Herc Holding announces succession in financial leadership
Herc Holdings Inc., a North American equipment rental supplier operating through Herc Rentals Inc., announced effective March 10, 2023, Senior Vice President and Chief Financial Officer Mark H. Irion will resign his position for another opportunity. He will remain with Herc Holdings through March 31, 2023, to ensure a smooth internal succession process. Irion joined Herc Holdings in June 2018. The company is pleased to announce that, effective March 10, 2023, Mark Humphrey, previously the company’s Vice President and Chief Accounting Officer, will be promoted to Senior Vice President and Chief Financial Officer. Humphrey joined Herc Holdings in April 2017 from Alico, Inc., a publicly traded agribusiness and resource-management company, where he served as Chief Financial Officer and as Chief Accounting Officer. His nearly 30-year career also includes roles as Chief Financial Officer for Compass Management Group, a property-management company, and nearly 10 years in public accounting with PricewaterhouseCoopers LLP. Also, effective March 10, 2023, Mark Schumacher, the company’s Vice President, Controller, will assume the additional role of Chief Accounting Officer. Schumacher joined Herc Holdings in February 2017 and has nearly 25 years of audit, accounting and financial reporting experience, including Global Controller for GE’s Automation and Controls division, Vice President, Corporate Controller, for SunEdison, Inc., and 14 years in public accounting with KPMG LLP. “I extend my best wishes to Mark Irion as he moves on to his next career chapter and thank him for his valuable contributions to the company’s progress over the past five years, including building strong accounting, financial planning, and financial control teams that are well-positioned to support the robust growth and evolution of our company moving forward,” said Larry Silber, President and Chief Executive Officer. “I am confident that we will have a seamless transition as Mark Humphrey and Mark Schumacher, along with their teams, have operated closely and cohesively with Mark Irion in executing the company’s business strategy. As seasoned professionals, both are strong, proven leaders who know our company and industry well. I look forward to continuing to work with them as we execute our strategy to grow our market share and improve shareholder value.”
High attendance at The ARA Show 2023 reflects positive State of Rental Industry
The American Rental Association (ARA) trade show, The ARA Show™ 2023, has wrapped, and attendance was phenomenal. The largest equipment and event rental trade show and convention in the world was held February 11-15 at the Orange County Convention Center (OCCC) in Orlando, Florida — the 5th time it has been held at that location. The sunny destination consistently attracts a high number of attendees who enjoy the warmth, which extended beyond the weather to reflect an overall positive tone for the event. “It was so good to be back on our normal schedule for The ARA Show and it’s the first time in three years that our exhibitors and attendees were able to interact without restrictions. Our first-time programs like Future of Equipment Rental and EventsU were lauded by attendees, and almost all of our signature events set new attendance records,” said Tony Conant, CEO of the American Rental Association (ARA). “Being able to see products firsthand, speak with exhibitors, attend education sessions, and network on such a large scale all in one place is such a unique opportunity. The energy level was incredibly high over the five days of events. Our industry is poised for another good year.” The number of rental stores that attended the show increased tremendously from the previous show in October 2021. More than 750 exhibitors attended the trade show – many celebrating milestones from first-time exhibitors to a remarkable 66 years as an exhibitor at the show. New this year was the addition of two rental-specific education programs, EventsU (formerly Events & Tents) and Future of Equipment Rental. More than 700 rental professionals attended the full-day education programs in event and equipment rental, respectively. The add-on programs were followed by the traditional full day of educational seminars on Sunday. The keynote address sponsored by ARA Insurance featured Daymond John of ABC’s “Shark Tank.” John is a NY Times best-selling author, the founder and CEO of FUBU, a global fashion brand, and a phenomenally successful businessperson. The award-winning entrepreneur empowered attendees with an inspiring presentation on goal-setting and achievement strategies. John’s keynote address also marked the opening of the trade show floor. “Overall attendance exceeded our initial expectations, and the momentum seemed to build from Saturday education programs to the trade show floor opening,” said Christine Hammes, vice president of association services/events. “It was exciting to see the trade show floor buzzing with activity. The feedback from attendees has been positive with many reporting an increase in buying activity, and optimism for the year ahead.” Many networking opportunities and programs throughout the week were sold out, including the Tuesday night event at Universal’s Islands of Adventure and the Women in Rental Breakfast. In 2024, The ARA Show will return to New Orleans and the Ernest N. Morial Convention Center with a full day of educational seminars on Sunday, Feb. 18, and the trade show from Monday, Feb. 19, through Wednesday, Feb. 21. Additional details on next year’s show will be available soon at ARAShow.org.
A Winner or a Loser?
