payable and other liabilities decreased $3.1 million and prepaid expenses and other assets increased $1.6 million.

Cash flow from investing activities. For the nine month period ended September 30, ~~2016, the net~~2018, our cash provided by our ~~operating~~investing activities was ~~$109.4~~exceeded by our cash used in our investing activities, resulting in net cash used in our investing activities of approximately $486.8 million. ~~Our reported net income~~The acquisitions of ~~$24.7~~CEC and Rental Inc. totaled $196.0 (net of cash acquired). Purchases of rental and non-rental equipment totaling $377.7 million ~~when adjusted for non-cash income~~ and expense items, such as depreciation and amortization, deferred income taxes, net amortization (accretion) of note discount (premium), provision for losses on accounts receivable, provision for inventory obsolescence, stock-based compensation expense and net gains onproceeds from the sale of ~~long-lived assets, provided positive cash flows~~rental and non-rental equipment of approximately ~~$165.2~~$86.9 million. These cash flows from operating activities were also positively impacted by a $5.8 million decrease in receivables and a $1.2 million decrease in prepaid expenses and other assets. Partially offsetting these positive cash flows were a $24.2 million decrease in manufacturing flooring plans payable and an $18.5 million decrease in accounts payable. Also, inventories increased $15.2 million and accrued expenses payable and other liabilities decreased $4.4 million. Deferred compensation payable decreased $0.3 million.

~~Cash flow from investing activities.~~ For the nine month period ended September 30, 2017, the cash provided by our investing activities was exceeded by cash used in our investing activities, resulting in net cash used in our investing activities of $126.7 million. This was a result of purchases of rental and non-rental equipment totaling $199.8 million and proceeds from the sale of rental and non-rental equipment of approximately $73.1 million.

Cash flow from financing activities. For the nine month period ended September 30, ~~2016, the~~2018, cash provided by our ~~investing~~financing activities was ~~exceeded~~$188.0 million. Net borrowings under our Credit Facility for the nine month period ended September 30, 2018 were $219.0 million, which was partially offset by ~~cash used in our investing activities, resulting in net cash used in our investing activities of approximately $104.4~~dividends paid totaling $29.4 million, or $0.825 per common share. Treasury stock purchases totaled $1.3 million. ~~This was a result of~~

~~purchases of rental and non-rental equipment totaling $169.4~~Payments on capital lease obligations were $0.2 million and ~~proceeds from the sale~~payments of ~~rental and non-rental equipment of approximately $64.9~~deferred financing costs were $0.1 million.

~~Cash flow from financing activities.~~ For the nine month period ended September 30, 2017, the cash provided by our financing activities was exceeded by our cash used in our financing activities, resulting in net cash used in our financing activities of approximately $31.2 million. Dividends totaling approximately $29.4 million, or $0.825 per common share, were paid during the nine month period ended September 30, 2017. Net payments under the Credit Facility were $85.4 million. Payments on capital lease obligations were $0.2 million. In connection with the redemption of our Old Notes, we paid $653.3 million, representing aggregate principal payments of $630.0 million and tender and redemption premiums totaling approximately $23.3 million. In connection with the issuance of our New Notes, net proceeds after deducting underwriting expenses of $10.3 million, were $739.7 million. Other transaction costs related to the New Notes were approximately $1.6 million.

For the nine month period ended September 30, 2016, the cash provided by our financing activities was exceeded by our cash used in our financing activities, resulting in net cash used in our financing activities of approximately $5.1 million. Dividends totaling approximately $29.3 million, or $0.825 per common share, were paid during the nine month period ended September 30, 2016. Payments on capital lease obligations were $0.2 million and we purchased treasury stock totaling approximately $0.5 million. Partially offsetting these uses of cash were net borrowings under the Credit Facility of $24.9 million.

