8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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): July 31, 2007

Hanover Compressor Company

(Exact name of registrant as specified in its charter)

Delaware	1-13071	76-0625124
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
12001 North Houston Rosslyn, Houston, Texas		77086
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (281) 447-8787

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Press Release

Item 2.02 Results of Operations and Financial Condition.

On July 31, 2007, we issued a press release announcing our financial results for the quarter ended June 30, 2007. The press release is furnished as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

99.1 Press release dated July 31, 2007, announcing the Company’s results of operations for the quarter ended June 30, 2007.

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
July 31, 2007	By:	/s/ Lee E. Beckelman
		Name:	Lee E. Beckelman
		Title:	Senior Vice President and Chief Financial Officer

Exhibit Index

Exhibit No.		Description
	99.1	Press release dated July 31, 2007, announcing the Company’s results of operations for the quarter ended June 30, 2007.

EX-99.1

Exhibit 99.1

        More Than a Compressor Company™

Press Information

Houston, July 31, 2007

Hanover Compressor Company Reports Strong Results
for Second Quarter 2007

Hanover Compressor Company (NYSE: HC), a global market leader in full service natural gas compression and a leading provider of service, fabrication and equipment for oil and natural gas production, processing and treating applications, today reported financial results for the quarter ended June 30, 2007.

Second quarter 2007 revenue increased to $515.7 million, a 27% increase over second quarter 2006 revenue of $405.7 million. Net income for the second quarter 2007 was $26.1 million, or $0.23 earnings per share, compared with net income of $21.7 million, or $0.21 earnings per share, in the second quarter 2006.

EBITDA⁽¹⁾ from continuing operations for the second quarter 2007 was a record $121.8 million, a 17% increase over second quarter 2006 EBITDA of $103.8 million. Second quarter 2007 EBITDA includes $3.1 million in merger related expenses. Second quarter 2006 EBITDA included an $8.0 million pre-tax gain on the sale of fabrication assets in Canada, or approximately $0.07 per share.

“We are pleased with the strong results for the second quarter, with record revenue, EBITDA, backlog and fabrication margin,” said John Jackson, President and CEO. “I want to congratulate the Hanover employees on these operational records and job well done to position the Company for a successful merger with Universal.”

12001 North Houston Rosslyn, Houston, Texas 77086
(281) 447-8787
www.hanover-co.com

Summary of Business Line Results

U.S. Rentals

(in thousands)

	Three months ended
	June 30,
							Increase
	2007			2006			(Decrease)
Revenue	$	99,562		$	93,073			7	%
Operating expense		40,258			36,729			10	%
Gross profit	$	59,304		$	56,344			5	%
Gross margin		60	%		61	%		(1	)%

U.S. rental revenue and gross profit increased during the three months ended June 30, 2007, compared to the three months ended June 30, 2006, due primarily to an improvement in market conditions for higher horsepower units that has led to an improvement in pricing. Gross margin decreased slightly in the current quarter as compared to the same period last year due to higher repair and maintenance expenses.

International Rentals

(in thousands)

	Three months ended
	June 30,
							Increase
	2007			2006			(Decrease)
Revenue	$	69,645		$	67,520			3	%
Operating expense		27,675			23,691			17	%
Gross profit	$	41,970		$	43,829			(4	)%
Gross margin		60	%		65	%		(5	)%

During the three months ended June 30, 2007, international rental revenue increased, compared to the three months ended June 30, 2006, primarily due to increased rental activity in Brazil and Mexico. Gross margin and gross profit decreased primarily due to higher repair and maintenance costs in Argentina and Venezuela as well as lower revenues in Nigeria in the second quarter of 2007. Revenue related to our Nigerian Cawthorne Channel Project was not recognized during the three months ended June 30, 2007 since the project was not on-line, however, we recorded expenses of $0.8 million related to maintaining the project. The three months ended June 30, 2006 included $3.9 million in revenue and $1.6 million in operating costs related to this project.

