Industrial Recession Strategies: Insights from Leading Equipment Rental Companies

Current Market Conditions and Impact

Economic downturns and geopolitical factors are impacting demand (HEES), with European market conditions affecting construction industries (CAT). Despite this, some companies report increased orders (MTW) and market normalization post-supply chain issues (URI). Government investments and mega trends are expected to support end-markets (TEX).

"• Economic downturns. The demand for our products is dependent on the general economy, which is in turn affected by geopolitical conditions, the stability of the global credit markets, inflationary pressures, increasing interest rates, the industries in which our customers operate or serve, and other factors." --- (HEES, sec filing, 2024/Q1)

"We now see a slightly stronger top line in Energy & Transportation after a strong first quarter, while our expectations have been tampered slightly in Construction Industries due to economic conditions in the European market." --- (CAT, earning call, 2024/Q1)

"Today, I'd like to start with my update on market conditions. Our orders for the first quarter were up 6% year-over-year." --- (MTW, earning call, 2024/Q1)

"As we've talked about for the past few quarters, our use margins reflect the ongoing normalization of the use market, following the extraordinary conditions created by supply chain issues that peaked in 2022." --- (URI, earning call, 2024/Q1)

"impact our end-markets over the coming years. In total, around 80% of our addressable market is aligned with stimulus from mega trends and from increasing government investment and incentives." --- (TEX, earning call, 2024/Q1)

Customer Retention Tactics

United Rentals focuses on operational efficiency, cross-selling products, and providing a "one-stop" shop to enhance customer retention. Additionally, offering availability information and substitution options reduces rental process friction, saves time, and maintains project schedules, further strengthening customer loyalty.

"We have a dedicated team responsible for reducing waste in our operational processes, with the objectives of: condensing the cycle time associated with preparing equipment for rent; optimizing our resources for delivery and pickup of equipment; improving the effectiveness and efficiency of our repair and maintenance operations; and implementing customer service best practices; The continued expansion and cross-selling of adjacent specialty and services products, which enables us to provide a "one-stop" shop for our customers." --- (URI, sec filing, 2024/Q1)

"We have a dedicated team responsible for reducing waste in our operational processes, with the objectives of: condensing the cycle time associated with preparing equipment for rent; optimizing our resources for delivery and pickup of equipment; improving the effectiveness and efficiency of our repair and maintenance operations; and implementing customer service best practices; The continued expansion and cross-selling of adjacent specialty and services products, which enables us to provide a "one-stop" shop for our customers." --- (URI, sec filing, 2024/Q2)

"Availability and Substitutions: Provides customers with availability information and substitution options before checkout, reduces friction during the rental process, saves customers time and preserves project schedules." --- (URI, press release, 2024/05/14)

Future Outlook and Strategic Planning

Leading equipment rental companies are optimistic about future growth, focusing on strategic planning and capturing business opportunities. United Rentals and H&E Equipment Services emphasize improving financial performance, while Terex Corporation highlights strong North American demand and government investments as key growth drivers.

"See below for further detail on each adjusting item. These items are excluded from adjusted EBITDA internally when evaluating our operating performance and for strategic planning and forecasting purposes, and allow investors to make a more meaningful comparison between our core business operating results over different periods of time, as well as with those of other similar companies." --- (URI, press release, 2024/04/24)

"Now more than ever, H&E is better positioned to capture developing business opportunities, while remaining focused on future growth and improving financial performance." --- (HEES, earning call, 2024/Q1)

"With that said, the outlook reflects strong demand in North America and plans for continued softness in Europe over the balance of the year." --- (TEX, earning call, 2024/Q1)

"In fact, we've been successful in each area. The outlook for large infrastructure projects, chip manufacturing, autos, and energy and power all remain positive." --- (URI, earning call, 2024/Q2)

"And so there's some nice things there that we can talk about as well. So we see that the government investment, particularly in the United States, that that builds momentum for us going forward into the future and opportunity for us to grow." --- (TEX, conference, 2024/06/05)