Highlights from a Great Year

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It was definitely a great year for the RER 100. Starting at the top, United Rentals came close to $5 billion in rental revenue, more than doubling its closest competitor Sunbelt Rentals, now at $2.3 billion after a stunning 25-percent rental volume growth. HERC has seen some changes at the corporate level, but continues to perform well in the field and is likely, with new leadership from industry veteran Larry Silber, to improve.

Home Depot Rentals? Well, people still like to criticize that company and I remember when so many said it would never last. After 19 years, it did $553 million in rental revenue in 2014 and it’s getting into delivery and larger equipment. Neff Rental is now publicly traded and with its emphasis on earthmoving equipment, should enjoy the next couple of years. And with non-residential on a growth swing, crane and aerial rental companies should continue a strong run. Keep your eye on fast-expanding TNT, which just spread into the Rocky Mountain region.

Several of the top Caterpillar dealerships, such as Finning, Holt Cat, Warren Cat Ohio Cat, and MacAllister Machinery made substantial facilities improvements during the past year. Another Cat dealer, Louisiana Cat, which posted a 32-percent rental volume jump, has, like many, become more proactive about telematics, diagnostic capability and preventive maintenance, not forgetting about the back end that supports growth.

Although RER 100 companies appear to be more disciplined about expansion, with the lessons from the recent recession still very much in mind, many are opening branches and making small acquisitions. Admar Supply expanded in Western Pennsylvania; Art’s Rental went into Lexington, Ky.; Able Equipment Rental started up in Philadelphia; Skyworks is building a new headquarters facility and planning a new branch in the southeast; SMS is opening in Kingston, Ontario; Lifting Gear in New Jersey and California; Honnen Equipment with a big new branch in Salt Lake City; Southeastern Equipment in Cambridge, Ohio; Rental One in San Antonio; Anderson in Gorham, Maine; Illini Hi-Reach into Indiana; Cooper Equipment in Toronto made a couple of acquisitions and nearly doubled its volume. And obviously many of the top 10 companies grew by making bolt-on acquisitions and start-ups. And there are others, too many to mention them all.

Another interesting move was HERC opening a dedicated used equipment sales facility. Maybe other rental companies have done this before but I don’t ever remember hearing about it.

As everybody knows all too well, this industry is cyclical. I so vividly remember a few short years ago when so many were upset at having to lay people off. They had to let go, in many cases, people who had served them loyally for a long time, who had worked long, hard hours, people with homes and families who would have to struggle to find jobs in a recession. And now so many of those same owners – and they knew this would inevitably happen – are concerned about finding good people again and how they’re going to put in place programs to educate and train them. It costs money and takes time, energy and commitment.

The industry is more sophisticated and the types of skills required are as well. Still -- and I hear business owners talk about this all the time and I see it everywhere I’ve worked -- there are the intangibles that are so important. People who are willing to do the little things, go the extra mile, and do things because they care. There’s a difference between someone who just wants to do the prescribed tasks in the scheduled number of hours and get out the door and someone who genuinely cares about doing a good job whether they get recognized for it or not. How do you recognize that quality? How, when you hire, do you know that somebody has it or if they don’t? Sometimes it’s gut feel, isn’t it?

Everybody I talked with on the RER 100 talked about oil prices. For some companies, the loss of oil-and-gas production is a minor concern, a small loss of income outweighed by the benefits of lower operating costs. For others, however, their livelihood depends on that production. As one rental owner said, “we try to diversify but we live in the oil patch.” And as for when those prices will rise again, some say soon, some say not so soon and others say if they were smart enough to be able to predict it they wouldn’t have to work for a living anymore.

So, for the rest of us who are still working, the consensus is we still have at least a couple of pretty good years left on this cycle before the dynamics change. Here’s to a good 2015!

To check out the RER 100, go to: rermag.com/rer-100/rer-100-top-rental-equipment-companies-2014.   

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Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a...

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Gary Stansberry is president of The Stansberry Firm LLC and specializes in business sales, fair market business valuations, operational consulting and positioning businesses to increase their value.
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