We and our subsidiaries are parties to a ~~$602.5~~$750.0 million ~~senior secured credit facility (the “Credit Facility”)~~Credit Facility with Wells Fargo Capital Finance, LLC ~~(“Wells Fargo”), agent~~ (as successor ~~in such capacity~~ to General Electric Capital ~~Corporation (“GE Capital”)) ,~~Corporation) as administrative agent, and the lenders named ~~therein (the “Lenders”).~~therein.

therein from $602.5 million to $750 million, (iii) increases the uncommitted incremental revolving capacity from ~~$130~~$150 million to ~~$150~~$250 million, ~~(iii) permits a like-kind exchange program under Section 1031 of the Internal Revenue Code of 1986, as amended,~~ (iv) provides that the unused ~~commitment~~line fee margin will be either ~~0.50%,~~ 0.375% or 0.25%, depending on the ~~ratio~~Average Revolver Usage (as defined in the Amended and Restated Credit Agreement) of the average of the daily closing balances of the aggregate revolving loans, swing line loans and letters of credit outstanding during each month to the aggregate commitments for the revolving loans, swing line loans and letters of credit,borrowers, (v) lowers the interest rate (a) in the case of ~~index~~base rate revolving loans, to the ~~index~~base rate plus an applicable margin of ~~0.75%~~0.50% to ~~1.25%~~1.00% depending on the ~~leverage ratio~~Average Availability (as defined in the Amended and Restated Credit Agreement) and (b) in the case of LIBOR revolving loans, to LIBOR (as defined in the Amended and Restated Credit Agreement) plus an applicable margin of ~~1.75%~~1.50% to ~~2.25%~~2.00%, depending on the ~~leverage ratio,~~Average Availability, (vi) lowers the margin applicable to the letter of credit fee to between ~~1.75%~~1.50% and ~~2.25%~~2.00%, depending on the ~~leverage ratio,~~Average Availability, and (vii) permits, ~~under~~subject to certain conditions, for the payment of dividends and/or stock repurchases or redemptions on the capital stock of the Company of up to $75 million per calendar year and further additionally permits the payment of the special cash dividend of $7.00 per share previously declared by the Company on August 20, 2012 to the holders of outstanding restricted stock of the Company following the declared payment date with such permission not tied to the vesting of such restricted stock (which includes the Company’s payment in June 2014 of all amounts that remained payable to the holders of the restricted stock of the Company with respect to such special dividend that was otherwise payable following the applicable vesting dates in May and July 2014 and 2015).

~~On February 5, 2015, we entered into~~ an ~~amendment to the Credit Facility which, among other things, increased the total~~unlimited amount of ~~revolving loan commitments under~~Permitted Acquisitions, Restricted Payments and prepayments of Indebtedness (in each case, as defined in the Amended and Restated Credit Agreement).

The Amended and Restated Credit Agreement ~~from $402.5~~continues to provide for, among other things, a $30 million ~~to $602.5 million.~~

Asletter of ~~September 30, 2017, we were in compliance with our financial covenants~~credit sub-facility, and a guaranty by certain of the Company’s subsidiaries of the obligations under the Credit Facility. In addition, the Credit Facility remains secured by substantially all of the assets of the Company and certain of its subsidiaries.

At September 30, ~~2017,~~2018, we had total borrowings under the ~~Company~~Credit Facility of $219.0 million and we could borrow up to ~~an additional $517.6~~$523.3 million and remain in compliance with the debt covenants under the ~~Company’s~~ Credit Facility.

At September 30, 2017, the interest rate on the Credit Facility was based on either a 4.00% U.S. Prime Rate plus 100 basis points or LIBOR plus 200 basis points, as applicable with respect to the type of revolving loan. The weighted average interest rate at September 30, 2017 was approximately 3.9%. At October ~~19, 2017,~~18, 2018, we had ~~$526.6~~$532.4 million of available borrowings under our Credit Facility, net of a $7.7 million of outstanding ~~letters~~letter of credit.

On August 24, 2017, we completed an offering of $750 million aggregate principal amount of 5.6250% senior notes due 2025 (the “New Notes”) and the settlement of a cash tender offer (the “Tender Offer”) with respect to our 7% senior notes due 2022 (the “Old Notes”). Net proceeds, after deducting $10.3 million of estimated offering expenses, from the sale of the New Notes totaled approximately $739.7 million. We used a portion of the net proceeds from the sale of the New Notes to repurchase $329.7 million of aggregate principal amount of the Old Notes in early settlement of the Tender Offer, which the Company launched on August 17, 2017. Holders who tendered their Old Notes prior to the early tender deadline received $1,038.90 per $1,000 principal amount of Old Notes tendered, plus accrued and unpaid interest up to, but not including, the payment date of August 24, 2017. Effective as of August 24, 2017, we (i) provided notice of the redemption of all remaining Old Notes that were not validly tendered in the Tender Offer at the expiration time and (ii) satisfied and discharged the indenture governing the Old Notes in accordance with its terms. On September 25, 2017, we redeemed the remaining $300.3 million principal amount outstanding of the Old Notes at a redemption price equal to 103.50% of the principal amount thereof, plus accrued and unpaid interest up to, but not including, the date of redemption.

