Herc Holdings acquires Houston-based Champion Rentals
Herc Holdings Inc., a North American equipment rental supplier operating as Herc Rentals Inc., announced that it has acquired substantially all the assets of Houston-based Champion Rentals, Inc. (Champion). Terms were not disclosed. Champion is a full-service general equipment rental company comprising approximately 100 employees and four locations serving contractors and industrial, manufacturing and government customers in the Houston metropolitan area. The addition of Champion expands Herc Rentals’ Houston-area presence to 12 physical locations, which collectively provide general and specialty equipment rental solutions and related services. “I am pleased to welcome Champion’s team members to Herc Rentals,” said Larry Silber, president and chief executive officer. “Champion has served the Houston market since 1982 and has a strong reputation for excellent customer service and premium equipment. Our combined team and resources position Herc Rentals to be a preeminent equipment rental partner for the Houston market’s diverse mix of construction, industrial and government customers. “This acquisition supports our long-term strategy to achieve greater density and scale in select urban markets across North America to better serve both our local and national customers. In addition, Champion’s locations will facilitate the expansion of our Centers of Excellence concept for vital categories of equipment to support critical projects and essential operations throughout Houston and across the nearby Gulf region.” The transaction represents Herc Rentals’ first multi-location acquisition since it became an independent, publicly traded company in 2016. The company expects the acquisition to be accretive to its earnings in the first year. “Our disciplined capital management has contributed to a solid balance sheet, strong free cash flow and a net leverage ratio comfortably within our stated target range of 2.5x to 3.5x,” added Silber. “We are well positioned to pursue growth across a variety of fronts, including expansion of select equipment categories, greenfield and acquired locations, and niche opportunities, while remaining committed to a sound financial footing.”
H&E opens new branch in Kings Mountain NC
Effective August 14, 2023, H&E Equipment Services Inc. (H&E) announces the opening of its Kings Mountain branch, its ninth rental location in the state of North Carolina and its fourth in the greater Charlotte vicinity. Since the beginning of the second quarter of 2023, H&E has opened eight new branches across the country, with two of those in the Tar Heel State. The facility is located at 612 Canterbury Road, Kings Mountain, NC 28086-9601, phone 980-341-1800. It includes a fully fenced yard area, offices, and a repair shop and carries a variety of construction and general industrial equipment. “The Charlotte metropolitan area is one of the fastest growing regions in the country, and we are bringing additional fleet and resources to serve customers there. Our existing North Charlotte, Charlotte and Statesville branches blanket the eastern and northern portions of the area, so we’ve strategically placed our new branch in Kings Mountain to reach farther west and southwest, including into upstate South Carolina,” says Branch Manager Rob Kendrick. “Our proximity to I-85 and Hwy. 74 is ideal and allows us to deliver equipment to job sites across the metro area quickly and efficiently.” The Kings Mountain branch specializes in the rental of aerial lifts, earthmoving equipment, telescopic forklifts, compaction equipment, generators, light towers, compressors, and more and represents the following manufacturers: Allmand, Atlas Copco, Bomag, Case, Club Car, Cushman, Doosan, Gehl, Generac Mobile, Genie, Hamm, Hilti, Husqvarna, JCB, JLG, John Deere, Kobelco, Kubota, LayMor, Ledwell, Lincoln Electric, Link-Belt Excavators, MEC, Miller, Multiquip, Polaris, Sany, Skyjack, SkyTrak, Sullair, Sullivan-Palatek, Tag, Towmaster, Unicarriers, Wacker Neuson, Yanmar, and others.
ARA’s quarterly economic forecast updates CIE rental revenues
The American Rental Association (ARA) has released an updated forecast for the construction and industrial equipment rental industry. In the quarterly update, the ARA presented significant changes in the economic forecast, particularly for construction and industrial equipment (CIE) rental revenues. In the previous forecast, CIE rental revenue was expected to reach $45.5 billion in 2023 and $46.7 billion in 2024. With new considerations, the CIE rental revenue is expected to total $56 billion this year and $59 billion in 2024. There are two factors underpinning these changes. The first is the data on non-residential construction spending used in the model and the second is the increasing importance of ‘specialty rental’ to overall rental revenues. Recent analysis by economists at the Federal Reserve Board has suggested that data for non-residential construction spending produced by the U.S. Census Bureau has underestimated non-residential construction spending by at least 20 percent since the second quarter of 2021. “The Fed economists’ analysis is both well-reasoned and analytically sound and we believe that this new information needs to be included in our revised forecast,” says John McClelland, Ph.D., ARA vice president for government affairs and chief economist. “The second change in our forecast is the inclusion of information about specialty rentals which has been a growing trend. Recent work by our partners at S&P Global has constructed a ten-year time series of specialty rental from multiple data sources. Incorporating this new information into our model now gives specialty rentals a larger share among the variables that forecast CIE revenues.” With current CIE forecasts including both traditional and specialty rental as the new industry measure, Canadian CIE rental revenues are expected to reach $4.4 billion in 2023 as opposed to previous forecasts totaling $3.7 billion. In 2024, Canadian CIE rental revenue is predicted to total $4.4 billion, an increase from the previous forecast of $3.8 billion. Canadian general tool equipment rental revenue is down slightly from the last forecast at $991 million. However, stronger growth is expected in 2024 and beyond as the forecast indicated 2024 revenue at $1 billion. In the United States general tool market, rental revenue growth will slow through 2023, totaling $14.9 billion this year. This is driven by weakness in residential construction markets. Growth in 2024 is predicted to slow as well, with revenues equaling $15.7 billion in 2024.
