Financing Companies Archives - Material Handling Wholesaler

AI, Automation & Enterprise Value: A Strategic Crossroads for Distributors

Mon, 16 Mar 2026 10:00:44 +0000

From everything I am reading, executives are taking a hard look at AI, automation, and eventually robots to help run the business and improve margins and “Sales per Employee” numbers. The Distribution Strategy Group’s 45-page report provides an overview of where distributors are in the evaluation process and outlines individual steps to move forward. 63% in the exploring stage. 27% are cautious observers. 43% actively investing. One distributor can be included in multiple categories. Virtually all distributors now recognize AI as critical to business success and a top priority for growth. A dramatic mindset shift from just a few years ago. Early Adoption is reporting big performance improvements As of today, at least 61% of distributors and related sectors plan to use autonomous AI systems. Expect big changes by 2028. A small percentage is actually fully installed. Survey indicates that the Performance Gap and the ability to catch up are narrowing. By 2027-28, the performance gap will become insurmountable. Smaller distributors can leapfrog larger competitors. Obstacles at this time are. Skill gaps, Change Resistance, Budget concerns, and Incomplete data. Leadership gaps These are comments from just the first four pages of the report. 40 pages to go, and I will cover them. The ELEPHANT in the room for some of you is the PERFORMANCE GAP issue, which I must have mentioned at least 20 times over the last couple of years. A bad outcome can result from “Doing Nothing,” as noted above, or from doing something that requires a major investment, which, because of installation problems or poor planning, fails to deliver the AI-related advantages. In either case, the value of your company presently will be reduced to what your balance sheet is worth, net of any debt on the books. In other words, worth net book value, which is substantially less than what it is worth now at some multiple of EBITDA or Free Cash Flow. And here we go again. If you are near retirement age or lack the capital to invest in these changes, you should investigate how to transition out of the business at current value. NOW! There are many avenues available to you, and if you wish to discuss this process, give me a call, and we can discuss options (at least 3 or 4). I have a list of professionals I work with regarding taxes, equipment valuations, legal documents, etc. Done this many times and know the drill. On the other hand, this is a perfect opportunity to expand your current operation by rolling up those dealers not wanting to venture into the AI adventures. There is private equity out there looking for a home. Interested? You can call me as well. Another topic to think about is the type of equipment and equipment/robots or some combination thereof that will be purchased by manufacturers and wholesalers to use in sync with their shop and warehouse technology. There seem to be numerous options for humanoid models that can walk, run, and move things, etc. What you don’t want to do is wind up with used units and rental assets that will be hard to sell 3-5 years from now. I have to think that customers are going through the same thought process, and don’t want to wind up with used units worth less as a percentage of the new price in 2026. I can see customers wanting to rent more or asking for an RPO (Rental Purchase Option), deal to minimize their risk. Some surveys I saw recently regarding construction equipment indicate these options are requested more by customers. Dealers are being asked to increase their rental units rather than purchase new units for inventory. I know that last month’s issue included a market analysis stating that all markets will be a “go”. And I can agree with that, as long as the AI, Automation, and Robots upgrades are installed on shop floors and in warehouses. But will the equipment required for these new systems match what you are buying this year and next? Or what customers are buying this year or next year? Let’s discuss something more exciting. TARIFFS! What a mess. I am writing this the day after the Supreme Court issued its ruling. All I could think about was the mess that would be created if they had to refund those who paid them. And, of course, they have to be paid back. (LOL with that one). So, there I am, sitting in my office, listening to the tariff news and wondering how they will ever get around to refunds, if need be. And lo and behold, a gentleman appears on Squawk Box, stating he has the import and related tariff data for all inputs. The company name is FlexPort. It uses a platform that coordinates global logistics from the factory to the customer’s door. CAN YOU BELIEVE THIS? I thought some of you may need help if you are looking to issue refunds and/or have to return refunds to customers. And I hope none of your tariff sales were collected on items without a tariff… could get expensive. But the best part of this day was getting up at 6 am to watch the 7 am Hockey Game. What a game! About the Columnist: Garry Bartecki is a CPA and MBA with GB Financial Services LLC, and a Wholesaler columnist since August 1993. E-mail editorial@mhwmag.com to contact Garry.

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Equipment Finance Industry Confidence at 11-Month High

Thu, 22 Jan 2026 19:55:11 +0000

The Equipment Leasing & Finance Association (ELFA) has released its January 2026 Monthly Confidence Index for the Equipment Finance Industry (MCI), revealing confidence in the equipment finance market rose to 64.6, up from 58.3 in December, and the highest level since February 2025. The index provides a qualitative assessment from key executives in the $1.3 trillion equipment finance industry. January 2026 Survey Results: Business Conditions – When assessing the next four months, 34.6% of responding executives believe business conditions will improve, up from 12.5% in December. Those who believe business conditions will remain the same declined to 57.7% from 75% the previous month. The percentage of executives who believe business conditions will worsen also declined to 7.7% from 12.5% in December. Capex Demand – For the next four months, 40% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase (up from 20.8% in December). Additionally, 56% expect demand to remain the same (down from 75%), and 4% believe demand will decline, relatively unchanged from December. Access to Capital – Over the next four months, 32% of respondents expect greater access to capital to fund equipment acquisitions, an increase from 25% in December. The majority (68%) anticipate the “same” access to capital to fund business, a decrease from 70.8% the previous month. None expect “less” access to capital, unchanged from December. Employment – Regarding employment over the next four months, 38.5%% of executives expect to hire more employees, a decrease from 50% in December. Also, 57.7% foresee no change in headcount (up from 45.8% last month), and 3.9% expect to hire fewer employees, down slightly from 4.2% in December. U.S. Economy – Of the respondents, 3.9% evaluate the current U.S. economy as “excellent,” up from none in December; 96.2% assess it as “fair,” down from 100% last month; and none evaluate it as “poor,” unchanged from December. Economic Outlook – Over the next six months, 30.8% of respondents believe that U.S. economic conditions will “get better,” a marked increase from 12.5% in December. Another 61.5% expect the U.S. economy to “stay the same,” up from 58.3%; and 7.7% believe economic conditions will worsen, a dramatic decline from 29.2% last month. Business Development Spending – Over the next six months, 34.6% of respondents believe their company will increase spending on business development activities, down from 35.7% in December. Those who believe there will be “no change” in business development spending increased to 65.4% (up from 58.3% in December), and none believe there will be a decrease in spending (down from 4.2% last month). January 2026 MCI-EFI Survey Comments from Industry Executive Leadership: Bank, Small Ticket “2025 was a strong year for our business and much of the industry. I think we will carry that momentum into 2026 and find new opportunities to continue our growth this year.” David Normandin, CLFP, President and Chief Executive Officer, Wintrust Specialty Finance Captive, Small Ticket “We observed an increase in December that has continued into January. We believe the improved interest rate environment has contributed to this momentum. Additionally, we suspect that a “tariff pre-buy” effect is occurring, as customers accelerate purchasing decisions ahead of potential cost increases.” Jim DeFrank, EVP and Chief Operating Officer, Isuzu Finance of America, Inc. Independent, Small Ticket “As interest rates and the economy improve in 2026, the equipment finance industry will likely be facing more competition from banks, the larger independents and new entrants.” James D. Jenks, CEO, Global Finance and Leasing Services, LLC Independent, Middle Ticket “I’m optimistic about AI and automation along with onshoring creating new demand for equipment. However, isolationist policies and lack of workforce are challenges to these positives, so it’s a mixed bag.” Jeffry Elliott, CLFP, CEO of Elevex Capital and Equipment Leasing & Finance Association Treasurer ELFA and the Foundation are unifying their research efforts. Starting in January 2026, all industry data and reports historically produced by the Foundation will move to a streamlined home on the ELFA website. To access more details and read the full survey results, visit the MCI web page.