I spend hours on a daily basis reading and listening to information regarding the equipment industries, rental industries, and the economy in general. Summing up all that has transpired and presented to me by various sources since the beginning of the year have provided me with enough to write a book about. But don’t worry, we will cover the major points in this month’s contribution to MHW. I decided on the Winner/Looser title after attending an online seminar presented by Nomi Prins via Rouge Economics. I really enjoy her almost daily emails and find them quite useful. In an event, Nomi started the presentation by stating that every time Congress passes a major spending bill both private and public companies will EITHER fall on the “WINNER” side or the “LOSER” side because of the changes in our laws or plans contained in the spending bill. Kind of makes sense. Nomi then went through a few examples, and it even made more sense. For example. As EV products increase the demand for the materials to produce batteries increases as do the prices for these materials. WINNER – Mining companies as well as EV parts suppliers. LOOSER- Car or vehicle manufacturers will have to increase the price of their products as well as lose future parts and service business. I also read an article in the European rental magazine and find that OEMs in Europe are selling more and more products direct to rental companies and end users. In another publication, I see that the demand for EV products is in high demand. Selling direct means dealers are being transformed into service providers, who are going to lose work because EVs require less maintenance and are made up of fewer parts. What do dealers do with their current fleets and how will the valuation of those units impact dealer sustainability and solvency? Another comment in the EU publication noted that there is a buying frenzy in terms of OEMs. If this takes place you have to believe that the consolidation of dealers is close behind. You get the drift…..The demand and requirements of conversion to EV are creating both “WINNERS AND LOSERS”, which can generate benefits if dealers plan to put themselves on the W side. Dealers with access to capital can do this. Hedge funds will jump on the bandwagon to assist as they have been with related industries. This consolidation may already be in the works. I work in Chicago and in the rental business and within the last five years the major public rental companies have bought out privately owned dealers and rental companies to the point where there are only a couple of independent rental companies in the market. As they say on TV….”What’s in your wallet? Some good news on the manufacturing front. The growth of annual reshoring and foreign direct job announcements increased from 6000/year in 2010 to 350,000 /year in 2022. Who will be the W or L regarding this change? All I know is after seeing the internal operation of the Tesla plant in Texas I did not see a lot of people or lift trucks moving materials through the process. Robots were doing most of the work. How will your company plan for this opportunity? Material handling dealers benefited from the expansion of distribution centers to bring completed products closer to end users. Do your products and services supplied on the distribution side carry over to the manufacturing side? Are OEMs addressing this opportunity to help you understand this new revised market? You have to assume that EVs will be a big part of the manufacturing question as well. I also listened in to the Davos meeting last week. They had Jamie Dimon from JP Morgan Chase on and asked him about his comments regarding a recession in the offing. He replied, “As CEO of JP Morgan Chase I have a responsibility to plan for any and every event they can think of”. A recession. Expansion. Interest rates. Inflation. Deflation. The length of the rate hikes. China coming back into the world economy. Energy costs. Customer exposure and so on. In short, do not stick to one program without having an “out” if you need it. Dimon said they are reviewing their risks three years out. Speaking of China, what happens this year in China will impact the war on inflation and the number of rate hikes. If China’s consumption rebounds, it could drive prices considerably higher. And the L could be manufacturers and distributors who find another round of price hikes to deal with. So where do material handling dealers fit into this crazy economic maze? Probably on the W side in some cases and the L side in terms of EV and solvency issues. What you can probably count on is the inflation battle will be longer with interest rates higher for some time, especially if China steps up economic activity. As part of your thought process, I would get a handle on what your company is worth. What you can do to improve that value. How you can blend in with the EV dynamo. How you can add value to current customers. How you can add value and provide needed services to manufacturers. And one last off-the-wall consideration is whether you have any children interested in the material handling business. I ask about the children because I work on a number of M&A projects and find that a well-run profitable business isn’t being passed down to the next generation. When I ask “why?”, I am told they are not interested. Unfortunately, I find this to be the case 80% of the time. Drives me nuts. A lot to think about. …..and plan for. About the Columnist: Garry Bartecki is a CPA MBA with GB Financial Services LLC and a Wholesaler columnist since August 1993. E-mail editorial@mhwmag.com to contact Garry.
Herc Holdings reports record Full Year 2022 results and announces 2023 Full Year guidance
Fourth Quarter Highlights – Equipment rental revenue increased 31.5% to a record $713.1 million – Total revenues increased 36.0% to a record $786.0 million – Net income increased 36.2% to $97.8 million, or $3.27 per diluted share – Adjusted EBITDA grew 40.8% to a record $361.2 million and adjusted EBITDA margin expanded 160 basis points to 46.0% – Repurchased approximately 510,000 shares of common stock Full Year Highlights – Equipment rental revenue increased 33.6% to a record $2,551.5 million – Total revenues increased 32.1% to a record $2,738.8 million – Net income increased 47.2% to $329.9 million, or $10.92 per diluted share – Adjusted EBITDA increased 37.2% to a record $1,227.2 million and adjusted EBITDA margin expanded 160 basis points to 44.8% – Repurchased approximately 1,050,000 shares of common stock – Full-year 2023 guidance announced at $1.45 billion to $1.55 billion for adjusted EBITDA and $1.0 billion to $1.2 billion for net rental equipment capital expenditures Herc Holdings Inc. (“Herc Holdings” or the “Company”) has reported financial results for the quarter and full year that ended December 31, 2022. Equipment rental revenue was $713.1 million and total revenues were $786.0 million in the fourth quarter of 2022, compared to $542.4 million and $578.0 million, respectively, for the same period last year. In the fourth quarter of 2022, the Company reported a net income of $97.8 million, or $3.27 per diluted share, an increase of 38.6% compared to $71.8 million, or $2.36 per diluted share, in the same 2021 period. “From beginning to end, 2022 was an exceptionally strong year for us, with record performance across key financial metrics,” said Larry Silber, president and chief executive officer. “Operating momentum and market share growth continued in every region driven by robust demand, improved pricing, strategic fleet investments, end market diversity, and greater branch-network efficiencies. “Through the hard work of the last several years, we are better positioned than ever to capitalize on a variety of growth avenues, including local market penetration, increased rentals of higher-margin specialty equipment, and trends relating to the multi-year fiscal stimulus and re-shoring mega projects. As a market leader with a strong reputation, broad-based capabilities, and service solutions, in 2023 we expect to continue to outpace industry expansion and capitalize on operating leverage while laying a foundation for long-term, profitable growth.” Silber continued, “The impressive progress we’re making is a direct result of the dedication and relentless execution of the entire Herc team. I want to thank them for their outstanding work and continuing commitment to our growth initiatives.” 