Herc Holdings reports strong Second Quarter 2023 results and reaffirms full-year 2023 Guidance
Record equipment rental revenue of $702 million, an increase of 16% Record total revenues of $802 million, an increase of 25% Net income increased to $76 million, or $2.66 per diluted share, an increase of 12% Adjusted EBITDA of $352 million increased 24%; adjusted EBITDA margin at 43.9% Rental pricing increased 7.8% year-over-year Common stock repurchases of approximately 520,000 shares Herc Holdings Inc. has reported financial results for the quarter ended June 30, 2023. Equipment rental revenue was $702 million and total revenues were $802 million in the second quarter of 2023, compared to $605 million and $640 million, respectively, for the same period last year. In the second quarter of 2023, the Company reported net income of $76 million, or $2.66 per diluted share, an increase of 12% compared to $73 million, or $2.38 per diluted share, in the same 2022 period. “We continue to generate strong, double-digit growth as a result of sound strategies and an unmatched team of product and logistics experts that embody a customer-first mindset,” said Larry Silber, president and chief executive officer. “In the second quarter, Team Herc increased equipment rental revenue by 16% on 7.8% higher pricing, despite continued supply chain inefficiencies and labor disruptions in the film and television industry, which has all but halted our studio entertainment business. Growth in national account revenue and local market expansion through acquisitions and greenfield locations drove rental revenue higher, while strong returns on fleet sales represented an incremental benefit to total revenue. This, coupled with cost efficiencies, supported a 24% increase in Adjusted EBITDA year over year. “Our non-residential and industrial markets are healthy and growing with outsized opportunities coming from federally funded, large-scale infrastructure and mega projects. The favorable market environment coupled with our expanding branch network, broad selection of premium equipment, leading customer experiences, comprehensive fleet management services and advanced technologies position us to continue to capture above-market growth in 2023 and over the long-term,” said Silber. 2023 Second Quarter Financial Results Total revenues increased 25% to $802 million compared to $640 million in the prior-year period. The year-over-year increase of $162 million primarily related to an increase in equipment rental revenue of $97 million, reflecting positive pricing of 7.8% and increased volume of 17.3%. Sales of rental equipment increased by $64 million during the period. Dollar utilization was 40.3% compared to 42.5% in the prior-year period. The change is primarily due to a slowdown in the studio entertainment business as a result of labor disruptions in the film and television industry, as well as the continued supply chain challenges that have disrupted the normal cadence of deliveries. Direct operating expenses of $282 million increased 14% compared to the prior-year period. The increase was primarily related to strong rental activity and associated additional headcount, in addition to higher maintenance and facilities expenses as we increase our fleet size and expand our branch network. Depreciation of rental equipment increased 24% to $161 million due to higher year-over-year average fleet size. Non-rental depreciation and amortization increased 22% to $28 million primarily due to amortization of acquisition intangible assets. Selling, general and administrative expenses was $111 million, or 14% higher primarily due to increases in general payroll and benefits, credit and collection expense, and selling expenses, including commissions and other variable compensation increases. Interest expense increased to $54 million compared with $25 million in the prior-year period due to higher interest rates on floating rate debt and increased borrowings on the ABL Credit Facility primarily to fund acquisition growth. Net income was $76 million compared to $73 million in the prior-year period. Adjusted net income increased 3% to $77 million, or $2.69 per diluted share, compared to $75 million, or $2.47 per diluted share, in the prior-year period. The effective tax rate was 26% in both periods. Adjusted EBITDA increased 24% to $352 million compared to $284 million in the prior-year period and adjusted EBITDA margin was 43.9% compared to 44.4% in the prior-year period. A decline in the Company’s studio entertainment revenue year over year, as well as sales of used equipment, which more than quadrupled over last year’s second quarter sales, impacted the margin performance in the latest quarter. 2023 First Half Financial Results Total revenues increased 28% to $1,542 million compared to $1,208 million in the prior-year period. The year-over-year increase of $334 million was related to an increase in equipment rental revenue of $224 million, reflecting positive pricing of 7.4% and increased volume of 20.0%. Sales of rental equipment increased $107 million during the first half of 2023. Dollar utilization decreased to 40.0% compared to 42.0% in the prior-year period. The change is primarily due to a slowdown in the studio entertainment business as a result of labor disruptions in the film and television industry, as well as the continued supply chain challenges that have disrupted the normal cadence of deliveries. Direct operating expenses of $563 million increased 19% compared to the prior-year period. The increase was primarily related to strong rental activity and associated additional headcount, in addition to higher fuel, maintenance and facilities expenses as we increase our fleet size and expand our branch network. Depreciation of rental equipment increased 26% to $313 million, due to higher year-over-year average fleet size. Non-rental depreciation and amortization increased 23% to $54 million primarily due to amortization of acquisition intangible assets. Selling, general and administrative expenses was $217 million, or 17% higher primarily due to increases in selling expenses, including commissions and other variable compensation, credit and collections expense, and general payroll and benefits. Interest expense increased to $102 million compared with $48 million in the prior-year period due to higher interest rates on floating rate debt and increased borrowings on the ABL Credit Facility primarily to fund acquisition growth. Net income was $143 million compared to $131 million in the prior-year period. Adjusted net income increased 9% to $146 million, or $5.03 per diluted share, compared to $134 million, or $4.41 per diluted share, in the prior-year period. The effective tax rate was 20% in the first half of 2023 compared to 21% in the
Briggs Industrial Solutions announces Mark Piccirillo as new Chief Financial Officer
Briggs Industrial Solutions, a Sammons Industrial company, announced Mark Piccirillo as the new Chief Financial Officer. A proven strategic leader, with more than 25 years of experience, Piccirillo has held roles with responsibilities in the US and abroad that included mergers & acquisitions, P&L ownership, growth initiatives, and profitability improvements. Piccirillo has a proven record in leading complex finance organizations across multiple industries and driving change. “I am excited to have Mark join our executive team and bring his breadth of experience to our organization. Mark’s approach to leadership and team development and strong values aligns with our company values and will help us to continue to grow in the future.” Dan Lister, President, Briggs Industrial Solutions. Piccirillo joins Briggs from Lennox International, where he most recently served as Vice President, Finance & Chief Financial Officer for Lennox’ Commercial HVAC and Refrigeration businesses. During his nearly 12 years with Lennox, Mark served as the CFO for four different business segments guiding the U.S. and Internationally based businesses through various stages of turn-around, growth and expansion. Mark is a Certified Public Accountant and graduated cum laude from Babson College.
