Equipment Finance Activity
Equipment Finance Activity NAELB Western Regional Meeting November 14,2015 Anaheim, California
Presented By:
Moderator:
Mark McClanahan
Steve Crane
Industry Manager, Finance & Capital Markets
BSB Leasing
EDA by RANDALL-REILLY
1
2014 Overview
EDA by RANDALL-REILLY
2
Keybridge Research Overview
• State of the Equipment Finance Industry – Continued Growth: “Cautious Optimism”
• Equipment Finance industry is slightly outpacing real GDP • New Business Volume (NBV) slowed for third consecutive year at 6.7% • NBV still above 10 year growth rate of 4.4%
EDA by RANDALL-REILLY
3
Keybridge Research Overview,
cont.
• State of the Equipment Finance Industry – Solid Financials / Record Portfolio Performance: • Profitability was stable in 2014 • Operating profits increase slightly to 36.2% • Razor thin margins and lower spreads • Delinquencies, charge-offs & non-accruals remained relatively low EDA by RANDALL-REILLY
4
Keybridge Research Overview,
cont.
• State of the Equipment Finance Industry – Intense Competition: “Hypercompetitive”
• Banks maintain largest market share at 55% but decreased in 2014 • Captives have 31% market share but decreased the most • Independents have 14% market share
• Independents outpaced Banks and Captives for the second straight year EDA by RANDALL-REILLY
5
Keybridge Research Overview,
cont.
• State of the Equipment Finance Industry – Improved Productivity:
• NBV per sales employee increased by 4% • % Employees engaged in Sales/Originations: – 26.3% for Banks
– 17.6% for Captives – 28.8% for Independents – 23.8% industry average
EDA by RANDALL-REILLY
6
Institute for Supply Management
EDA by RANDALL-REILLY
7
Institute for Supply Management
• October Manufacturing Report – Overall economy grew for the 77th consecutive month – Manufacturing sector expanded in October for the 34th consecutive month • New Orders and Production Growing • Supplier Deliveries Slowing • Employment and Inventories Contracting
EDA by RANDALL-REILLY
8
Institute for Supply Management,
cont.
• October Manufacturing Report – 7 manufacturing industries are growing • Printing & Related Support Activities • Furniture & Related Products • Miscellaneous Manufacturing
• Food, Beverage & Tobacco Products • Chemical Products • Paper Products • Fabricated Metal Products EDA by RANDALL-REILLY
9
Institute for Supply Management,
cont.
• October Manufacturing Report – 9 manufacturing industry are contracting • Apparel, Leather & Allied products • Primary Metals • Petroleum & Coal products • Plastics & Rubber Products • Electrical Equipment • Appliances & Components • Transportation Equipment • Wood Products • Computer & Electronics EDA by RANDALL-REILLY
10
Institute for Supply Management,
cont.
• October Manufacturing Report – What respondents are saying: “Demand remains steady with 3% top line unit growth. Sales are flat due to currency and cost changes.” (Paper Products) “Currency exchange is having a large impact on business results.” (Chemical Products) “Energy market continues to struggle. Effects are beginning to bleed into other areas.” (Computer & Electronic Products) EDA by RANDALL-REILLY
11
Institute for Supply Management,
cont.
• October Manufacturing Report – What respondents are saying,
cont.
“Business is improving. We still need young machinists to replace those retiring.” (Fabricated Metal Products) “Business is picking-up in general.”
(Transportation Equipment) “Some level of slowing, but activity is acceptable.” (Machinery)
“Customer backlogs are increasing…” (Plastics & Rubber Products) EDA by RANDALL-REILLY
12
Institute for Supply Management,
cont.
• October Manufacturing Report – What respondents are saying,
cont.
