Photos by Cooper Equipment Rentals
In a recent interview with RER, Doug Dougherty, CEO of Cooper Equipment Rentals, Canada’s largest equipment rental company, talked about the company’s prospects for 2024, becoming a national Canadian equipment rental company, specialty rentals, the improving supply chain, and more.
RER: How was 2023 for you and what do you expect for 2024?
Dougherty: 2023 was another good year for us really across the board. Rental was up over 30 percent year over year, so that’s a nice uptick. We started to see some softer utilization numbers around August and that has carried through the balance of 2023. Partially because of some residential market softness and I think also partially because we expanded our fleet so much. We landed a lot of fleet in the early part of 2023.
We kept our orders in place throughout the COVID period because the supply chain was a little unpredictable, so we wanted to make sure we were going to have equipment. The supply chain now seems to be returning to normal for the most part. Booms and telehandlers would be the exception, there’s still longer lead times on those. But we have an aggressive capex plan for 2024, we’re optimistic, we’re bullish, particularly in western Canada for 2024. Western Canada markets are a little bit more resource-driven, they tend to run a bit counter-cyclical to the Eastern Canadian markets, so that’s still strong across the board. We’re expecting to grow at a little bit slower pace. Somewhere between 12 and 20 percent, depending on whether we do an acquisition or not, just organically 12 to 15 percent.
You are certainly progressing on becoming a national rental company in Canada. Looks like you are getting well established in B.C., Alberta, the Maritimes as well as of course Quebec and Ontario. Not yet established in Saskatchewan, Manitoba? Do you have further expansion plans in the coming year?
We do have some acquisitions in the pipeline actually. We did three in 2023, which is about our scale, the way we do acquisitions that’s a pretty good number for us.
We just closed an acquisition in the interior of B.C., in September. Warner Rentals, so there was some further expansion in B.C. We’re upgrading some facilities in the lower mainland and expanding our footprint into Kelowna, B.C., so we’re making investments there.
We’ll also continue to expand our specialty offering into other markets where we currently have branches, so in Alberta and B.C. for example, we opened climate control and pump & power and trench safety all in the lower mainland of B.C. in the last little while. So that will continue to expand. We have a new branch opening up in the Maritimes, in Moncton, New Brunswick. And also Niagara, Ontario, we’ve got a new branch there. We’re still on the lookout for opportunity in Saskatchewan and Manitoba, we haven’t found the right place yet, but that’s very much on our agenda over the next couple or three years.
We say we’re coast to coast, but we have a couple of gaps.
What do you plan to do to improve the company’s infrastructure where you are already established? What plans do you have to develop your IT structure?
We made a commitment a few years back to make heavy investments in technology, a lot of that has gone into advanced reporting and analytics tools. So the focus this year and next year is on things that can be of value to customers, bringing better insight to customers on things like fleet usage and emissions data, delivery status, costing analysis, mobile on and off rental, those kinds of tools for customers.
We’ve been able to provide customers with a lot of data, but now it’s moving to the next level where the data is great but what they’re really looking for is not data, they’re looking for information, they’re looking for insights into their business and how they can organize their sites more efficiently from the standpoint of emissions and fuel consumption and those kinds of things. That’s more the focus on the IT side now, where the IT infrastructure is concerned. We continue to expand our fleet and our footprint in our markets. From the company infrastructure point of view, we can provide deeper and broader service to customers in those markets. And what I mentioned earlier about bringing specialty to those markets.
Sound like you’re doing a tremendous job in expanding the depth of the service that you’re offering. It’s more than just equipment.
That’s right, it’s solutions. We did a customer advisory symposium in 2023 and 10 or 11 of our key customers at a very senior level in a facilitative format and we learned a lot from our customers about what they really want from us. Basically, without going into a great deal of detail, they said “We need you to help us more. It’s great that your reps show up on our jobsites and stay in touch with our people but when you come to the jobsites, bring us information, bring us insights. Our jobsites are complicated, they’re a sort of organized chaos, and we can use the help.”
You’ve expressed support for sustainability efforts, for transitioning towards zero- and low-emission equipment as much as possible, tell me about those efforts?
It’s still really early days there. Whether it’s going to go to all electric vehicles, all electric equipment or some other form of energy that’s driving construction equipment. Electric has its limitations, especially as you get into larger equipment. The other side of that is not just the equipment, we’re developing systems to measure and monitor and report on emissions, whether it be from electrical equipment or from combustion-engine-powered equipment. We maintain a young fleet and the focus is to continue to maintain a young fleet, which ensures that we are supplying the latest and most energy-efficient equipment to customers: electric, hybrid and so on. We’ll continue to expand our fleet of electric equipment from manufacturers, they are coming up with new models every day on that, so we’ll continue to respond to the demand there. Our message to customers is this is a cleaner-running piece of equipment, it lowers emissions, it's more cost-efficient for you. So, it’s a win-win, right?
Also, we’re working with our supply-chain partners and our GPS service providers to develop advanced tools for measuring and monitoring and analyzing downstream emissions. You may have seen recently where United Rentals announced an emissions dashboard. So, [we’re developing] something along those lines.
And then just the basic things with facilities: energy-efficient lighting, and electrical and waste-management upgrades of the facilities and making sure we’re being responsible citizens and upgrading our branches.
Along with electrical equipment what about the charging network?
