Beyond the Basics: Understanding Today, Planning for Tomorrow
Sunday, Feb. 21, 2016
3:30 p.m. – 5:00 p.m.
Presented by:
Garry Bartecki, Illini Hi-Reach, Lemont, Ill.
Scott Hazelton, IHS Economics, Lexington, Mass.
Gary McArdle, Rouse Services, Beverly Hills, Calif.
John McClelland, Ph.D., American Rental Association, Washington, D.C.
American Rental Association 1900 19th St., Moline, IL 61265 800-334-2177 ARArental.org
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Beyond the Basics:
Understanding Today,
Planning for Tomorrow
Sunday, February 21, 2016
3:30 – 5:00 p.m.
Panelists
Garry Bartecki, Illini Hi-Reach, Lemont, Ill.
Scott Hazelton, IHS Economics, Lexington, Mass.
Gary McArdle, Rouse Services, Beverly Hills, Calif.
Moderator
John McClelland, Ph.D., American Rental Association, Washington, D.C.
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Rental Market Monitor
The ARA State of the Equipment Rental Industry Outlook
A Tactical and Strategic Roadmap for the Rental Market
• An economic overview and forecasts through 2019 for the
United States and Canada.
• U.S. and Canadian national equipment rental revenue figures
and forecasts
• These are broken out by rental segment – construction
and industrial equipment, general tool, and party and
event.
• U.S. national-level rental equipment investment data.
• Quarterly updates in February, May, August and November.
• Quarterly webcasts and Q&A opportunities with IHS
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View the Rental Market as you See It
• 363 U.S. metropolitan statistical areas (MSAs),
such as Chicago; Montgomery, Alabama; Cedar
Rapids, Iowa; and Washington, D.C.
• U.S. states, which includes all MSAs in the state.
• The nine U.S. Census regions, which includes all
states and MSAs in the region.
• Provincial-level data are available for Canada.
A Solution to Your Business Problems
• Online critical information
• Increase competitive advantage
• Forecast store/company revenue
• Develop and justify financing/credit requests
• Create business plans and determine annual budget:
• Staffing needs
• Marketing – what types of customers to target
• Inventory/fleet purchases
• Decide where to expand business geographically
Based Upon Public Data and Exclusive Analysis
• Annual U.S. Census County Business Patterns
• U.S. Economic Census
• Bureau of Economic Analysis
• Bi-annual ARA Member Surveys
• IHS Developed Rental Market Forecasting Equations
• Linked to IHS Models of the U.S. Macroeconomic, U.S. Regional
and Canadian Macroeconomic forecasting models
• IHS Business Market Insights
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National Level Results - Total U.S. Equipment Rental Revenue
Rental Market Monitor Interface
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Sign In
Select Data
Display Data
View Your Markets in Context
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Show Data
Full Access
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ARA Market Monitor also Offers Written Analysis
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Webcast Content - US real construction growth by sector
2014 2015F 2016F 2017F
Total construction* 4.7 3.9 6.4 6.6
Residential 1.7 8.7 9.6 9.7
Commercial 19.3 12.3 8.3 11.0
Manufacturing 11.2 49.9 9.7 -16.9
Mines & wells 6.5 -34.7 -20.1 17.3
Healthcare -7.6 15.0 5.3 7.0
Public utilities 6.2 -9.9 2.5 -5.0
Highways & streets 2.4 6.3 7.6 0.4
Public education -1.7 5.9 5.3 2.1
(Percent change)
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* Annual investment data
RENTAL METRICS
BENCHMARKING
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PARTICIPANTS
• United Rentals • Ahern Rentals • BlueLine Rental
