Interview with Graham Hood: Rental Rate Momentum

RER recently interviewed Graham Hood, CEO of Neff Rental, No. 14 on the new RER 100 about the company’s improved 2011 performance, its rental rate momentum, 2012 expansion plans, and the impact of Tier 4 equipment.

RER: You had a better year in 2011 than in 2010. Was there any particular customer sector that contributed the most to the improvement?

Hood: We deal with a diversified mix of end market segments and we experienced year-over-year improvement in most of them. Obviously oil and gas has been one of the strongest segments for most rental industry companies, including Neff. All of our key revenue metrics improved on a year-over-year basis in 2011.

What about rental rates for your company and in your markets in 2011 versus the previous year?

We are focused on rates as a company and we have enjoyed good upward momentum in that metric for several quarters. We saw an 8.3-percent increase in rental rates for the full year 2011. We saw improvement across all categories of equipment and all regions of the country.

Do you have any particular expansion or growth plans for 2012 that you are able to share?

We have three planned greenfield openings in 2012 in markets within our existing footprint designed to better serve our existing customer base and complement our existing network of branches.

Any other observations about the market that you’d like to pass along?

Although it is difficult to quantify, I do believe that more companies are turning to renting as a primary option versus buying. This dynamic is helping drive the industry results in spite of a choppy construction environment.

As Tier 4 equipment pricing is phased in, it is going to have an impact on returns for the industry going forward, so companies are going to have to continue to drive rate improvement just to maintain current returns and accelerate that rate growth to see any improvement in the returns.

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