ARA forecast shows equipment rental moving from relief to recovery
Equipment rental revenue, comprised of the construction/industrial and general tool segments, is expected to explode past its peak totals in 2022 according to the latest forecast released by the American Rental Association Equipment rental revenue, comprised of the construction/industrial and general tool segments, is expected to explode past its peak totals in 2022 according to the latest forecast released by the American Rental Association. The updated forecast calls for equipment rental revenue to reach just less than $47.7 billion in 2021, up 3.1 percent after a decline of 9.1 percent in 2020. However, the forecast calls for a robust 12 percent increase in construction/industrial rental revenue in 2022, taking the combined total for the two segments up to nearly $52.3 billion. The growth rate is expected to be consistent at between 2 and 5 percent for the next three years according to the forecast with combined equipment rental revenues reaching $57.5 billion in 2025. “The equipment rental segment is moving like the rest of the macroeconomy from relief to recovery. We are seeing a good uptick in business activity that is going to bring rental revenues back to pre-pandemic levels in 2022,” said John McClelland, Ph.D., ARA vice president for government affairs and chief economist. The biggest concern going forward is the slump in nonresidential construction. However, a robust infrastructure bill from Congress would provide a significant long-term boost to that sector as well.” This is the first quarter that ARA has segmented the updated forecast to include just the construction/industrial and general tool segments. ARA currently is developing new ways to gather data and methodology to forecast results for the event rental segment with more information to be available later this year. The new ARA forecast calls for construction/industrial rental revenue to grow 3 percent in 2021 to nearly $34.5 billion and then jump 12 percent to $38.5 billion in 2022. In 2023, ARA forecasts growth of another 5 percent to nearly $40.3 billion, followed by growth of 2 percent in 2024 to $41.5 billion and 3 percent in 2025 to $42.5 billion. For general tool, the forecast is steady, calling for a revenue increase of 5 percent in 2021 to $13.2 billion and then growing 4 percent in 2022, and 3 percent during the next three years to surpass $15 billion in segment revenue in 2025. Revenue for both segments is expected to surpass pre-pandemic peak levels reached in 2019 by the end of 2022. “While the overall U.S. economy is recovering strongly, the sectors that drive equipment rental are coming along more slowly,” said Scott Hazelton, director, economics and country risk, IHS Markit, Andover, Mass., the economic forecasting firm that partners with ARA to provide data and analysis for the ARA Rentalytics subscription service for ARA members. “In particular, the nonresidential construction and infrastructure sectors are still contracting and may not see growth until the end of the year. However, leading indicators, such as the Architectural Billings Index have begun to show strong improvement. “Construction activity follows architectural design by 12 to 18 months, which suggests a strong rebound in 2022. The energy sector has also begun to recover but will improve further next year as major economies in Europe and Latin American emerge from the pandemic and air traffic returns to something approaching 2019 levels. Further stimulus via an expanded infrastructure bill could push growth higher. The key takeaway is that we expect equipment rental revenue to recover to 2019 levels in 2022; it is a multi-year event, with the strongest recovery expected in 2022.” The forecast for Canada calls for double-digit equipment rental revenue growth for both the construction/industrial (11 percent) and general tool (13 percent) segments in 2021 to reach a combined total of $3.98 billion. Canada’s equipment rental revenue for the two segments also is expected to grow between 5 and 8 percent in 2022 to reach $4.29 billion, surpassing the previous peak revenue of $4.04 billion in 2018. Growth is expected to slow down to 2 to 3 percent in the next years of the forecast to reach $4.73 billion in 2025.
M&R Rentals moves to new location after 50 years
M&R Rental in Gainesville, GA has a new location after outgrowing their old location of 50 years. The former location was located on Enota Avenue and its new location is located at 2577 Monroe Drive. M&R Rental still offers the same services as the location but has more room to grow. The business was started by Harrison Martin and David Reed in 1967. Nathan Crumley purchased the business in December 2008. Soon after, Nathan’s brothers Don and Will have joined him in operating the business. M&R serves the Gainesville and surrounding area in Georgia. They are looking to expand to more locations in the near future.