2022 Fourth Quarter Financial Results Total revenues increased 36.0% to $786.0 million compared to $578.0 million in the prior-year period. The year-over-year increase of $208.0 million was primarily related to an increase in equipment rental revenue of $170.7 million, reflecting positive pricing of 6.6% and an increased volume of 28.6%. Sales of rental equipment also increased by $35.2 million during the period. Dollar utilization decreased to 43.5% compared to 44.6% in the prior-year period primarily due to a mix of equipment on rent. Direct operating expenses of $276.7 million increased 26.2% compared to the prior-year period. The $57.5 million increase was primarily related to strong rental activity and increases in payroll and related expenses associated with additional headcount, in addition to higher maintenance, fuel prices, and facilities expenses. Depreciation of rental equipment increased 29.0%, or $33.0 million, to $146.8 million due to higher year-over-year average fleet size. Non-rental depreciation and amortization increased 35.4%, or $6.8 million, to $26.0 million primarily due to the amortization of acquisition intangible assets. Selling, general and administrative expenses increased 24.9% to $112.2 million compared to $89.8 million in the prior-year period. The $22.4 million increase was primarily due to increases in selling expenses, including commissions and other variable compensation increases, general payroll and benefits, and travel expenses. Interest expense increased to $41.3 million compared with $22.5 million in the prior-year period due to increased balances and interest rates on the ABL Credit Facility and AR Facility. Net income was $97.8 million compared to $71.8 million in the prior-year period. Adjusted net income increased 37.2% to $102.8 million, or $3.44 per diluted share, compared to $74.9 million, or $2.46 per diluted share, in the prior-year period. The effective tax rate was 26.6% compared to 21.4% in the prior-year period. Adjusted EBITDA increased 40.8% to $361.2 million compared to $256.5 million in the prior-year period, while adjusted EBITDA margin increased 160 basis points to 46.0% compared to 44.4% in the prior-year period. 2022 Full-Year Financial Results Total revenues increased 32.1% to $2,738.8 million compared to $2,073.1 million in the prior-year period. The year-over-year increase of $665.7 million was related to an increase in equipment rental revenue of $641.1 million, reflecting positive pricing of 5.8% and an increased volume of 31.8%. Sales of rental equipment also increased by $12.6 million during the period. Dollar utilization increased to a record 43.3% compared to 43.0% in the prior-year period primarily due to increased volume and rate. Direct operating expenses of $1,027.7 million increased 31.4% compared to the prior-year period. The $245.4 million increase was primarily due to strong rental activity and increases in payroll and related expenses associated with additional headcount, in addition to increases in maintenance, fuel prices, facilities, delivery and freight, and re-rent expenses related to the corresponding increase in re-rent revenue. Depreciation of rental equipment increased 27.4%, or $115.2 million, to $535.9 million during 2022 due to higher year-over-year average fleet size. Non-rental depreciation and amortization increased 39.6%, or $26.9 million, to $94.9 million primarily due to the amortization of acquisition intangible assets. Selling, general and administrative expenses increased 31.9% to $410.1 million compared to $310.8 million in the prior-year period. The $99.3 million increase was primarily due to increases in selling expenses, including commissions and other variable compensation, general payroll and benefits, and travel expense. Interest expense increased to $122.0 million compared with $86.3 million in the prior-year period due to increased balances and interest rates on the ABL Credit Facility and AR Facility. Net income was $329.9 million compared to
United Rentals acquires ABLE Equipment Rental
According to the ABLE Equipment Rental website and social media, United Rentals has acquired ABLE Equipment Rental located in Deer Park, N.Y., for an undisclosed amount. Family-owned and operated ABLE Equipment Rental was founded in 1996 by Steve Laganas. As of June 2022, the company had grown to include six locations, 270 employees, and a service territory spanning six states. They recently acquired Extreme Rentals in July 2022. Further details on the acquisition have not been released from either company.
First Financial Canadian Leasing
Rental industry pioneer Bill Bulter dies
William “Bill” Butler, one of the pioneers of the rental industry in Southern California, died on January 10th at the age of 83. William “Bill” Butler, one of the pioneers of the rental industry in Southern California, died this week at the age of 83. Butler was born March 11, 1939, and died January 10, 2023. Butler started Able Equipment Rental in 1961 at the age of 22, starting with a “handshake” and a Quonset hut in Santa Fe Springs, Calif. (just east of downtown Los Angeles), according to his daughter-in-law Pamela Butler. His son Jeffrey worked in the business for many years, and Jeff’s son William Jefferson “Jake” Butler, named for his grandfather, still works in the rental industry as a sales rep for H&E Equipment Services. In 1998, Butler sold his six-location company to United Rentals. Butler is survived by his wife Lois, and three children – Jeffrey (wife Pamela), daughter Pamela (married to Richard McKenney}, and daughter Patricia (married to Douglas Cook.) Butler is also survived by nine grandchildren and six great-grandchildren.
GM Equipment Rentals acquires Magnum Equipment
GM Equipment Rentals, an aerial and material handling company based in North Central Pennsylvania, has completed its acquisition of Magnum Equipment LLC., located in Hudsonville, Mich., near Grand Rapids. This acquisition now extends GM Equipment’s coverage area across Pennsylvania, New York, Ohio, West Virginia, Maryland, and Michigan. GM Equipment Rentals is a family-owned company. It offers a large array of aerial and material handling equipment, along with a line of dirt and support equipment. Customer service, prompt deliveries, and quick turnaround times are themes GM Equipment hangs its hat on. Its common saying is “We are a service company first, that happens to rent and repair equipment.” The GM Equipment Rentals team also strives to create a great working environment for its employees by offering excellent pay and benefits packages. As part of GM Equipment’s ongoing growth strategy, the addition of Magnum Equipment extends its service area, customer base, and infrastructure. The acquisition also aligns with its heavy arsenal of MEWP and material-handling equipment. The Michigan customer base will now be able to enjoy a variety of added benefits that GM Equipment Rentals has to offer, including the ability to quickly view their account information and on-rent reports through GM Equipment’s online portal. Z Rental Consulting represented Magnum Equipment in the transaction.
Equipment Leasing and Finance Association’s Survey of Economic Activity: Monthly Leasing and Finance Index
November new business volume up 9 percent year-over-year, down 24 percent month-to-month, up 6 percent year-to-date The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross-section of the $1 trillion equipment finance sector, showed their overall new business volume for November was $8.6 billion, up 9 percent year-over-year from new business volume in November 2021. Volume was down 24 percent from $11.3 billion in October. Year-to-date, cumulative new business volume was up 6 percent compared to 2021. Receivables over 30 days were 1.7 percent, unchanged from the previous month and down from 2.2 percent in the same period in 2021. Charge-offs were 0.27 percent, up from 0.26 percent the previous month and up from 0.20 percent in the year-earlier period. Credit approvals totaled 77.7 percent, up from 77.0 percent in October. The total headcount for equipment finance companies was down 4.7 percent year-over-year. Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in December is 45.9, an increase from the November index of 43.7. ELFA President and CEO Ralph Petta said, “Moving into the final month of the year, equipment finance companies report solid performance. Rising interest rates seem to have little or no effect on origination volume in November. The economy grew in Q3—albeit slowly—and is expected to do so again in the current quarter. Labor markets are stable, inflation woes appear to be abating, consumers are spending, and businesses continue to expand and grow: a recipe for stable growth by providers of equipment financing.” Patrick Hoiby, President, Equify Financial, LLC, said, “New volume continues to be very strong despite continued rate hikes. Charge-offs and delinquency are remaining in check and overall credit quality is good. Employee count is hard to measure because many companies wish to expand, but are having hard times finding people.”