“Sales demand becoming more consistent… Outlook more positive than negative.” (Electrical Equipment, Appliances & Components) “Wood products market is sluggish with prices varying up/down depending on size and grade.” (Wood Products)
EDA by RANDALL-REILLY
13
EDA’s UCC Database
EDA by RANDALL-REILLY
14
EDA’s Data Source
• Uniform Commercial Code Filings – Secretary of State – 6+ million UCC filings per year
– Daily, weekly, bi-weekly & monthly – Electronic & paper-based UCC filings
EDA by RANDALL-REILLY
15
Our Equipment Data
• Our focus is on equipment-based filings – 8 primary categories – 500+ equipment types – 5.0+ million debtors – 25+ million transactions – 7 filing types – 5,000+ units uploaded daily
EDA by RANDALL-REILLY
16
Our Equipment Categories
• Review collateral section for equipment types: – Agriculture – Construction
– Lift Trucks – Logging – Machine Tools
– Printing & Packaging – Trucks & Trailers – Woodworking
• Standardize & convert into 4 digit equipment code
EDA by RANDALL-REILLY
17
New Business Volume based on UCC Filings
– 5 Year Compounded Annual Growth Rate (CAGR) = 7.13%
Based on # Equipment Units, New or Used, Lease or Loan Filing Types
EDA by RANDALL-REILLY
18
New Business Volume based on UCC Filings
– YTD growth in 2015 Q3 is positive but slower than 2014 Q3
2.6% 5.9%
8.7% 27.9% 8.3%
Year 2010 2011 2012 2013 2014 2015
Units 492,815 533,793 682,954 742,636 786,469 807,010
Growth NA 8.3% 27.9% 8.7% 5.9% 2.6%
4 states unreported for September, 2015 EDA by RANDALL-REILLY
19
New Business Volume based on UCC Filings
– NBV Units by Month: 2012 to 2015 • Peaks in April through October
4 states unreported for September, 2015
EDA by RANDALL-REILLY
20
New Business Volume based on UCC Filings
– NBV Unit Change by Month •
2012 2013 2014 2015
JAN
FEB
8,207 317 -3,734
-578 -2,174 5,803
EDA by RANDALL-REILLY
MARCH -20,307 23,783 5,684
APRIL 7,301 5,199 11,717
MAY
UNIT CHANGE BY MONTH JUNE JULY AUG
14,001 587 5,157
13,081 5,753 8,194
19,556 5,140 5,826
9,958 147 -400
Gains in 2015 were strong in April but have slowed down
SEP 8,463 5,081 3,434
OCT 8,896 1,024
NOV -7,780 3,410
DEC 7,955 9,641
21
New Business Volume based on UCC Filings
– Percent Mix & Growth by Equipment Type •
• • •
Ag Eqt is largest but % mix is declining Trucking & Construction Eqt is growing fastest Lift Trucks & Machine Tools is softening Printing Eqt is lowest
2014 2014 Pct Mix
AG 559,223 54%
5 Yr - CAGR
5.5%
10.6%
3.0%
7.3%
0.7%
11.6%
6.9%
2014 vs 2013
-2.1%
10.9%
-5.7%
-0.2%
-17.0%
30.8%
0.7%
EDA by RANDALL-REILLY
CE 232,906 23%
LT 47,000 5%
MT 40,741 4%
PR 20,247 2%
TR 123,352 12%
WW ANNUAL 4,670 1,030,153 0.5% 100%
22
New Business Volume based on UCC Filings
– NBV for Used Equipment Filings • % has dropped slightly but still healthy YEAR 2012 2013 2014
EDA by RANDALL-REILLY
UNITS TOTAL 397,939 906,143 411,644 974,896 402,525 1,032,804
PCT 43.9% 42.2% 39.0%
23
New Business Volume based on UCC Filings
– NBV 2014 versus 2013 by Census Regions
• Midwest
-3.6%
• West
+6.5%
• South
+7.8%
• Northeast +6.7&
EDA by RANDALL-REILLY
24
New Business Volume based on UCC Filings
– NBV 2014 versus 2013 for Western Region • YTD 2015 Q3 indicates downward shift in 7 states
REGION WEST WEST WEST WEST WEST WEST WEST WEST WEST WEST WEST WEST WEST
EDA by RANDALL-REILLY
STATE AK AZ CA CO HI ID MT ND NM OR UT WA WY
2013 2,519 7,363 40,483 14,473 962 9,050 8,715 14,210 3,361 9,577 6,371 12,440 3,434
2014 3,046 10,772 42,085 15,460 1,178 9,253 8,639 12,540 4,166 10,079 6,369 13,175 4,888
PCT CHG 20.9% 46.3% 4.0% 6.8% 22.5% 2.2% -0.9% -11.8% 24.0% 5.2% 0.0% 5.9% 42.3%
2014q3 2,303 8,413 30,593 12,169 887 7,136 6,886 9,682 3,261 7,864 4,674 9,929 3,471
2015q3 2,616 6,005 34,293 11,410 1,035 6,991 6,853 7,813 2,712 8,565 5,468 9,664 3,758
PCT CHG 13.6% -28.6% 12.1% -6.2% 16.7% -2.0% -0.5% -19.3% -16.8% 8.9% 17.0% -2.7% 8.3%