• Admar Supply • All Star Rents • Aerial Access Equipment • Butler Rental & Sales • Capital Rentals • CBS • Ecco Equipment • Equipco • Equipment Depot • Excavator Rental Services • Lift Works • Noble Iron • One Source • PDQ Rentals • Priority Equipment Rental • Rental One • Tejas Equipment Rental
INDEPENDENTS (17)
LARGE GENERAL RENTAL (8)
• Alban CAT • Blanchard Machinery • Beard Equipment (John Deere) • Bramco (Komatsu) • Empire CAT • Fabick CAT • Foley CAT • Carolina CAT • Carter Machinery • Cashman • Cleveland Brothers • Cowin Equipment (Volvo) • Cresco Rentals • Holt CAT • Holt of CA • Hugg & Hall Equipment (Volvo) • JA Riggs • Johnson Machinery
OEM DEALER RENTAL (35)
• Louisiana Machinery • MacAllister Machinery • NC Machinery • Ohio CAT • Patten CAT • Power Motive (Komatsu) • Puckett Machinery • Quinn Company • Ransome CAT • Ring Power • Stribling (John Deere) • Thompson Tractor • Titan Machinery (Case) • Wagner CAT • Warren CAT • Western States • Yancey Brothers
• Hertz Equipment Rental • H&E Equipment Services • Neff Rental
• NES Rentals • Sunstate Equipment
RENTAL RATE TREND January 2011 – October 2015
Average,[CELLREF]
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
1.40
1.45
RENTAL RATE TREND - AWPS January 2011 – October 2015
Telescopic Booms,[CELLREF]
Articulating Booms,[CELLREF]
Scissor Lifts,[CELLREF]
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
1.40
1.45
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RENTAL RATE TREND - FORKLIFTS January 2011 – October 2015
Hi-Reach Forklifts [CELLREF]
Warehouse/ Industrial Forklifts
[CELLREF]
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
1.40
1.45
RENTAL RATE TREND - EARTHMOVING January 2011 – October 2015
Excavators,[CELLREF] Backhoes,[CELLREF] Skid Steers,[CELLREF]
Wheel Loaders,[CELLREF]
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
1.40
1.45
RENTAL RATE TREND - GENERATORS January 2011 – October 2015
Generators,[CELLREF]
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
1.40
1.45
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PURCHASE PRICE INFLATION Cumulative 2007 – 2015
Average 16%
AWPs 10%
Earthmoving 24%
Forklifts 23%
0%
5%
10%
15%
20%
25%
30%
2007 2008 2009 2010 2011 2012 2013 2014 2015
PROCESS
COMPARE PERFORMANCE &
SET STRATEGY
EDUCATE & MANAGE
REPS
TRACK IMPACT
RENTAL DASHBOARD DEMO
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Depreciation Magic
Now you see it and then you don’t.
Depreciation Shows up in Many Places
Balance sheet
Federal tax returns
State tax returns
Income statements
Cash Flow Statement
Purpose of Depreciation
Measure cost of using depreciable assets
Estimate value of depreciable assets
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Help Your Banker
Make book value mirror OLV
See Rouse Report
50% over 60 months seems to work
Down to 30% over 84 months
Leave it at that.
Tax Extender Bill
Section 179 made permanent at $500,000
Bonus extended 5 years
• 50% through 2015-2017
• 40% for 2018
• 30% for 2019
Tax Benefits of Depreciation
Section 179
• 100% expensing of New and Used up to $500,000
with $2 million phaseout threshold.
Bonus
• NEW only. 50% of cost plus normal depreciation
on remaining tax basis.
Standard Depreciation
• MACRS or Straight-line over Useful Life.
Must be placed in service by end of tax year.
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Tax Benefit =
$100,000 rental unit or fixed asset
Could write-off for federal tax purposes
• $100,000
• $60,000
• $55,000
• Or maybe something in between
Tax Benefit
Use 179 first
No carryback of 179 benefit
Bonus can be used to generate carryback claim
Note that tax benefit % could be different than
recapture %
Tax Planning
It pays to track fleet additions and deletions
It pays to track current tax position
Like-Kind Exchange can also help manage tax
burden
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Tax Traps re: Depreciation
Rate differential
Individual asset sales
Ownership Transition – Sale of Company
Questions?
