Hertz 2015 Annual Report Download - page 22

Table of Contents
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is often highly fragmented, with large numbers of companies operating on a regional or local scale and dealing in a limited number of products. The
number of industry participants operating on a national scale is comparatively much smaller, although national participants often have significant
breadth in the categories of equipment they rent. We believe, based on market and industry data, that we are one of the leading participants
(together with United Rentals, Inc. and Ashtead Group plc’s Sunbelt Rentals brand) in the North American equipment rental industry, with the
remainder comprising a small number of multi-location regional or national operators and a large number of relatively small, independent
businesses serving discrete local markets and specialty rental segments. Subsequent to the sale of our operations in France and Spain, we
generated almost all of our equipment rental revenue in North America with approximately 1% of our equipment rental revenue generated through
our international operations. In North America, the other top national-scale industry participants are United Rentals, Inc., H&E Equipment Services,
Inc. and the Ashtead Group plc’s Sunbelt Rentals brand. Aggreko is a global competitor in the power generation rental markets in the same
markets in which we participate. In the United Kingdom, the other principal national-scale industry participant is the Ashtead Group plc’s A-Plant
brand. In China, the other principal national-scale industry participants are Far East Rental and LiLuo. In Saudi Arabia, the other principal national-
scale industry participants are Zahid Tractor (CAT Dealer) and Rapid Access Gulf (Lavendon Group). In Qatar, the other principal national-scale
industry participants are Byrne Equipment Rental Solutions and Rapid Access Gulf (Lavendon Group).
Competition in the equipment rental industry is intense, often taking the form of aggressive price competition. Among other factors, we believe that
our competitive success is the result of 50 years of experience in the equipment rental industry, our systems and procedures for monitoring,
controlling and developing our branch network, our capacity to maintain a comprehensive rental fleet, the reliability and safety of our equipment,
the quality and experience of our sales team, our innovative customized rental solutions and our established national and industrial accounts
programs. In addition to our historical profile, we believe continued diversification of our customer base and products will provide strategic
competitive advantages in the rental industry.
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Our worldwide equipment rental operation is a seasonal business, with demand for our rental equipment tending to be lower in the winter months.
We have the ability to manage fleet capacity, the most significant portion of our cost structure, to meet market demand. For instance, to
accommodate increased demand, we increase our available fleet and staff during the second and third quarters of the year. A number of our other
major operating costs vary directly with revenues or transaction volumes; however, certain operating expenses, including rent, insurance, and
administrative overhead, remain fixed and cannot be adjusted for seasonal demand. Seasonal changes in our revenues do not alter those fixed
expenses, typically resulting in higher profitability in periods when our revenues are higher, and lower profitability in periods when our revenues are
lower. Our equipment rental business, especially in the construction industry, has historically experienced decreased levels of business from
December until late spring and heightened activity during our third and fourth quarter until December. Additionally, in an effort to reduce the
impacts of seasonality, we are focused on expanding our customer base through specialty products that have less seasonality and complement
other cycles.
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