In Canada there are very real concerns about where all the electricity is going to come from. We don’t have the grid today, and the investment that would be needed to put a grid in place that supports all of these climate goals, for 2035, or 2050, it’s hard to see where that’s all going to come from. And just the operational limitations around batteries and battery-powered equipment, especially with big equipment, there’s still a fair amount of questions around all of that.
But that’s not a reason not to pursue a disciplined approach to doing our part in regard to climate change.
What are your expectations in 2024 for Canada overall and your market areas in particular, especially as it effects rental. Construction, non-residential construction, infrastructure spending, etc. There has been some legislation to spur infrastructure spending in the U.S. – How about in Canada?
You said it pretty well, I expect a pretty good year coming up. Compared to prior years, we expect slower overall growth of the rental market in Canada, something along the lines of 4 percent or so. The infrastructure spending you mentioned, the government programs, roads, bridges, underground utilities, mega projects, hospitals, universities -- that all looks very good, and we’re connected to those markets. We operate in all of them. Just regionally we’re expecting strong markets in Alberta, and to a lesser extent in B.C to eastern Canada, which is more of an industrial, manufacturing-based economy.
We’ve done very well in pipeline projects over the last few years, it’s going to be a bit of a lull of maybe 12 to 18 months on pipeline, so some of the specialized equipment that we use for pipeline, we’ll have lesser utilization on that equipment for a little while but we’re bullish on pipeline. I think there’s a really good program coming on pipeline, but on energy transmission and also for private capture, we expect a 12- to 18-month lull there.
You mentioned that the supply chain is a lot better for you now.
I would say returning to normal for the most part, but I’d call it a prudently aggressive approach to growth capex for 2024. Our total capex spending will be up from 2023. When you combine maintenance capex and growth capex, our capex spending will increase. Our growth capex spending for 2024 compared to 2023 will be the same or down a little bit depending on how we see the first half of the year shaping up. That’s one of the benefits of the supply chain returning to normal is we can keep some powder dry and as we see opportunities and as we see how the components of the business go in the first half of the year, we can buy equipment and we can get it. For the last couple of years that hasn’t been the case, you’d be waiting months and months for equipment. It allows us to be a little bit more opportunistic and maintain some flexibility.
It's funny, I just inquired on behalf of a customer, he wanted to buy three large telehandlers and we’re still being quoted sometimes in 2025. Once you get an order into the pipeline, sometimes you can move those delivery dates around but they are still quoting long lead times on some equipment.
It sounds as though your Pump and Power division has done well. Can you tell me a little about it?
It started as a pump division in Southern Ontario, and last year we expanded to include power. Our General Rental branches still handle pumps and generators and pipe up to a certain size, but we’ve moved all the bigger stuff into the Pump and Power division and that allowed it to be just better at providing not only the power and the pumping but also designing and supplying systems that can do the whole job as opposed to just renting a better generator or better pump. So, it’s a much broader and deeper service and it’s done very well. It has grown and like I said we added power last year and we’ve expanded that beyond southern Ontario to all of Ontario and also Alberta and B.C. So, we’re very excited and encouraged about the continued growth and performance of this division.
As well as the other divisions – trench safety is a big one for us, that’s been really good since 2016 or 2017 when we started that. And climate control has done very well, we’re very strong in climate control in southern Alberta for example and in Ontario, and that’s expanding into B.C. Also we started a work zone safety offering – fencing and other things, including edge protection around balconies and condo projects and things like that. Specialty offerings have done very well for us, it really allows us to enhance our value to a broad range of customers and bring the full power of Cooper to key markets across Canada.
Any other new developments?
A few new developments, I can tell you about a couple of them. On the people side of things, we built our DE&I (diversity, equity & includion) strategic plan on four pillars: Relationships; hiring and onboarding; health, safety and wellness; and growth, promotion and beyond. This really began in 2020 as an initiative around gender parity with a goal to attract and retain and promote more women and it really evolved into a long-term strategy with action plans and timelines for each of the initiatives even around those four pillars.
We’re really proud that we received our gender parity certification around women in governance in Canada last year. And we’re proud of our progress towards becoming a truly diverse organization. The construction industry and the rental industry have been really a man’s world for a long time. We’re excited about that.
And we also became the first rental company to achieve certification of recognition in safety. So, we’re certified in Canada and we’re able to demonstrate to construction customers that our health and management systems has been fully developed and implemented and evaluated on an annual basis to comprehensive internal and external audits. So that’s something that no other rental company in Canada can say right now.
We’ve really expanded and revamped our benefits package for employees. To provide extra support for employees and their families on the mental health side of things. We doubled our benefits allowance for therapy, and we provided for everyone with access to a healthcare app which includes mental health, which allows employees to book virtual appointments with mental health professionals and provides mental health support tools. In this post-Covid world it’s important to recognize that people are experiencing challenges that maybe they weren’t before or if they were they just weren’t being addressed by their organization. So, these are sort of proactive holistic approaches to mental healthcare. We’ve always had the EAP (Employee Assistance Program website so that if they had a mental health issue maybe they can get some help, but this really deals with things before they become mental health issues. It’s important.
The need for that is underestimated.
The challenges that people have been through these past few years: The transition to working from home and then hybrid work, trying to balance family and work and school and all of these things, there have been a lot of stresses on people’s mental health.