Herc Rentals reports increased revenues for first quarter ’21
Total revenues for the first quarter of 2021 were $453.8 compared to $436.2 million for Q120, a 4-percent hike Herc Holdings posted equipment rental revenue of $400.4 million in the first quarter of 2021 compared to $386.5 million during the first quarter of 2020, a 3.6-percent year-over-year increase. Total revenues for the first quarter of 2021 were $453.8 compared to $436.2 million for Q120, a 4-percent hike. Herc reported a net income of $32.9 million, or $1.09 per diluted share in the first quarter of 2021, compared to a net loss of $3.7 million, or $0.13 per diluted share in the first quarter of 2020. Pricing declined a slight 0.3 percent compared to the same period in 2020. Dollar utilization increased to 38.6 percent compared to 35.7 percent in the year-ago period. “Our year is off to a great start with first-quarter total revenues up 4 percent and adjusted EBITDA up 25 percent compared with last year,” said Larry Silber, president and CEO. “Our adjusted EBITDA margin hit a record for the first quarter of 40.7 percent and reflects the strength of our operating model. Strong performance by our ProSolutions and entertainment rental businesses drove rental revenue growth, and the efficient execution of our operating model propelled adjusted EBITDA margin expansion of 680 basis points. Our focus on customer service and the consistent implementation of a strategy to diversify our customer and industry base continues to demonstrate the strength of our business.” Adjusted EBITDA increased 25 percent to $184.6 million compared to $147.7 million in the prior-year period. The increase was primarily from improved operating efficiencies and higher contributions from the sale of rental equipment. Herc reported net rental equipment capital expenditures of $50.6 million for 2021. Gross rental equipment capex was $90.9 million compared with $83 million in the year-ago quarter. Proceeds from disposals were $40.3 million compared to $34.6 million last year. As of March 31, 2021, Herc’s total fleet was approximately $3.63 billion at original equipment cost. The average fleet at OEC dropped 5.1 percent year over year. The average fleet age of 48 months at the end of the quarter was the same at the end of the first quarter of 2020. The improved results in the first quarter along with the trends the company is seeing in the market inspired officials to raise its adjusted EBITDA guidance for the year, Silber said. “Our guidance range for adjusted EBITDA now exceeds our pre-pandemic 2019 results by 8 percent to 13 percent,” Silber said. “Overall, our end markets are showing positive momentum and demand for rental equipment is increasing. We intend to continue to take market share in our specialty businesses and to maximize our operating leverage as revenue growth accelerates in the seasonally strong part of the year.” Herc raised its expectations for adjusted EBITDA from the $730 million to $760 million range to a range of $800 million to $840 million.