Cooper Equipment Rentals acquires Warner Rentals Ltd. and Scotty’s Rentals and Landscaping Ltd. in Western Canada
Cooper Equipment Rentals Limited has announced the acquisition of Warner Rentals Ltd. and Scotty’s Rentals and Landscaping Ltd., expanding Cooper’s branch and specialty footprint in western Canada. “Our entire team is excited about these two acquisitions. They reaffirm our on-going commitment to building a truly Canadian, coast-to-coast equipment rental company,” says Justin Wharton, Cooper’s western Canada Director of Operations. “Adding Warner Rentals and Scotty’s to the Cooper network helps us deliver the Cooper Difference – unsurpassed customer care, the best solutions and deep expertise – at a whole new level in western Canada,” adds Cooper CEO Doug Dougherty. Warner Rentals was founded in 1975 by owner Ralph Warner and currently has five locations in Kamloops, Princeton, Revelstoke, Salmon Arm and Scotch Creek, British Columbia. Over the past 48 years, Warner Rentals has become a staple of the communities it serves, with a reputation for quality, integrity, and community involvement. The acquisition of Warner Rentals sees Cooper expand the company’s footprint in the central British Columbia interior and intensifies their service coverage in a rapidly growing and important western Canadian market. “Warner Rentals brings a highly experienced and respected team to the Cooper family, sharing the same deep passion for customers and community.” says Rob Potter, British Columbia Regional Manager for Cooper. “We knew of Cooper’s well-established presence in the market and already have a great working relationship with their team in British Columbia, enhancing our ability to serve customers better across western Canada,” says Ralph Warner, owner of Warner Rentals. Headquartered in Rock View County, Alberta, Scotty’s specializes in providing climate control equipment – including heaters, generators, and tarping services – as well as fencing for residential construction. Since their founding in 2007, the company has built a reputation for providing excellent service and support. The addition of Scotty’s bolsters Cooper’s climate control division, while also adding a new product line in fencing. “We are excited to join the Cooper family. The Company being Canadian was a key factor in this decision, and Cooper’s size allows us to continue to service our customers with a variety of equipment solutions,” says Peter Jensen, owner of Scotty’s. “Our team is looking forward to continuing to deliver the exceptional service we have built our business on, while being part of a larger company that is also committed to servicing local communities with a customer-first approach.” “These acquisitions not only exemplify our unwavering commitment to expanding our presence in western Canada but also reinforce our dedication to providing top-tier rental solutions to all major markets across Canada,” says Brian Spilak, Chief Operating Officer of Cooper “By integrating the strengths of Warner Rentals and Scotty’s with our own, we are poised to continue to deliver an unmatched level of service and support to customers across many new markets.”
ARA’s Women in Rental and Young Professional Network conferences set for October in Florida
The American Rental Association (ARA) has announced that the 2023 Women in Rental and Young Professional Network (YPN) conferences will be hosted in Clearwater Beach, Florida, in October. The conferences will be held back-to-back at the brand-new JW Marriott Clearwater Beach Resort & Spa. The Women in Rental conference will take place Monday, October 23 through Tuesday, October 24. The Young Professional Network conference will be held Wednesday, October 25 through Thursday, October 26. “We are excited to be hosting these two conferences in October as they will provide members the opportunity to experience focused education and targeted networking among their peers in a welcoming and fun atmosphere,” said Christine Hammes, ARA vice president, association services. “These conferences offer members an environment to foster lasting relationships and create deeper engagement within the industry.” Registration for both conferences opens Wednesday, July 5. Complete event details and registration information can be found at: Women in Rental conference: Monday, October 23 – Tuesday, October 24 YPN conference: Wednesday, October 25 – Thursday, October 26 In addition to a two-night hotel stay, conference materials and swag, two interactive networking receptions and breakfast and lunch during the conferences, registered attendees also will experience renowned speakers exclusive to their respective events: Sara Ross will present “Activate Your Aliveness Factor” at the Women in Rental conference. Ross’s session will leave attendees laughing, inspired and feeling recharged with actionable takeaways to create more human-centered organizations, energized leaders and healthier, happier, high-performing people. James Taylor will present “Supercreativity™: Augmenting Human Creativity in the Age of Artificial Intelligence” for the YPN group. Attendees will learn what disruptive technologies such as AI mean for you, your team and the industry; how to use the new science of “Augmented Creativity” to generate, evaluate, develop and implement more ideas, more quickly; which job roles in the industry are most at risk from automation and more. Capacity is limited for both conferences, so it is suggested to sign up early to secure a spot at these inspiring rental industry events. The Women in Rental conference is sponsored by Alert Rental Software, Toro and John Deere. The education sessions for both conferences are sponsored by the ARA Foundation.