25
New Business Volume based on UCC Filings
– Top 25 Fastest Growing States in 2014 REGION WEST SOUTH WEST WEST WEST WEST NORTHEAST SOUTH SOUTH SOUTH SOUTH SOUTH NORTHEAST MIDWEST SOUTH NORTHEAST SOUTH SOUTH WEST SOUTH SOUTH NORTHEAST NORTHEAST WEST SOUTH
STATE AZ DC WY NM HI AK RI MS AL VA TX FL NY WI DE PA SC MD CO OK TN CT NJ WA AR
EDA by RANDALL-REILLY
2013 7,363 236 3,434 3,361 962 2,519 1,615 24,855 25,461 17,945 97,199 31,881 28,601 27,683 2,559 27,544 14,229 9,314 14,473 29,984 26,440 6,731 13,021 12,440 30,679
2014 10,772 338 4,888 4,166 1,178 3,046 1,865 28,331 28,688 20,102 108,700 34,996 31,290 30,095 2,778 29,886 15,381 10,005 15,460 32,020 28,214 7,174 13,834 13,175 32,476
PCT CHG 46.3% 43.2% 42.3% 24.0% 22.5% 20.9% 15.5% 14.0% 12.7% 12.0% 11.8% 9.8% 9.4% 8.7% 8.6% 8.5% 8.1% 7.4% 6.8% 6.8% 6.7% 6.6% 6.2% 5.9% 5.9%
2014q3 8,413 234 3,471 3,261 887 2,303 1,109 21,499 22,082 15,870 82,505 25,297 24,083 22,794 2,053 22,383 11,930 7,117 12,169 25,287 21,991 5,455 9,502 9,929 24,921
2015q3 6,005 497 3,758 2,712 1,035 2,616 1,107 24,997 23,250 15,208 87,727 32,781 23,630 22,951 2,145 22,170 12,911 7,814 11,410 26,148 22,570 4,661 11,600 9,664 27,658
PCT CHG -28.6% 112.4% 8.3% -16.8% 16.7% 13.6% -0.2% 16.3% 5.3% -4.2% 6.3% 29.6% -1.9% 0.7% 4.5% -1.0% 8.2% 9.8% -6.2% 3.4% 2.6% -14.6% 22.1% -2.7% 11.0%
Note that many of the Top 25 States in 2014 are losing ground in 2015
26
EDA Online
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27
Market View
EDA by RANDALL-REILLY
28
Thank You!
EDA by RANDALL-REILLY
29
Presented By:
Moderator:
Mark McClanahan
Steve Crane
Industry Manager, Finance & Capital Markets
BSB Leasing
EDA by RANDALL-REILLY
1
2014 Overview
EDA by RANDALL-REILLY
2
Keybridge Research Overview
• State of the Equipment Finance Industry – Continued Growth: “Cautious Optimism”
• Equipment Finance industry is slightly outpacing real GDP • New Business Volume (NBV) slowed for third consecutive year at 6.7% • NBV still above 10 year growth rate of 4.4%
EDA by RANDALL-REILLY
3
Keybridge Research Overview,
cont.
• State of the Equipment Finance Industry – Solid Financials / Record Portfolio Performance: • Profitability was stable in 2014 • Operating profits increase slightly to 36.2% • Razor thin margins and lower spreads • Delinquencies, charge-offs & non-accruals remained relatively low EDA by RANDALL-REILLY
4
Keybridge Research Overview,
cont.
• State of the Equipment Finance Industry – Intense Competition: “Hypercompetitive”
• Banks maintain largest market share at 55% but decreased in 2014 • Captives have 31% market share but decreased the most • Independents have 14% market share
• Independents outpaced Banks and Captives for the second straight year EDA by RANDALL-REILLY
5
Keybridge Research Overview,
cont.
• State of the Equipment Finance Industry – Improved Productivity:
• NBV per sales employee increased by 4% • % Employees engaged in Sales/Originations: – 26.3% for Banks
– 17.6% for Captives – 28.8% for Independents – 23.8% industry average
EDA by RANDALL-REILLY
6
Institute for Supply Management
EDA by RANDALL-REILLY
7
Institute for Supply Management
• October Manufacturing Report – Overall economy grew for the 77th consecutive month – Manufacturing sector expanded in October for the 34th consecutive month • New Orders and Production Growing • Supplier Deliveries Slowing • Employment and Inventories Contracting
EDA by RANDALL-REILLY
8
Institute for Supply Management,
cont.
• October Manufacturing Report – 7 manufacturing industries are growing • Printing & Related Support Activities • Furniture & Related Products • Miscellaneous Manufacturing
• Food, Beverage & Tobacco Products • Chemical Products • Paper Products • Fabricated Metal Products EDA by RANDALL-REILLY
9
Institute for Supply Management,
cont.