Parts, Service and Used Equipment

(in thousands)

	Three months ended
	June 30,
							Increase
	2007			2006			(Decrease)
Revenue	$	72,664		$	55,737			30	%
Operating expense		56,036			45,061			24	%
Gross profit	$	16,628		$	10,676			56	%
Gross margin		23	%		19	%		4	%

Parts, service and used equipment revenue, gross profit and gross margin for the three months ended June 30, 2007 were higher than the three months ended June 30, 2006 primarily due to an increase in parts and service revenues in both the U.S. and internationally as well as higher used rental equipment sales.

Parts, service and used equipment revenue includes two business components: (1) parts and service and (2) used rental equipment sales and installation revenues. For the three months ended June 30, 2007, parts and service revenue was $49.8 million with a gross margin of 27%, compared to $41.9 million and 21%, respectively, for the three months ended June 30, 2006. Used rental equipment and installations sales for the three months ended June 30, 2007 was $22.8 million with a gross margin of 14%, compared to $13.8 million with a 14% gross margin for the three months ended June 30, 2006. Our installation revenue and used rental equipment sales and gross margins vary significantly from period to period and are dependent on the exercise of purchase options on rental equipment by customers and timing of the start-up of new projects by customers.

Compressor and Accessory Fabrication

(in thousands)

	Three months ended
	June 30,
							Increase
	2007			2006			(Decrease)
Revenue	$	139,508		$	70,128			99	%
Operating expense		106,016			58,482			81	%
Gross profit	$	33,492		$	11,646			188	%
Gross margin		24	%		17	%		7	%

For the three months ended June 30, 2007, compression and accessory fabrication revenue, gross profit and gross margin increased primarily due to improved market conditions that led to higher sales levels, better pricing and an improvement in operating efficiencies. As of June 30, 2007, we had compression fabrication backlog of $299.0 million, compared to $193.0 million at June 30, 2006.

Production and Processing Equipment Fabrication

(in thousands)

	Three months ended
	June 31,
							Increase
	2007			2006			(Decrease)
Revenue	$	122,595		$	103,653			18	%
Operating expense		104,336			89,203			17	%
Gross profit	$	18,259		$	14,450			26	%
Gross margin		15	%		14	%		1	%

Production and processing equipment fabrication revenue, gross profit and gross margin for the three months ended June 30, 2007 increased over the three months ended June 30, 2006, primarily due to an improvement in market conditions that led to an increase in awarded sales, improved pricing and an improvement in operating efficiencies. During the quarter ended June 30, 2007, Belleli’s revenue increased $24.4 million to $81.0 million and gross profit increased $0.4 million to $6.3 million compared to the quarter ended June 30, 2006. Belleli’s gross profit was negatively impacted during the three months ended June 30, 2007 by approximately $6.7 million of re-work costs on one of its projects.

As of June 30, 2007, we had a production and processing equipment fabrication backlog of $731.6 million compared to $521.5 million at June 30, 2006, including Belleli’s backlog of $569.4 million and $454.2 million at June 30, 2007 and 2006, respectively.

Capital and Other
Hanover had capital expenditures of approximately $69 million in the second quarter of 2007, compared to approximately $62 million in the second quarter of 2006. At June 30, 2007, the Company had approximately $1.35 billion in debt and compression equipment lease obligations, compared to $1.44 billion at June 30, 2006. At June 30 2007, the Company had approximately $53.8 million in cash on its balance sheet.

Total compression horsepower at June 30, 2007 was approximately 3,343,000, consisting of approximately 2,419,000 horsepower in the United States and approximately 924,000 horsepower internationally.

Backlog (in millions)

	Compression &		Production &		Total
Date	Accessory		Processing*		Fabrication
June 30, 2007	$	299.0	$	731.6	$	1030.6
December 31, 2006		325.1		482.5		807.6
June 30, 2006		193.0		521.5		714.5

* Includes Belleli backlog of $569.4 million, $414.0 million and $454.2 million at June 30, 2007, December 31, 2006 and June 30, 2006, respectively.

Compression HP Utilization Rate

Date	U.S.			International			Total
June 30, 2007		81	%		96	%		85	%
December 31, 2006		84	%		97	%		87	%
June 30, 2006		84	%		98	%		88	%

Conference Call Details
Hanover Compressor Company (NYSE: HC) announces the following schedule and teleconference information for its second quarter 2007 earnings release:

• Earnings Release: Tuesday, July 31, 2007 before market open by public distribution through Business Wire and the Hanover website at www.hanover-co.com.