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Big Joe Forklifts introduces Financial Services division for Warehouse Operations

Tue, 20 Jan 2026 15:46:38 +0000

Big Joe Forklifts just announced the launch of Big Joe Financial Services (BJFS), created to provide dealers and end-users with competitive options for financing Big Joe’s full line of forklifts, warehouse equipment, and autonomous solutions. BJFS is offering financing from trusted and well-established financing providers, PNC Vendor Finance, Verdant Commercial Capital, and Mitsubishi HC Capital America, to help dealers and customers access equipment, drive sales, and build stronger businesses. “We are excited about the launch of Big Joe Financial Services, which will provide financing solutions that are tailored to support customer growth, whether that be at the dealer or end-user level,” said Tom Larchey, Chief Financial Officer at Big Joe Forklifts. Big Joe is committed to ensuring we continue to evolve as a company and provide ways for our customers to stay on track.” Dealer Support BJFS gives dealers the tools to stock more equipment, close deals faster, grow their businesses, and maximize competitiveness by providing flexible financing through trusted partners and delivering comprehensive solutions and adaptable credit lines to support inventory and rental fleet purchases. Approvals are built to be fast with competitive rates and terms. Contact your Big Joe sales representative today to learn how Big Joe Financial Services can help you stock more equipment, streamline your operations, and boost profitability. End User Support BJFS makes it easier than ever for equipment companies to get the equipment they need to keep your operation on the cutting edge of warehouse equipment. Big Joe partners offer flexible financing options designed to fit budgets and help provide the right solutions without delay. Options include flexible payment arrangements, quick access to equipment, and personalized support from your trusted Big Joe sales representative.

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CapEx Finance Index November 2025: Recent rate cuts expected to bolster Equipment Demand heading into 2026

Tue, 23 Dec 2025 14:23:15 +0000

The latest CapEx Finance Index (CFI), released today by the Equipment Leasing & Finance Association (ELFA), indicates the equipment leasing and finance sector is poised for a strong fourth quarter. Market volatility and a slowing economy have not affected equipment demand, which is heading into 2026 with significant momentum after the Fed lowered rates again at the December FOMC meeting. Financial conditions remain healthy, suggesting the sector will not be materially affected if borrowing costs stay near current levels next year. Total new business volumes (NBV) among surveyed ELFA member companies were $10.3 billion on a seasonally adjusted basis, down slightly from the prior month. Year-to-date NBV contracted by 0.9% relative to the same period in 2024. Year-over-year, NBV dropped by 4.4% on a non-seasonally adjusted basis. “Demand for equipment remained strong in November. New business volumes topped $10 billion for the fourth straight month,” said Leigh Lytle, President and CEO at ELFA. “We’re still on pace for one of our strongest years on record, and we expect that the Fed’s decision to lower the federal funds rate by 75 basis points in 2025 will bolster momentum for equipment demand next year. Even though policymakers may be done cutting for a while, the November financial data showed that delinquencies and losses remain relatively low, indicating that the industry is well-positioned for current financial conditions.” Equipment demand tops $10 billion for fourth straight month. Total NBV grew by $10.3 billion in November. New activity declined by 2.1% from the previous month but remained above its trailing six-month average of $10.1 billion. The total new volume series tracks the amount of new activity added by banks, independents, and captives in a given month. Total new activity is on pace to reach $114.4 billion in 2025, slightly down from its all-time high in 2024 but still well above the average in the second half of the pre-pandemic expansion. Small ticket volume growth tracks broader economic conditions and is an essential barometer of aggregate demand for equipment. Small-ticket deals grew by $3.3 billion, down from their 2025 high the previous month. Activity at all three institution types declined in November. New deal growth at banks edged down by 1.0% to $4.9 billion, while volumes at captives declined by 9.3% to $2.9 billion, and latest activity at independents declined by 12.9% to $1.9 billion. The overall credit approval rate remains elevated. The industry-wide average edged up to 78.2% in November. It continues to hover around its decade high. The average small ticket approval rate ticked up from the prior month to 81.4%, down from its 2025 high but still well above its 2024 average of 75.4%. The bank rate dipped to 79.4%. The rate at captives fell to 81.7%, while the rate at independents rose to 72.6%. Delinquencies drop, while losses edged up. The overall delinquency rate dropped by 0.23 percentage points to 2.0%. The November decline offset the 0.24 percentage point increase in the previous month. The overall rate continues to oscillate in a narrow band between 1.9% and 2.2%. The average delinquency rate at banks and independents fell sharply, while the rate at captives rose. The overall loss rate ticked up by 0.05 percentage points to 0.49% in November. The average loss rate for small ticket deals increased by 0.13 percentage points to 0.69%, the second-highest reading of 2025. Loss rates rose modestly at banks and captives, and more sharply at independents. “Across the United States, demand continues to strengthen as companies reassess how they deploy capital amid rapid technological change. AI is accelerating refresh cycles for both devices and data-center infrastructure,” said Wayne Fowkes, Executive Vice President of the Americas, CHG-MERIDIAN. “At the same time, businesses are seeking greater financial flexibility as they navigate uncertain economic conditions. With 2025 shaping up to be one of the strongest years for our industry, we expect this momentum to continue, supported by agile, future-ready investment strategies that set a more resilient path for long-term competitiveness. The latest ELFA CapEx Finance Index underscores this shift and mirrors the strong growth we are seeing at CHG-MERIDIAN.” Industry Confidence The Monthly Confidence Index from ELFA’s affiliate, the Equipment Leasing & Finance Foundation, tracks the sentiment of executives in the industry. The index remains steady at year’s end at 58.3 from 59.9 in November, a heightened level for the seventh consecutive month. Technical Note New business volume data are concurrently seasonally adjusted each month to capture the latest seasonal patterns. Data in previous months and years may change due to updated seasonal factors.

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“2026: The Year to Reinvent Your Dealership”

Thu, 18 Dec 2025 06:00:56 +0000

Various financial newsletters that cover the Industrial Economic Outlook state that the U.S. can expect GDP growth in the 2.3% range in 2026. The improved outlook reflects a more supportive fiscal policy environment, less restrictive monetary policy, and a tariff situation in which further escalation is unlikely. These articles also state that Business Fixed Investment has been and will continue to be sustained by all things Tech- and AI-related, with business-friendly tax policy changes to support investment growth in more traditional capex categories, which have struggled of late. We can also look forward to new business returning to the U.S., in addition to the TECH and AI spend. Some of these are already taking place but expect the bulk of these projects to begin operating in the next couple of years. Let’s hope that fiscal and monetary policy don’t upset the apple cart. Remember, if we add to the national debt or lower interest rates, we can expect prices to rise because the dollar will be worth less. Documentation on equipment dealers suggests that new and used inventories are high, prompting OEMs to offer incentives on new machines, with successful results. Sounds like gook plan until OEMs decide it is time to go back to standard pricing, even if it means lower unit sales. More recent information suggests inventories have stabilized, with the outlook more certain. Will this work for the dealers who have been experiencing low margins? Dealers, of course, have other options to improve margins. Move the used units as quickly as possible unless you believe using them offsets any upcoming price hikes. Refurb and sell units with a maintenance contract. Market parts and service more aggressively Offer new short-term and long-term rental programs. Meet with customers to find new services you can provide. If demand increases for any specific revenue silo, increase the rates Each dealer, however, will need to manage their store depending on where they are located, their customer mix, how much tariffs impact pricing, and how much Tech and AI they have available to work with. In other words, each dealer has unique profit opportunities. From a Strategic point of view, I would go back and find your copy of the December 2025 MHW publication, which outlined various paths to investigate to see if any parts-and-service potential offerings could fit your operation and your customer needs. Chris Aiello provided many discussion points regarding dealer-OEM relationships as well as programs to share with both potential and existing customers. Vee Sitharama then outlined changes to shop and warehouse buildings to make them more resilient and agile, noting that AI will play a significant role in achieving these goals. I attended an Oracle program last week where they demonstrated how they can tie all of the company’s systems together to manage all segments of the business and determine why any specific action occurred. It was amazing. Looking ahead, it’s clear that embracing technological advancements and staying informed about the industry’s best practices will be crucial for dealers seeking a competitive edge. As new tools and strategies emerge, especially those integrating AI to streamline operations and enhance customer engagement, proactive adaptation will set successful dealers apart. Regularly reassessing processes, leveraging data-driven insights, and fostering strong relationships with both customers and manufacturers will help position your dealership to capitalize on evolving market dynamics. Ultimately, flexibility and a willingness to innovate will be the keys to sustaining growth and profitability in the changing landscape. Since dealers are now in the shop and warehouse providing services, it strikes me that lift truck dealers should also be the ones supplying maintenance for both automation programs, as well as the Robot members working in both the shop and the warehouse. THERE IS ONLY ONE MAJOR ISSUE REGARDING THESE NEW SERVICES. ROBOTS work 24 hours per day and maybe even 7 days a week. It looks like planning for this type of service will take a lot of management discussion to plan how to service this equipment. Working with the equipment manufacturers should be at the top of your list when following up on this opportunity. When I reviewed to determine how many robot manufacturers there are. I was surprised by how many there were. The list is very, very long. Is there any doubt that industries coming back to the U.S. or new to the U.S. will want state-of-the-art building, automation, AI, and systems to minimize payroll and other employee costs? This approach will not only impact their business, but also your current customers’ business who may have to compete with these state-of-the-art operations. Think about it, how long will you have that customer who is far behind the technology curve? You must believe that OEMs have a major in this process as well. It should be worthwhile drawing up a program to sell to existing customers on automation, robots, AI applications, and bidirectional training, along with a financial model to discuss costs, funding requirements, joint venture agreements, and ROI. Maybe you could do this by partnering with your OEM and/or your twenty group members who choose to participate. Dealers also could open a new revenue silo or form a joint venture with various manufacturers to involve existing customers in these new, cost-effective programs. A dealer may even want to develop a program to train people in various automation, AI, and robotics roles to assist with managing and maintaining the new technology, with investments from the other program players and even your OEM. Having a trained staff that you “own” would be a great way to lock in your services. 2026 is going to be the year you start investigating how to get involved with automation, AI, and Robotics. This will make you one of the industry leaders who decided to move forward rather than remain behind. Perhaps you could work out a deal with your OEM to take over the dealers who have no desire to move into the NEXT INDUSTRIAL EVOLUTION. By 2027, many of these points will be in

