Quality Magazine

Equipment Lease Finance Industry Confidence Up Again In February

February 25, 2013

 

Washington, DC–-The Equipment Leasing & Finance Foundation (the Foundation) releases the February 2013 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. Designed to collect leadership data, the index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $725 billion equipment finance sector. Overall, confidence in the equipment finance market is up for the third consecutive month at 58.7, an increase from the January index of 54.2, reflecting industry participants’ increasing optimism despite a wary eye on economic conditions and government management of fiscal policies.  
 
When asked about the outlook for the future, MCI survey respondent Anthony Cracchiolo, president and CEO, Vendor Services, U.S. Bank Equipment Finance, said, “The industry continues to look stable and positioned on solid footing for future growth.  The replacement economy is well under way.  However, expansion of the markets is still questionable. The next several months will tell the story for 2013 and answer the question of whether 2013 will see moderate or significant growth.  In either case, the equipment finance industry will be on the leading edge of the overall economy.” 
 
February 2013 Survey Results:
The overall MCI-EFI is 58.7, up from the January index of 54.2.
 
•When asked to assess their business conditions over the next four months, 20% of executives responding said they believe business conditions will improve over the next four months, up from 6.1% in January.  
 
•20% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 12.1% in January. 
 
•22.9% of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 18.2% in January. 
 
•When asked, 22.9% of the executives reported they expect to hire more employees over the next four months, down from 24.2% in January.  
 
•85.7% of the leadership evaluates the current U.S. economy as “fair,” down from 87.9% last month.  
 
•22.9% of survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 6.1% in January.  
 
•In February, 37.1% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 30.3% in January.  
 
Depending on the market segment they represent, executives have differing points of view on the current and future outlook for the industry.
 
Independent, Small Ticket:
“Demand for equipment in the small-ticket space has been very strong considering that overall economic growth is low. It's hard to see how this is sustainable.  Until we see strong and consistent job growth we are expecting slower growth this year. Our outlook for credit quality continues to remain positive.”--David Schaefer, president, Orion First Financial, LLC
 
Independent, Middle Ticket:
“It appears sources are more plentiful, but the bar keeps getting raised for credit size and worthiness coupled with higher rates.  There seems to be a dichotomy of credit quality to rates.”--George Booth, managing director, Black Rock Capital, LLC
 
 
volume over 2012. General sentiment amongst customers and industry players is cautiously optimistic.”--Russell Nelson, president, Farm Credit Leasing Services Corp. Washington, DC–-The Equipment Leasing & Finance Foundation (the Foundation) releases the February 2013 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. Designed to collect leadership data, the index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $725 billion equipment finance sector. Overall, confidence in the equipment finance market is up for the third consecutive month at 58.7, an increase from the January index of 54.2, reflecting industry participants’ increasing optimism despite a wary eye on economic conditions and government management of fiscal policies.  
 
When asked about the outlook for the future, MCI survey respondent Anthony Cracchiolo, President and Chief Executive Officer, Vendor Services, U.S. Bank Equipment Finance, said, “The industry continues to look stable and positioned on solid footing for future growth.  The replacement economy is well under way.  However, expansion of the markets is still questionable. The next several months will tell the story for 2013 and answer the question of whether 2013 will see moderate or significant growth.  In either case, the equipment finance industry will be on the leading edge of the overall economy.” 
 
February 2013 Survey Results:
The overall MCI-EFI is 58.7, up from the January index of 54.2.
 
•When asked to assess their business conditions over the next four months, 20% of executives responding said they believe business conditions will improve over the next four months, up from 6.1% in January.  
 
•20% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, an increase from 12.1% in January. 
 
•22.9% of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 18.2% in January. 
 
•When asked, 22.9% of the executives reported they expect to hire more employees over the next four months, down from 24.2% in January.  
 
•85.7% of the leadership evaluates the current U.S. economy as “fair,” down from 87.9% last month.  
 
•22.9% of survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 6.1% in January.  
 
•In February, 37.1% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 30.3% in January.  
 
Depending on the market segment they represent, executives have differing points of view on the current and future outlook for the industry.
 
Independent, Small Ticket:
“Demand for equipment in the small-ticket space has been very strong considering that overall economic growth is low. It's hard to see how this is sustainable.  Until we see strong and consistent job growth we are expecting slower growth this year. Our outlook for credit quality continues to remain positive.”--David Schaefer, president, Orion First Financial, LLC
 
Independent, Middle Ticket:
“It appears sources are more plentiful, but the bar keeps getting raised for credit size and worthiness coupled with higher rates.  There seems to be a dichotomy of credit quality to rates.”--George Booth, managing director, Black Rock Capital, LLC
 
Bank, Middle Ticket
“Continuation of low interest rates, extension of bonus depreciation/Section 179, pent-up demand for replacement assets, upswing in housing and construction starts, and bullish financial markets should bode well for the equipment finance industry with similar to slightly higher growth in 
volume over 2012. General sentiment amongst customers and industry players is cautiously optimistic.”--Russell Nelson, president, Farm Credit Leasing Services Corp.