Baird, in partnership with RER, last week published the results of its first-quarter 2012 rental equipment industry survey, which showed continued double-digit rental revenue growth of 10.5 percent year over year, compared with 11.5 percent year over year in the fourth quarter of 2011. While trends remain varied based on geography and end market, overall trends show continued improvement.
“The market appears to be growing very quickly due to the oil & gas drilling sector,” one respondent noted. “[We’re] seeing more rental of equipment, with a continued reluctance on the part of contractors to purchase,” said another.
On average, respondents’ rental rates increased by 3 percent year over year, consistent with the 3.8-percent increase reported in the fourth quarter of last year. Utilization rates remained healthy at 53.6 percent in the first quarter, seasonally lower than the reported 55.9 percent in 4Q11. Average utilization for big iron equipment was 60.4 percent in 1Q12, while small iron was 48.6 percent and other was 37.9 percent.
“We are seeing an increase in activity, with our typical customer’s question being ‘Is it available?’ rather than ‘At what price,’” said one survey participant. “We now have plenty of fleet and will focus on raising rates, which will probably sacrifice utilization,” said another.
In the first quarter, respondents reported that the number of units in their rental fleet increased by 6.3 percent year over year, down slightly from a 7.4-percent increase in the fourth quarter last year.
In the updated outlook for 2012 revenue growth, respondents forecast a 12.2-percent year-over-year growth, even more positive than the previous forecast in 4Q12 of 11.0 percent. In addition, the updated outlook for 2012 estimate for rental rates was an improvement of 3.4 percent year over year, a modest improvement from the estimate of 3.0 percent in the last 2012 rental rate forecast last quarter.
In terms of fleet spending, respondents reported that they expect to increase spending on fleet by 9.2 percent over the next six months, up slightly from the expectation of 8.6-percent growth reported in the 4Q11 survey.
Participants in the Baird/RER survey are senior executives or senior managers at regional divisions of rental equipment businesses in all regions of the United States, parts of Canada and some international markets, representing nearly $9 billion in annual revenue.
Robert W. Baird & Co. is an employee-owned, international wealth management, capital markets, private equity and asset management firm with offices in the United States, Europe and Asia. For more information, visit Baird’s website at rwbaird.com.
RER has covered the equipment rental industry since 1957, providing its readers with a mix of news, features and product information. For more information, visit www.rermag.com. To let us know about any additional information you would like measured by the Baird/RER survey, post your comments on our Facebook page at www.facebook.com/pages/Rental-Equipment-Register.