Equipment Rental Model

The model rolls each equipment category forward from opening units. Retirements are calculated as opening units divided by useful life and rounded, so roughly one life-fraction of the fleet reaches end-of-life each year.

• Growth units equal opening units times a growth rate. Purchases equal retirements plus growth, which means the fleet never shrinks: closing units always exceed opening units by growth.
• Average units, the base for revenue, depreciation and maintenance, is the mean of opening and closing. Four categories span tools, recreational gear, event equipment and specialty appliances.

Available rental-days equal average units multiplied by days available per unit, which is 365 less maintenance, transit and downtime. Utilisation is the fraction of those days equipment is actually on hire.

• Each category starts at its own Year-1 utilisation and ramps by a fixed number of percentage points per year toward a shared practical ceiling. Rental-days achieved equal available rental-days times utilisation, and this figure drives revenue.
• Blended utilisation, total rental-days divided by total available days, is the headline operating KPI. The MIN function caps utilisation so no category exceeds its ceiling.

Rental revenue per category equals rental-days achieved times the average daily rate, escalated from Year 1 at a price-escalation rate.

• On top of rental revenue, two ancillary lines are charged as attach rates: a damage-waiver or insurance fee and a delivery and pickup fee.
• Both are percentages of rental revenue, so total revenue is rental revenue grossed up by the two attach rates.
• Fleet costs include straight-line depreciation on average units at acquisition cost divided by useful life, maintenance and repair per unit, and a loss, theft and damage write-off applied to gross fleet value.

Fleet capex is split explicitly into replacement capex, equal to retirements times acquisition cost, and growth capex, equal to growth units times acquisition cost, both escalated at equipment cost inflation. Because useful lives are short, replacement capex alone is large.

• The P&L moves from total revenue through fleet maintenance, fleet losses, yard labour, facilities, transport, marketing and G&A to EBITDA, then depreciation to EBIT, tax and net income. Unlevered free cash flow equals NOPAT plus depreciation less total fleet capex less the change in working capital.
• The DCF sums explicit UFCF present values and a Gordon-growth terminal value to enterprise value, subtracts net debt for equity value, and cross-checks with an exit multiple.

Unlevered free cash flow = NOPAT + depreciation − total fleet capex − the change in working capitalCopy