Texas First Rentals, a Division of HOLT, acquires Rental One
Texas First Rentals®, a division of HOLT, announced that it has acquired Rental One, a full-service equipment and storage container rental company offering a complete line of construction equipment and supplies in 15 locations throughout the Dallas-Fort Worth Metroplex and Central Texas regions. Texas First Rentals, a construction equipment rental company, offers rental solutions through its full line of aerial, dirt, and portable power equipment. The equipment Texas First Rentals provides includes boom lifts, scissor lifts, excavators, generators, pumps, and trench safety equipment. “Rental One is an excellent strategic and cultural fit that complements our existing products and services,” said CEO and General Manager of HOLT, Peter J. Holt. “More importantly, Rental One is a multi-generational, family-owned Texas company. As a family-owned business ourselves, we know the value of such an organization and what that means to our customers.” Rental One, founded in 2004 in Colleyville, Texas, with equipment rental roots going back to the 1950s, is a family-owned, full-service equipment and storage container rental company offering a full line of well-maintained, quality construction equipment and concrete, safety, erosion control, and construction supplies throughout its locations. “Our team has worked to build a successful business with meaningful relationships that span three generations,” said Rental One President Mike O’Neal. “Our customers will benefit from a broader range of products and combined expertise as we join the Texas First Rentals team. We continue to be committed to providing customers with the best equipment and reliable service they have grown to know.” With this acquisition, the 300 current Rental One employees, including the leadership team, will become employees of Texas First Rentals and will continue to operate from current Rental One locations. “I’m confident joining a values-based organization is a positive move for us all,” said O’Neal. “We look forward to collaborating with the Texas First Rentals team to build upon our mutual success.” This acquisition will allow Texas First Rentals to expand its presence to a total of 40 locations in highly attractive regions poised for future growth.
2023 Economic Outlook forecasts 4.2% expansion in Equipment and Software Investment and 0.9% GDP growth next year amid mild U.S. Recession
In what is likely to be a more challenging year for both the economy and the equipment finance industry, the 2023 forecast for equipment and software investment growth is 4.2%, according to the 2023 Equipment Leasing & Finance U.S. Economic Outlook. The report released today by the Equipment Leasing & Finance Foundation also forecasts sluggish U.S. GDP growth of 0.9% (annualized) due to a mild recession that is expected to begin midway through the year. The Foundation’s report is focused on the $1.16 trillion equipment leasing and finance industry and highlights key trends in equipment investment, placing them in the context of the broader U.S. economic climate. Nancy Pistorio, Foundation Chair and President of Madison Capital LLC, said, “Equipment investment, the lifeblood of the equipment finance industry, has maintained steady growth since the onset of the pandemic. Despite higher interest rates, inflation, and expectations of a downturn in 2023, the report indicates that a ‘soft landing’ in which the economy avoids recession is still possible. In addition, there are several factors that may make the looming downturn less severe for our industry than previous recessions, including pro-industrial legislation, equipment order backlogs, and reshoring trends.” Highlights from the 2023 Outlook include: Equipment and software investment growth boomed in the second half of 2022 with nearly 12% annualized growth in Q3, providing a solid jumping-off point for 2023. However, rising interest rates are expected to weigh on investment growth next year. The U.S. economy also saw GDP growth bounce back during the second half of 2022, although underlying conditions remain troubling. The housing market is struggling, financial markets are highly volatile, and the global economy is slowing. The manufacturing sector continues to outperform expectations given rising interest rates and the global economic slowdown. Although activity appears likely to slow in 2023 given expectations for a recession, recent pro-industrial legislation and a push for supply chain re-shoring should give the manufacturing sector a boost. For Main Street businesses, the combined effects of high inflation and tightening financial conditions are likely to contribute to turbulent operating conditions in 2023. Fortunately, financial stress is still quite low, and small business lending activity remains positive for now. Monetary policy is among the biggest questions facing the equipment finance industry in 2023. The Fed has hinted at the possibility of slowing down interest rate hikes while stressing it is committed to reining in inflation at the risk of higher unemployment or a recession. Interest rate levels are expected to rise above 5% next year, and potentially higher. The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, which is released in conjunction with the Economic Outlook, tracks 12 equipment and software investment verticals. In addition, the Momentum Monitor Sector Matrix provides a customized data visualization of the current values of each of the 12 verticals based on recent momentum and historical strength. This month one vertical is expanding, six are peaking, two are recovering, and three are weakening. Over the next three to six months, year over year: Agriculture machinery investment growth is likely to sidewind. Construction machinery investment growth is likely to ease. Materials handling equipment investment growth may improve slightly. All other industrial equipment investment growth may continue to decelerate. Medical equipment investment growth will likely sidewind. Mining and oilfield machinery investment growth may decelerate. Aircraft investment growth may continue to pick up. Ships and boats investment growth are unlikely to accelerate. Railroad equipment investment growth may have peaked and could decelerate. Trucks investment growth is unlikely to improve. Computers investment growth is unlikely to accelerate further. Software investment growth is unlikely to improve. Download the full report at https://www.leasefoundation.org/industry-resources/u-s-economic-outlook/.
