Baird, in partnership with RER, this week published the results of its third-quarter 2011 survey of the rental equipment industry, which showed rental revenue growth of 10.1 percent year over year and an improvement from 9.3-percent growth in the second quarter of 2011.
Respondents’ reported that average fleet size grew 6.6 percent year over year, and was up slightly from 5.3-percent growth in Q211. Rental rates increased 3.3 percent in the third quarter from the same period last year, and improved from 2.2-percent growth in the second quarter of this year. Survey respondents noted that tight competition and lingering pricing pressure from national rental companies, coupled with some equipment availability issues have pushed rental rates somewhat higher.
“Most rental houses have right-sized their fleet, so we are seeing minor rate increases due to availability,” one respondent said.
Utilization rates declined to 55.4 percent on average, slightly below the average of 58.3 percent reported in the second quarter. Survey respondents again noted availability issues as a common reason for the decline in utilization rates.
Used equipment sales in the third quarter improved 5.4 percent year-over-year, but were down from 8.4-percent growth in the second quarter of 2011.
The Baird/RER survey showed that the initial 2012 rental revenue forecast estimates a revenue increase of 6.9 percent year over year, while rental rates are estimated to increase by 4.3 percent in 2012. Fleet spending over the next six months is expected to increase 9.6 percent year over year, which is virtually unchanged from estimates in the second quarter of this year.
According to the survey, all geographic and end-market segments appear to be benefitting from economic uncertainty with increased rental vs. ownership. One respondent stated, “General trepidation about purchases is driving more companies towards rental.” Another added, “Specific segments like oil and gas are booming. Others like general construction are flat.”
Participants in the Baird/RER survey are senior corporate 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 $16 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.