United Rentals acquires ChaseCo Rentals
ChaseCo Rentals, an independent general rental equipment provider headquartered in Sullivan, Mo., has been acquired by United Rentals. Founded in 2004, ChaseCo Rentals quickly distinguished itself with customers by providing the highest quality rental equipment and unsurpassed customer service throughout central and eastern Missouri, according to Catalyst Strategic Advisors LLC, which served as exclusive transaction advisor to ChaseCo Rentals. “I am exceptionally proud of the ChaseCo team, and their extraordinary commitment to our customers and each other,” said Chase Darrah, founder and owner of ChaseCo Rentals. “I am pleased that United Rentals will take the ChaseCo platform to the next level by providing our customers and team with futher investment in growth. I am excited about the future our customers and team will have with United Rentals.” “We are excited to announce that ChaseCo Rentals has joined United Rentals,” said United Rentals CEO Matt Flannery. “United Rentals offers the broadest range of equipment and solutions delivered by the strongest customer service team in the industry.” Flannery said they will work to make the transition “as seamless as possible,” but for now, “it’s business as usual.”
H&E opens new Houston South branch
Effective June 5, 2023, H&E Equipment Services Inc. (H&E) announces the opening of its Houston South branch, its 22nd rental location in the state of Texas. The branch is located at 6100 Almeda Genoa Road, Houston, TX 77048-4539, phone 346 547-0300. It includes a fully fenced yard area, offices, and a separate repair shop and is capable of handling a variety of construction and general industrial equipment. “Strategically positioned just north of Beltway 8 with quick access to I-610 and I-45, our new branch extends our reach across the large and continuously growing Houston market. With more Houston-area locations and added fleet inventory available, coverage now blankets all geographic corners of the metro area, and we can more efficiently serve job sites wherever they are located,” says Branch Manager Alex Soliman. “Our Houston South team consists of equipment professionals who have worked with H&E in this area for a number of years, so we know the market. We can locate equipment from any number of facilities in the area and supply our customers quickly. We’re hitting the ground running.” The Houston South branch specializes in the rental of aerial lifts, earthmoving equipment, telescopic forklifts, compaction equipment, generators, light towers, compressors, and more and represents the following manufacturers: Allmand, Atlas Copco, Bomag, Case, Club Car, Gehl, Generac Mobile, Genie, Hamm, JCB, JLG, John Deere, Kobelco, Kubota, LayMor, Ledwell, Lincoln Electric, Link-Belt Excavators, MEC, Miller, Multiquip, Nissan, Polaris, Sany, Skyjack, SkyTrak, Sullair, Sullivan-Palatek, Unicarriers, Wacker Neuson, Yanmar, and others.
H&E opens new branch in Pueblo Colorado
Effective June 1, 2023, H&E Equipment Services Inc. (H&E) announces the opening of its Pueblo branch, its sixth rental location in the state of Colorado. The branch is located at 3001 N Freeway Road, Pueblo, CO 81008-1023, phone 719 467-2900. It includes a fully fenced yard area, offices, and a separate repair shop and can handle a variety of construction and general industrial equipment for customers in the southern half of the state. “H&E’s placement of its newest Centennial State facility in close proximity to its existing Colorado Springs branch provides increased coverage and convenience for existing customers in all of southern Colorado and positions us favorably to win new business. Thanks to easy access to I-25 and an extensive fleet of new equipment, we can supply job sites down to the state line as well as across the entire lower portion of the state from east to west. Our reach is extensive,” says Pueblo Branch Manager Bob Goering. “Pueblo is a strong market with a variety of industrial and nonresidential projects, and our new location allows us to be even more effective in delivering the reliable equipment and service our Colorado customers have come to depend on.” The Pueblo branch specializes in the rental of aerial lifts, telescopic forklifts, earthmoving machinery, compaction equipment, generators, compressors, and more and represents the following manufacturers: Allmand, Atlas Copco, Bomag, Case, Club Car, Gehl, Generac Mobile, Genie, Hamm, JCB, JLG, John Deere, Kobelco, Kubota, LayMor, Ledwell, Lincoln Electric, Link-Belt Excavators, MEC, Miller, Multiquip, Nissan, Polaris, Sany, Skyjack, SkyTrak, Sullair, Sullivan-Palatek, Unicarriers, Wacker Neuson, Yanmar, and others. Founded in 1961, H&E Equipment Services is one of the largest equipment rental companies in the nation, providing the higher standard in equipment rentals, sales, parts, and service. Branches are located throughout the Pacific Northwest, West Coast, Intermountain, Southwest, Gulf Coast, Southeast, Midwest, and Mid-Atlantic regions.