• October Manufacturing Report – 9 manufacturing industry are contracting • Apparel, Leather & Allied products • Primary Metals • Petroleum & Coal products • Plastics & Rubber Products • Electrical Equipment • Appliances & Components • Transportation Equipment • Wood Products • Computer & Electronics EDA by RANDALL-REILLY
10
Institute for Supply Management,
cont.
• October Manufacturing Report – What respondents are saying: “Demand remains steady with 3% top line unit growth. Sales are flat due to currency and cost changes.” (Paper Products) “Currency exchange is having a large impact on business results.” (Chemical Products) “Energy market continues to struggle. Effects are beginning to bleed into other areas.” (Computer & Electronic Products) EDA by RANDALL-REILLY
11
Institute for Supply Management,
cont.
• October Manufacturing Report – What respondents are saying,
cont.
“Business is improving. We still need young machinists to replace those retiring.” (Fabricated Metal Products) “Business is picking-up in general.”
(Transportation Equipment) “Some level of slowing, but activity is acceptable.” (Machinery)
“Customer backlogs are increasing…” (Plastics & Rubber Products) EDA by RANDALL-REILLY
12
Institute for Supply Management,
cont.
• October Manufacturing Report – What respondents are saying,
cont.
“Sales demand becoming more consistent… Outlook more positive than negative.” (Electrical Equipment, Appliances & Components) “Wood products market is sluggish with prices varying up/down depending on size and grade.” (Wood Products)
EDA by RANDALL-REILLY
13
EDA’s UCC Database
EDA by RANDALL-REILLY
14
EDA’s Data Source
• Uniform Commercial Code Filings – Secretary of State – 6+ million UCC filings per year
– Daily, weekly, bi-weekly & monthly – Electronic & paper-based UCC filings
EDA by RANDALL-REILLY
15
Our Equipment Data
• Our focus is on equipment-based filings – 8 primary categories – 500+ equipment types – 5.0+ million debtors – 25+ million transactions – 7 filing types – 5,000+ units uploaded daily
EDA by RANDALL-REILLY
16
Our Equipment Categories
• Review collateral section for equipment types: – Agriculture – Construction
– Lift Trucks – Logging – Machine Tools
– Printing & Packaging – Trucks & Trailers – Woodworking
• Standardize & convert into 4 digit equipment code
EDA by RANDALL-REILLY
17
New Business Volume based on UCC Filings
– 5 Year Compounded Annual Growth Rate (CAGR) = 7.13%
Based on # Equipment Units, New or Used, Lease or Loan Filing Types
EDA by RANDALL-REILLY
18
New Business Volume based on UCC Filings
– YTD growth in 2015 Q3 is positive but slower than 2014 Q3
2.6% 5.9%
8.7% 27.9% 8.3%
Year 2010 2011 2012 2013 2014 2015
Units 492,815 533,793 682,954 742,636 786,469 807,010
Growth NA 8.3% 27.9% 8.7% 5.9% 2.6%
4 states unreported for September, 2015 EDA by RANDALL-REILLY
19
New Business Volume based on UCC Filings
– NBV Units by Month: 2012 to 2015 • Peaks in April through October
4 states unreported for September, 2015
EDA by RANDALL-REILLY
20
New Business Volume based on UCC Filings
– NBV Unit Change by Month •
2012 2013 2014 2015
JAN
FEB
8,207 317 -3,734
-578 -2,174 5,803
EDA by RANDALL-REILLY
MARCH -20,307 23,783 5,684
APRIL 7,301 5,199 11,717
MAY
UNIT CHANGE BY MONTH JUNE JULY AUG
14,001 587 5,157
13,081 5,753 8,194
19,556 5,140 5,826
9,958 147 -400