ARA announces industry contributor award recipients
Each year, the American Rental Association (ARA) honors individuals for outstanding service to the association and the equipment and event rental industry. The following are recipients of this year’s industry contributor awards, which will be presented at The ARA Show™ 2023 in Orlando. Industry Ambassador Award: Frederick “Fred” Dupy This award recognizes an individual who has demonstrated long-term leadership and service to the association at the national, state, or local levels. Frederick “Fred” Dupy was the president of American Party Rental in Austin, Texas, until his death in May 2022. Dupy was a tireless advocate for industry service. He always put ARA members and the association first. He was a long-time member and served on national, state, and local levels. He was very active in the Texas Rental Association (TRA) serving in various roles on the board including two terms as president. Dupy received the Region Four Person of the Year award in 2004 and 2012. He was named TRA Person of the Year in 2013. Prior to his TRA service, Dupy served on the board of the Heart of Texas Rental Association for many years. Dupy was a passionate supporter of the ARA Foundation and its programs, especially those supporting scholarships and education. He was serving his second term on the ARA Foundation Board of Trustees at the time of his death and served as the board chair in 2020. During his time on the ARA Foundation board, Dupy also served on the scholarship and disaster grant review committees. He and his wife, Monica, were generous financial supporters of the ARA Foundation. They received the 1976 Club Award six times and the James Keenan Award eight times since 2012. Exemplary Service Award: Jeff Lignugaris This award recognizes an individual or group that has made a significant contribution in a defined area of association service (such as government affairs, education, technology, or workforce development). Jeff Lignugaris, president, of Northside Tool Rental, Atlanta, Ga., has been an active member of the ARA and ARA of Georgia for more than 20 years. As a result of his years-long active and direct involvement in legislative advocacy to help equipment rental operators in his state, Lignugaris was crucial to getting legislation passed in Georgia in 2022 — which offers expanded property tax relief to more equipment and event rental companies. He was involved with the first initiative which secured relief for that owning equipment over 5,000 lbs. and was recently successful in lowering this weight limit to 1,500 lbs. Lignugaris continually went to great lengths to make himself available to help with this legislative initiative. He provided names and contact information for other members in targeted counties who needed to be heard to persuade various legislators of the need for this relief. His knowledge and relationship with other members provided invaluable assistance. Industry Impact Award: Jody Kerr This award recognizes a manufacturer supplier and/or independent manufacturer representative rental industry professional who made a significant impact on the association and/or industry during the past two years. Jody Kerr, manager, Toro, Bloomington, Minn., has continually supported ARA — previously serving on ARA’s Exhibitor Advisory Council from 2014-2017 and as Associate Member director on the ARA Board of Directors from 2015-2017. Kerr is a founding member and supporter of the Women in Rental Committee. She also reviewed materials and provided valuable input for the ARA Foundation Mentoring Program. Kerr has volunteered at multiple ARA Foundation/The Toro Company Foundation Community Impact Projects. She is an active ARAPAC [ARA’s Political Action Committee] supporter. Rising Star Award: Dillon Hughes The Rising Star Award recognizes a young professional who has demonstrated leadership at the grassroots level. Dillon Hughes, the owner, of Only 1 Rentals, Navasota, Texas, has served on the TRA board since 2014 and is the current TRA immediate past president. He is the youngest to serve as TRA president. Hughes also has stepped up to assist with workforce development initiatives and participated in the TRA Legislative Day. On the national level, he has served on the ARA Young Professionals Committee and has attended the ARA National Legislative Caucus multiple times. He’s also attended the ARA Young Professional Conference and the ARA Leadership Conference. He was named to the Rental Management 12 to Watch Under 40 in 2018. Leadership Impact Awards These awards recognize an individual in each of the ARA 10 regions whose leadership benefited their state and/or local association and its members over the past year. Region One: Stefani Donabedian-Soucy, Mobile Air & Power Rentals, Worcester, Mass. Region Two: Reggie Eda, Oxon Hill Rentals, Fort Washington, Md. Region Three: Kevin Marchin, M & M Sales, Belmont, N.C. Region Four: Marty Bamburg, Bamco of LA, Shreveport, La. Region Five: Dan Fielitz, General Rent-All, Massillon, Ohio Region Six: Joshua Swanson, Great Northern Equipment Distributing, Rogers, Minn. Region Seven: Brady Castro, PRO EM National Event Services, Phoenix, Ariz. Region Eight: Megan “Mac” Whittlesey, CERP, Ideal RentAll, Mount Vernon, Wash. Region Nine: Jared Medaris, CERP, Expo Party Rentals, Fresno, Calif. Region 10: Rob Potter, Cooper Equipment Rentals, Richmond, British Columbia, Canada
Rental Hall of Fame inductees announced
Each year, the American Rental Association (ARA) honors individuals for outstanding service to the association and the rental industry. This year, two longtime rental industry leaders will become the newest inductees into the Rental Hall of Fame and will be honored at The ARA Show™ 2023 in Orlando. The Rental Hall of Fame was created in 2000 to honor those individuals who have changed the trajectory of the equipment and event rental industry. Each year, nominations are accepted to recognize outstanding industry leaders who have made a substantial and lasting impact on the industry’s success and growth at the national and/or international levels. “The Rental Hall of Fame is ARA’s most prestigious award. This year, we are honored to recognize two individuals whose vision and leadership has made a significant impact on the equipment and event rental industry. Their dedication has been felt across the rental community and I would like to personally thank and congratulate them,” says Tony Conant, ARA CEO. Doron Broadfoot, The Rent-It Store, Saskatoon, Saskatchewan, Canada Doron Broadfoot has been a member of the rental industry for more than 50 years. It all started in 1972 when he started working for his father at The Rent-It Store in Saskatoon. In 1974, he invested in a business owned by Acklands-Grainger. When the company decided to close — leaving employees out of work — Broadfoot and his business partner, Doug Mitchell, decided to postpone their retirement and purchased the business in 2005. Throughout his career, Broadfoot always has encouraged both employees and business partners to get involved with ARA and the Canadian Rental Association (CRA). He is being recognized for his leadership and long-term dedication and service to ARA, CRA, and the ARA Foundation. Broadfoot was CRA president from 1989-1990 and then served as the ARA Region 10 director from 2000-2003. He is a huge supporter of the ARA Foundation both as a volunteer and a donor. He served on the ARA Foundation board of trustees for two terms from 2009-2014 and sat as the chair of the board in 2011 and 2012. He established the Region 10 Doug Mitchell scholarship in honor of his late business partner in 2014. In recognition of his philanthropic efforts, he has received the ARA Foundation James Keenan Award five times and the 1976 Club Award 10 times. James “Jim” Ziegler, Rental City, Boulder, Colo. Jim Ziegler started his career in the rental industry in 1969 when he bought an A-Z Rental franchise in Boulder — which would eventually become Rental City. Ziegler built Rental City from the ground up and turned it into a thriving business. After 30 years, he sold the company to NationsRent in 2000. Ziegler also was the CEO of RenTrain, a business he developed to help reduce insurance costs and improve operating techniques through educational programs for rental equipment dealers and provide websites for small businesses. Ziegler has been actively involved with ARA and the ARA of Colorado for years having served on the ARA of Board of Directors from 1988-1992 and as the 29th ARA president in 1990. While on the ARA of Colorado board, he also served as president.