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ELFA names Deborah Baker of HP Inc. as 2026 Board Chair

Wed, 29 Oct 2025 14:19:27 +0000

Confirms New Slate of Officers and Directors The Equipment Leasing & Finance Association (ELFA) has announced its new Board of Directors and Officers who will serve for the next 12 months, following the conclusion of the association’s 64th Annual Convention. Deborah Baker, VP, Global Payment Solutions, HP Inc., is the new ELFA Board Chair and Nathan Gibbons, CLFP, Chief Experience Officer, QuickFi, is now Chair-Elect. The Chair-Elect and new Board members were recommended by ELFA’s Nominating Committee and approved by a vote of the general membership. “It’s such an honor to take on this position to represent the members, board and staff of ELFA as the next Chair,” said Baker. “I look forward to picking up the baton from our Immediate Past Chair James Cress, and working with CEO Leigh Lytle as we focus more deeply on areas like research, education, and the future of our workforce. I’m particularly excited about the possibilities for getting even more qualified talent engaged in our industry. There are tremendous opportunities to build on the incredible momentum attained over the last year—particularly with advocacy and people—and you can expect another packed agenda as we drive greater achievements for ELFA, the industry and our economy in the coming year.” “I’m delighted to welcome Deb Baker as Chair of ELFA,” said ELFA President and CEO Leigh Lytle. “As our association and our $1.3 trillion industry navigate increasing impact on the broader U.S. economy, Deb’s deep industry expertise and innovative approach will be tremendous assets. Under her leadership, I’m confident ELFA will unlock new opportunities to support our members and propel the industry into its next phase of growth.” As an active member of ELFA, Baker has held a number of key leadership roles. She has served on the Board of Directors, the Executive Committee, the Nominating Committee and as the Board liaison to the Women’s Council. She served as Chair of the ELFA Women’s Council, and as a founding member of ELFA’s Equality (now Equity) Committee. She is also a member of the Mentor Match Initiative Community launched earlier this year to strengthen member-to-member connections and professional growth. Baker has been a long-time generous donor of the Equipment Leasing & Finance Foundation and was a reviewer for the Foundation’s student scholarship evaluations in 2022-2023. As the Vice President, Head of Global Payment Solutions at HP, Inc., Baker leads HP’s multi-finance partner strategy supporting all HP technologies and customer segmentations (from Consumer to Global Accounts). She is a finance veteran with over 30 years’ experience supporting captive and vendor financing. Prior to joining HP, she held a variety of positions with Cisco Systems Capital Corporation, HP Financial Services and CIT. Baker holds a bachelor’s degree in business administration and an MBA from Fairleigh Dickinson University in Madison, NJ. 2026 ELFA Board of Directors The newly elected members of the ELFA Board of Directors include: Eric Bunnell, CLFP, President, Arvest Equipment Finance John Grosso, Senior Vice President (U.S. and Canada) and Chief Marketing Officer, John Deere Financial Dominic Janney, President, Canon Financial Services, Inc. Kyin Lok, CEO, Dext Capital Rick Matte, President and Chief Executive Officer, Post Road Equipment Finance Donna Yanuzzi, Executive Vice President, 1st Equipment Finance (FNCB Bank) The following individuals were elected by the membership to serve as ELFA Vice Chairs: First Vice Chair Kirk Phillips, President & CEO, Wintrust Asset Finance, Inc., and Second Vice Chair Neal Garnett, Chief Commercial Officer and Executive Board Member, DLL. Jeffry Elliott, CLFP, Founder & CEO of Elevex Capital will serve as Treasurer, and Daryl Muller, ELFA’s Chief Operating Officer and Corporate Secretary, will serve as Secretary. James Cress, Vice President & General Manager, Flex Financial, Stryker, is Immediate Past Chair. Other members of the Board are: Hollis Bufferd, CEO, Star Hill Financial LLC Theresa Dixon, Managing Director, Syndication Manager, Bank of America Global Leasing Katie Emmel, COO, Solifi Jon Gerson, President, Executive Solutions for Leasing and Finance, LLC Randy Haug, Executive Vice President, Vice Chairman & Co-Founder, LTi Technology Solutions Mathew Iacobucci, SVP – Head of Bank Markets, U.S. Bank Christopher Johnson Robert Moskovitz William Perry Moorari Shah, Partner, Sheppard Mullin Richter & Hampton LLC Pasqual Slaughter, Vice President North America, Caterpillar Financial Services Corporation Michelle Speranza, CLFP, SVP, Chief Marketing Officer, LEAF Commercial Capital Inc. Stephen White, Executive Vice President, Stonebriar Commercial Finance

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Q4 Planning: A Pivotal Moment for Margin Growth and Operational Transformation

Sat, 20 Sep 2025 05:00:38 +0000

This is probably one of your most crucial planning opportunities to improve margins, operating profit, and free cash flow as a result of AI adoption, system upgrades, new services offered to present and potential customers, and new business opportunities related to manufacturing and warehouse systems, which include robots that can help reduce costs and improve productivity. There is no doubt that we are in a use-it-or-lose-it situation. Financial and operating department heads will need to study the current situation, review current operating and cash flow results, and identify potential changes and upgrades that benefit both the company and customer needs. Based on the people I talk to, there is no doubt that business practices are improving and changing faster than most management teams expect. Believe me when I suggest that conversion rates are moving faster than you think, which means managers need to review their current operations with the intention of improving operating results in 2026. Investigating potential new systems and preparing budgets to cover conversions are part of the Q4 work expected from each department head. Hopefully, part of this process involves the OEMs in finding suitable systems or means to improve both the company’s and the customer’s needs. OBBBA One area to cover is the benefits and drawbacks associated with income taxes. ABBBA should be reviewed with a tax expert familiar with your industry. I would expect comments and suggestions that cover transactions reported regarding your company and the impact on customer transactions. Management should be aware that specific provisions of the Bill have associated timelines, which could have significant negative consequences if the required dates are missed. I want to request a written memo outlining the steps necessary to maximize the benefits. This memo should be drafted in a format that can be used by customers as well. Believe it or not, state and local tax requirements are changing in response to federal changes. I would suggest finding a state and local expert to provide a memo to your CFO, which both the sales staff and customers can use. This is important and very tough to fix once a transaction is complete. A group of dealers selling similar products may want to spread the cost of preparing the federal tax memo, but also cover the states where members of the group are doing business. Need help with the tax review? Let me know. OPERATING OPTIONS I suspect some of you think I am going nuts based on the recent columns I provided to Dean. I assure you that is not the case. I believe that dealers and OEMs will need to adapt to the changing business environment if they are to remain competitive with their product and service lines. I began with the Performance Gap discussion, which I firmly believe will have a significant impact on any dealer that fails to identify the necessary changes to remain competitive in their market. The conclusion I expect is dealers who invest and take steps to improve operating profits, compared to management teams that do not feel the need to, will find that the vales of their respective companies will development a “spread” to the point where those that choose not to improve will find themselves with a company not as valuable as the dealers that invested in AI, Systems, Marketing Plans and programs that assist customers with making similar changes. The bottom line here is that the sooner the weaker dealer sells, the more they will get. If you need some help discussing this topic, let me know. I also offered a suggestion regarding GAAP accounting versus a more critical metric, such as Free Cash Flow. Note how FCF is now being used more as a measuring tool for public companies. FCF is the cash available after you pay all your bills. It will cover transactions related to both your income statement and balance sheet. What is notable about FCF is its ability to calculate FCF not only for the company but also for individual customers, products, revenue silos, and so on. It would be nice to know what you are making for each customer on your list. Or what product lines are producing the most? Speaking from personal experience, I was working with a company to address its cash flow needs, and as a result, the bank involved requested a 13-week cash flow statement to compare the actual cash flow (or outflow) with the budget provided to the bank—an interesting exercise. FCF will also help you avoid trouble by showing you can pay your bills on time. Next, I went nuts with the potential changes required, such as AI, Tech Systems, and New Revenue Silos related to customer needs, especially related to manufacturing and warehouse systems. And let us not forget our robot crew that will require training and maintenance to keep them up and running. The more I read and listen to various business sources, the more I am convinced that these changes are occurring and happening faster each month. NO DOUBT ABOUT THIS!. More reasons to plan, budget ahead, train ahead, and stay competitive in your territory. I also want to reinforce my earlier comments that lift truck dealers will need to be in the Robot business if they wish to remain competitive. I am preparing a list of both systems and robots to allow dealers to meet with and partner up with system and robot manufacturers. BOTTOM LINE The Bottom Line here is that the dealer business is changing. As a result, operating metrics will also change. I can envision staff reductions, the creation of new revenue silos tailored to customer needs, new partnerships with system and robot manufacturers, and the development of new customer relationships resulting from the implementation and maintenance of customer equipment. The result will be a new set of company metrics to compare your work against. Staff will be reduced. New revenue silos will appear. Gross profits will increase. Turnover will increase. Tech costs will increase. Training costs will increase.