Pursuant to a registration rights agreement entered into between us, the guarantors of the New Notes and the initial purchasers of the New Notes, we agreed to make an offer to exchange (the “Exchange Offer”) the New Notes and guarantees for registered, publicly tradable notes and guarantees that have terms identical in all material respects to the New Notes (except that the exchange notes will not contain any transfer restrictions) within a certain period of time following the completion of the offering.

Our principal sources of liquidity have been from cash provided by operating activities and the sales of new, used and rental fleet equipment, proceeds from the issuance of debt, and borrowings available under the Credit Facility. Our principal uses of cash have been to fund operating activities and working capital (including new and used equipment inventories), purchases of rental fleet equipment and property and equipment, fund payments due under facility operating leases and manufacturer flooring plans payable, and to meet debt service requirements. In the future, we may pursue additional strategic acquisitions and seek to open new start-up locations. We anticipate that the above described uses will be the principal demands on our cash in the future.

The amount of our future capital expenditures will depend on a number of factors including general economic conditions and growth prospects. Our gross rental fleet capital expenditures for the nine month period ended September 30, ~~2017~~2018 were approximately ~~$193.4~~$374.5 million, including ~~$9.6~~$23.9 million of non-cash transfers from new and used equipment to rental fleet inventory. Our gross property and equipment capital expenditures for the nine month period ended September 30, ~~2017~~2018 were ~~$16.0~~$27.0 million. In response to changing economic conditions, we believe we have the flexibility to modify our capital expenditures by adjusting them (either up or down) to match our actual performance.

To service our debt, we will require a significant amount of cash. Our ability to pay interest and principal on our indebtedness (including the Credit Facility, the Senior Notes and our other indebtedness), will depend upon our future operating performance and the availability of borrowings under the Credit Facility and/or other debt and equity financing alternatives available to us, which will be affected by prevailing economic conditions and conditions in the global credit and capital markets, as well as financial, business and other factors, some of which are beyond our control. Based on our current level of operations and given the current state of the capital markets, we believe our cash flow from operations, available cash and available borrowings under the Credit Facility will be adequate to meet our future liquidity needs for the foreseeable future. As of October ~~19, 2017,~~18, 2018, we had ~~$526.6~~$532.4 million of available borrowings under the Credit Facility, net of $7.7 million of outstanding letters of credit.

We cannot provide absolute assurance that our future cash flow from operating activities will be sufficient to meet our long-term obligations and commitments. If we are unable to generate sufficient cash flow from operating activities in the future to service our indebtedness and to meet our other commitments, we will be required to adopt one or more alternatives, such as refinancing or restructuring our indebtedness, selling material assets or operations or seeking to raise additional debt or equity capital. WeGiven current economic and market conditions, including the significant disruptions in the global capital markets, we cannot assure investors that any of these actions could be effected on a timely basis or on satisfactory terms or at all, or that these actions would enable us to continue to satisfy our capital requirements. In addition, our existing debt agreements, including the Credit Facility and the indenture governing the Senior Notes, as well as any future debt agreements, contain or may contain restrictive covenants, which may prohibit us from adopting any of these alternatives. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debt.

On August ~~21, 2017,~~8, 2018, the Company announced a quarterly dividend of $0.275 per share to stockholders of record, which was paid on September ~~11, 2017,~~7, 2018, totaling approximately ~~$9.9~~$9.8 million. The Company intends to continue to pay regular quarterly cash dividends;

however, the declaration of any subsequent dividends is discretionary and will be subject to a final determination by the Board of Directors each quarter after its review of, among other things, business and market conditions.

Although we believe our business is not materially impacted by seasonality, the demand for our rental equipment tends to be lower in the winter months. The level of equipment rental activities is directly related to commercial and industrial construction and maintenance activities. Therefore, equipment rental performance will be correlated to the levels of current construction activities. The severity of weather conditions can have a temporary impact on the level of construction activities. Adverse weather has a seasonal impact in parts of the markets we serve, including our Intermountain region, particularly in the winter months.