First Financial Equipment Leasing expands operations in Canada following acquisition of NorFund Capital
First Financial Equipment Leasing (FFEL), a provider of equipment financing solutions and a member company of JA Mitsui Leasing Ltd (JAML), announces a strategic expansion into Canada with the acquisition of NorFund Capital. Based in Toronto, Canada, NorFund Capital is an independent leasing company specializing in capital equipment, solar and alternative energy, and vendor finance programs. The acquisition continues First Financial Equipment Leasing’s tremendous growth trajectory, driven by its vision to elevate and broaden solutions offered to its global customers. “NorFund Capital’s expertise and creativity within the Canadian market made it the ideal fit to lead our growth in new markets and industries,” said Tom Slevin, FFEL Co-Founder and CEO. “With Canada becoming a significant part of our North American platform, this acquisition provides key opportunities for us to extend our financing solutions and enhance the customer experience throughout our global client base.” “We are excited to join First Financial Equipment Leasing and the JA Mitsui Leasing Ltd. family of companies,” said Robert MacFarlane, President and Founder NorFund Capital. “Our organizations have a shared passion for building innovative financing solutions with a customer-focus approach. Given the complementary nature of our combined businesses, we look forward to a strengthened global platform with expanded investment opportunities.” MacFarlane will lead the newly named First Financial Canadian Leasing as Senior Vice President, overseeing the Canadian sales strategies and business development. He will focus on growing the company’s fair market value (FMV) leases and establishing First Financial Canadian Leasing as a market leader in renewable energy financing in Canada. MacFarlane has over 30 years of experience in the leasing industry and has built and managed several highly successful equipment finance companies. First Financial Equipment Leasing was represented by Cassels Brock & Blackwell LLP on the transaction.
United Rentals completes acquisition of Ahern Rentals
United Rentals, Inc. has announced that it has completed its previously announced acquisition of the assets of Ahern Rentals, Inc. for approximately $2.0 billion in cash. The transaction and related expenses were funded through a combination of newly issued senior secured notes and existing capacity under the company’s ABL facility. The transaction adds approximately 2,100 employees, 60,000 rental assets, and 106 locations to United Rentals in the United States, and makes the company’s specialty rental solutions available to thousands of new construction and industrial customers. Matthew Flannery, chief executive officer of United Rentals, said, “Today we completed the Ahern acquisition on schedule and welcomed over two thousand colleagues to Team United. The integration is off to a strong start, giving us significantly more capacity to serve our expanded customer base. This transaction strengthens our positioning for the robust demand we expect in 2023, while also aligning with our longer-term strategy to ‘grow the core’ to drive greater shareholder value.” The company will issue its 2023 guidance in January, reflecting a full year of beneficial impact from the combination.
Sunbelt Rentals acquires Wagner Rental & Supply locations
Sunbelt Rentals has acquired Wagner Rental & Supply, which has locations in Chillicothe, New Boston, Jackson, Ohio, and Ashland, Kentucky. “We are excited to announce the start of a new chapter at Wagner Rental & Supply. After much thought and consideration, we have decided to merge our four locations with Sunbelt Rentals and become part of their team. We are certain that this new chapter will result in us serving our community better and will help advance the careers of all of our current employees. After this transition, you will continue to see the same faces at each of our locations and we are excited to better serve you!” Wagner Rental & Supply has been in business for nearly 75 years. The company primarily rented to small contractors and homeowners, offering a wide range of hand tools, plumbing tools, lawn and garden equipment, track loaders, excavators, skid-steer loaders, floor-care equipment, scaffolding equipment, and aerial equipment. The Stansberry Firm represented Wagner Rental & Supply in the transaction.
Equipment Leasing and Finance Association’s Survey of Economic Activity: Monthly Leasing and Finance Index
October New Business Volume Up 6 Percent Year-over-year, 11 Percent Month-to-month and Nearly 6 Percent Year-to-date The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross-section of the $1 trillion equipment finance sector, showed their overall new business volume for October was $11.3 billion, up 6 percent year-over-year from new business volume in October 2021. Volume was up 11 percent from $10.2 billion in September. Year-to-date, cumulative new business volume was up nearly 6 percent compared to 2021. Receivables over 30 days were 1.7 percent, up from 1.5 percent from the previous month and unchanged from the same period in 2021. Charge-offs were 0.18 percent, up from 0.17% the previous month and up from 0.16 percent in the year-earlier period. Credit approvals totaled 77.0 percent, down from 77.3 percent in September. The total headcount for equipment finance companies was down 4.7 percent year-over-year. Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in November is 43.7, a decrease from the October index of 45. ELFA President and CEO Ralph Petta said, “The equipment finance industry demonstrates its typical resilient nature, producing an increase in October’s new business volume despite months of interest rate hikes brought on by the Fed’s efforts to control inflation. Despite the spectre of an imminent recession—as many economists predict—equipment finance organizations continue to do what they do best, i.e., help supply the nation’s businesses with productive assets that enable them to survive and thrive.” James Currier, Chief Revenue Officer, Finloc USA Inc., said, “By now there should be some consensus amongst economists and industry vets alike that the economy slowing down is not only predictable but intended—and necessary. We see it coming and know it’s close. We just won’t know what the severity and duration will be until we come out on the other side. Despite the rhetoric from drama-driven sources, it’s unlikely that the sky will fall given our modern quantitative tightening policies and practices. Tough, yes, global economic catastrophe, probably not. We see the economic tightening as an opportunity for carriers to get back on track with normal equipment replacement cycles that have been postponed and explore new verticals. Business reorganizations will require lenders to adapt to changing practices and operations. It will not be business as usual for the foreseeable future, so it is our role as lenders and financing consultants to help manage difficult situations.”
