In late 2020, RER interviewed a few dozen executives of rental companies about how the COVID-19 pandemic affected them. Here Lance Renzulli, of High Reach Co., Sanford, Fla., talks about how the lessons of the great recession helped the company handle the slowdown, how the staff pulled together; strength in residential construction, and more.
How has business been for you in 2020? How has the pandemic affected your business?
Business in 2020 has been a bit of a challenge to say the least. We started out the year with what was the best first quarter in the history of the company. That came to an abrupt halt by early April, and our April rent revenue fell back to 2016 revenues. Anxiety, panic, and fear were at the forefront of most employees, families, customers, and friends. At our company we adapted to the new environment, mentally and financially. Rental and sales fell 15 percent to 20 percent. Fortunately, we had a fairly flat 2019 and began to prepare for a slowdown, but not of this type. We more than doubled our cash on hand from the prior year and have maintained profitability all year. We have paid down third-party bank debt by more than 20 percent and reduced our scheduled principle payments to lenders by nearly 30 percent. Capex for the year will be $10 million, most all of which was received in the first quarter. We are continuing to build cash even with the lower revenues. We have had no layoffs and are positioning ourselves for what is to come in the future, good or bad. (Hopefully good!)
We learned a tremendous amount in the great recession in 2008-2010, we applied what we learned then to our current economic situation.
How do you expect the pandemic to affect business going forward into 2021?
As of today, we anticipate a similar year at least for the first half. We will continue to monitor and adjust on a day to day, week to week, month to month basis. We feel the pandemic will continue to affect business, good or bad.
How has the pandemic affected and changed your company’s ability to meet with customers, go on jobsites and essentially conduct rental business as you always have?
We have been very diligent in our following the CDC, state and county guidelines and will continue to do so. The majority of our customers, to our knowledge, are very much doing the same. Most all meetings, whether at the office or jobsite visits are scheduled in advance, no more cold calls or popping in at jobsites.
How have different areas been affected and how do you expect them to be affected going forward -- homeowner business, small contractors, residential construction, non-residential, industrial, petrochemical, oil and gas, power generation, etc.
The majority of our business is from non-residential, small contractors, some industrial and residential construction. Some of our customers in the multi-family and residential construction are saying that 2020 will be a record year for them. (Great news in times like these) As phase 3 opened up we saw a 5 to 7 percent increase in utilization.
Have there been any good opportunities that have come out of the pandemic, i.e., more people doing home improvements, work renting to testing centers, etc.?
We feel our best opportunity has been to reduce debt and increase cash flow. Our revenue from home improvement and testing centers is only 1 to 2 percent. It has also been a great opportunity as a company with respect to our employees, seeing everyone unite and care for the health and safety for us all.
This is a very uncertain time in the economy in regard to the pandemic and so many job cancelations. Does this uncertainty benefit rental in the sense that contractors would want to avoid capital expenditures on equipment and would therefore rent more?
In our market, we haven’t experienced any mass number of job cancelations. We have seen many put on hold or staffed with fewer workers, making the stages of the jobs stretch out longer. It seems our equipment sales have recently returned to similar cycles to the last few years.