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Steady Hands in Shifting Sands: Maintaining Your Dealership’s Edge

Wed, 20 Aug 2025 05:00:57 +0000

In the September issue, we typically cover the latest developments in finance, rental, and leasing, providing input that dealers can use to modify their systems and procedures, ultimately leading to higher profits and increased cash flow. To accomplish meaningful results, you dig into industry data sources, talk to bankers, and put together comparative data year-to-year, explanations of why results shifted, and if you are lucky, compile estimates about the future 12 months at a minimum. This year, however, it appears that every avenue regarding equipment, interest rates, unit costs, customer requirements, rental activity, technology, new tax bills, and almost everything you look at is in a state of flux, meaning that any short-term analysis is probably going to be tough to work with because assumptions used could change at any time. Let’s start with a brief review of the industry, and then we’ll move on to the more significant changes you will need to address. If you recall, my previous series of articles focused on performance gaps and potential changes a dealer may encounter, which, if left unaddressed, would reduce the value of their investment. However, as I prepared this article, I realized that the five-year timeframe for AI and technology we have been hearing about will soon be upon us, requiring a decision to be made. Short-term decisions require a conservative approach to business planning. Dealers may also want to consider bringing in outsiders to help contemplate their personal technological literacy and access to expertise. This same method should be applied to risk management and prioritizing technology investments. Obtaining input from peer groups and OEMs is also essential. The most significant change will be in the metrics used to compare your statements with those of the standard industry results. For many of you, current metrics will no longer be comparable against your “new “numbers. This was one of the reasons I covered Free Cash Flow in a recent column: to determine how much free cash you have available for growth and technology. This conservative approach will impact both dealers and customers. Consequently, purchases of equipment will be kept to a minimum, with units in use receiving more attention from customers. Interest rates will lead customers to avoid higher-priced units, instead opting for rental or refurbished units that are available for purchase. Taking a conservative approach to the balance sheet is also essential. Clean up the AR, review the parts inventory, and eliminate slow-moving items. The same applies to used units with low time utilization. New unit purchases should be kept to a minimum until we get a better understanding of the market. You may also need capital for new types of inventory. Continue this review with your rental fleets to keep them available when needed. Also consider what units would be refurbished for sale. Squeeze as much capital out of the balance sheet that you can. The income statement line items should also be reviewed to see what can be eliminated and when. After completing these reviews and adjusting, you will have a much better story to take to the bank in support of additional capital needs Now let’s get to the potential change that will change the way you do business and, as a result, change the metrics from what they were to what they are after making both product and technological changes. What is going to change? AI development Technology ROBOTS Believe it or not, you will be in the ROBOT business because manufacturing and warehouse customers are going to demand it. Because China has built the most automated manufacturing empire in human history. Producing products faster and cheaper than anyone thought possible. China installed 276,000 industrial robots in 2023- more than half of all robots deployed worldwide that year. In 2021, more industrial robots were produced than ever before; China also produces 50% of the industrial robots it installs. And now they are starting to build robots themselves. And once they perfect this cycle of robots building better robots, US companies become permanent customers of Chinese factories. US companies are demanding a national robotics strategy. Every single factory or warehouse being built will be more automated than anything the US has ever built. Let’s face it, labor costs make traditional manufacturing uncompetitive. To beat China at this game, we need to out-automate them. Steal the robot jobs from China and use our robots to produce goods and services in the US. What is great about this is that your services and some products are what these manufacturers and distribution companies need to transition to full automation using robots. You sell, rent, maintain, and assist with the construction or rehabilitation process to modify an existing facility. Material Handling dealers should take steps to access robots, technology, and AI expertise to make it available to their customers. At the same time, they should have an arrangement with service providers to refer new customers they encounter. Now you understand, based on the “state of flux” comment I made earlier, as well as my earlier comment about the performance gap. Most dealers will be entering a new business with fewer personnel, lower prices, and fewer inventory units because of the AI/Technology opportunity. I also want to mention that Steve Pierson, CPA, and dealer tax expert, is available if you have questions about the new tax bill. Jim Margner, CPA, is the state and local tax expert who may be impacted by the new tax bill. If enough people are interested, we can set up a podcast to discuss the tax bill in more detail. Please let Dean know if you are interested. His email is dmillius@MHwmag.com. BDO sent me their summary of the tax bill, which I sent to Dean. Let him know if you need a copy. Last comment. Where do you fit into this new business environment? Where does your product fit in going forward? I suspect that there will be a few M&A deals available for dealers who are not willing to make the switch to this new

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Drewry’s World Container Index decreased 3% to $2,350 per 40ft container this week

Thu, 14 Aug 2025 13:58:24 +0000

World Container Index – 14 Aug For many years, World Container Index has been the go-to, independent, global reference for index-linked contracts. If your organisation is considering index-linked contracts or requires regional visibility/coverage beyond the eight trade lanes provided below, contact our ocean freight cost benchmarking team. Drewry’s World Container Index decreased 3% to $2,350 per 40ft container this week. Source: Drewry World Container Index, Drewry Supply Chain Advisors Our detailed assessment for Thursday, 14 Aug 2025 Drewry’s World Container Index (WCI) declined for nine consecutive weeks and continued to stabilise after a volatile period. The unpredictability began after US tariffs were announced in April, which caused rates to surge from May through early June. Subsequently, the market saw a huge decline until mid-July, before the downward trend lost momentum and the rate of decrease slowed considerably. Transpacific spot rates fell this week, as rates on Shanghai–Los Angeles fell 2% ($2,494/feu) and those on Shanghai–New York 5% ($3,638/feu). Since the big rush to ship cargo before the tariff increase is now over, Drewry expects spot rates to be less volatile in the coming week. Drewry’s Container Forecaster expects the supply-demand balance to weaken again in 2H25, which will cause spot rates to contract. The volatility and timing of rate changes will depend on Trump’s future tariffs and on capacity changes related to the introduction of US penalties on Chinese ships, which are uncertain. Spot freight rates by major route Our assessment across eight major East-West trades: Source: Drewry Supply Chain Advisors WCI Methodology Ocean spot market freight rates against 6,700 global port pairs If you need spot market container freight rate information on other routes to those above, find out more about our Container Freight Rate Insight (CFRI) online service, which covers 6,700 global port pairs updated monthly (2,450 updated fortnightly). Container Freight Portal: Request a demonstration

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Fed holds rates steady amid diverging views; Manufacturing outlook remains strong

Wed, 30 Jul 2025 19:50:53 +0000

The Federal Reserve held the federal funds rate steady at a target range of 4.25% to 4.5% for the fifth meeting in a row. For the first time since December 1993, two members of the committee dissented, instead favoring a quarter-point cut to the federal funds rate. In announcing the decision, Fed Chair Jerome Powell said, “The economy is not performing as if overly restrictive monetary policy is holding it back.” “Looking past the oscillations caused by trade, the latest GDP report showed continued spending by consumers on goods and investment in new equipment. Powell acknowledged that the current level of interest rates is not overly restrictive and the outsized demand for manufacturing technology in the first half of 2025 appears to confirm this outlook,” said Christopher Chidzik, principal economist of AMT – The Association For Manufacturing Technology. “Should the economy continue to operate at or near full employment as Powell has asserted in the past two meetings, further investment in manufacturing technology may be required to meet sustained consumer demand.” Although swings in net exports continue to affect the data, recent indicators suggest that the growth of economic activity moderated in the first half of the year. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate. In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities, agency debt, and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Jeffrey R. Schmid. Voting against this action were Michelle W. Bowman and Christopher J. Waller, who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting. Absent and not voting was Adriana D. Kugler.