• Teleconference: Tuesday, July 31, 2007 at 11 a.m. EDT hosted by Stephen York, Vice President, Investor Relations and Technology. Speakers will be John E. Jackson, President and CEO, and Lee E. Beckelman, Senior Vice President and CFO. To access the call, United States and Canadian participants should dial (800) 811-8824. International participants should dial (913) 981-4903 at least 10 minutes before the scheduled start time. Please reference Hanover conference call number 4801055.

• Live Webcast: The webcast will be available in listen-only mode via the Company’s website: www.hanover-co.com

• Webcast Replay: For those unable to participate, a replay will be available from 1:30 p.m. EDT on Tuesday, July 31, until 1:30 p.m. EDT Tuesday, August 7, 2007. To listen to the replay, please dial 888-203-1112 in the U.S. and Canada, or 719-457-0820 internationally and enter access code 4801055.

*****

About Hanover Compressor Company
Hanover Compressor Company (NYSE:HC) is a global market leader in full service natural gas compression and a leading provider of service, fabrication and equipment for oil and natural gas production, processing and transportation applications. Hanover sells and rents this equipment and provides complete operation and maintenance services, including run-time guarantees for both customer-owned equipment and its fleet of rental equipment. Founded in 1990 and a public company since 1997, Hanover’s customers include both major and independent oil and gas producers and distributors as well as national oil and gas companies. More information can be found at www.hanover-co.com.

Forward Looking Statements
Certain matters discussed in this presentation are “forward-looking statements” intended to qualify for the safe harbors from liabilities established by the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can generally be identified as such because of the context of the statement or because the statement includes words such as “believes,” “anticipates,” “expects,” “estimates,” or words of similar import. Similarly, statements that describe Hanover’s future plans, objectives or goals or future revenues or other financial measures are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially

from those anticipated as of the date the statements were made. These risks and uncertainties include, but are not limited to: our inability to renew our short-term leases of equipment with our customers so as to fully recoup our cost of the equipment; a prolonged substantial reduction in oil and natural gas prices, which could cause a decline in the demand for our compression and oil and natural gas production and processing equipment; reduced profit margins or the loss of market share resulting from competition or the introduction of competing technologies by other companies; changes in economic or political conditions in the countries in which we do business, including civil uprisings, riots, terrorism, kidnappings, the taking of property without fair compensation and legislative changes; changes in currency exchange rates; the inherent risks associated with our operations, such as equipment defects, malfunctions and natural disasters; ability to obtain components used to fabricate our products; our inability to implement certain business objectives, such as international expansion, ability to timely and cost-effectively execute integrated projects, integrating acquired businesses, generating sufficient cash, accessing the capital markets, and refinancing existing or incurring additional indebtedness to fund our business; our inability to consummate the proposed merger with Universal Compression Holdings, Inc.; changes in governmental safety, health, environmental and other regulations, which could require us to make significant expenditures; and our inability to comply with covenants in our debt agreements and the decreased financial flexibility associated with our substantial debt. A discussion of these and other factors is included in the Company’s periodic reports filed with the Securities and Exchange Commission.

Investor Relations Inquiries:
Stephen York
Vice President, Investor Relations and Technology
Tel: (832) 554-4856
E-mail: syork@hanover-co.com

(Tables Follow)