Rental Equipment Investment Corp. acquires Midstream Equipment Corporation
Rental Equipment Investment Corp. (“REIC”), a portfolio company of Kinderhook Industries, LLC (“Kinderhook”), has announced the acquisition of Midstream Equipment Corporation (“Midstream”). Founded in 2015 and headquartered in Calgary, Alberta, Midstream is a provider of specialty rental solutions for high-demand, critical applications in the oil & gas and large industrial sectors. Midstream represents REIC’s sixth add-on acquisition under Kinderhook’s ownership and the Company’s 18th since inception. The financial terms of the transaction were not disclosed. “We are excited to welcome the Midstream team to REIC”, said Kevin Fitzgerald, Chief Executive Officer of REIC. “Midstream’s product offering and technical knowledge lead the market and we look forward to helping Kyle Twa and Jay Formenti grow the business.” Kyle Twa and Jay Formenti (Co-Presidents at Midstream) commented, “We are looking forward to leading Midstream to the next phase of our growth and we are delighted at the opportunity to join the REIC / Kinderhook portfolio. Increasing our access to the additional resources of REIC will help scale our business and, most importantly, continue to service our customers.” “The acquisition of Midstream further enhances REIC’s specialty rental offering”, said Paul Cifelli, Managing Director at Kinderhook. “We are eager to partner with Midstream’s experienced management team who have deep sector expertise and a long history of growing businesses in this market.” Nate Druckenmiller, Vice President at Kinderhook, added, “The REIC team has demonstrated ongoing success in organic growth and seamless integration of acquisitions, leading to enhanced synergies, expanded market share, and accelerated overall growth. We are excited to continue supporting their strategic growth plan.”
Alliance Rental Group
Herc Rentals recognized among America’s Climate Leaders 2023
Herc Holdings, Inc., a North American equipment rental supplier operating through Herc Rentals Inc., has been included on USA TODAY’s list of America’s Climate Leaders 2023. This distinction is presented by USA TODAY and Statista Inc., a world-leading statistics portal and industry ranking provider, to U.S. companies that achieved comparably significant reductions in Scope 1 and 2 greenhouse gas emissions intensity, relative to revenue, from 2019 to 2021. To be considered for inclusion on the list, companies must have reported $50 million or more in revenue in 2021 and met emission data reporting criteria. “A focal point of our sustainability efforts is reducing our greenhouse gas emissions and, since 2019, we have reduced Scope 1 and 2 GHG emissions intensity by 17%,” said Herc Rentals President and CEO Larry Silber. “Our recognition as one of America’s Climate Leaders for 2023 reflects the progress we are making on our sustainability initiatives and our continued efforts to reduce the environmental impacts of our business activities.” Herc Rentals’ ESG strategy and sustainability goals can be viewed here: https://ir.hercrentals.com/sustainability To view the list of America’s Climate Leaders 2023, visit www.usatoday.com
ARA participates in Construction on the National Mall
Three-day festival shines a spotlight on the construction industry The American Rental Association (ARA) highlights the role of rental at the Celebration of Construction on the National Mall event. The festival was held Sunday, May 14 through Tuesday, May 16 in Washington, D.C. The ARA was one of 17 partnering organizations that joined forces to tell the construction industry story. In partnership with the Association of Equipment Manufacturers (AEM), ARA leadership, members, and construction companies from across the nation joined together to bring construction equipment to the nation’s capital and speak with federal representatives about what’s important to the construction industry. “Representing ARA members at AEM’s Celebration of Construction on the National Mall event helps the rental industry solidify its place as part of the broader construction industry for federal legislators,” says Josh Nickell, ARA vice president, equipment segment. “This is critical now that more than 50% of equipment on a construction job site is rented versus owned. “It also allows us to speak about issues impacting our members, remind legislators that we are a more sustainable solution than ownership, and help the construction industry better react to market cycles like we are currently experiencing.” To bring awareness to the industry’s sustainability initiatives, participating AEM members showcased cutting-edge innovations, including alternative-powered equipment, autonomous systems with live demonstrations, and an array of other tools that are enabling the industry to sustainably build the infrastructure that makes modern society possible. Exhibits were open to the public and focused on workforce development, worker safety, sustainable materials, and environmental stewardship. Through participation in the event, ARA leadership was able to engage with members of Congress, regulators, and staff about the importance of the construction sector, innovation and sustainability impacts, and the sector’s positive effect on the American economy.
