Key Takeaways
- Rental companies are optimistic about the short-term outlook, driven by strong demand from both residential and non-residential construction sectors.
- With higher utilization rates and growing customer demand, rental companies are increasing their fleet investments.
- Some equipment manufacturers are struggling to scale production due to component shortages, which may slow the addition of new equipment to rental fleets.
- Most industry players expect these positive trends to continue in the near future.
The fundamentals for equipment rental companies are improving as both residential and non-residential construction activity rebounds post-pandemic. Rental rates and equipment utilization remain strong, indicating a need for more capital investment in fleets. However, some manufacturers are facing production delays, which could impact deliveries in the second half of 2021.
Looking ahead, most companies are confident that current momentum will carry over into the next quarter. The construction sector is showing signs of sustained growth, and rental companies are leveraging this opportunity to expand their operations and meet rising demand.
Company Outlooks
| Company | Outlook | Date |
| Alta Equipment | Positive | 8/12/2021 |
| United Rentals | Positive | 7/28/2021 |
| Herc Rentals | Positive | 7/22/2021 |
| Ashtead | Neutral | 6/15/2021 |
Alta Equipment
“Our second-quarter performance reflects a positive operating environment across the material handling and construction markets we serve. The constrained supply chain affecting our manufacturing partners has driven demand for higher-margin product support offerings and increased rental utilization. Tightened supply has also elevated equipment pricing across the industry, creating unique opportunities to strategically sell rental fleets, satisfy customer demand, and achieve field population targets typically set for new equipment installs. We believe our performance in the second quarter further validates our ability to adapt quickly and efficiently to changing market conditions, resulting in healthy year-over-year and sequential adjusted EBITDA growth,†said Ryan Greenawalt, CEO of Alta Equipment.
“The strength of our first-half results, along with a record backlog in our Construction and Material Handling businesses, positions us well to meet our full-year growth objectives.â€
“Customer demand increased each month throughout the second quarter, while new equipment supply constraints persisted and lead times extended for deliveries of new equipment. The supply-demand imbalance is also driving price appreciation of new and used equipment, and increased rental rates.â€
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United Rentals
“(Our results reflect) a continued recovery across our construction and industrial markets. Looking forward, we remain encouraged by the gains we’ve seen in end-market indicators, including our customers’ sentiment and project visibility. We are raising our guidance to reflect the expected contribution from our recently completed acquisitions, as well as accelerated momentum in our underlying business. Combined, we believe this positions us well to deliver strong growth and returns in the second half of the year,†said Matthew Flannery, CEO of United Rentals.
“Our operating environment continues to recover. Our customers are increasingly optimistic about their prospects.â€
“Customer optimism is a great barometer, and the trend we see in the field supports their view. 2021 is a pivotal year for us. It confirms our return to growth, including our 19% rental revenue growth in the second quarter. I’ll point to some of the drivers of that growth, starting with geography. The rebound in our end markets continues to be broadly positive, with all geographic regions reporting year-over-year growth in rental revenue.â€
“I also want to give you some color on project types. There are two takeaways: the diversity of the projects in Q2, and the fact that each region contributed to growth in its own way. The recovery has taken root across geographies and verticals on both coasts, with solid activity and heavy manufacturing, corporate campuses, schools, and transmission lines. And this quarter, we’re also seeing project starts in power, transit, and technology.â€
View all United Rentals locations
Herc Rentals
“Our second-quarter performance provides momentum for the rest of 2021,†said Larry Silber, president and CEO. “Tight supply of new equipment and steady demand from a number of key markets have provided a positive operating environment. Second-quarter total revenues were up 33%, and adjusted EBITDA increased 39% compared with last year. Adjusted EBITDA margin rose 170 basis points year-over-year to 42.3% in the second quarter, reflecting solid overall performance and excellent growth in our specialty businesses.â€
“Our strong free cash flow supports our fleet expenditures, greenfield expansion, and M&A activity. We are excited to carry our momentum from Q2 into the balance of 2021 for what looks likely to be a record year for Herc Rentals revenues and net income.â€
“Given the current operating environment, we also decided to invest an additional fleet before the end of the year and have raised our 2021 net fleet capital expenditure guidance by $100 million to $500 million to $550 million. Our year-to-date momentum is expected to drive a year of record performance.â€
“The current market environment of tight equipment supplies and steady demand has supported our focus on rate, and our team continues to deliver rate lift. We believe we are leading the market as we continue to benefit from our excellent pricing tools and the discipline and professionalism of our sales team. We have got momentum back into our pricing, and you can see from our 2019 results, the performance we can deliver in a favorable environment.â€
“We are clearly in the early stages of the next construction upcycle, with steady demand even before we get into any potential benefit from future infrastructure spending. Equipment suppliers are tight, with our OEMs struggling to manufacture and deliver new equipment due to worldwide supply chain bottlenecks.â€
“There is plenty of demand in most of our end markets to support growth for the remainder of 2021 and into 2022.â€
“Our purchasing department continues to excel and has been able to source additional fleet in an incredibly tight market for new equipment. As a result, we're taking up our net rental equipment CapEx guidance to $500 million to $550 million. We are pleased with the performance we have reported for the quarter and are excited about the performance we anticipate over the next couple of years.â€
View all Herc Rentals locations
Ashtead (Sunbelt Rentals)
“The current activity levels we are experiencing in the business align with the positive Dodge momentum index, which is at its highest levels since 2007, and the strong ABI figures. Importantly, we can say the same for our business and non-construction segments, such as MRO, emergency response, and the very early return to live events. There seems to be an abundance of momentum in the markets,†said Brendan Horgan, CEO of Ashtead Group (parent company of Sunbelt Rentals).
“Residential construction, which has been a positive surprise throughout the year, is showing no signs of slowing.â€
“Our usual and extensive fleet planning exercise carried out last fall and early winter proved more important this year, as the supply constraints are significant, with OEMs working through supply chain and workforce challenges while ramping back up their production levels.â€
View all Sunbelt Rentals locations
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