Equipment sales cycles are also subject to some seasonality with the peak selling period during the spring season and extending through the summer. Parts and services activities are typically less affected by changes in demand caused by seasonality.

~~Except as otherwise reported in this Quarterly Report on Form 10-Q, there~~There have been no material changes from the information included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

There have been no material changes from the information included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

Our earnings may be affected by changes in interest rates since interest expense on the Credit Facility is currently calculated based upon the index rate plus an applicable margin of ~~1.00%~~0.50% to ~~1.50%~~1.00%, depending on the ~~leverage ratio,~~Average Availability (as defined in the Credit Facility), in the case of index rate revolving loans and LIBOR plus an applicable margin of ~~2.00%~~1.50% to ~~2.50%~~2.00%, depending on the ~~leverage ratio,~~Average Availability (as defined in the Credit Facility), in the case of LIBOR revolving loans. At September 30, ~~2017,~~2018, we had ~~total~~outstanding borrowings ~~outstanding~~ under the Credit Facility ~~of approximately $77.2~~totaling $219.0 million. A 1.0% increase in the interest rate on the Credit Facility would result in an increase of approximately ~~a $0.8~~$2.2 million ~~increase~~ in interest expense on an annualized basis. At October ~~19, 2017,~~18, 2018, we had ~~$526.6~~borrowings outstanding totaling $209.8 million, with $532.4 million of available borrowings, ~~under the Credit Facility,~~ net of $7.7 million of outstanding letters of credit. We did not have significant exposure to changing interest rates as of September 30, ~~2017~~2018 on the fixed-rate ~~Senior Notes.~~senior unsecured notes. Historically, we have not engaged in derivatives or other financial instruments for trading, speculative or hedging

purposes, though we may do so from time to time if such instruments are available to us on acceptable terms and prevailing market conditions are accommodating.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or furnishes under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure.

Our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively) have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a‑15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10‑Q. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of September 30, ~~2017,~~2018, our current disclosure controls and procedures were effective.

The design of any system of control is based upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all future events, no matter how remote, or that the degree of compliance with the policies or procedures may not deteriorate. Because of its inherent limitations, disclosure controls and procedures may not prevent or detect all misstatements. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

There were no changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) that occurred during the quarter ended September 30, ~~2017~~2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

From time to time, we are involved in various claims and legal actions arising in the ordinary course of our business. In the opinion of management, after consultation with legal counsel, the ultimate disposition of these various matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A - “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, which could materially affect our business, financial condition or future results.

As of the date of this Quarterly Report on Form 10-Q, there have been no material changes with respect to the Company’s risk factors previously disclosed on Form 10-K for the year ended December 31, ~~2016.~~2017.

On August 1, ~~2017, 18,153~~2018, 37,037 shares of non-vested stock that were issued in ~~2014~~2017 vested at ~~$21.97~~$35.85 per share. Certain holders of those vested shares returned an aggregate of ~~5,750~~10,891 shares of common stock to the Company during the quarter ended September 30, ~~2017~~2018 as payment for their respective withholding taxes. This resulted in an addition of ~~5,750~~10,891 shares to treasury stock.

On August 1, ~~2017, 40,633~~2018, 38,583 shares of non-vested stock that were issued in 2016 vested at ~~$21.97~~$35.85 per share. Certain holders of those vested shares returned an aggregate of ~~12,917~~11,274 shares of common stock to the Company during the quarter ended September 30, ~~2017~~2018 as payment for their respective withholding taxes. This resulted in an addition of ~~12,917~~11,274 shares to treasury stock.

On August 3, ~~2017, 48,381~~2018, 45,758 shares of non-vested stock that were issued in 2015 vested at ~~$22.46~~$35.78 per share. Certain holders of those vested shares returned an aggregate of ~~15,287~~14,764 shares of common stock to the Company during the quarter ended September 30, ~~2017~~2018 as payment for their respective withholding taxes. This resulted in an addition of ~~15,287~~14,764 shares to treasury stock.

* The registrant has omitted schedules and similar attachments to the subject agreement pursuant to Item 601(b)(2) of Regulation S-K. The registrant will furnish a copy of any omitted schedule or similar attachment to the U.S. Securities and Exchange Commission upon request.

