<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 8, 2000
HANOVER COMPRESSOR COMPANY
(Exact Name of Registrant as Specified in Charter)
Delaware 1-13071 76-0625124
(State or Other (Commission File Number) (IRS Employer
Jurisdiction Identification No.)
of Incorporation)
12001 North Houston Rosslyn 77086
Houston, Texas 77086 (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (281) 447-8787
<PAGE>
Item 5. Other Events.
See the following press release.
HANOVER COMPRESSOR REPORTS RECORD THIRD QUARTER DRIVEN BY STRONG GROWTH ACROSS
ALL BUSINESS SEGMENTS
YEAR-OVER-YEAR QUARTERLY NET INCOME INCREASES 48% YEAR-OVER-YEAR QUARTERLY CASH
FLOW INCREASES 60%
HOUSTON--(BUSINESS WIRE)--Nov. 8, 2000-- Hanover Compressor Company (NYSE:HC -
news), a leading provider of outsourced natural gas compression services, today
reported continued strong growth in revenue, cash flow and net income for the
third quarter ended September 30, 2000.
Total revenue for the third quarter 2000 was $162.6 million, representing an 86
percent increase over total revenue for the quarter ended September 30, 1999 of
$87.3 million. Cash flow (income before income taxes, interest expense, leasing
expense, distributions on mandatorily redeemable convertible preferred
securities and depreciation and amortization) increased 60 percent in the third
quarter of 2000 to $55.2 million or $0.77 per fully diluted share. Year earlier
cash flow was $34.5 million or $0.56 per fully diluted share. Net income grew 48
percent to $15.4 million or $0.23 per fully diluted share, compared with $10.4
million or $0.17 per fully diluted share for the third quarter of 1999.
Total revenues for the nine-month period ended September 30, 2000 were $370.2
million, compared with $227.8 million for the first nine months of 1999, an
increase of 63 percent. Cash flow increased 47 percent to $139.4 million or
$2.16 per fully diluted share, compared with cash flow of $94.8 million or $1.55
per fully diluted share. Net income grew 43 percent to $39.3 million or $0.61
per fully diluted share, compared with $27.5 million or $0.45 per fully diluted
share for the nine months ended September 30, 1999. Per share results have been
adjusted to reflect the 2-for-1 stock split of outstanding shares on June 13,
2000.
"Hanover's very strong growth in revenues, cash flow and earnings reflect the
Company's outstanding execution of our five-part growth strategy as well as the
continued industry-wide growth in outsourcing in this highly favorable operating
environment,'' said Michael J. McGhan, president and chief executive officer.
``Our company has continued to make substantial gains in the core compression
and gas handling business through strong organic growth as well as the
successful integration of Hanover's recent major acquisitions, PAMCO Services
International and Dresser-Rand's Compression Services Division. At the same
time, Hanover has very successfully expanded into related product and service
markets such as outsourced gas treating, compression maintenance and gas
measurement, among others, expanding Hanover's market reach and increasing its
return on capital. Through these moves we are able to offer the broadest set of
compression and gas handling solutions, adding more value to our customers and
assisting them to achieve their own performance and growth goals," McGhan
added.
Compression rental revenue for the quarter ended September 30, 2000, increased
33 percent to $66.3 million, compared with $50.0 million for the third quarter
of 1999. Total compression
<PAGE>
horsepower was 2,098,000 at September 30 and fleet horsepower utilization
averaged 93 percent during the quarter. This statistic includes the impact of
Hanover's acquisition of PAMCO Services International and Dresser-Rand's
Compression Services Division in July and September, respectively, whose
combined fleet aggregates 375,000 horsepower and is presently operating at 85
percent horsepower utilization, compared with 76 percent at the time of those
acquisitions. Hanover's parts, service and used equipment segment continued to
experience the fastest rate of growth among Hanover's businesses, with total
revenue of $28.7 million, up 132 percent from the same period a year earlier.
Third quarter compressor fabrication revenues increased 88 percent to $31.0
million, reflecting an increase in both compression horsepower packaged as well
as unit sales to third party customers. Production and processing equipment
fabrication revenue was $32.8 million, up 324 percent from the year earlier
period, reflecting both the strengthening of Hanover's oil and gas production
equipment business and the contribution of the T.H. Russell Co. and Maloney
Industries units of Applied Process Solutions, Inc., acquired by Hanover on June
5, 2000.
