Key Takeaways

• Rental companies remain upbeat about the short-term outlook, highlighting robust demand from both residential and non-residential construction sectors.
• With higher utilization rates and strong customer demand, rental firms are boosting their investments in fleet expansions.
• Some equipment manufacturers are facing challenges in scaling up production due to component shortages, potentially delaying new equipment additions to rental fleets.
• Industry leaders expect the current positive trends to continue for the foreseeable future.

The fundamentals of the equipment rental sector continue to strengthen as construction activities rebound post-pandemic. Rental rates and equipment utilization are on the rise, indicating a growing need for increased fleet capital expenditures. However, some manufacturers are grappling with supply chain issues, which may affect equipment deliveries in the latter part of 2021.

Company Outlooks

Alta Equipment

"Our second-quarter performance reflects a favorable operating environment across the material handling and construction markets we serve. The supply chain disruptions impacting our manufacturing partners have driven demand for higher-margin product support services and increased rental utilization. The constrained supply has further boosted equipment prices across the industry, creating unique opportunities to strategically sell rental fleet, meet customer demand for equipment, and achieve field population goals typically associated with new equipment installations. We believe our performance in the second quarter underscores our ability to swiftly adapt to various 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, combined with a record backlog in our Construction and Material Handling divisions, puts us in a strong position to achieve our full-year growth targets."

"Customer demand grew each month during the second quarter, while new equipment supply constraints persisted and delivery lead times for new units extended. The supply-demand imbalance is driving price increases for both new and used equipment, as well as rental rates."

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United Rentals

"Our results highlight a continued recovery across our construction and industrial markets. Looking ahead, we remain optimistic about the progress we've seen in end-market indicators, including customer sentiment and project visibility. We're raising our guidance to account for the expected contributions from our recent acquisitions, as well as accelerated momentum in our core business. Together, 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 improve. Our customers are becoming increasingly hopeful about their prospects."

"Customer optimism is a reliable indicator, and the trends we observe in the field reinforce their perspective. 2021 is a critical year for us. It confirms our return to growth, including our 19% rental revenue growth in the second quarter. Let me share some insights into the drivers of that growth, starting with geography. The rebound in our end markets remains broadly positive with all geographic regions reporting year-over-year rental revenue growth."

"I also want to provide some context on project types. There are two key takeaways: the diversity of projects in Q2, and the fact that each region contributed to growth in its own way. The recovery has taken hold across geographies and industries on both coasts, with solid activity in heavy manufacturing, corporate campuses, schools, and transmission lines. This quarter, we're also seeing project starts in power, transit, and technology."

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Herc Rentals

"Our second-quarter performance has set the stage for a strong finish to 2021," said Larry Silber, president and CEO. "The tight supply of new equipment and steady demand from key markets have created a positive operating environment. Total revenues for the second quarter increased by 33%, and adjusted EBITDA rose by 39% compared to last year. Adjusted EBITDA margins improved by 170 basis points year-over-year to 42.3% in the second quarter, reflecting solid overall performance and excellent growth in our specialty businesses."

"Our strong free cash flow supports our fleet investments, greenfield expansion, and M&A activities. We are excited to build on our momentum from Q2 into the remainder of 2021, which looks poised to be a record year for Herc Rentals in terms of revenues and net income."

"Given the current operating environment, we have decided to increase our fleet investments before the end of the year and have raised our 2021 net fleet capital expenditure guidance to between $500 million and $550 million. Our year-to-date momentum is expected to drive record-breaking performance."

"The current market conditions of tight equipment supplies and steady demand have reinforced our focus on pricing. Our team continues to deliver rate increases. We believe we are leading the market as we benefit from our advanced pricing tools and the professionalism of our sales team. We are regaining momentum in our pricing strategy, as evidenced by our performance in 2019."

"We are clearly in the early stages of the next construction upcycle, with steady demand even before any potential benefits from future infrastructure spending boosts. Equipment suppliers are strained, with our OEMs struggling to produce and deliver new equipment due to global supply chain bottlenecks."

"There is ample demand in most of our end markets to support growth for the remainder of 2021 and into 2022."

"Our procurement team continues to excel and has managed to secure additional fleet in an extremely tight market for new equipment. As a result, we're increasing our net rental equipment CapEx guidance to $500 million to $550 million. We are pleased with the performance we've reported for the quarter and are excited about the performance we anticipate over the next couple of years."

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Ashtead (Sunbelt Rentals)

"The current activity levels we are experiencing align with the positive Dodge momentum index, which is at its highest since 2007, and the strong ABI figures. Importantly, the same positive trends apply to our non-construction segments, such as MRO, emergency response, and the early return to live events. There is clear momentum across the markets," said Brendan Horgan, CEO of Ashtead Group (parent company of Sunbelt Rentals).

"Residential construction, which has been a pleasant surprise this year and shows no signs of slowing down."

"Our extensive fleet planning exercise conducted last fall and early winter proved crucial this year, as supply constraints remain significant. OEMs are navigating supply chain and workforce challenges while ramping up production."

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