Rermag 7643 Rer 100 2016 1
Rermag 7643 Rer 100 2016 1
Rermag 7643 Rer 100 2016 1
Rermag 7643 Rer 100 2016 1
Rermag 7643 Rer 100 2016 1

The RER 100: Top Rental Equipment Companies of 2016

May 1, 2017
The oil-and-gas slowdown took its toll on quite a few RER 100 companies in 2016, but greater optimism and a good start to 2017 keep hope alive.
By Michael Roth
After five consecutive years of growth, the RER 100 took a bit of a tumble in 2016. Not a large drop – 2.9 percent – and a good chunk of that was a major company, NES Rentals, being acquired and coming off the list. But after five consecutive years of growth – four years of double-digit increases and 2015 revenue up 9.2 percent – 2016 results were a far cry from the energy of this growth cycle. And, speaking of energy, it was precisely the energy industry that caused the slowdown with the RER 100, specifically the oil-and-gas segment.
Almost 20 companies specifically said their revenues were affected by the slump in the oil-and-gas market, and a number of others didn’t mention it but based on their location and previous conversations, clearly their revenues were affected. It is not so much that rental companies are renting directly to energy exploration firms, although many of them do. It is more the economic activity going on upstream. Oil and gas workers need accommodations, restaurants, hotels, and many more services. Roads are required to reach energy exploration sites, and pipelines require massive construction. The oil-and-gas slowdown has greatly affected the rental business in Texas, Oklahoma, all through the Gulf Coast region, Ohio, Pennsylvania, Colorado, the Dakotas, the province of Alberta and more. What is the expectation going forward? It’s difficult to say and observers of the energy industry have different opinions. While national rental companies reported increased demand in the first quarter, oil prices around press time have tumbled into the $40 range. Still, RER 100 companies are reporting that for the most part, their customers in the rental industry have fairly high expectations for 2017.
The same high expectations apply to construction in general and most rental companies are reporting that they started 2017 with more rental activity than in 2016. Customers seem to be busy and to have enough projects in the books to keep them busy this year and next. Cautious optimism is the prevailing sentiment as rental companies remember the last recession and are innately hesitant to expand too quickly. In general, rental companies and their customers are more optimistic about 2017 than they were about 2016. 
Will there be a massive investment in infrastructure spending? Rental people are hopeful but few are taking that expectation for granted. Although the Trump Administration has referred to plans to invest in infrastructure, rental company executives say that if that occurs, it won’t happen in 2017, and they aren’t counting on it at all. While the overall list was off a bit, the top 10 of the RER 100 did pretty well, although their revenue increases were smaller than in recent years. After five consecutive years of double-digit jumps, the top 10 only increased by 4.9 percent in 2016.  
Overall for those companies that reported rental volume increases in 2016 – and about half of the listees did post increases – there were fewer dramatic double-digit increases than we have seen in recent years, although more than 20 companies posted double-digit hikes. However, there were more than a dozen double-digit rental volume declines, mostly attributable to the oil-and-gas slowdown.
Non-residential construction appears to be strong for the next year. Predictions from Associated General Contractors and IHS point to a solid year for construction, and most rental companies say their customers expect the same. With those expectations and those of rental customers, the RER 100 is likely to return to more significant growth next year. We will see.