By Michael Roth
It's still pretty hot at the top. That’s what the RER 100 is showing us this year. After four consecutive years during which the RER 100 posted double digits in rental volume growth, including a sizzling 15 percent last year (covering 2014 revenue), the 2016 RER 100, covering 2015 revenue, had to settle for 9.2 percent year-over-year rental volume.
Most companies would usually be happy with 9 percent volume growth and considering some of the headwinds that rental companies faced in 2015, most RER 100 companies seemed happy with their results. It’s no secret that the drop in oil and gas exploration and extraction had a significant impact on the rental industry in 2015. Companies with high exposure to that market tended to see rental volumes drop or at least slow down some in terms of rate of growth.
So what happened to all of that equipment that was involved in upstream oil applications? The tendency was for companies that could to deploy it elsewhere, creating a lot of crowded marketplaces. Often a recession in the rental industry is caused by too much equipment chasing too few jobs, leading to significantly depressed rental rates. Fortunately, in general construction is on an upswing in most regions of the United States right now and so recession is not on the immediate horizon.
So while a number of markets were crowded and the oil-related markets obviously struggled in 2015, it was still a strong year for most RER 100 companies. The total rental volume of the 100 companies – the 101 through 110 honorable mentions are not included in this total – is $19.355 billion, an all-time high by far, and a 9.2-percent increase compared to the previous year total of $17.728 billion.
The top 10 companies totaled $12.673 billion, a 10.4-percent jump from the previous year.
Almost 40 percent of the companies listed on the RER 100 posted double-digit rental volume growth. Almost 15 percent topped 20 percent and nearly 10 topped 30 or 40 percent. Several companies reported significant volume declines as well, partially balancing out the good news.
Still the good news clearly outweighed the bad and most of the RER 100 companies expressed optimism.
California did extremely well; Florida and Texas appeared solid, despite the oil industry difficulties in Texas. Most Canadian companies reported some difficult times with continuing major challenges for the immediate future. Several rental companies said they have started 2016 better than expected and the consensus was an optimistic expectation for the next couple of years, although caution seems to be outweighing dramatic expansion for most when it comes to expanding fleet.
Still, all signs point to the next RER 100 topping $20 billion in rental volume with plenty of room to spare.
* Denotes RER estimate based on regional economic conditions, industry sources and interviews by members of the RER staff. Other revenue figures are based on actual reported revenue for North American operations. Location data is as of publication to the best of the knowledge of the RER staff. While every effort is made to ensure accuracy and thoroughness, omissions sometimes occur. All figures are in U.S. dollars, except for Canada-based companies, which are reported in Canadian dollars.
