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The focus of Baton Rouge-based H&E Equipment Services is now squarely on its fastest-growing business segment: equipment rental.
In recent years, H&E has repositioned itself as a pure play rental business. While the legal name of the company has not changed, a new sub-brand—H&E Rentals—has been introduced to reflect the shift in business strategy.
H&E was founded in 1961 as a distribution company, meaning it sold equipment and provided parts and service on behalf of manufacturers. For many years, H&E did rent assets, but it did so as a distributor.
According to CEO Brad Barber, H&E took the first step toward divesting itself of its distribution business in 2021 with the sale of its crane business. The company went on to finalize that divestiture in 2022 when it sold its earthmoving business.
Now, the vast majority of H&E’s revenues—about 80%—come from equipment rental. Sales of new equipment and sales of rental equipment make up the remaining 20%.
“The punchline is that we’ve transitioned from a distribution business to a hybrid business—meaning we rented and sold—to what is now a pure play rental business,” Barber says.
While some of H&E’s growth in recent years can be attributed to a handful of acquisitions it has made in the equipment rental space, Barber says the majority of the company’s growth has come “organically” through opening its own locations throughout the U.S. H&E currently has about 140 branches in 30 states, and Barber expects to open 12 to 15 more locations in 2024.
“We’re still in growth mode,” Barber says.
The recent moves appear to be paying off. According to H&E’s Q1 earnings report released on Tuesday, revenues increased by 15.2% from Q1 2023 to $371.4 million. Equipment rental made up the bulk of the company’s revenues, bringing in $295.3 million.
H&E’s Q1 growth follows up on the company’s record-setting 2023 figures. Last year, H&E’s total revenues came in just under $1.5 billion—an 18% increase from 2022.