United Rentals first quarter ’21 total revenue drops
United Rentals reported total revenues of $2,057 million in the first quarter of 2021 compared to $2,125 million in the first quarter of 2020, a 3.2-percent dip. Equipment rental revenue was $1,667 million in first-quarter 2021 compared to $1,783 million in the first quarter of 2020, a 6.5-percent decrease. The general rentals segment decreased year over year to $1,273 million for the quarter. Rental gross margin increased by 20 basis points to 32.3 percent. However, the specialty rentals segment, or Trench, Power and Fluid Solutions increased 1.3 percent during the quarter to $394 million. Rental gross margin increased by 50 basis points to 42.1 percent, primarily because of decreases in temporary labor and fleet repair costs. Net income for the quarter increased 17.3 percent year over year to $203 million, while net income margin hiked 180 basis points to 9.9 percent. The first quarter of 2020 included a $26 million non-cash asset impairment charge, not related to the coronavirus pandemic. Adjusted EBITDA for the quarter decreased 4.6 percent year over year to $873 million, which adjusted EBITDA margin dropped 70 basis points to 42.4 percent. “We were very pleased with our first-quarter results and the strong start to our year, as our key end-markets continue to rebound from the challenges of 2020,” said United Rentals CEO Matthew Flannery. “Sentiment among our customers continues to improve, and we are well prepared to support them as we enter the busiest part of our season. The recovery that we’ve seen since the middle of last year remains evident across our business, and virtually all indicators point to these trends continuing. As such, we are raising our full-year guidance to reflect our expectations for stronger growth in our core rental business and increased used equipment sales. Most importantly, we are leveraging our significant competitive advantages to add value for both our customers and our investors.” During the first quarter, United acquired Franklin Equipment, a 20-location rental company headquartered in Ohio. Subsequent to the quarter, on April 15, United agreed to acquire General Finance, a mobile storage rental specialist for $19 per share in cash, totaling $996 million including the assumption of $400 million in net debt. The acquisition is expected to close during the second quarter. United Rentals has updated its full-year outlook, including the contribution from the acquisition of Franklin Equipment, but not including the impact of the pending acquisition of General Finance Corp. The previous expectation for total revenue in 2021 was in the range of $8.625 to $9.025 billion. Now the company is expecting revenue within the range of $9.05 billion to $9.45 billion.
Jefferds Corporation
H&E opens new facility in Marietta, GA
Effective April 21, 2021, H&E Equipment Services Inc. (H&E) announces the opening of its Marietta branch, the fifth facility located in Georgia and the third in the Atlanta area. The new location is at 1069 Canton Road, Marietta, GA 30066-6039, phone 770-343-2200. The 30,000-square-foot facility sits on 3.5 acres with a fully fenced yard area, offices, parts warehouse, and a repair shop with six service bays. It is capable of servicing a variety of construction and general industrial equipment for customers northwest of Atlanta. The 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, Blue Diamond, Bomag, Case, Club Car, Doosan, Gehl, Generac Mobile, Genie, Hamm, Hy-Brid Lifts, JCB, JLG, John Deere, Kubota, LayMor, Link-Belt Excavators, MEC, Miller, Multiquip, Okada, Polaris, Skyjack, SkyTrak, Sullair, Sullivan-Palatek, Takeuchi, Wacker Neuson, Yanmar, and others. “Some of the fastest-growing cities in Georgia are on the northwest side of Atlanta, so Marietta was the obvious choice for another H&E location. With various infrastructure, commercial and multifamily residential construction projects increasing, we needed to grow to meet the demands of our customers,” says Branch Manager Jeremiah Smith. “Our existing branches located in nearby Decatur and Suwannee have solidified relationships with their customer base. With our three metro Atlanta branches, we now have excellent coverage of the area and can locate equipment and provide quick service to all H&E customers in the region.”
