Baird/RER 1Q24 Rental Equipment Survey
· 1Q24 revenue 6.8% above 1Q23 on average (~5.1% equal weighted), 21% of respondents (revenue weighted) reported 1Q missed internal budgets (32% equal weighted), only 9% seeing better-than-expected results and 69% seeing results in line with expectations. The net negative (-12%) is the second straight quarter below expectation on a net basis.
· Fleet utilization 57.9% (4Q23: 62.0%, 1Q23: 65.6%) as supply of equipment has increased while demand growth is moderating.
· Average rental rate up 0.6% year/year, down from +1.6% last quarter and a peak of +4.8% in 3Q22. Respondents expect very modest rate growth to continue for the full year.
· Average fleet size (units) increased 3.6% year/year in 1Q24. The fleet growth slowdown experienced in 2022 was a function of supply chains impacting OEM deliveries (particularly for smaller buyers), improved supply chains resulted in higher shipments in prior quarters, but fleet growth slowed again in 1Q24 as capex is moderating.
· Equipment pricing is cooling as equipment availability has improved and price/cost has regained equilibrium.
· New Access Equipment availability and lead times are showing material improvement. 50% of respondents (equal weighted) report Access Equipment availability has gotten better over the past three months with only 13% reporting availability has gotten worse (up slightly sequentially). On a revenue-weighted basis, only 1% of respondents reported worse conditions, while 58% saw improvement (larger buyers continue to have better ability to secure Access Equipment).
· Respondents’ 2024 capex expectations are muted. On a revenue-weighted basis, respondents expect to increase fleet spending by 1% (slightly down year/year on an equal-weighted basis).
· 2Q24: respondents expect a 5.1% revenue increase (4.3% on an equal-weighted basis), slight deceleration vs 1Q24.
· Average rental revenue expected up 6.7% in 2024 (last quarter: +7.6%); this estimate is similar to the actual growth in 1Q (+6.8%) and modestly above the 2Q24 forecast (+5.1%) and could prove to be optimistic given capex/rental rate expectations.
Slides 10-12 contain additional anecdotal commentary on a variety of topics such as labor shortages, wage inflation, equipment availability, supply chain constraints, and current demand dynamics.