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Equipment Rental Industry – Q4 – 2020

Originally posted on: 2/10/2021

 2020 is finished and good riddance! The Event Rental industry felt hardships only equaled by the hospitality industry they serve. On the other side of the fence, general tool rental saw the resurgence of the “weekend warrior” unlike any recent year, with a significant move to short-term, smaller rental contracts. Heavy construction equipment rental was “fair to middling” with growth in certain asset classes but felt a major hit in Oil & Gas support. Here are the results from the Peer Executive Group Network for 4th Quarter 2020.4th Qtr data shows 7.67% median growth with an average of 6.41%. Remember, this data is in comparison to 4th Qtr 2019. In the previous quarter the average was 7.54% so the average is moving slightly down, but not a bad winter quarter.When you look backwards 12 months (ie. How was 2020?) our median growth tightens up to 1% but our average growth is 4%. In the 3rd Qtr our 12-month lookback was at 6%, so we are trending down somewhat.In terms of operational productivity – we look at revenue generated per employee hour worked. This includes any overtime or salaried employee. In the 4th Qtr we had a median of $107 per hour and an average of $140. This is up from 3rd Qtr which averaged $132 per hour.We also study employee costs as a percentage of revenue. Our median operation was able to generate a dollar of sales spending only 26 cents. (26.57%) The average was 35.77% – much higher and way up from our 3rd Qtr average of 21.07%. We attributed this, in part, to the loosening of overtime procedures and year-end bonusing.For the last time we will look at Liquidity and as we have seen throughout 2020 that our network is very cautious and conservative with their cash. In the 4th Qtr, our middle operator had 9x more cash and receivables than payables and our group averaged over 12x. This is even up over our average in 3rd Qtr of 11x.When it comes to Debt Management our network of operators were leveraged 60 cents for every 1 dollar sold. Our middle operator had 49% debt to sales. In 3rd Qtr our average was 61% so we are down 1% on debt to sales.Next quarter we will introduce “rolling twelve” productivity data on our employees and we will focus going forward on Asset Utilization and Leverage.Our quarterly financial scorecard allows our members to compare their results with their peer group, similar sized and shaped operations, or other rental operators in their region. It is produced quarterly.If you would like to participate in our survey and receive a quarterly financial dashboard for your company, contact Zoe Zsido, Administrator at [email protected]

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