Herc Holdings Reports 2020 Fourth Quarter and Full Year 2020 results and announces Full Year Guidance for 2021
Equipment rental revenue was $427.3 million in the fourth quarter and $1,543.7 million for the full year Total revenues were $520.4 million in the fourth quarter and $1,781.3 million for the full year Net income was $35.5 million, or $1.19 per diluted share in the fourth quarter, and $73.7 million, or $2.51 for the full year Adjusted EBITDA was $195.6 million in the fourth quarter and $689.4 million for the full year Free cash flow increased to $424.5 million for the full year The Company announced full-year 2021 guidance ranges of $730 million to $760 million for adjusted EBITDA and $400 million to $450 million for net rental equipment capital expenditures Herc Holdings Inc. today reported financial results for the quarter ended December 31, 2020. Equipment rental revenue was $427.3 million and total revenues were $520.4 million in the fourth quarter of 2020, compared to $457.0 million and $540.1 million, respectively, for the same period last year. Herc reported net income of $35.5 million, or $1.19 per diluted share, in the fourth quarter of 2020, compared to $35.1 million, or $1.20 per diluted share, in the same 2019 period. Fourth-quarter 2020 adjusted net income was $40.2 million, or $1.35 per diluted share, compared to $38.9 million, or $1.33 per diluted share, in 2019. See page A-5 for the adjusted net income and adjusted earnings per share calculations. “We exceeded our expectations for the fourth quarter and have good momentum going into 2021,” said Larry Silber, president and CEO. “During the year, we adjusted fleet to respond to the declines in volume related to the impact of COVID-19 on our customers and focused on controlling costs. The quick implementation of those initiatives led to our improved adjusted EBITDA margin and excellent free cash flow for the full year. Our commitment to customer service and consistent implementation of a strategy to diversify our customer and industry base continues to demonstrate the strength of our business model.” 2020 Fourth Quarter Highlights Equipment rental revenue was $427.3 million compared to $457.0 million in the prior-year period. The COVID-19 business slowdown continued to impact volume and pricing. Total revenues were $520.4 million compared to $540.1 million in the prior-year period. The year-over-year decline of $19.7 million was related primarily to lower equipment rental revenue of $29.7 million, offset by an increase in sales of rental equipment of $10.8 million. Pricing declined 0.8% compared to the same period in 2019. Dollar utilization increased to 40.6% compared to 40.5% in the prior-year period and increased 300 basis points sequentially from the third quarter of 2020. Direct operating expenses (DOE) of $185.9 million decreased 5.1% compared to the prior-year period. The $9.9 million decline was primarily related to lower re-rent expense and personnel-related costs. Selling, general and administrative expenses (SG&A) declined 5.2% to $69.8 million compared to $73.6 million in the prior-year period. The $3.8 million decline was primarily attributed to reductions in selling and travel expenses. Impairment expense was $5.9 million and consisted of the impairment of certain rental equipment and capitalized software related to financial systems that were replaced during the fourth quarter of 2020. Interest expense decreased to $22.5 million compared to $27.1 million in the prior-year period. The decrease was primarily related to both lower interest rates and balances of the Company’s ABL Credit Facility in 2020. The income tax provision was $9.5 million compared with $18.1 million for the prior-year period. The Company reported a net income of $35.5 million compared to $35.1 million in the prior-year period. Adjusted net income was $40.2 million compared to $38.9 million in the prior-year period. Adjusted EBITDA declined 8.8% to $195.6 million compared to $214.4 million in the prior-year period. The decrease was primarily due to lower volume and pricing. Adjusted EBITDA margin declined 210 basis points to 37.6% compared with 39.7% in the prior-year period, primarily due to higher costs related to sales of rental equipment in the quarter. Full Year 2020 Highlights • Equipment rental revenue was $1,543.7 million compared to $1,701.8 million in the comparable prior-year period. The 9.3%, or $158.1 million decline, was primarily due to lower volume related to the impact of COVID-19. • Total revenues were $1,781.3 million compared to $1,999.0 million in the prior-year period. The economic slowdown related to the COVID-19 pandemic impacted all of the Company’s revenue streams in 2020. Lower equipment rental revenue and sales of rental equipment were the primary factors contributing to the 10.9%, or $217.7 million, decline compared to the prior-year period. • Pricing increased 0.1% compared to the same period in 2019. • Dollar utilization was 36.1% compared with 38.7% in the prior year, primarily a result of lower volume and mix. • DOE fell 10.6%, or $81.9 million, to $689.2 million compared to the prior-year period. The decline was primarily related to lower transportation, re-rent, and maintenance expense, as well as a lower personnel-related expense as a result of furloughs and lower overtime expense. • SG&A decreased 12.7% to $257.4 million compared to $294.8 million in the prior-year period. The $37.4 million decline was primarily attributed to reductions in selling and travel expenses, as well as lower bad debt expense due to continued improvement in collections. • The Company recorded restructuring expense of $0.7 million primarily related to personnel reductions compared with $7.7 million in the prior-year period associated with closures of underperforming branches. • Impairment expense was $15.4 million and consisted of partial impairment of a long-term receivable related to the sale of a former joint venture, the impairment of certain rental equipment and capitalized software related to financial systems, assets related to the closure of two branch locations in 2019, and the sale of two locations in 2020. Impairment expense of $5.1 million in 2019 was primarily related to certain international assets that were deemed held for sale as of December 31, 2019. • Interest expense decreased to $92.6 million compared to $173.5 million in the prior-year period. The decrease was primarily related to the $53.6 million debt extinguishment
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 the expansion of select equipment categories, greenfield and acquired locations, and niche opportunities while remaining committed to a sound financial footing.”
