Baton Rouge-based H&E Equipment Services said it has reached a deal to buy an equipment rental company for $130 million, a move that expands its presence in the Midwest.
H&E said it expects to close on the purchase of One Source Equipment Rental by the end of the year. One Source, based in Illinois, has 10 locations in Illinois, Indiana, Kentucky, Tennessee and Alabama. The company posted $59 million in revenue for the 12-month period ending in July, with a fleet valued at $138 million. One Source’s fleet consists of lifts, forklifts and backhoes.
H&E has 107 locations nationwide, primarily in the South and West. The One Source deal will allow the company to enter the Illinois, Indiana and Kentucky markets, said Brad Barber, CEO of H&E.
H&E plans to add 10 “warm start” businesses this year, which are located near existing locations.
Stanley Elliott, an analyst who tracks the construction industry for Stifel, said the acquisition fits in with H&E’s plans to grow its general equipment rental business. H&E sold off its crane business in 2021 for $130 million.
One Source is exclusively an equipment rental business, although the company does sell some used equipment, Elliott said. “This is a good fit,” he said. “It gets H&E into new regions and gives them an opportunity to fill out the rest of the portfolio..”
Steven Ramsey, who covers the construction equipment industry for Thompson Research Group, said H&E’s acquisition of One Source makes sense.
“The construction equipment industry likes bigger companies,” Ramsey said. The larger an equipment rental company is, the better its chances are of getting new equipment from manufacturers and the better of a price it gets, he said.
H&E posted $1.06 billion in revenue for 2021, with equipment rentals accounting for nearly $730 million. The company’s rental fleet is valued at just over $1.9 billion.
Shares of H&E were up $1.32, or 4.3%, to close Monday at $31.77.
BY TIMOTHY BOONE | BUSINESS EDITOR