"Looking ahead, management sees continued significant growth due to the
increasing outsourcing trend among our rapidly expanding customer base,
Hanover's continued expansion of new and highly-related business lines and
further improvements in the performance of recently acquired companies," McGhan
said. "Hanover's solid performance to date confirms our view that a period of
accelerated growth in the compression and gas handling industries is underway.
The current outlook for our industry is very favorable and Hanover, the market
leader, is expanding its lead. Steady growth in demand has resulted in industry-
wide improvement in fleet utilization as the outsourcing trend intensifies.
Hanover's strategies, organization and growth drivers are in place and the
activity level throughout our company is very high, contributing to our very
strong outlook."
Hanover Compressor Company is the market leader in full service natural gas
compression and a leading provider of service, financing, fabrication and
equipment for contract natural gas handling applications. Hanover provides this
equipment on a rental, contract compression, maintenance and acquisition
leaseback basis to natural gas production, processing and transportation
companies that are increasingly seeking outsourcing solutions. Founded in 1990
and a public company since 1997, its customers include premier independent and
major producers and distributors.
This news release contains forward-looking statements intended to qualify for
the safe harbors from liability established by the Private Securities Litigation
Reform Act of 1995, including statements regarding the expected expansion of
Hanover's compression rental fleet and new business lines, improvements in the
performance of newly acquired businesses and anticipated compression and gas-
handling demand growth for 2000. These projections and statements are based on
management's estimates and assumptions with respect to future events and
financial performance and are believed to be reasonable, though are inherently
uncertain and difficult to predict. Actual results could differ materially from
those projected as a result of certain factors. A discussion of these factors is
included in the Company's periodic reports filed with the Securities and
Exchange Commission, including its most recent filings on Forms 10-K and 10-Q.
<PAGE>
HANOVER COMPRESSOR COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME (unaudited)
(in thousands of dollars, except per share amounts)
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
------------------- ---------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
-------- ------- -------- --------
Revenues:
Rentals $ 66,309 $50,042 $180,210 $137,749
Parts, service
and used equipment 28,743 12,402 64,293 27,403
Compressor
fabrication 30,975 16,493 60,146 35,441
Production equipment
fabrication 32,759 7,733 53,870 21,177
Gain on sale of
other assets 1,572 503 4,172 3,927
Other 2,223 96 7,531 2,141
-------- ------- -------- --------
162,581 87,269 370,222 227,838
-------- ------- -------- --------
Expenses:
Rentals 23,263 16,228 62,104 45,454
Parts, service
and used equipment 17,951 8,156 42,202 18,617
Compressor
fabrication 26,208 13,785 50,082 29,102
Production equipment
fabrication 25,520 5,727 41,938 15,664
Selling, general
and administrative 14,467 8,851 34,481 24,232
Depreciation and
amortization 14,179 9,086 36,830 28,536
Leasing expense 11,460 7,143 29,596 14,727
Interest expense 2,925 1,804 5,560 7,841
Distributions on
mandatorily
redeemable
convertible
preferred
securities 1,593 - 4,776 -
-------- ------- -------- --------
137,566 70,780 307,569 184,173
-------- ------- -------- --------
Income before
income taxes 25,015 16,489 62,653 43,665
Provision for
income taxes 9,605 6,101 23,305 16,156
-------- ------- -------- --------
Net income $ 15,410 $10,388 $ 39,348 $ 27,509
======== ======= ======== ========
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Diluted net income
per share:
Net income 15,410 10,388 39,348 27,509
Distributions on
mandatorily
redeemable
convertible
preferred
securities, net
of income tax 1,016 - - -
-------- ------- -------- --------
Net income for
purposes of computing
diluted net income
per share 16,426 10,388 39,348 27,509
======== ======= ======== ========
Weighted average
common equivalent
shares outstanding:
Basic 63,966 57,084 60,324 56,966
-------- ------- -------- --------
Diluted 72,097 61,456 64,619 60,974
-------- ------- -------- --------
Earnings per
common share
Basic $0.24 $0.18 $0.65 $0.48
-------- ------- -------- --------
Diluted $0.23 $0.17 $0.61 $0.45
-------- ------- -------- --------
</TABLE>
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HANOVER COMPRESSOR COMPANY
Date: November 9, 2000 By: /s/ Michael J. McGhan
---------------------
Name: Michael J. McGhan
Title: President and Chief Executive Officer
