Baton Rouge-based H&E Equipment Services Inc. reported second quarter earnings of $15.8 million, or 43 cents per share, compared to $8.8 million, or 24 cents per share, during the same period a year ago.

Baton Rouge-based H&E Equipment Services Inc. is selling its struggling crane business for $130 million in cash in a major step toward becoming a pure heavy equipment rental company.

As demand from customers in the oil and gas industry has waned, so has H&E's crane rentals and sales, records show.

The overall demand for equipment rentals has proven to be more stable and resilient to market disruptions than the distribution business, the company said. H&E’s equipment rental business has shown consistent growth, with a compound annual growth rate of 11% in the five years leading up to 2020. The rental portion of H&E’s business expanded from 32% of revenue 10 years ago to 51% in 2020.

A subsidiary of publicly-traded Wisconsin crane manufacturer The Manitowoc Co. Inc. is expected to acquire H&E's crane rental and sales business for more than the original value of the cranes themselves, reported to be worth $73.5 million for 183 cranes, according to U.S. Securities and Exchange Commission records.

Manitowoc expects to use cash and debt to finance the transaction, which includes 11 full-service branches across the country. H&E Equipment described itself as the largest distributor of Manitowoc crane equipment. 

The deal is expected to close by the end of 2021 if it clears regulatory approval, including federal antitrust laws tied to the Hart-Scott-Rodino Act. 

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"The effects of the COVID-19 outbreak has decreased demand for oil and gas prices as companies and other organizations have suspended or curtailed travel," according to H&E's federal disclosure records. "Although worldwide crude oil and natural gas prices have partially recovered from the 2020 first quarter decline, we believe the uncertainty regarding future oil and natural gas prices continues to impact customer capital expenditure decisions."

In some situations, customers "canceled large capital purchases due to the uncertainty surrounding the COVID-19 pandemic." For example, sales of new cranes declined by $53.4 million in 2020.

H&E expects to spend its cash on expansion, investment in its existing rental portfolio and technology.

“We expect our continued migration to higher margin rentals will promote our strategic focus on geographic expansion and fleet investment," Brad Barber, CEO of H&E Equipment, said in a news release.

H&E's stock gained $2.02, or nearly 7%, Tuesday to close at $31.20.

Email Kristen Mosbrucker at kmosbrucker@theadvocate.com or follow her on Twitter @k_mosbrucker