The year 2013 proved to be a strong year in the equipment rental business and 13 a fairly lucky number for most. It was a year of significant changes. Starting at the very top, not only did United Rentals have a strong and profitable year, its total volume numbers were close to $5 billion, and its rental volume numbers well beyond $4 billion. And its stock price: as I write this I take a quick look and it’s north of $97 a share. In March of 2009, it was less than $3. You can do your own math as you wonder why you didn’t snap some up back then.
Thinking back to United’s history, I could easily make a list that would fill more than this page of people who predicted United Rentals’ demise during the first dozen years of its existence. Not only has it survived and thrived, but many people now see it as a model of how they’d like their own rental companies to operate, in terms of operating systems, efficiencies and performance. Yes, there are many local companies that can provide a more personal level of service, but the “United will never last” comments are now a fading memory.
Sunbelt Rentals had a very strong 2013. The “who is going to buy HERC?” questions have faded for now as Hertz Global goes forward with plans to spin the equipment rental division into a separate company. Home Depot Rentals seems more solid and consistent. Volvo Rents was acquired by Platinum Equity and changed its name to BlueLine Rental.
This past year turned out to be pretty spectacular for Ahern Rentals as well. As the economic recovery gained steam and the company’s business went national, it was able to find enough funding to emerge from bankruptcy protection and pay off its creditors in full. And if that wasn’t enough, owner Don Ahern’s forklift manufacturing company Xtreme – which also makes truck beds and modular cubes for construction – acquired struggling aerial work platform manufacturer Snorkel and is reviving that venerable and respected aerial brand.
Delta Rigging & Tools was also acquired, and the rigging and lifting specialist is thriving. Cooper Equipment Rentals, Toronto, got a nice infusion of private equity and acquired a local player City Rents. H&E Equipment Services and Sunstate Equipment, among others, enjoyed considerable growth. After years of constant rumors about being acquired imminently, Neff Rental uncorked a 20-percent rental volume hike.
The energy business continues to drive the equipment rental business in a trend that shows no signs of slowing down. Shale gas plays continue to fuel equipment rentals in more and more states as both the United States and Canada rank among the world’s leaders in oil and natural gas extraction.
And now United Rentals, with its recent acquisition of National Pump and numerous greenfield start-ups in its specialty division, is growing in the pump, trench safety and tools and industrial solutions segments. Sunbelt Rentals, HERC and other national players are growing in these specialty areas as well. The aerial work platform space has certainly recovered from the hard times of the recession. And aerials are getting bigger and bigger. Genie came out with its 180-foot boomlift, followed by JLG’s 185, and aerial specialists such as Acme Lift Co. and Skyworks immediately have put them to use as have others.
Some of the areas so hard hit by the recession have recovered significantly. Take a look at the rental volumes of most of the California rental companies on the RER 100 and you see some nice rebounds. Nevada and Arizona still have ways to go but they are improving. Times are tough in a number of places — the inquiry into corruption in the construction industry has put a damper on business in the province of Quebec right now – but most of North America is doing well and expects several years of pretty good growth ahead.
Rental companies on the RER 100 tend to be back in the growth mode. Most of them are building up their fleets again, considering acquisitions and new branches, hiring back personnel they had let go during the recession and once again believing that growth is good. Of course many remember the casualties of the past recession, still fairly fresh in our minds. Will rental companies become over-leveraged again and make the same mistakes? I hear awareness of those issues echoing in the thoughts of many that I speak to, although economic cycles always seem to carry surprises and be caused by factors previously unconsidered. So I’ll avoid raining on anybody’s parade.
I hope you enjoy the new RER 100 and I look forward to hearing your comments.