Durante Rentals, LLC acquires assets of Iron Source, LLC
This strategic relationship will enable Durante Rentals to continue building a regional network of equipment rental, sales, and service for its expanded customer base. Durante Rentals has just announced its acquisition of Delaware-based equipment rental provider and dealer, Iron Source. This move is expected to expand Durante Rentals’ reach in the Mid-Atlantic region and enhance its already robust product and service capabilities. Iron Source will continue to operate under its current branding, and its day-to-day managers, Chess Hedrick and Wyatt Wiggins will remain in their positions. All of the company’s employees will also become part of the Durante Rentals team. According to Kenneth Cockrill, CEO of Durante Rentals, the two organizations share many common synergies and are well-positioned to deliver world-class products and services while maintaining exceptional customer service. For Chess Hedrick, the acquisition is an exciting opportunity to expand the company’s fleet and resources, enabling it to grow its footprint much faster than before. Hedrick also emphasizes that the two companies share similar values, particularly their mutual investment in their employees and their safety. Durante Rentals has been a reliable name in construction equipment rentals since 2009, and its geographic footprint continues to expand with locations throughout the Northeast and Mid-Atlantic regions. The company serves a broad range of customers in various industries, including general construction, facilities maintenance, civil construction, homebuilding, structural engineering, entertainment, and government. It is currently ranked #73 on the RER 100 and has won seven INC. 5000 Hall of Fame awards. Durante Rentals is supported by Clairvest Group Inc., a top-performing private equity management firm with over CAD $3.3 billion of capital under management based in Toronto, Canada.
ARA’s quarterly forecast reveals economic optimism reflected in rental operator attitudes
The outlook calls for greater growth than the previous quarter’s projection The American Rental Association (ARA) indicates in its updated forecast that the United States equipment rental industry’s growth will soften but still grow. Last quarter, the year-over-year growth was expected to be 4.7 percent in 2023 and 2.1 percent in 2024. The most current projections indicate 7.6 percent growth in 2023 totaling $60.4 billion in construction and general tool rental revenue. As for 2024, a 3.1 percent revenue increase is now expected. “While the growth has softened, we’re looking at a more optimistic outlook than we were a quarter ago. The recession fears we had have subsided,” says Scott Hazelton, managing director at S&P Global. “After talking with many manufacturers and operators at CONEXPO-CON/AGG and in the weeks after, it’s clear the headwinds are still there,” says Tom Doyle, ARA vice president of program development. “Inflation is still high, interest rates are still high and they may continue to rise, while issues remain with labor shortages and supply.” However, investment in the construction industry and construction employment approaches a record high. Also evident is rental companies’ adaptiveness. “I continue to marvel at the adaptability of our members. They have found ways to overcome these headwinds and provide solutions for their customers,” Doyle says. In Canada, equipment rental revenue growth is higher in 2023 compared to last quarter’s data due to inflation and resilient demand. At the end of 2022, the Canadian equipment rental revenue forecast for 2023 was -0.3 percent and 4.7 percent for 2024. Now, Canadian equipment rental revenue growth (construction and general tool combined) is projected to be 2.9 percent in 2023 and 4.3 percent in 2024, totaling $4.6 billion and $4.8 billion respectively. “Canada was able to avoid a technical recession, but the GDP remains weak, and that contributes to the new projections,” Hazelton says. “The big issue is the pullback on the residential market as home values have weakened and there is high inflation. However, The Bank of Canada is predicted to press pause on interest rate hikes, so consumer sentiment is improving.” Mike Savely, ARA director of program development, says, “ARA’s quarterly member survey reveals that not only is consumer sentiment improving, but rental operators also echo the optimism.” Savely adds, “Interestingly enough, the last couple quarters we’ve seen synchronicity from the top-down (S&P Global) and bottom-up (quarterly member survey) data, including projections and sentiments,” Savely says. “They’re both showing growth. Our members are benefitting from getting both the top-level economic picture and results of our internal surveys.” Last quarter, ARA members were asked about the current situation of equipment rental and 18 percent of respondents believed the situation was getting better. This quarter, 32 percent of respondents indicated a more positive outlook with 86 percent of respondents reflecting a generally positive sentiment. Looking to the second quarter, ARA members were asked if they expect a revenue change compared to the same quarter last year. Results show that 76 percent of respondents believe their revenues will increase compared to quarter two in 2022.
Maintainco Equipment Co
Herc Holdings reports record First Quarter 2023 results and affirms 2023 Full Year guidance
Record equipment rental revenue of $654 million, an increase of 24% Record total revenues of $740 million, an increase of 30% Net income increased 16% to $67 million, or $2.28 per diluted share Adjusted EBITDA of $308 million increased by 30%; adjusted EBITDA margin at 41.6% Rental pricing increased 7.0% year-over-year Common stock repurchases of approximately 460,000 shares Herc Holdings Inc. has reported financial results for the quarter that ended March 31, 2023. Equipment rental revenue was $654 million and total revenues were $740 million in the first quarter of 2023, compared to $527 million and $568 million, respectively, for the same period last year. In the first quarter of 2023, the Company reported a net income of $67 million, or $2.28 per diluted share, an increase of 19% compared to $58 million, or $1.92 per diluted share, in the same 2022 period. “We continue to build on our momentum coming out of 2022 with record first-quarter revenue that significantly outpaced industry growth,” said Larry Silber, president and chief executive officer. “Higher rental rates are more than offsetting inflation, while demand across regions and in our end markets is seasonally strong, benefiting from the multi-year fiscal stimulus, re-shoring and mega projects, as well as long-term industrial maintenance contracts for on-site fleet management.” Silber continued, “While macro concerns are focused on residential and commercial construction, we have very diversified end markets, with a growing share in manufacturing and reshoring projects, the private and government spend in infrastructure, as well as industrial MRO, which is required in all economic environments. Investments to capitalize on these opportunities are strategic and disciplined, whether it be in fleet, people, or acquisitions. As a tenured market leader with a strong reputation, a comprehensive product and service offering, broad capabilities, and one of the leading teams in the industry, we will continue to execute our strategies to win new business and deliver profitable growth.” 