HANOVER COMPRESSOR COMPANY
CONSOLIDATED FINANCIAL DATA AND EBITDA RECONCILIATION

(in thousands of dollars, except per share amounts)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2007		2006			2007		2006
Revenues and other income:
U.S. rentals	$	99,562	$	93,073		$	199,198	$	184,716
International rentals		69,645		67,520			136,936		130,026
Parts, service and used equipment		72,664		55,737			154,004		105,008
Compressor and accessory fabrication		139,508		70,128			218,216		124,819
Production and processing equipment fabrication		122,595		103,653			255,833		182,272
Equity in income of non-consolidated affiliates		6,279		5,230			11,962		11,078
Gain on sale of business and other income		5,465		10,330			12,797		40,549
		515,718		405,671			988,946		778,468
Expenses:
U.S. rentals		40,258		36,729			79,135		74,820
International rentals		27,675		23,691			50,980		45,023
Parts, service and used equipment		56,036		45,061			122,881		86,123
Compressor and accessory fabrication		106,016		58,482			169,261		105,175
Production and processing equipment fabrication		104,336		89,203			215,874		158,166
Selling, general and administrative		56,240		49,783			108,034		97,838
Foreign currency translation		319		(2,236	)		11		(3,733	)
Debt extinguishment costs		—		—			—		5,902
Merger expenses		3,065		—			3,389		—
Other		—		1,204			—		1,204
		393,945		301,917			749,565		570,518
EBITDA from continuing operations (1)		121,773		103,754			239,381		207,950
Depreciation and amortization		52,772		43,077			103,668		85,045
Interest expense		26,775		29,287			53,640		60,927
		79,547		72,364			157,308		145,972
Income from continuing operations before income taxes and minority interest		42,226		31,390			82,073		61,978
Provision for income taxes		16,162		9,546			30,607		17,993
Income from continuing operations before minority interest		26,064		21,844			51,466		43,985
Minority interest, net of taxes		—		(93	)		—		(93	)
Income from continuing operations		26,064		21,751			51,466		43,892
Loss from discontinued operations, net of tax		—		(47	)		—		(139	)
Cumulative effect of accounting change, net of tax		—		—			—		370
Net income	$	26,064	$	21,704		$	51,466	$	44,123
Basic income per common share:
Income from continuing operations	$	0.25	$	0.21		$	0.49	$	0.44
Loss from discontinued operations, net of tax		—		—			—		—
Cumulative effect of accounting change, net of tax		—		—			—		—
Net income	$	0.25	$	0.21		$	0.49	$	0.44

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Diluted income per common share:
Income from continuing operations(2)	$	0.23		$	0.21		$	0.46		$	0.43
Loss from discontinued operations, net of tax		—			—			—			—
Cumulative effect of accounting change, net of tax		—			—			—			—
Net income	$	0.23		$	0.21		$	0.46		$	0.43
Weighted average common and common equivalent shares outstanding:
Basic		105,889			101,017			104,631			100,888
Diluted		118,054			112,052			117,828			111,740
Gross profit percentage:
U.S. rentals		60	%		61	%		60	%		59	%
International rentals		60	%		65	%		63	%		65	%
Parts, service and used equipment		23	%		19	%		20	%		18	%
Compressor and accessory fabrication		24	%		17	%		22	%		16	%
Production and processing equipment fabrication		15	%		14	%		16	%		13	%

(1) EBITDA from continuing operations consists of consolidated income from continuing operations before interest expense, provision for income taxes, and depreciation and amortization. We believe that EBITDA is a commonly used measure of financial performance for valuing companies in our industry. EBITDA should not be considered as an alternative to measures prescribed by generally accepted accounting principles and may not be comparably calculated from one company to another.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2007		2006		2007		2006
EBITDA Reconciliation
Income from continuing operations	$	26,064	$	21,751	$	51,466	$	43,892
Add:
Depreciation and amortization		52,772		43,077		103,668		85,045
Interest expense		26,775		29,287		53,640		60,927
Minority interest		—		93		—		93
Provision for income taxes		16,162		9,546		30,607		17,993
EBITDA from continuing operations	$	121,773	$	103,754	$	239,381	$	207,950

(2)	Net income for the diluted earnings per share calculation for the three and six-month periods ended June 2007 is adjusted to add back interest expense and amortization of financing costs, net of tax, relating to the Company’s convertible senior notes due 2014 and convertible subordinated notes due 2029 totaling $1.2 million and $2.7 million, respectively.
	Net income for the diluted earnings per share calculation for the three and six-month periods ended June 2006 is adjusted to add back interest expense and amortization of financing costs, net of tax, relating to the Company’s convertible senior notes due 2014 totaling $1.8 million and $3.6 million, respectively.