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

Delaware		81-0553291
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

7500 Pecue Lane,		70809
Baton Rouge, Louisiana		(ZIP Code)
(Address of Principal Executive Offices)

Large Accelerated Filer	☑	Accelerated Filer ☐	Non-Accelerated Filer	☐

Smaller Reporting Company	☐	Emerging Growth Company ☐

		Page
PART I. FINANCIAL INFORMATION		4

Item 1. Financial Statements:		4
Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2018 (Unaudited) and December 31, ~~2016~~2017		4
Condensed Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017		5
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017		6
Notes to Condensed Consolidated Financial Statements (Unaudited)		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2733
Item 3. Quantitative and Qualitative Disclosures About Market Risk		4148
Item 4. Controls and Procedures		4248

PART II. OTHER INFORMATION		4350

Item 1. Legal Proceedings		4350
Item 1A. Risk Factors		4350
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		4350
Item 3. Defaults upon Senior Securities		4350
Item 4. Mine Safety Disclosures		4350
Item 5. Other Information		4350
Item 6. Exhibits		4351

Signatures		4552


		$’s in thousands

Cash		$ 1,244
Accounts receivable, net of allowance for doubtful accounts (1)		7,583
Inventory		504
Prepaid expenses and other assets		324
Rental equipment		55,342
Property and equipment		2,700
Intangible assets (2)		21,500
Total identifiable assets acquired		89,197
Accounts payable		(1,023)
Accrued expenses payable and other liabilities		(876)
Total liabilities assumed		(1,899)
Net identifiable assets acquired		87,298
Goodwill (3)		45,092
Net assets acquired		$ 132,390


	Fair Value (amounts in thousands)	Life (years)
Customer relationships	$ 21,000	10
Tradenames	300	1
Leasehold interests	200	10
	$ 21,500


			Three Months Ended September 30, 2017
Statement of Income:		As Previously Reported		Adjustments	Current Presentation
Revenues:
Equipment rentals	$ 125,616			$ ─	$ 125,616
New equipment sales	48,940			─	48,940
Used equipment sales	22,250			─	22,250
Parts sales	27,763			1,771	29,534
Services revenues	16,097			─	16,097
Other	18,496			(1,771)	16,725
Total revenues	259,162			─	259,162
Cost of revenues:
Rental depreciation	43,255			─	43,255
Rental expense	19,988			─	19,988
New equipment sales	43,609			─	43,609
Used equipment sales	15,116			─	15,116
Parts sales	20,125			1,452	21,577
Services revenues	5,567			─	5,567
Other	17,476			(1,452)	16,024
Total cost of revenues	165,136			─	165,136
Gross profit	$ 94,026			$ ─	$ 94,026



		Three Months Ended September 30,
		2018					2017
		Topic 840	Topic 606		Total		Topic 840		Topic 605		Total
Rental revenues		$ 155,840	$ 197		$ 156,037		$ 125,071		$ 545		$ 125,616
New equipment sales		─	68,233		68,233		─		48,940		48,940
Used equipment sales		─	30,294		30,294		─		22,250		22,250
Parts sales		─	31,484		31,484		─		27,763		27,763
Service revenues		─	16,426		16,426		─		16,097		16,097
Other		5,623	14,044		19,667		4,800		13,696		18,496
Total revenues		$ 161,463	$160,678		$ 322,141		$ 129,871		$ 129,291		$ 259,162
	Nine Months Ended September 30,
	2018							2017
	Topic 840			Topic 606		Total		Topic 840		Topic 605		Total
Rental revenues	$ 428,115			$ 1,112		$ 429,227		$ 349,704		$ 1,599		$ 351,303
New equipment sales	─			183,265		183,265		─		128,883		128,883
Used equipment sales	─			87,287		87,287		─		75,219		75,219
Parts sales	─			89,916		89,916		─		81,063		81,063
Service revenues	─			48,250		48,250		─		47,121		47,121
Other	15,565			39,477		55,042		12,951		38,813		51,764
Total revenues	$ 443,680			$ 449,307		$ 892,987		$ 362,655		$ 372,698		$ 735,353


Rental Component 1	$25,233
Rental Component 2	18,391
New Equipment	217
Used Equipment	632
Parts	379
Service	240


		$’s in thousands

Cash		$ 260
Accounts receivable, net of allowance for doubtful accounts (1)		2,873
Inventory		5,324
Prepaid expenses and other assets		47
Rental equipment		22,578
Property and equipment		1,935
Intangible assets (2)		10,200
Total identifiable assets acquired		43,217
Accounts payable		(439)
Manufacturer flooring plans payable		(3,293)
Accrued expenses payable and other liabilities		(469)
Total liabilities assumed		(4,201)
Net identifiable assets acquired		39,016
Goodwill (3)		29,554
Net assets acquired		$ 68,570