Equipment rental revenue poised to continue growth in 2023 and beyond
After two years of rapid post-pandemic revenue growth in 2021 and 2022, the equipment rental industry is expected to see single-digit increases over the next four years according to the latest American Rental Association (ARA) forecast released in early November. The forecast calls for equipment rental revenue — which includes the construction and industrial as well as the general tool segments — to increase by 3.4 percent in 2023 to nearly $57.7 billion after a growth of 11 percent in 2022 to reach almost $55.8 billion. In subsequent years, equipment rental revenue is expected to grow 2.9 percent in 2024, 3.3 percent in 2025, and another 3.4 percent in 2026 to reach nearly $63.4 billion. “In the current forecast we see a definite softening in rental revenue growth, but we do not see negative growth,” says John McClelland, Ph.D., ARA vice president for government affairs and chief economist. The construction and industrial segment, according to S&P Global Market Intelligence, the forecasting firm that compiles data for the ARA forecast and the ARA Rentalytics™ subscription service showed double-digit revenue increases in 2021 and 2022 at 10.2 and 12.7 percent respectively. The segment is forecast to show a 4 percent increase in 2023, 2 percent in 2024, and 3 percent in 2025 and 2026. On the general tool side, revenue growth was a more moderate 4.5 percent in 2021 and 6.2 percent in 2022 and is forecast to be 1 percent in 2023 and then 5 percent in 2024 and 2025 and 4 percent in 2026. “There is variability in the forecast, depending on the end markets rental companies serve. However, nonresidential construction spending will be strong, and money continues to be spent from government stimulus programs, which both are positives for the rental industry,” says Tom Doyle, ARA vice president, the association program development. “In addition, the supply chain is improving, which can help alleviate the backlog of equipment orders, allowing equipment rental companies to expand inventory to meet demand, which adds to the positive outlook for the industry in 2023 and beyond,” Doyle says. Scott Hazelton, director, of S&P Global Market Intelligence, agrees that the outlook for the equipment rental industry is positive but adds that a slowdown is coming with a recession and an anticipated reduction in demand. In addition, according to S&P Global Market Intelligence, investment in construction and industrial equipment now is expected to decline slightly in 2023 after a growth of 55.1 percent in 2021 and 40 percent in 2022. Investment growth is forecast to be 4.8 percent in 2024 and 6.4 percent in 2025. In Canada, equipment rental revenue also showed a post-pandemic boost of 15.8 percent in 2021 and 11.1 percent in 2022 to reach $4.6 billion. The same as in the U.S., revenue growth is expected to settle into a single-digit pattern over the next four years. The ARA forecast calls for equipment rental revenue in Canada to increase by 1.6 percent in 2023, 4 percent in 2024, 5.3 percent in 2025, and 3.5 percent in 2026 to reach nearly $5.3 billion.
United Rentals to acquire Ahern Rentals for $2 Billion cash
United Rentals, Inc. has announced that the company has entered into a definitive agreement to acquire the assets of family-owned Ahern Rentals, Inc. for approximately $2.0 billion in cash. The board of directors of United Rentals unanimously approved the agreement. The transaction is expected to close prior to year-end 2022, subject to customary conditions. Founded in 1953, Ahern Rentals is the eighth-largest equipment rental company in North America, with approximately 2,100 employees and 106 locations in 30 states serving approximately 44,000 customers in the construction and industrial sectors. For the trailing 12 months ended September 30, 2022, Ahern Rentals generated $310 million of adjusted EBITDA on $887 million of total revenue. Strong Strategic Rationale Consistent with United Rentals’ “grow the core” strategy, customers of both companies will be better served by the combined scale, and legacy customers of Ahern Rentals will benefit from one-stop access to United Rentals’ specialty rental offerings. Ahern Rentals’ customer service footprint of branches, fleet, and experienced employees is complementary with United Rentals’ existing network. The combination will increase capacity for United Rentals in key geographies, with concentrations on both U.S. coasts and in the Gulf region. The combination will expand the fleet available to United Rentals customers by over 60,000 rental assets with an original cost of $1.85 billion, as well as approximately $145 million of the non-rental fleet. Notably, over 75% of Ahern Rentals’ rental fleet is comprised of high-demand aerial and material handling equipment. The integration of the acquired branch and sales operations represents significant opportunities to improve efficiency, productivity, and new business development with the adoption of United Rentals technology and field management processes. Ahern Rentals and United Rentals use a number of the same technology platforms, including the RentalMan ERP system. Strong Financial Rationale The purchase price of approximately $2.0 billion represents a multiple of 6.5x adjusted EBITDA for the trailing 12 months ended September 30, 2022, or 4.5x adjusted EBITDA net of cost synergies and the net present value of tax attributes estimated at $426 million. The acquisition is expected to be accretive to United Rentals’ adjusted earnings per share and free cash flow generation in its first-year post-close. The transaction is projected to result in a net leverage ratio at year-end 2022 at the low end of the company’s target range: 2.1x adjusted EBITDA as-reported, and 2.0x on a pro forma basis. Return on invested capital (ROIC) is expected to exceed the cost of capital within 24 months of closing on a run-rate basis, with an attractive IRR and NPV. Importantly, the return profile of the transaction is compelling across a range of macro scenarios. The combination is expected to generate approximately $40 million of annualized cost synergies within the first 12 to 18 months of closing, primarily in the areas of corporate overhead, operations, and cost of rentals due to efficiencies of scale. Additionally, United Rentals expects to realize procurement savings based on the combined spending of both companies. United Rentals expects to realize approximately $60 million of annual revenue synergies by year three, led by the cross-selling of its specialty rental offerings to an expanded customer base. The transaction is not conditioned on financing. United Rentals expects to use a combination of newly issued debt and existing capacity under its ABL facility to fund the transaction and related expenses. The company currently plans to pause its $1.25 billion share repurchase program through the initial phase