Riggs Tractor Rolls With Rental Trend

by George Waldon  on Monday, May. 20, 2013 12:00 am  

John Riggs IV, president and CEO of J.A. Riggs Tractor Co.: “Our biggest asset is our rental fleet.” (Photo by Jason Burt)

J.A. Riggs Tractor Co. has ridden out the ups and downs of 85 years of business, built on its foundation as a Caterpillar distributor.

The Little Rock enterprise ranks No. 43 among the largest private companies in the state with 2012 revenue of $197 million. That figure reflects a one-year decline of 10 percent.

The decrease is associated mostly with a slowdown in shale play activity in the Ozarks. The downturn is a blip on the financial radar compared to the real estate meltdown in northwest Arkansas that preceded it.

“Out of our top 10 customers up there in 2008, only one is still in business,” said John Riggs IV, president and chief executive officer.

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Revenue at the company reached a pinnacle of $233.7 million in 2006 and nosedived to $166 million in 2009. A staff that numbered 509 in 2006 was cut to 410 by 2009 through targeted layoffs, early retirements and attrition.

Diversification has positioned the company to financially endure turbulent market conditions that have seen more clients opt to rent equipment instead of buying.

“As they’ve de-leveraged, we’ve had to leverage,” Riggs said. “It’s another way to help our customers be more efficient.”

Back in 1984, the company carried rental inventory of maybe 20 pieces of heavy equipment worth less than $1 million. Today, that number has grown to 597 pieces valued at nearly $79.2 million. Ninety percent is Caterpillar equipment, ranging from attachments to $750,000 dozers.

“Our biggest asset is our rental fleet,” Riggs said. “It’s bigger than our facility here.”

Customers can mitigate their financial risk by renting instead of owning, and for Riggs, there are tax advantages to renting afforded through double declining depreciation.

Repair work in the shop and in the field also adds to the corporate cash flow.

 

 

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