Monthly Confidence Index - Equipment Finance Industry (MCI-EFI)
June 2010
June 2010 Survey Results:
The overall MCI-EFI is 65, a decrease from May 2010.
- When asked to assess if their current business conditions would remain the same over the next four months, 53.5% of executives responding said they believe business conditions will improve over the next four months, a drop from 56% in May. 4.8% believe conditions will get worse, and 46.5% believe business conditions will remain the same over the next four months.
- 41.9% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 53.7% in May, while 55.8% believe demand will "remain the same" during the same four month time period.
- 58% of the survey respondents indicate they expect the "same" access to capital to fund business, up from 51.2% in May. 39.5% of executives expect more access to capital to fund equipment acquisitions over the next four months, down from 46.3% in May.
- When asked, 30% of the executives reported they expect to hire more employees over the next four months, down significantly from 37.7 % in May, and 62.8% expect no change in headcount over the next four months, compared to 56 % from May 2010.
- 100% of the leadership still evaluates the current U.S. economy as "poor" or "fair." In June, 67.4% rated the economy as "fair" and 32.6% rated the economy as "poor".
- 41.9% of survey respondents believe the U.S. economic conditions will get "better" over the next six months, down from the May responses of 51.2%. 53.5% of survey respondents indicate they believe the US economy will "stay the same" over the next six months.
- In June, 34.9% compared to 39% of respondents in May, believe their company will increase spending on business development activities during the next six months. 62.8% believe there will be "no change" in business development spending.
June 2010 Survey Comments from Industry Executive Leadership:
Depending on the market segment they represent, executives have differing, but improving points of view on the current and future outlook for the industry.
-
Captive Middle Market:
"The industry seems to have stabilized yet most lessors have fewer origination opportunities." Robert Stowers, Altec Capital Services -
Bank Middle Market:
"Global market volatility and pace/direction of economic recovery in the U.S. will continue to inhibit/drive capital expenditure decisions for all customer segments. Growing pent-up demand and need for replacement/additions to existing plant and equipment will have a significant and positive impact for the equipment finance industry, with the key unknown of when the process will commence." Russell Nelson, Farm Credit Leasing Services Corporation -
Independent Middle Market:
"Funding still very tight - available money very expensive - bar keeps getting raised on credit quality." George Booth, Black Rock Capital, LLC -
Independent, Small Ticket:
"The future of the industry overall is on solid ground at this point. The larger players have come back into selected markets - liquidity has most certainly returned in a strong way for the better credits. It has been good to see the establishment of vendor programs that are not as one-sided as they have been in the past." Valerie Jester, Brandywine Capital Associates, Inc.
Survey Respondent Demographics:
Market Segment:
- Bank: 43.9%
- Captive: 19.5%
- Financial Services: 4.9%
- Independent: 29.3%
- Other: 2.4%
Market Segments Based on Transaction Size of New Business Volume
- Large-Ticket (New Business Volume Avg. Transaction Size Over $5 Million): 7.3%
- Middle-Ticket (New Business Volume Avg. Transaction Size of $250,000 - $5 Million): 56.1%
- Small-Ticket (New Business Volume Avg. Transaction Size of $25,000 - $249,999): 31.7%
- Micro-Ticket (New Business Volume Avg. Transaction Less Than $25,000): 4.9%
Organization Size (Based on Annual New Business Volume for Fiscal Year 2009):
- Under $50 Million: 12.2%
- $50 Million - $250 Million: 24..4%
- $250 Million - $1 Billion: 26.8%
- Over $1 Billion: 36.6%