of the integration, consistent with its approach during the integrations of similarly sized general rental transactions. CEO Comments Matthew Flannery, chief executive officer of United Rentals, said, “Our acquisition of Ahern Rentals supports our strategy to deploy capital to grow the core business and drive shareholder value. We view ourselves as the ideal owner of these assets within our network, as customers will benefit from the combination of the two organizations moving forward together. We’re leveraging our competencies in larger-scale M&A to augment both our near- and long-term earnings power.” Flannery continued, “Our integration playbook is underway so we can prepare the acquired branches to take full advantage of our systems and operational capabilities and gain from our employee and customer-centric culture. I look forward to welcoming our new team members upon the closing of the acquisition.” Don Ahern, chief executive officer of Ahern Rentals, said, “I’m proud of what we’ve built at Ahern Rentals over nearly seven decades, and I’m extremely pleased that the combination with United Rentals will take the business forward in this next chapter of growth. I want to thank our employees for driving the results that make this transaction possible. This is a strong outcome for both organizations and our customers.” Key Statistics of the Acquisition Financial data in $ millions Purchase Price $ 2,000 Present Value of Acquired Tax Assets $ 426 Total Revenues (LTM 9/30/22) $ 887 Adjusted EBITDA (LTM 9/30/22) $ 310 Estimated Annualized Cost Synergies Achieved in Year Two $ 40 Estimated Annualized Cross-Selling Benefits Achieved by End of Year Three $ 60 Original Equipment Cost of Acquired Rental Fleet $ 1,850 Non-Rental Fleet $ 145 Employees ~2,100 Rental Branches 106 Customers ~44,000
Q4 Update to the 2022 Economic Outlook forecasts 5.9% expansion in Equipment and Software investment and 1.8% GDP growth this year
Despite early indicators of a modest rebound in equipment and software investment growth in Q3, demand may soften in several end-user markets over the remainder of the year due to high-interest rates and expectations for further rate hikes, according to the Q4 update to the 2022 Equipment Leasing & Finance U.S. Economic Outlook. The report released today by the Equipment Leasing & Finance Foundation forecasts equipment and software investment growth of 5.9% in 2022, while U.S. GDP growth of 1.8% is expected. The Foundation’s report is focused on the $1.16 trillion equipment leasing and finance industry and highlights key trends in equipment investment, placing them in the context of the broader U.S. economic climate. Nancy Pistorio, Foundation Chair and President of Madison Capital LLC, said, “While many of the factors highlighted in the Foundation’s Q4 Economic Outlook have worsened in recent months, including the U.S. housing sector, the global economic backdrop, and Fed actions to control inflation, there are bright spots. The industrial core of the economy continued to hum along in the late summer and early fall, and demand for equipment remains strong despite concerns of a looming recession.” Highlights from the Q4 update to the 2022 Outlook include: Equipment and software investment grew just 1.9 percent (annualized) in Q2, a notable slowdown from strong growth in Q1. The effects of Fed interest rate hikes appear to be filtering through the economy, but most verticals are not showing cause for serious concern. However, demand is expected to soften late this year and in early 2023 as the Fed continues to address inflation. The U.S. economy contracted through the first six months of 2022, amplifying recession concerns. The labor market remains a bright spot, but higher interest rates are increasingly taking a toll on the U.S. housing market and the global economy, which is struggling under the weight of the strongest dollar in decades. Still, a recession is unlikely to occur in 2022. In the manufacturing sector, loosening supply chains have allowed the industrial activity to continue expanding despite rising interest rates and high inflation weighing on business confidence. The recent passage of multiple infrastructure-related bills should provide a modest tailwind for the equipment finance industry in 2023. The outlook for Main Street businesses over the remainder of the year has worsened. While small and medium-sized businesses are starting from a position of relative strength, the dual impacts of high inflation and surging interest rates are likely to impact smaller firms first and hardest. With borrowing more expensive and sales expectations weak, small business owners are likely to feel pressure to slow or pause expansion and hiring plans. Despite rapidly increasing interest rates, the Fed’s actions to quell inflation seem to have had little effect. Fed officials have repeatedly emphasized the importance of reining in inflation, even if it means sending the U.S. economy into a recession. The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, which is released in conjunction with the Economic Outlook, tracks 12 equipment and software investment verticals. In addition, the Momentum Monitor Sector Matrix provides a customized data visualization of current values of each of the 12 verticals based on recent momentum and historical strength. This month four verticals are expanding/thriving, four are peaking/slowing, and four are weakening/struggling. Over the next three to six months, year over year: Agriculture machinery investment growth is unlikely to improve. Construction machinery investment growth is likely to slow. Materials handling equipment investment growth is likely to remain soft. All other industrial equipment investment growth may continue to decelerate. Medical equipment investment growth will likely hold steady. Mining and oilfield machinery investment growth may have peaked, though growth is expected to remain positive. Aircraft investment growth may begin to rebound. Ships and boats investment growth are unlikely to accelerate. Railroad equipment investment growth will likely remain strong. Trucks investment growth may improve. Computers investment growth will likely continue to sidewind. Software investment growth will likely decelerate further. The Foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economic and public policy consulting firm Keybridge Research. The annual economic forecast provides the U.S. macroeconomic outlook, credit market conditions, and key economic indicators. The Q4 report is the third update to the 2022 Economic Outlook and the final quarterly update before the publication of the 2023 Economic Outlook in December. Download the full report at https://www.leasefoundation.org/industry-resources/u-s-economic-outlook/. Download the Momentum Monitor at https://www.leasefoundation.org/industry-resources/momentum-monitor/. All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.