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Q2 Industrial Manufacturing soars 31% for planned projects over $100M; June planned Industrial Projects hit 141

Sun, 20 Jul 2025 05:00:11 +0000

Industrial SalesLeads has announced the June 2025 results for its new planned capital project spending report, highlighting the continued strong activity in the Industrial Manufacturing sector. According to the firm’s research, 141 new industrial manufacturing projects were tracked in June 2025 alone, reflecting robust activity across North America. In addition, Q2 2025 saw a 31% increase over Q1 in the number of new Industrial Manufacturing facility construction projects valued at over $100 million. The following are selected highlights on new Industrial Manufacturing industry construction news. Industrial Manufacturing – By Project Type Manufacturing/Production Facilities – 129 New Projects Distribution and Industrial Warehouse – 77 New Projects Industrial Manufacturing – By Project Scope/Activity New Construction – 48 New Projects Expansion – 38 New Projects Renovations/Equipment Upgrades – 57 New Projects Plant Closings – 12 New Projects Industrial Manufacturing – By Project Location (Top 10 States) California – 10 Indiana – 10 Texas – 10 Wisconsin – 8 Florida – 7 New York – 7 North Carolina – 7 Massachusetts – 6 Tennessee – 6 Maryland – 5 Largest Planned Project During the month of June, our research team identified 25 new Industrial Manufacturing facility construction projects with an estimated value of $100 million or more. The largest project is owned by Micron Technology, which plans to invest $150 billion in the construction of a manufacturing complex in Clay, NY. Construction is expected to start in late 2025. Top 10 Tracked Industrial Manufacturing Projects UTAH: The semiconductor manufacturer is planning to invest $15 billion in expansion and equipment upgrades at its manufacturing facility in Lehi, UT. They are currently seeking approval for the project. GEORGIA: A pharmaceutical company is considering investing $5 billion in the construction of a processing facility and is currently seeking a site in GEORGIA. Watch SalesLeads for updates. FLORIDA: A gas turbine engine manufacturer. is planning to invest $1 billion in the construction of a 1 million square foot manufacturing facility in Crestview, FL. They are currently seeking approval for the project. Construction will occur in 3 phases, with completion of the first phase slated for late 2026. INDIANA: A battery manufacturer and recycling company are considering investing $1 billion in the construction of a processing facility and are currently seeking a site in Indiana. Watch SalesLeads for updates. FLORIDA: A semiconductor manufacturer is planning to invest $470 million in the construction of a manufacturing and office facility in NEOCITY, FL. They are currently seeking approval for the project. SOUTH CAROLINA: A lumber company is planning to invest $225 million for the construction of a 375,000 square-foot manufacturing facility on Barker Mill Pond Rd. in FAIRFAX, SC. They are currently seeking approval for the project. Construction is expected to start in late 2025, with completion slated for early 2027. INDIANA: An industrial automation equipment manufacturer is planning to invest $180 million in the expansion of its manufacturing, laboratory, and office campus in Franklin, WI. They will consolidate their WI and IL operations upon completion in Summer 2027. KENTUCKY: A global electronics manufacturer is planning to invest $174 million in the construction of a manufacturing facility in LOUISVILLE, KY. They are currently seeking approval for the project. TEXAS: An IT infrastructure equipment manufacturer plans to invest $152 million in renovations and equipment upgrades for a 393,000-square-foot manufacturing and warehouse facility located at 9220 Socorro Road in Socorro, TX. They have recently received approval for the project. MAINE: A medical device manufacturer is planning to invest $134 million in expansion and equipment upgrades at their manufacturing facility in BRUNSWICK, ME. They are currently seeking approval for the project. About Industrial SalesLeads, Inc. Since 1959, Industrial SalesLeads, based in Jacksonville, FL is a leader in delivering industrial capital project intelligence and prospecting services for sales and marketing teams to ensure a predictable and scalable pipeline. Our Industrial Market Intelligence, IMI, identifies timely insights on companies planning significant capital investments such as new construction, expansion, relocation, equipment modernization, and plant closings in industrial facilities. The Outsourced Prospecting Services, an extension to your sales team, is designed to drive growth with qualified meetings and appointments for your internal sales team. Visit us at salesleadsinc.com.

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Account for your most important account balance

Sun, 20 Jul 2025 05:00:08 +0000

Last month, I opened a discussion changing the way a dealer accounts for daily, monthly, and annual financial activity, switching from GAAP accounting to Pre-Tax Profit to a Free Cash Flow model, which reports actual Free Cash Flow available to spend as you see fit. The bottom line here is that GAAP is geared to help report readers understand how a company conducts its business through GAAP Internal Statements. As you know, GAAP accrues transactions, defers expenses and income, and amortizes expenses over an estimated useful life. Most GAAP rules are understandable, which I agree with, but I have to say that the LEASE ACCOUNTING RULES can drive a person nuts. Most business owners I know will tell you they have a tough time explaining how their cash flow changes and what amount is available to invest, reduce debt, or pay other liabilities. An FCF statement will provide better input along these lines to help understand cash flow movement. We will spend more time on this topic and how it may help manage your business. To get started, I created an FCF Template for you to review and gain a better understanding of actual cash flows. The FCF Template has three sections. The internal GAAP Income Statement. The Conversion of the GAAP Income Statement into Operating Cash Flow. Account for Working Capital changes and CapX items paid for. When we finalize the three sections, we have a balance that includes both balance sheet and income statement adjustments, which make up Free Cash Flow. This helps avoid overspending and, at the same time, indicates what you have available to spend without developing a cash flow problem. Information every CEO needs to know. Review the CAPX notes. Most companies will not include long-term note payments in these calculations. Instead, you have an ending figure that indicates what is available to make long-term note payments. Items actually purchased during the year are included in the calculation, as you can see in Section 3. Companies are starting to use this method because FCF is becoming the standard for valuing an M&A target, rather than using EBITDA multiples. The other topic I plan to explore is converting management reports using FCF data instead of GAAP results. It should be fun. About the Columnist: Garry Bartecki is a CPA and MBA with GB Financial Services LLC, and a Wholesaler columnist since August 1993. E-mail editorial@mhwmag.com to contact Garry.

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Sluggish inventory growth signals tighter operations

Fri, 18 Jul 2025 15:55:58 +0000

Business inventories across the U.S. were unchanged in May, according to the Commerce Department’s latest report, marking a second month of flat growth. Economists had anticipated the stagnation, as overall inventory levels remain 1.7% above last year. Retail inventories climbed 0.3%, with motor vehicle inventories up 0.6%. Wholesale inventories declined 0.3%, and manufacturer inventories edged up 0.1%. Business sales fell 0.4%, lifting the inventory-to-sales ratio to 1.39 months—its highest level since April. The first quarter saw heavy pre-tariff stockpiling, adding 2.59 percentage points to GDP. Yet, record import-driven trade deficits more than erased those gains, leading to a 0.5% economic contraction. For material handling professionals, these numbers reflect a market in flux: slower turnover means longer storage times, lower equipment utilization, and pressure on labor efficiency. Operations may need to adapt through leaner inventory strategies and investments in technology to optimize throughput in an uncertain demand environment.