Gains in 2015 were strong in April but have slowed down
SEP 8,463 5,081 3,434
OCT 8,896 1,024
NOV -7,780 3,410
DEC 7,955 9,641
21
New Business Volume based on UCC Filings
– Percent Mix & Growth by Equipment Type •
• • •
Ag Eqt is largest but % mix is declining Trucking & Construction Eqt is growing fastest Lift Trucks & Machine Tools is softening Printing Eqt is lowest
2014 2014 Pct Mix
AG 559,223 54%
5 Yr - CAGR
5.5%
10.6%
3.0%
7.3%
0.7%
11.6%
6.9%
2014 vs 2013
-2.1%
10.9%
-5.7%
-0.2%
-17.0%
30.8%
0.7%
EDA by RANDALL-REILLY
CE 232,906 23%
LT 47,000 5%
MT 40,741 4%
PR 20,247 2%
TR 123,352 12%
WW ANNUAL 4,670 1,030,153 0.5% 100%
22
New Business Volume based on UCC Filings
– NBV for Used Equipment Filings • % has dropped slightly but still healthy YEAR 2012 2013 2014
EDA by RANDALL-REILLY
UNITS TOTAL 397,939 906,143 411,644 974,896 402,525 1,032,804
PCT 43.9% 42.2% 39.0%
23
New Business Volume based on UCC Filings
– NBV 2014 versus 2013 by Census Regions
• Midwest
-3.6%
• West
+6.5%
• South
+7.8%
• Northeast +6.7&
EDA by RANDALL-REILLY
24
New Business Volume based on UCC Filings
– NBV 2014 versus 2013 for Western Region • YTD 2015 Q3 indicates downward shift in 7 states
REGION WEST WEST WEST WEST WEST WEST WEST WEST WEST WEST WEST WEST WEST
EDA by RANDALL-REILLY
STATE AK AZ CA CO HI ID MT ND NM OR UT WA WY
2013 2,519 7,363 40,483 14,473 962 9,050 8,715 14,210 3,361 9,577 6,371 12,440 3,434
2014 3,046 10,772 42,085 15,460 1,178 9,253 8,639 12,540 4,166 10,079 6,369 13,175 4,888
PCT CHG 20.9% 46.3% 4.0% 6.8% 22.5% 2.2% -0.9% -11.8% 24.0% 5.2% 0.0% 5.9% 42.3%
2014q3 2,303 8,413 30,593 12,169 887 7,136 6,886 9,682 3,261 7,864 4,674 9,929 3,471
2015q3 2,616 6,005 34,293 11,410 1,035 6,991 6,853 7,813 2,712 8,565 5,468 9,664 3,758
PCT CHG 13.6% -28.6% 12.1% -6.2% 16.7% -2.0% -0.5% -19.3% -16.8% 8.9% 17.0% -2.7% 8.3%
25
New Business Volume based on UCC Filings
– Top 25 Fastest Growing States in 2014 REGION WEST SOUTH WEST WEST WEST WEST NORTHEAST SOUTH SOUTH SOUTH SOUTH SOUTH NORTHEAST MIDWEST SOUTH NORTHEAST SOUTH SOUTH WEST SOUTH SOUTH NORTHEAST NORTHEAST WEST SOUTH
STATE AZ DC WY NM HI AK RI MS AL VA TX FL NY WI DE PA SC MD CO OK TN CT NJ WA AR
EDA by RANDALL-REILLY
2013 7,363 236 3,434 3,361 962 2,519 1,615 24,855 25,461 17,945 97,199 31,881 28,601 27,683 2,559 27,544 14,229 9,314 14,473 29,984 26,440 6,731 13,021 12,440 30,679
2014 10,772 338 4,888 4,166 1,178 3,046 1,865 28,331 28,688 20,102 108,700 34,996 31,290 30,095 2,778 29,886 15,381 10,005 15,460 32,020 28,214 7,174 13,834 13,175 32,476
PCT CHG 46.3% 43.2% 42.3% 24.0% 22.5% 20.9% 15.5% 14.0% 12.7% 12.0% 11.8% 9.8% 9.4% 8.7% 8.6% 8.5% 8.1% 7.4% 6.8% 6.8% 6.7% 6.6% 6.2% 5.9% 5.9%
2014q3 8,413 234 3,471 3,261 887 2,303 1,109 21,499 22,082 15,870 82,505 25,297 24,083 22,794 2,053 22,383 11,930 7,117 12,169 25,287 21,991 5,455 9,502 9,929 24,921
2015q3 6,005 497 3,758 2,712 1,035 2,616 1,107 24,997 23,250 15,208 87,727 32,781 23,630 22,951 2,145 22,170 12,911 7,814 11,410 26,148 22,570 4,661 11,600 9,664 27,658
PCT CHG -28.6% 112.4% 8.3% -16.8% 16.7% 13.6% -0.2% 16.3% 5.3% -4.2% 6.3% 29.6% -1.9% 0.7% 4.5% -1.0% 8.2% 9.8% -6.2% 3.4% 2.6% -14.6% 22.1% -2.7% 11.0%
Note that many of the Top 25 States in 2014 are losing ground in 2015
26
EDA Online
EDA by RANDALL-REILLY
27
Market View
EDA by RANDALL-REILLY
28
Thank You!
EDA by RANDALL-REILLY
29
