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Golf Course Builders Association of America

Equipment Symposium Annual Summer Meeting – St. Augustine, FL 1:30 – 4:30pm The Rent v. Buy Decision. Golf Course Builders Association of America. Presented by: David Zipps - Cat John Hale – John Deere John Washburn – Sunbelt Rentals John. www.gcbaa.org.

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Golf Course Builders Association of America

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  1. Equipment Symposium Annual Summer Meeting – St. Augustine, FL 1:30 – 4:30pm The Rent v. Buy Decision Golf Course Builders Association of America Presented by: David Zipps- Cat John Hale – John Deere John Washburn – Sunbelt Rentals John www.gcbaa.org

  2. Structural Change – Ownership to Rental • Equipment rental increasing in popularity • Penetration estimates vary, but industry experts agree we are near 40% • What is driving the shift? • Life cycle cost associated with ownership • Availability/OEM capacity • Access to Capital • Rental industry that is far more reliable than not too distant past • Recovery or not??

  3. A General Rule of Thumb • Equipment utilization is >65% = Own • Anything less… RENT IT

  4. The Cost of Ownership • What is the cost of owning equipment? • Cost of the asset • Depreciation • Interest • Preventive Maintenance • Repairs • Transportation • Storage • Inspections • Insurance Total Cost of Ownership: Ownership Costs Operating Costs Administrative Costs

  5. The Cost of Ownership - Example • Consider the initial investment on a hypothetical piece of equipment • Purchase cost of $100,000 • Used price after 5-year lifecycle of $25,000 • Depreciation of $75,000 • Now, add these costs • Interest of 6% • Insurance, taxes and associated fees of $6,000 • Wear parts of $18,000 • Preventive maintenance of $8,000 • Repairs of $25,000 • Administrative cost of $8,000 • Now, add more costs • Transportation • Operator • Fuel Note: cost estimates based on equipment usage of 2,000 hours annually

  6. Additional Considerations • Financing equipment reduces your cash flow • When owned equipment breaks down, you may need to rent it • Repairs will require a maintenance staff or hiring an outside firm • Transportation will require the right truck size and a driver with a CDL • Project Backlog • Target Fleet Mix (owned versus rent) • Government compliance • Tier 4 • Environmental regulations

  7. Does Renting Make Sense? • Conserves capital • No large outlays of cash are required • Minimized Headcount • Saves the storage costs • Gives you the right equipment for the job • Fitting the equipment to the application • Controls your inventory • Only have the equipment on hand when required • Reduces downtime • If equipment breaks down it is repaired or replaced within four hours • Leverages efficiencies • Take advantage of on-line tools to manage inventories, pay invoices, etc.

  8. John Washburn, Vice President of Sales Thank You!

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