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13% decrease in Consumer Sentiment in June 2025

Wed, 25 Jun 2025 14:11:12 +0000

The WalletHub Economic Index decreased by 13% between June 2024 and June 2025. This means consumers are less confident about their financial outlook this month than they were at the same time last year. The WalletHub Economic Index is based on a monthly survey that evaluates economic prospects based on 10 components of consumer sentiment. These components revolve around how people feel about their finances, purchasing plans, and employment opportunities. “The 13% decrease in consumer sentiment over the past year is a worrying sign that our economic recovery may be stalling, and it demonstrates that people are not optimistic about their financial future. People who have low financial confidence are likely to spend less money, make fewer large purchases, and pay down less debt than people with high confidence. As a result, when consumer sentiment experiences a significant decrease, that is negative for the economy.” Chip Lupo, WalletHub Analyst Main Findings Change in WalletHub Economic Index: June 2025 vs. June 2024 Economic Index Change Likelihood of buying a home in the next six months -22.7% Likelihood of buying a car in the next six months -20.6% Likelihood of making a big purchase in the next six months -12.9% Positive outlook on finances six months from now -7.3% Stress level about money now -6.5% Positive sentiment about current employment opportunities -4.7% Confidence in having a job in six months -3.7% Positive sentiment about credit score in the next six months -1.9% Positive sentiment about debt levels in the next six months -1.5% Positive sentiment about finances now -1.3% Overall WalletHub Economic Index -13.3% Detailed Findings Year-over-year, consumers felt less confident about their financial outlook in June 2025, with the value of the overall index registered being 13% lower than in June 2024. Overall Month Consumer Index Dec-20 2.4367 Jan-21 2.5875 Feb-21 2.6973 Mar-21 2.8747 Apr-21 2.8602 May-21 2.9083 Jun-21 2.8467 Jul-21 2.8809 Aug-21 2.9561 Sep-21 2.7818 Oct-21 2.8905 Nov-21 2.7205 Dec-21 2.7919 Jan-22 2.9204 Feb-22 2.8592 Mar-22 2.7848 Apr-22 2.6812 May-22 2.7833 Jun-22 2.4610 Jul-22 2.7971 Aug-22 2.8198 Sep-22 2.7463 Oct-22 2.7448 Nov-22 2.6210 Dec-22 2.7067 Jan-23 2.5536 Feb-23 2.7050 Mar-23 2.5559 Apr-23 2.5974 May-23 2.8207 Jun-23 2.9142 Jul-23 2.8124 Aug-23 2.6164 Sep-23 2.7196 Oct-23 2.8747 Nov-23 2.8245 Dec-23 3.1176 Jan-24 2.6672 Feb-24 2.9604 Mar-24 2.6705 Apr-24 2.7031 May-24 3.4450 Jun-24 3.0243 Jul-24 2.9285 Aug-24 2.7318 Sep-24 2.8328 Oct-24 2.9703 Nov-24 2.9471 Dec-24 2.9900 Jan-25 2.6064 Feb-25 2.5645 Mar-25 2.4050 Apr-25 2.4889 May-25 2.5228 Jun-25 2.6218 Decreasing financial optimism: In June 2025, consumers’ optimism about their finances recorded a slight increase (+1.6%) from the previous month. On the flip side, the level of optimism decreased by 1.3% over the past year. How do you feel about your finances right now? Month Level of Optimism Dec-20 2.9497 Jan-21 3.0791 Feb-21 3.0472 Mar-21 3.3062 Apr-21 3.1255 May-21 3.0776 Jun-21 3.0613 Jul-21 2.9432 Aug-21 3.2342 Sep-21 3.0000 Oct-21 3.1024 Nov-21 2.9913 Dec-21 3.0455 Jan-22 3.1653 Feb-22 3.0861 Mar-22 3.0513 Apr-22 2.9349 May-22 2.9333 Jun-22 2.7747 Jul-22 3.0080 Aug-22 2.9870 Sep-22 2.9156 Oct-22 2.8744 Nov-22 2.8978 Dec-22 3.0377 Jan-23 2.7324 Feb-23 2.8962 Mar-23 2.7254 Apr-23 2.9643 May-23 2.9484 Jun-23 3.0866 Jul-23 2.9640 Aug-23 2.7975 Sep-23 2.8349 Oct-23 2.9874 Nov-23 2.8900 Dec-23 3.0796 Jan-24 2.7957 Feb-24 2.8565 Mar-24 2.7557 Apr-24 2.7468 May-24 3.1952 Jun-24 2.9745 Jul-24 3.0348 Aug-24 2.9568 Sep-24 3.0134 Oct-24 2.8884 Nov-24 2.9773 Dec-24 3.1100 Jan-25 2.8650 Feb-25 2.9100 Mar-25 2.8069 Apr-25 2.7711 May-25 2.8878 Jun-25 2.9350 Note: The higher the value, the more optimistic people feel about their finances. Decreasing stress: Consumers’ stress levels regarding money are lower (-6.5%) in June 2025 compared to the same period last year. How do you feel about money? Month Stress Level Dec-20 2.4444 Jan-21 2.3439 Feb-21 2.2406 Mar-21 1.9904 Apr-21 2.2941 May-21 2.3147 Jun-21 2.1992 Jul-21 2.3974 Aug-21 2.1599 Sep-21 2.2596 Oct-21 2.3071 Nov-21 2.3537 Dec-21 2.3182 Jan-22 2.1488 Feb-22 2.2582 Mar-22 2.3333 Apr-22 2.4326 May-22 2.3333 Jun-22 2.6087 Jul-22 2.5080 Aug-22 2.3766 Sep-22 2.3867 Oct-22 2.4619 Nov-22 2.4178 Dec-22 2.3302 Jan-23 2.4648 Feb-23 2.5425 Mar-23 2.5410 Apr-23 2.4286 May-23 2.4085 Jun-23 2.3333 Jul-23 2.4279 Aug-23 2.5443 Sep-23 2.4009 Oct-23 2.3655 Nov-23 2.6100 Dec-23 2.3333 Jan-24 2.4609 Feb-24 2.5185 Mar-24 2.6250 Apr-24 2.5759 May-24 2.3905 Jun-24 2.6943 Jul-24 2.3781 Aug-24 2.6173 Sep-24 2.5089 Oct-24 2.4622 Nov-24 2.6136 Dec-24 2.2300 Jan-25 2.5000 Feb-25 2.4000 Mar-25 2.5545 Apr-25 2.6219 May-25 2.4341 Jun-25 2.5200 Note: The lower the value, the less stress people feel about money. Decrease in optimism: In June 2025, consumers’ optimism about whether their finances will improve in the next six months is lower (-7.3%) than it was last year. How will your finances look six months from now? Month Level of Improvement Dec-20 3.0952 Jan-21 3.1818 Feb-21 3.2500 Mar-21 3.3014 Apr-21 3.3020 May-21 3.3233 Jun-21 3.3678 Jul-21 3.3057 Aug-21 3.3086 Sep-21 3.2723 Oct-21 3.3425 Nov-21 3.2358 Dec-21 3.3017 Jan-22 3.3058 Feb-22 3.2951 Mar-22 3.2265 Apr-22 3.1488 May-22 3.2333 Jun-22 2.8933 Jul-22 3.2080 Aug-22 3.2424 Sep-22 3.1022 Oct-22 3.2152 Nov-22 3.2044 Dec-22 3.1698 Jan-23 3.1455 Feb-23 3.2358 Mar-23 3.2090 Apr-23 3.1607 May-23 3.2582 Jun-23 3.2424 Jul-23 3.1802 Aug-23 3.1350 Sep-23 3.2500 Oct-23 3.1218 Nov-23 3.2850 Dec-23 3.5522 Jan-24 3.3304 Feb-24 3.3981 Mar-24 3.3011 Apr-24 3.2468 May-24 3.5810 Jun-24 3.3885 Jul-24 3.2488 Aug-24 3.2160 Sep-24 3.4063 Oct-24 3.0717 Nov-24 3.4318 Dec-24 3.2600 Jan-25 3.2800 Feb-25 3.1050 Mar-25 3.1485 Apr-25 3.0995 May-25 3.0878 Jun-25 3.1400 Note: The higher the value, the greater the improvement people expect in their finances. Less new employment opportunities: The share of consumers who feel new employment opportunities are “abundant” is lower (-4.7%) in June 2025 compared to last year. How would you describe current employment opportunities? Month Job Availability Dec-20 2.4947 Jan-21 2.4901 Feb-21 2.6179 Mar-21 2.5646 Apr-21 2.8078 May-21 2.9009 Jun-21 3.0728 Jul-21 3.0611 Aug-21 3.1450 Sep-21 3.0979 Oct-21 3.1181 Nov-21 3.0961 Dec-21 3.1570 Jan-22 3.1736 Feb-22 3.0943 Mar-22 2.9103 Apr-22 2.9814 May-22 3.1167 Jun-22 2.8300 Jul-22 3.0480 Aug-22 3.0736 Sep-22 3.0533 Oct-22 3.0090 Nov-22 2.8933 Dec-22 2.9528 Jan-23 2.9437 Feb-23 2.9764 Mar-23 2.8607 Apr-23 2.8571 May-23 2.8967 Jun-23 3.1126 Jul-23 3.0045 Aug-23 3.0380 Sep-23 2.8915 Oct-23 2.9454 Nov-23

