Excavator Market Values with Mitch Helman of Sandhills Global

Monday, October 19, 2020 | Blackbird TV

Mitch Helman of Sandhills Global discusses market values of excavators and other dirt-moving equipment, and what he’s seeing during the COVID-19 pandemic and beyond.

About this segment of Blackbird TV

Guest: Mitch Helman, Sales Manager, Sandhills Global. To learn more about our guest, visit Sandhills.com, or call 402-458-4506.

Recorded: October 13, 2020

Published: October 19, 2020

Segment transcript

I’d like to introduce Mitch Helman. Mitch is from Sandhills Global, pretty much a behemoth in the publishing industry and they’ve crept their way into the the auction industry. Sandhills does a really really fabulous report every month in different market segments, and I’d like to talk about the excavator market and I’d like to get your opinion on what you see happening in the in the excavator market right now. This is September data, this is live hot off the press from Sandhills. So tell us a little bit in particular, I see some movement in the inventory trending lines—I have the report in front of me—can you talk about that? Excavators as a whole has been an interesting part of the market right now, we’re seeing—when it comes to the auction side of it—we’re seeing a big influx of just excavators in general, retailing and selling through auctions right now. As a whole, is primarily… if you look at inventory trends as a whole, it’s your lower horsepower, it’s coming in big quantities, there was a big production of excavators in around 2012, and when you look across any industry you know you gotta look at those big production years as a whole whether it’s excavators dozers it’s a tractor it’s an over-the-road truck sleeper. Big production years mean big sell-offs at some time down the road and the construction industry as a whole is a little less predictable on when stuff is going to happen because there’s different outside factors that will dictate when people are going to sell off. But when you go back, big production years in 2012, there’s a lot of machines out there and we’re seeing it coming in from the the smaller side, as a whole. There’s a lot of rental fleet out there that is liquidating equipment, a lot of the major big rental companies have dumped some machinery which you’ll see when that happens the inventory trend starts going south and there’s some movement in the market as a whole the big excavators we see in auction have been holding value we got a product called Fleet Evaluator that tracks real-time pricing so we compare things when it sells and big excavators have been strong, very strong, and prices are going up right now, which has been a good thing to see. So that’s great. Let’s take a look at this graph real quick on the inventory trend in the US market, and when we focus in on that end tail, it’s going down. [Mitch: Yep.] So is this just a simple supply and demand where your inventory is going down and your prices are going up? You know [David: or remaining strong?]…yeah typically. Excavators is one of those that’s it’s a little unique because the inventory trend when you look at the overall market it is sliding, when you break it into the different tonnage and the metric tons, excavators have a have a lot of different uses, and one of the things we like to do is break it down into metric tons because then you can get into the different usage. Is used for mining? Is it a mini excavator that’s used more on your home or your landscape jobs? What is that usage of that excavator? And that’s where—as a whole—inventory coming off rental fleets is going in that case they’re not getting into the big heavy-duty dirt moving equipment as much, or mining equipment as much as the smaller contractor lighter duty dirt moving stuff and there’s been a big decrease in inventory as a whole when it comes into that. Yeah, and which weight classes are the hardest to find right now? Which ones have the strongest price support in this COVID section right now, where we stand? Yeah… one thing that with COVID happening, May, June, and this is pretty much across all industries, ag, construction, and truck, you had a production shutoff, so production was shut off. There was a bigger pent-up demand for used equipment because new orders got pushed back so as a whole that’s what was going on with some of this drive that was kind of unpredictable in the market due to COVID, so when we look into a lot of these excavators now, and the different usages, and what’s going on, we’re seeing a lot of the medium to smaller duty excavators, those are getting kind of unleashed and sold out at a rapid pace, but I would say as a whole the ones that are holding their value the most—and that we actually see increasing—would be your bigger dirt moving excavators. And a lot of that was driven by the infrastructure bill. It’ll be interesting come 2021, if we got another one that will support the infrastructure but the roads and highways it’s full steam ahead right now, and we’re starting to see that impact into the equipment business. If it’s helping values, so time will tell what the future holds for us, but for now that’s good to see. David: And the pivot to online auctions has really helped Sandhills’ various auction platforms that are online, I bet you guys have been really busy. Mitch: Yeah, in the auction side, but I would even say the retail side, too! The whole COVID thing has it…our market as a whole lags the car industry as the buyer base a little bit, but this COVID has forced everyone online, and so for us as a whole we’ve been able to benefit from it, just because we live in that retail space with Machinery Trader on the construction side, but we live in the auction space with the Auction Time side and everyone’s seen record traffic online it’s been unbelievable so the more buyers the better results but it’s been an interesting last nine months since this is all kind of transpired. David: to say the least. Mitch, real quick, how does this all distill down to Blackbird Asset Services clients? We work for banks and bankruptcy professionals. If you’re a banker and you’re lending into the construction industry right now, and you look at the excavator market in particular, some banks are giving PMSI money and purchase money on some of these things. Do you have confidence in strong pricing looking into the future right now? Mitch: Yeah, we do. I think what—and i’ll go back to some of this—if we get an infrastructure bill that gets passed next year and it’s going to help this road construction, the construction that has been taking place the last several years as we’re starting to feel that right now in the equipment side and jobs are full bore, and I see the next few years it should stay fairly strong. David: That’s excellent. And a rising tide lifts all ships. So, collateral values you’d say should be pretty stable into the future? Mitch: Yeah. David: that’s great. Mitch: We work with a lot of banks and helping them out move equipment, in your case like with Blackbird, it’s banks getting right on values from the get-go and having a pulse on what’s happening in the market in real time is hugely important. David: That’s why I love your reports. Mitch Helman, Sandhills, thanks for your time this morning. Mitch: David, thank you.