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Exclusive Interview with Stanley Elliott, a Vice President in the Diversified Industrials Sector with Stifel, Nicolaus & Co., Inc.: Lease Vs. Buy for Construction Equipment Vendors

67 WALL STREET, New York - May 6, 2014 - The Wall Street Transcript has just published its Building Materials, Residential Construction and Housing Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Construction Equipment Replacement Trends - Growth in Equipment Leasing Adoption Rates - Infrastructure Build in Emerging Markets - Energy Infrastructure Companies - Infrastructure Spending - Production Rates in Capital Goods - Opportunities in Domestic Shale Infrastructure - Increased Rental Demand

Companies include: Martin Marietta Materials Inc. (MLM), Vulcan Materials Company (VMC), United Rentals, Inc. (URI), Terex Corp. (TEX), Oshkosh Corporation (OSK), Manitowoc Co. Inc. (MTW), Caterpillar Inc. (CAT)

In the following excerpt from the Building Materials, Residential Construction and Housing Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Are the machinery and the diversified industrial names tied closely to the ups and downs in the overall macroeconomy? Is that a primary driver of their success or lack of success?

Mr. Elliott: I think a large part of the success of these companies is driven by what is going on across the broader economy, but there are other parts to the story as well. For example, you have seen replacement demand improving and you have seen a lot of capital invested from companies like United Rentals (URI) in the rental channel. The rental channel has been a big user and a big buyer of equipment recently.

TWST: Explain the phenomena with rental a little bit. Is that sector growing because it is a substitute for purchasing new while still allowing companies to have the equipment they need?

Mr. Elliott: Increased rental demand could be a deferral of buying new equipment; it also could be representative of an underlying secular shift toward the rental channel. I think to some extent you are seeing a shift toward the rental channel. Years ago we weren't really talking about the rental channel, and now some industry experts say the rental channel is 50%-plus penetrated into a number of these end markets. I think many contractors enjoy the flexibility that renting offers.

Overall, you get the feel that there is a recovery underway, and if you look at industry surveys, most of the contractors are as optimistic as they've been in quite some time. There seems to be momentum and optimism building, but that being said, business conditions are not robust either. It's what you would expect from a slow, steady type recovery. The rental channel gives contractors flexibility, and should the economy falter again, they are not straddled with the five- to seven-year payment on equipment that they are not using. A lot of it boils down to what is the utilization and how confident you are in the outlook.

TWST: Then so we got the rental versus the buying, but what about subsectors, are you seeing, for example, certain types of machinery doing better right now?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.