2023 First Quarter Financial Results Total revenues increased 30% to $740 million compared to $568 million in the prior-year period. The year-over-year increase of $172 million was primarily related to an increase in equipment rental revenue of $127 million, reflecting positive pricing of 7.0% and an increased volume of 23.2%. Sales of rental equipment increased by $43 million during the period. Dollar utilization was 39.7% compared to 41.4% in the prior-year period. The change is primarily due to a slowdown in the studio entertainment business as a result of a potential writers’ strike, as well as the Company’s decision to continue to accept equipment deliveries in the seasonally slow fourth quarter of 2022 and the first quarter of 2023, in order to ensure it has the fleet needed for the more robust construction season. Continued supply chain challenges have disrupted the optimal cadence of deliveries. Direct operating expenses of $281 million increased by 24% compared to the prior-year period. The increase was primarily related to strong rental activity and associated additional headcount, in addition to higher maintenance, fuel prices, and facilities expenses. Depreciation of rental equipment increased 28% to $152 million due to higher year-over-year average fleet size. Non-rental depreciation and amortization increased by 24% to $26 million primarily due to the amortization of acquisition intangible assets. Selling, general and administrative expenses were 19% higher primarily due to increases in selling expenses, including commissions and other variable compensation increases, and general payroll and benefits. Interest expense increased to $48 million compared with $23 million in the prior-year period due to increased borrowings on the ABL Credit Facility primarily to fund acquisition growth and higher interest rates on floating rate debt. Net income was $67 million compared to $58 million in the prior-year period. Adjusted net income increased 17% to $69 million, or $2.35 per diluted share, compared to $59 million, or $1.95 per diluted share, in the prior-year period. The effective tax rate was 11% compared to 13% in the prior-year period. Adjusted EBITDA increased 30% to $308 million compared to $237 million in the prior-year period, while the adjusted EBITDA margin was 41.6% compared to 41.7% in the prior-year period. Sales of used equipment, which more than doubled over last year’s first quarter sales, as well as a decline in the Company’s studio entertainment revenue year over year, impacted the margin performance in the latest quarter. Rental Fleet Net rental equipment capital expenditures were as follows (in millions): Three Months Ended on March 31, 2023 2023 2022 Rental equipment expenditures $ 332 $ 287 Proceeds from disposal of rental equipment (49) (29) Net rental equipment capital expenditures $ 283 $ 258 As of March 31, 2023, the Company’s total fleet was approximately $5.9 billion at OEC. The average fleet at OEC in the first quarter increased year-over-year by 29% compared to the prior-year period. The average fleet age was 47 months as of March 31, 2023, compared to 48 months in the comparable prior-year period. Disciplined Capital Management The Company completed three acquisitions with a total of six locations and opened three new greenfield locations during the quarter. Net debt was $3.2 billion as of March 31, 2023, with net leverage of 2.5x compared to 2.3x in the same prior-year period. Cash and cash equivalents and unused commitments under the ABL Credit Facility contributed to $1.5 billion of liquidity as of March 31, 2023. The Company announced a 10% increase in the quarterly dividend to $0.6325, payable to shareholders of record as of February 22, 2023, with a payment date of March 9, 2023. The Company acquired approximately 460,000 shares of its common stock for $52 million during the three months that ended March 31, 2023. As of March 31, 2023, approximately $229 million remains available under the share repurchase program. Outlook The Company is affirming its full-year 2023 adjusted EBITDA guidance range and net rental capital expenditures guidance presented below. The guidance range for the full year 2023 adjusted EBITDA reflects an increase of 18% to 26% compared to the full year 2022 results. Adjusted EBITDA: $1.45 billion to $1.55 billion Net
Technology forced changes
Technology changes have been talked about for the last ten years and probably more. Many of you have adopted newer technology by investing in new operating systems, CRM systems, marketing systems, and many apps to improve communication with customers, employees, and OEM personnel. And some of you have only made minor changes because of the cost involved and the lack of OEM suggestions that you do so. And some of you are just “thinking” about changes because you lack the internal talent and professional relationships to help lead the way. Quite frankly, this spread in the way management moves their company forward, where some dive in and move the bar upward, and others just keep juggling the issue until they MUST adapt to the norm, while others just wind up so far behind the curve that they just as well pass the torch on to a new owner with the means to play “catch-up”, and hopefully generate a profit on their investment. Unfortunately, these three levels of change management seem to be the norm. And now there is 2023. And starting in 2023 there will be changes for just about 100% of equipment dealers that will take place whether dealers like it or not. You will either make the changes or stand to lose your business. The reasons for these changes are a result of inflation, interest rates, and a need to provide “green” products and services. Put them all together into your planning file and shake it up and I am sure you will find that changes WILL be made if you hope to stay in business. Just to give you a little background of what is in store for the industry I suggest you go to U-Tube and find WEALTHION LUCKY LOPEZ. Wealthion