H&E Equipment Services (HEES) M&A announcement summary

Deal rationale and strategic fit

• Adds a North American aftermarket platform for services, rebuilds, rent-to-purchase options and used-equipment sales, supporting growth in less-cyclical, higher-margin activities.

• Provides 11 crane branches across nine states and closer access to crane rental houses, construction companies and operators.

• Extends a dealer relationship of more than 50 years; the acquired fleet is largely Manitowoc cranes.

Financial terms and conditions

• Purchase price: $130 million, subject to working-capital and rental-fleet adjustments at closing.

• Expected to close in Q4 2021 and be accretive to earnings and operating cash flow in the first 12 months.

• Adjusted EBITDA margin expected to be ~20% after eliminating intercompany sales.

• Funding expected to combine cash on hand and debt; stated debt cost assumption was 150 bps. Rental fleet to be recorded as fixed assets at fair value.

Synergies and expected cost savings

• Initial deal is positioned as a platform; potential back-office efficiencies in HR, administration and finance were tied mainly to future acquisitions.

• Management identified business growth, including greater customer reach and market share, as the primary opportunity rather than near-term cost reductions.