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GAAP out—Free Cash Flow in

Fri, 20 Jun 2025 05:00:18 +0000

I know I am as guilty as anyone of stating that CASH IS KING. Must have included that statement at least once or twice a year. Then someone added that “cash flow is king,” which is hard to argue with. I am going to take it a step further and state that FREE CASH FLOW means more to your business than either of the other two titles. Those of you who follow the stock market noticed the FCF line item when disclosing operating results for the year. So, what is it and why is it so important? I began conducting my own research after seeing numerous references to FCF and subsequently published a book on Amazon, authored by George Christy, CFA. George explains how to calculate FCF and why the data you receive from FCF is better than the GAAP statements you received from your accounting firm and the internal statements, which mirror the GAAP statements you paid for. You may want to purchase a dozen of these books for your internal financial staff, the sales department, the C suite, and your Board Members. I would even suggest that you instruct your outside accounting firm to present an FCF instead of the GAAP statement they usually send. Informing your banker about this change should be received positively. If not, provide them with a copy of the book as well. Just so you know, EBITDA is not part of this FCF process. Neither is the GAAP Statement of Cash Flows. FCF captures all cash flows in and out of the company, is not distorted by accrual items, and includes changes in working capital and cap-X investments. A formal FCF definition = Revenues MINUS cash expenses PLUS non-revenue cash receipts PLUS or MINUS cash changes in working capital MINUS Cap-X expenditures. If you have prepared cash flow statements for a bank, you are close to preparing an FCF statement. The conversion from your GAAP statement to a cash flow statement is a three-step process. Start with your GAAP Income Statement Convert the Income Statement to Operating Cash Flow. Reflect the Cash Impact of the Working Capital Change and Cap-X. You start with the Operating Income in Step One, make changes to convert to Operating Cash Flow, and reflect the cash impact of Working Capital Change and Cap-x. In the end, you wind up with FREE CASH FLOW. So, what helps management manage the business and, as a result, improve the value of the company? Working with GAAP statements or FREE CASH FLOW. FCF is the correct answer. And when you can convert your internal GAAP statements to an FCF statement, the decision process becomes easier to use and corrective steps easier to make and follow up on. George Christy notes how Warren Buffett made his money by determining the value of a target company by calculating discounted cash flow. I have seen this discounted cash flow calculation many times. Current thinking is that older financial types were brought up using GAAP and will continue to do so. On the other hand, recent accounting graduates and Certified Financial Analysts (CFAs) are switching to a FREE CASH FLOW because every executive out there wants to know their FREE CASH FLOW position, which in turn converts into a company valuation. So, is GAAP out? Perhaps not entirely, but for the ability to stay on top of your company’s value and, at the same time, utilize free cash flow data to manage sales, customer activity, corporate reports, peer group analysis, and M&A activities, GAAP cannot compare to the FCF analysis. I am going to set up a template to use for determining FCF and to guide the use of the report in improving results. Interested in participating, give me a shout …sounds like fun and will be interesting to see how the reports turn out. You can make your request through Dean. His email address is dmillius@MHWmag.com. Also, I am going to ask Dean if we can get us a deal on the book purchase. About the Columnist: Garry Bartecki is a CPA and MBA with GB Financial Services LLC, and a Wholesaler columnist since August 1993. E-mail editorial@mhwmag.com to contact Garry.

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Equipment Leasing & Finance Foundation releases monthly confidence index

Wed, 18 Jun 2025 15:21:31 +0000

The Equipment Leasing & Finance Foundation (the Foundation) releases the June 2025 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. Overall, confidence in the equipment finance market is 58.2, a return to historically more positive levels after dramatic lows in April and May. The index provides a qualitative assessment of both prevailing business conditions and future expectations, as reported by key executives from the $1.3 trillion equipment finance sector. When asked about the outlook for the future, MCI-EFI survey respondent Jim DeFrank, EVP and Chief Operating Officer, Isuzu Finance of America, Inc., said, “As companies are getting a better feel for where tariffs will land, it’s very plausible we’ll see pent-up demand begin to release, backlogged or postponed purchases resurface, and a shift in financing behavior. Leasing in particular could spike, as companies look to preserve cash while still upgrading assets.” June 2025 Survey Results The overall MCI-EFI is 58.2, up from the May index of 44.5. Business conditions – When asked to assess their business conditions over the next four months, 29.6% of the executives responding said they believe business conditions will improve over the next four months, an increase from 4% in May. 59.3% believe business conditions will remain the same over the next four months, up from 52% the previous month. 11.1% believe business conditions will worsen, down from 44% in May. Capex demand – 29.6% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 8% in May. 55.6% believe demand will “remain the same” during the same four-month time period, up from 44% the previous month. 14.8% believe demand will decline, a decrease from 48% in May. Access to capital – 18.5% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 4.2% in May. 81.5% of executives indicate they expect the “same” access to capital to fund business, down from 95.8% the previous month. None expect “less” access to capital, unchanged from May. Employment – When asked, 33.3% of the executives report they expect to hire more employees over the next four months, an increase from 24% in May. 66.7% expect no change in headcount over the next four months, down from 72% last month. None expect to hire fewer employees, down from 4% in May. U.S. economy – None of the leadership evaluates the current U.S. economy as “excellent,” unchanged from May. 96.3% evaluate the economy as “fair,” up from 84% the previous month. 3.7% evaluate it as “poor,” down from 16% in May. Economic outlook – 29.6% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 12% in May. 51.9% indicate they believe the U.S. economy will “stay the same” over the next six months, up from 44% last month. 18.5% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 44% the previous month. Business development spending – In June, 18.5% of respondents indicated they believe their company will increase spending on business development activities during the next six months, down from 32% the previous month. 77.8% believe there will be “no change” in business development spending, an increase from 64% in May. 3.7% believe there will be a decrease in spending, relatively unchanged from last month.

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March 2025 US Cutting Tool Orders total $207.1M, Up 4.3% from February

Thu, 22 May 2025 14:27:58 +0000

Shipments of cutting tools, measured by the Cutting Tool Market Report compiled in a collaboration between AMT – The Association For Manufacturing Technology and the U.S. Cutting Tool Institute (USCTI), totaled $207.1 million in March 2025. Orders increased 4.3% from February 2025 but dropped 4.2% from March 2024. Year-to-date shipments totaled $605.6 million, a drop of 5.9% from the same period in 2024. “Despite the uncertainty from Washington, it was still business as usual for most companies,” said Jack Burley, chairman of AMT’s Cutting Tool Product Group. “However, most tooling manufacturers are either dealing with increased tariffs for products sourced abroad or increased costs for raw materials like tungsten carbide, or both. These increased costs for perishable tools are already getting passed on, resulting in a hit to the operating margins for manufacturers.” Bret Tayne, president of Everede Tool Co., said, “March cutting tool sales improved over February and were at the highest level we have seen since October 2024. Despite the improvement, year-over-year sales remained below 2024 levels for the third consecutive month. Although this data precedes the ‘Liberation Day’ tariff announcements, I’ve anecdotally heard optimism that the current volatility will be short-lived, and modest growth will return in the second half of the year.” The Cutting Tool Market Report is jointly compiled by AMT and USCTI, two trade associations representing the development, production, and distribution of cutting tool technology and products. It provides a monthly statement on U.S. manufacturers’ consumption of the primary consumable in the manufacturing process, the cutting tool. Analysis of cutting tool consumption is a leading indicator of both upturns and downturns in U.S. manufacturing activity, as it is a true measure of actual production levels.

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Tariffs and global trade: The economic impact on business