Able Equipment Rental hires new VP of Sales
Able Equipment Rental, located in Deer Park, N.Y., has appointed Robert Veshosky vice president of sales. Veshosky joins Able with more than 25 years of management experience in the construction equipment industry, including senior management positions at the three largest companies in the equipment rental industry. Most recently Veshosky was a regional vice president for Herc Rentals. His career experience includes general rental, aerial & material handling, pump and power, and climate remediation. Veshosky has worked across many business segments including construction, industrial, oil and gas, renewable energy, marine, entertainment, and government. “Bob brings to Able Equipment a diversified industry background where he managed various sales functions, at companies both large and small,” said Able’s chief operating officer Chris Pera. “His emphasis on developing and coaching key talent together with a strong focus on team building will bolster Able’s revenue and profitability as our company continues to expand.” Able purchases equipment from the industry’s leading manufacturers and continues to invest in the product while offering a diverse line up of equipment. All equipment is available for daily, weekly, monthly and long-term rentals. Equipment financing plans are also available for both new and used equipment purchases. Able has six locations and provides rentals, sales, service, parts, transportation, and training, as well as applications for critical infrastructure maintenance and support, contingency planning, and disaster recovery. Able’s fleet of service vehicles provides emergency service and repairs to both corporate and customer-owned equipment. Able’s locations serve the northeast markets of New York, New Jersey, Connecticut, Pennsylvania, Delaware, and Maryland.
Episode 136 – 2021 Thoughts with Garry Bartecki
In this episode, I talk to Garry Bartecki of GB Financial Services for the January 2021 cover story of Material Handling Wholesaler. This is the latest in our partnership with Material Handling Wholesaler and our second podcast with Garry. You can find our first discussion on financing and leasing material handling equipment in Episode 102. The January 2021 cover story is titled “2021 Based on 2020. The Way I See It.” written by Garry. As you can imagine, our discussion revolves around 2021 but we also have an interesting discussion about Garry’s background and refurbished material handling equipment. Key Takeaways It is no secret that 2020 has been quite a tough year and while there is hope that 2021 will be better, Garry doesn’t sugar coat anything and discusses the reality that businesses will have to look at things differently in order to get through the year. He discusses how businesses will have to look at their programs completely differently and be open to trying new ways to accommodate their customers in order to survive. Garry discusses how a refurbishment program is something that can help both dealers and customers during 2021 and beyond. Refurbished equipment can help dealers by giving them an additional offering to their customers and as Garry explains many times the margins work out better for dealers on refurbished units. From a customer perspective, a refurbished unit is a way to get new equipment but sometimes at 60% the cost of a new unit. Additionally, Garry calms any concerns that people might have of them not performing as well as he mentions that he cannot tell any difference between them in his experience and that they are pretty much starting out with all new components. Towards the end of our discussion, Garry and I talk about how important it is to embrace the younger generation entering the industry. Garry has some great points of how individuals coming right out of school tend to have aggressiveness and eagerness when it comes to learning about the job and industry in which they are in. They also have a higher understanding of technology and should be embraced and utilized to help companies improve their processes and also adapt to the new technology and systems they can use to help improve their business. Listen to the episode below and let us know your tip for 2021 in the comments. The New Warehouse Podcast EP 136: 2021 Thoughts with Garry Bartecki