Rental Component 1	$9,064
Rental Component 2	5,445
New Equipment	10,217
Used Equipment	1,692
Parts	2,171
Service	964



	(amounts in thousands, except per share data)
	Three Month Period Ended September 30, 2017
	H&E	CEC	Rental Inc.	Total
Total revenues	$259,162	$9,186	$9,247	$277,595

Pretax income	7,577	2,133	2,153	11,863
Pro forma adjustments to pretax income:
Impact of fair value mark-ups/useful life changes on depreciation (1)	—	(823)	(713)	(1,536)
Intangible asset amortization (2)	—	(605)	(300)	(905)
Interest expense (3)	—	—	(451)	(451)
Elimination of historic interest expense (4)	—	425	90	515
Pro forma pretax income	7,577	1,130	779	9,486
Income tax benefit	(885)	(127)	(87)	(1,099)
Net income	$ 8,462	$1,257	$ 866	$10,585
Net income per share – basic	$ 0.24	$ 0.04	$0.02	$ 0.30
Net income per share - diluted	$ 0.24	$ 0.04	$0.02	$ 0.30



	(amounts in thousands, except per share data)
	Nine Month Period Ended September 30, 2017
	H&E	CEC	Rental Inc.	Total
Total revenues	$735,353	$25,715	$26,472	$787,540

Pretax income	31,775	5,022	6,311	43,108
Pro forma adjustments to pretax income:
Impact of fair value mark-ups/useful life changes on depreciation (1)	—	(2,535)	(2,094)	(4,629)
Intangible asset amortization (2)	—	(1,815)	(600)	(2,415)
Interest expense (3)	—	—	(1,226)	(1,226)
Elimination of historic interest expense (4)	—	1,225	292	1,517
Pro forma pretax income	31,775	1,897	2,683	36,355
Income tax expense	8,045	484	684	9,213
Net income	$ 23,730	$1,413	$1,999	$27,142
Net income per share – basic	$ 0.67	$0.04	$0.06	$ 0.76
Net income per share - diluted	$ 0.67	$0.04	$0.06	$ 0.76



	(amounts in thousands, except per share data)
	Nine Month Period Ended September 30, 2018
	H&E(5)	Rental Inc.(6)	Total
Total revenues	$ 892,987	$7,408	$900,395

Pretax income	69,908	1,020	70,928
Pro forma adjustments to pretax income:
Impact of fair value mark-ups/useful life changes on depreciation (1)	─	(749)	(749)
Intangible asset amortization (2)	─	(250)	(250)
Interest expense (3)	─	(480)	(480)
Elimination of historic interest expense (4)	─	82	82
Pro forma pretax income (loss)	69,908	(377)	69,531
Income tax expense (benefit)	18,345	(100)	18,245
Net income (loss)	$ 51,563	$ (277)	$ 51,286
Net income (loss) per share – basic	$ 1.45	$(0.01)	$ 1.44
Net income (loss) per share - diluted	$ 1.44	$(0.01)	$ 1.43

	Number of Shares			Weighted Average Exercise Price		Weighted Average Contractual Life In Years
Outstanding options at December 31, 2016		4,500		$	19.27
Granted		—			—
Exercised		—			—
Canceled, forfeited or expired		(4,500	)	$	19.27
Outstanding options at September 30, 2017		—			—		—
Options exercisable at September 30, 2017		—			—		—

Balance at December 31, 2015	$	627,306
Accretion of discount through December 31, 2016		1,055
Amortization of note premium through December 31, 2016		(887	)
Amortization of deferred financing costs through December 31, 2016		237
Balance at December 31, 2016	$	627,711
Accretion of discount on Old Notes		683
Amortization of note premium on Old Notes		(574	)
Amortization of deferred financing costs on Old Notes		153
Aggregate principal amount paid on Old Notes		(630,000	)
Writeoff of unaccreted discount on Old Notes		5,294
Writeoff of unamoritized note premium on Old Notes		(4,452	)
Writeoff of deferred financing costs on Old Notes		1,185
Aggregate principal amount issued on New Notes		750,000
Note discount and deferred transaction costs on New Notes		(11,931	)
Accretion of note discount on New Notes		132
Amortization of deferred financing costs on New Notes		21
Balance at September 30, 2017	$	738,222