is a site that provides quality speakers that deal with economic issues as well as specific industry discussions. In this case, Mr. Lopez is a car industry nut who not only loves cars but the industry as well. He owns dealerships, invests in car loan papers, spends a lot of time at auction houses, and studies new and used auto transactions to the point where he can pretty much foresee where things are going into 2023 and beyond. And after you listen to his comments you have to basically agree because it all ties together. I have to warn you that this is a 51-minute discussion, but worth every minute of your time. I have watched it three times and can’t stop thinking about it. No, I am not going to tell you what Mr. Lopez’s final conclusions suggest. All I will say is that car dealers had the best years of their lives in the last couple of years. Made tons of money. When discussing the lift truck dealer business, we always wind up saying that what happens in the auto dealer business is sure to find its way into the lift truck business. Sometimes these changes are positive and sometimes they are not. But no matter what, both sides share the issues we all do such as inflation, interest rates, lack of personnel, lack of inventory, and fears related to a “recession” that will turn everything upside down. But the biggest issue every OEM and Dealer in the world had to deal with is the potential switch of the product line into EV. EV will change your entire business model, revenue streams, and costs while trying to figure out how to manage owned gas or diesel units, new units you overpaid for, and used units that everyone wants to buy (for now) when you have shortfalls in your rental fleet. The way I see it transitioning to a high percentage of EV sales and rental assets will be an expensive proposition for most dealers. BUT NOT FOR THE LIFT TRUCK BUSINESS. Making a change to primarily EV from gas or diesel units will be a killer needing a lot of capital to reach the other side. Lift truck dealers do not have that issue at the same level as other dealers do. You are already in the battery business with the ability to make a switch to lithium batteries that puts you over the hump. Well, how about that? Are you now thinking you are in the clear because of the battery advantage? Maybe not. All the equipment industry material I read leads me to believe that rental activity is going to increase because users do not want to deal with the “high cost” equipment, interest rates, personnel issues, and let’s not forget fixed costs and bank covenant issues. And, guess what, they don’t have to because they will let you keep the headaches. Rent they will do. Buying at this time is not high on the list. And don’t be surprised if customers prefer to rent as opposed to a long-term lease, or ask to pay for hourly usage of the units you have on their floor. A flat rate to cover the cost of ownership and a second rate to cover the cost to operate. It may be that the OEM-Dealer agreements we are used to are about to change. There seems to be a number of OEMs buying other OEMs. There is also a strong consolidation taking place in the equipment rental industry. Companies are looking to expand their rental programs promoting units where dealer networks are not part of the program. In Europe, dealers are becoming service centers for various brands that no longer sell through dealer networks. They sell directly to end users as well as rental companies. Maybe in the US lift truck dealers do not have to worry about the auto industry, but maybe they do have to think about what is taking place in Europe. Make sure you closely review the TM Capital 2023 Equipment Rental and Dealer Report that Dean sent out. About the Columnist: Garry Bartecki is a CPA MBA with GB Financial Services LLC and a Wholesaler columnist since August 1993.
ARA forecast shows positive outlook with softening growth for equipment rental
The outlook calls for a slowdown of growth after 2022 revenue surpassed pre-pandemic highs The American Rental Association (ARA) indicates that United States equipment rental revenue surpassed its pre-pandemic highs in 2022, ending the year as a $56.1 billion industry. The ARA released the updated first-quarter forecast at The ARA Show™ 2023 in Orlando. In 2023, the United States equipment rental industry’s growth with soften, but still grow. Year-over-year growth in 2022 was around 13.5 percent and year-over-year growth is expected to be around 5.3 percent in 2023 and 1.9 percent in 2024. Despite a slowdown, positivity is evident among ARA members with large and small operations. Tom Doyle, ARA vice president of program development, says, “In speaking with rental companies across the United States and Canada, despite some unprecedented headwinds, their businesses are strong. It’s generally a great time to be in rental.” ARA’s third annual construction equipment survey, released in January, showed fleet growth in all 30 product groups. Rental companies in North America that responded are estimating a 58 percent increase in new equipment purchases. Of those respondents, 79 percent said their orders included mobile elevating work platforms (MEWPs) and 59 percent said their orders included earthmoving equipment. Growth will also slow in the U.S. for general tool rental revenue in 2023. This will be driven by weakness in the construction markets, especially residential. Year-over-year growth in 2022 was 6.5 percent. In 2023, 2.8 percent growth is estimated and in 2024 growth is estimated at 2.9 percent. Federal policy and investments will continue to affect the rental industry, from the Infrastructure Investment and Jobs Acts to the tax policy of the Tax Cuts and Jobs Act to $185 billion available for new projects. “The outlook for equipment rental continues to be positive. With significant funding for infrastructure coming in 2023, the demand for equipment will continue to grow,” says John McClelland, Ph.D., ARA vice president for government affairs and chief economist. “In addition, more funding is coming from the Inflation Reduction Act as we begin to build out the electricity infrastructure for both vehicles and equipment.” In 2022, Canadian equipment rental revenue totaled $4.5 billion. Overall in 2023, stagnant growth is anticipated with a rebound expected in 2024. The projected 2023 rental revenue for Canadian construction and industrial equipment is $3.8 billion, with slow growth from 2024 to 2026. The projected Canadian general tool rental revenue in 2023 is $969 million, a decrease of 1.5 percent from 2022. However, a strong rebound of 4.7 percent growth is expected in 2024 to reach more than $1 billion in revenue. For more in-depth economic data, visit www.ARArental.org/ara-rentalytics.