Tue, 20 May 2025 05:00:45 +0000

The recent wave of tariffs and other trade controls has created radical uncertainty for businesses. Here’s how decision-makers can best position their companies to thrive in the evolving landscape. Since the United States announced reciprocal tariffs on April 2, 2025, financial markets around the world have seen heightened volatility, raising concerns about the impact on the global economy. The combined tariffs enacted by the US government since that date have rapidly raised the country’s weighted-average tariff rate to its highest level in the past 100 years, from approximately 2 percent at the start of 2025 to more than 20 percent as of April 11, 2025. Other governments’ responses have varied, from China imposing 125 percent tariffs on US imports to more than 75 countries offering to negotiate, according to the US administration.1 How these measures will evolve is highly uncertain, particularly given the 90-day pause that the US government has placed on most country-specific tariffs. However, the tariffs’ impact on business cost structures, business and consumer demand, and companies’ relative competitive advantages is bound to be substantial. Business leaders are navigating a multitude of near-term decisions, with some setting up geopolitical nerve centers to coordinate their responses. In this article, we outline three actions that can help businesses make medium- to long-term decisions: analyzing relative positioning, defining strategic posture and actions, and pressure testing decisions in light of current uncertainty. Analyze relative positioning As leaders move beyond immediate tactical responses to consider more enduring shifts to their businesses, they should assess how the new tariffs will affect their competitive advantages and growth prospects: Relative competitive advantage. Tariffs’ impact varies widely by country and sector, and every business has a different geography and product mix, operations footprint, and supply chain. This variance makes it necessary for each organization to assess the new tariffs’ implications for its relative competitive advantage. Most business leaders are already calculating the cost impact on their operations. The next step is to analyze how the tariffs affect competitors’ cost structures and substitute products. This analysis will determine whether a business can sustain its margins—and even accelerate sales—or whether it must retrench. Since some countries have instituted new export controls and other trade restrictions in response to US tariffs, decision-makers should also assess their ability to maintain access to markets and supplies compared with competitors and whether their position might justify expanding production. Demand. Tariff changes are likely to meaningfully affect business, consumer, and government spending, as well as trade flows. Companies should therefore evaluate how macroeconomic conditions may affect demand for their products. They should also assess the elasticity of that demand if evolving tariffs necessitate price increases. Finally, they should consider whether their key end-customer markets align with growing or shrinking trade corridors. Analyzing these two dimensions for each major product–geography combination can help business leaders define a set of actions to protect their businesses’ economics and potentially accelerate growth (exhibit). Companies can assess their position based on tariffs affecting their competitive advantage and customer demand. Company-level tariff impact matrix Define strategic posture and actions Decision-makers should go beyond mitigating the downside of the new trade measures and look for opportunities that the changes may present, as we outlined in a prior article.2 The combinations of actions that companies might consider in response to the recent tariff changes can be grouped into four strategic postures, which will vary based on a company’s specific circumstances: Drive commercial acceleration and invest in growth. Companies in this category have operational footprints and supply chains that give them a competitive advantage. As such, they are positioned to accelerate commercial actions, including optimizing pricing, expanding their sales force or channel presence, and boosting production in existing facilities. They should simultaneously assess investments with longer time horizons, such as new product launches, brand enhancement initiatives, acquisitions, and the development of new production facilities. Capture market share and protect margins. Companies in this category are positioned better than their competitors, but have reduced customer demand. They would benefit from focusing on actions that leverage internal capabilities and eschew major capital investments until demand stabilizes. Measures to consider include adjusting pricing for specific customer segments, implementing loyalty incentives, and expanding sales into channels and customer pools where the company’s position relative to competitors has improved since the new tariffs’ implementation. Invest to reset the cost structure. This strategic posture would apply to companies that find themselves in a diminished competitive position but with steadily increasing customer demand. Assuming that business leaders believe their company’s competitive position remains viable, they might consider cost reductions to improve margins as they continue to benefit from healthy demand. Their immediate actions could include cost reengineering, design-to-value improvements, supplier renegotiations, targeted supplier reconfiguration, price calibration, and, if within reach, investments in product differentiation. In some cases, corporate leaders should also consider exiting unprofitable business lines and simplifying their operational and product portfolios. In the medium term, companies in this group should determine how to improve their overall market position—for example, by making changes to their supply chains and realigning their manufacturing footprint and talent operations. Rationalize and refocus. Companies in this category are in the most vulnerable position because their products are highly exposed to tariffs, and they are experiencing diminished customer demand. Their leaders’ strategic imperative is to reduce that exposure by accelerating cost containment, deferring capital investments in exposed areas, and exploring restructuring options. In some cases, limiting their focus to markets where the company has a margin advantage and defendable market position may be the most pragmatic move. Optimizing both the product–market portfolio and the business portfolio is another important step. Pressure test decisions in light of current uncertainty The strategic postures that companies adopt aren’t static determinations. Business leaders need to analyze a range of potential scenarios, some of which might necessitate different strategic moves. To find the best approach, leaders should ask themselves the following questions: For which products does my positioning remain stable across a range of scenarios? Which sets of actions are common for these products across most scenarios? For major decisions, such

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Think before you buy: The hidden cost of tariffs

Tue, 20 May 2025 05:00:33 +0000

I talked with Jim Margner (my state and local tax expert), who prepared notes for the Illinois Equipment Dealers Association presentation. I attended one of Jim’s prior sessions for this group, and he did a very nice job related to a highly complex topic. Illinois changed the rental equipment use tax collected when rental equipment is purchased to one based on rental billings starting January 1, 2025. The tax is not only based on rental billing but also on rental rates for the city where the equipment is being used. In other words, rental coordinators must have access to a rental rate list by city or town to estimate or prepare a billing invoice. As we discussed the potential problems associated with a rental tax using various rates, I started thinking how tariffs could complicate matters even more. Since rental rates are related to the cost of equipment, one must assume a unit that generates a tariff will have a different rental rate than a similar unit without a tariff. On the other hand, it could be tough to explain to a customer why one unit’s rate is 50-100% higher than that of a similar unit. So, based on this discussion with Jim, I decided to prepare a discussion paper this month to help you understand how tariffs will impact your financial statements and cash flow. After just playing around with this topic for 30 minutes or so, I came up with about 20 questions and a transaction tree to demonstrate options dealers must account for regarding tariffs. And from what I can tell, it will be very easy to mess up your financial and cash flow if tariff purchases are material. ACCOUNTING FOR TARIFF ON EQUIPMENT PURCHASES When a U.S. company purchases equipment from a Chinese vendor with a 50% tariff, the tariff impacts the overall cost of the equipment. The tariff is included in the equipment’s purchase price and capitalized on the Balance Sheet for accounting purposes. This increased capital cost is then depreciated using your standard book depreciation rate. The immediate cash outflow includes the purchase price plus the tariff, representing a significant financial commitment compared to a pre-tariff transaction. IMPACT ON EQUIPMENT RENTAL TRANSACTIONS For equipment rental transactions, the 50% tariff increases the cost basis of the rental equipment, affecting rental pricing. Higher acquisition costs necessitate higher rental rates to maintain profitability on the “tariff” units. Dollar utilization is typically profitable in the 35-40% range. 35% of $100,000 is quite a bit different from a similar unit costing $150,000. And the issues do not stop there. What about financing that $150,000 unit? What would the OLV (Orderly Liquidation Value) be on such a unit? But no matter how you slice it, a dealer must recover cost plus profit or risk damaging financial performance metrics. Do not forget that the interest cost of financing tariff units will be 50% higher than financing a non-tariff unit. Also, consider any cost increases related to parts purchases with a tariff tagged on to them. Another issue that blew me away was the pricing for rent-to-sell units and the potential higher parts costs incurred to maintain the unit before any purchase occurs. Good luck explaining this type of deal. CASH FLOW Additional tariff cost before the unit can be released to the buyer. Additional maintenance costs if parts are subject to tariffs. Higher interest cost for both inventory and rental units. Higher potential sales proceeds from both new and used rental units. Lower department margins if the cost of tariffs is not covered by sales prices that ensure profitability. MY THOUGHTS Avoid tariff purchases. Buy used units to support the rental fleet. Avoid RTS transactions using tariff units. Find ways to recover the tariff tax to avoid a cash crunch. Refurbished customer units instead of selling new tariff units to them. Watch the time between when the tariff is paid and subsequent cash receipts from sales. Adjust budgets and cash flow models as tariff units and transactions increase. Business Owner and department heads: GET A HANDLE ON THIS ASAP OR OUTSOURCE AS NECESSARY. The tariffs will eat into your equity position if you take a wrong turn. About the Columnist: Garry Bartecki is a CPA and MBA with GB Financial Services LLC, and a Wholesaler columnist since August 1993. E-mail editorial@mhwmag.com to contact Garry.

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OnPoint Capital announced name change to NextGen Equipment Finance

Tue, 13 May 2025 13:53:16 +0000

New name reflects broadened financial offerings and corporate development OnPoint Capital has announced that it has completed its company name change to NextGen Equipment Finance, LLC (“NextGen), effective immediately. This change is part of a larger rebranding effort emphasizing the company’s expanding financial offerings to a growing vendor, end user, and financial partner base. The evolution of NextGen’s brand better communicates the organization’s leading strategic position in the market and reflects their commitment to providing innovative solutions to end users, vendors and financial institutions alike. NextGen’s market presence has strengthened significantly as they have expanded their focus on full-asset life cycle management and flexible financial solutions. The transition to the NextGen brand aims to better position the company to meet the growing demands of customers and prospects, with a focus on exceptional customer service as always. “The NextGen name clearly defines our company focus,” said Nate Josic, President of NextGen. “As larger banks continue to take a more conservative stance in the market, NextGen seeks to push beyond the status quo to bring creative solutions to our customers and partners. With the breadth of our services expanding parallel to our partner bases and the markets in which we operate, our company is better positioned to strengthen our industry standing. This is a very exciting time for our company as we continue to position ourselves for accelerated growth in the market.”

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