Balance at December 31, 2016	$	627,711
Accretion of discount on Old Notes through August 24, 2017		683
Amortization of note premium on Old Notes through August 24, 2017		(574	)
Amortization of deferred financing costs on Old Notes through August 24, 2017		153
Aggregate principal amount paid on Old Notes		(630,000	)
Writeoff of unaccreted discount on Old Notes		5,294
Writeoff of unamortized premium on Old Notes		(4,452	)
Writeoff of deferred financing costs on Old Notes		1,185
Aggregate principal amount issued on New Notes		950,000
Note discount and deferred transaction costs on New Notes		(14,684	)
Note premium on New Notes		8,500
Accretion of discount on New Notes from August 24, 2017 through December 31, 2017		542
Amortization of note premium on New Notes from August 24, 2017 through December 31, 2017		(375	)
Amortization of deferred financing costs on New Notes August 24, 2017 through December 31, 2017		105
Balance at December 31, 2017	$	944,088
Accretion of discount through September 30, 2018		1,154
Amortization of note premium through September 30, 2018		(797	)
Additional deferred financing costs on New Notes		(97	)
Amortization of deferred financing costs through September 30, 2018		236
Balance at September 30, 2018	$	944,584


~~2.1~~		~~Agreement and Plan of Merger, dated as of July 14, 2017, by and among H&E Equipment Services Inc., Yellow Iron Merger Co. and Neff Corporation (Incorporated by reference to Exhibit 2.1 to the~~ ~~Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 14, 2017~~).*

~~4.1~~		Indenture, dated August 24, 2017, by and among H&E Equipment Services, Inc., the Guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to the 5.6250% Senior Notes due 2025 (incorporated by reference to Exhibit 4.1 to the ~~Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 24, 2017~~).

~~4.2~~		Registration Rights Agreement, dated August 24, 2017, by and among the Company, GNE Investments, Inc., Great Northern Equipment, Inc., H&E California Holding, Inc., H&E Equipment Services (California, LLC, H&E Equipment Services (Mid-Atlantic), Inc., and H&E Finance Corp. and Wells Fargo Securities, LLC (incorporated ~~by reference to Exhibit 4.2 to the~~ ~~Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 24, 2017~~).

~~10.1~~		Exchange and Termination Agreement, dated as of July 14, 2017, by and among H&E Equipment Services, Inc., Neff Corporation, Neff Holdings LLC, Wayzata Opportunities Fund II, L.P., and Wayzata Opportunities Fund Offshore II, L.P. (Incorporated by reference to Exhibit 10.1 to the ~~Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 14, 2017~~).

~~10.2~~		Exchange and Termination Agreement, dated as of July 14, 2017, by and among H&E Equipment Services, Inc., Neff Corporation, Neff Holdings LLC, Mark Irion, as management representative, and the other parties thereto (Incorporated by reference to Exhibit 10.2 to the ~~Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 14, 2017~~).

~~10.3~~		Commitment Letter, dated as of July 14, 2017, by and among the Company, Wells Fargo Bank, National Association, WF Investment Holdings, LLC and Wells Fargo Securities, LLC (Incorporated by reference to Exhibit 10.3 to the ~~Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 14, 2017~~).

31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1		Certification pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

~~99.1~~		~~Support~~ Agreement, dated as of July 14, 2017, by and among H&E Equipment Services, Inc., Wayzata Opportunities Fund II, L.P. and Wayzata Opportunities Fund Offshore II, L.P. (Incorporated by reference to Exhibit 99.1 to the ~~Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 14, 2017~~).

101.INS		XBRL Instance Document (filed herewith).

101.SCH		XBRL Taxonomy Extension Schema Document (filed herewith).

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).

101.LAB		XBRL Taxonomy Extension Label Linkbase Document (filed herewith).

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).

	H&E EQUIPMENT SERVICES, INC.

Dated: October ~~26, 2017~~25, 2018	By:	/s/ John M. Engquist
		John M. Engquist Chief Executive Officer (Principal Executive Officer)

Dated: October ~~26, 2017~~25, 2018	By:	/s/ Leslie S. Magee
		Leslie S. Magee Chief Financial Officer and Secretary (Principal Financial and Accounting Officer)