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CIT GROUP INC. (CIT)

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CIT Group Inc. : CIT Equipment Financing Study Finds Demand for Capital Goods

06/27/2012 | 08:35am US/Eastern
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  • 82% of Executives Have Made at Least One Capital Goods Acquisition of Significant Value in the Past Year
  • 78% Intend to Acquire Capital Goods Within the Next 6 to 18 Months
  • 62% Say Vendor Financing Plays an Important Role in Their Lease Vs. Buy Decisions

Despite continued economic uncertainty, more than four out of five (82%) middle market executives have made at least one capital goods acquisition of significant value in the past year, and more than three-quarters (78%) say they plan to make one capital goods acquisition of significant value within the next six to 18 months.

Vince Belcastro, Managing Director and head of CIT Capital Equipment Finance (Photo: Business Wire)

Vince Belcastro, Managing Director and head of CIT Capital Equipment Finance (Photo: Business Wire)

These are some of the findings in the research study, U.S. Capital Goods and Equipment Financing Outlook: A Focus on Essential Acquisitions, (cit.com/equipmentfinancingstudy) released by CIT Group Inc. (NYSE: CIT) cit.com, a leading provider of financing to small businesses and middle market companies and Forbes Insights. This study is the latest research report from the CIT Outlook Series of exclusive industry studies focused on the perspectives of C-suite middle market executives.

The study gathered the views of 279 middle market executives on their capital goods decision making process and their outlook for equipment financing.

"Our study found that, despite general economic uncertainties, more than a third of executives reported their business need was simply too strong to delay their equipment purchase," said Ron Arrington, Global President of CIT Vendor Finance. "Executives also indicated that customer demand made such investments mandatory, or pointed to emerging opportunities that required new equipment. And as they seek to acquire new equipment, nearly two-thirds said the availability of vendor financing plays an important role in their decision making process."

Vince Belcastro, Managing Director and head of CIT Capital Equipment Finance, said, "Executives overwhelmingly indicated their intent to acquire capital goods over the next six to 18 months. For buyers, this could present an opportunity to negotiate a good deal on assets that can go a long way toward improving efficiency or perhaps growing top-line revenues."

Key Findings from the Report:

  • WHEN MAKING A PURCHASE, CASH IS KING: As executives consider the purchase of capital goods, 54% indicate they would use cash; 45% cited bank credit lines; 32% said balance sheet financing; and 27% would use asset-based financing. In providing a reason for making a purchase now, rather than delay it, more than a third of executives (37%) said that the business need was simply too strong, 31% indicated that business opportunities required new equipment, and 30% reported that customer demand made such investments mandatory.
  • SEVERAL FACTORS IMPACT LEASE-VERSUS-BUY DECISIONS: When it comes to lease versus buy decisions, executives typically consider a range of factors, including the expected impact on cash flow (74%), the cost of capital (65%), the return on the capital (60%), depreciation (57%), maintenance (57%), and taxes (53%).
  • AVAILABILITY OF VENDOR FINANCING KEY: Whether in the form of a lease or a loan, nearly two-thirds of executives (62%) said the availability of vendor financing plays either an important (37%) or a very important (25%) role when deciding to acquire capital goods. Additionally, more than three out of five executives (64%) say they have chosen one or more vendors based on their ability to provide financing and 47% have ruled out one or more vendors based on their inability to offer financing.
  • A FOCUS ON EFFICIENCY GAINS: While many companies remain focused on cutting costs, some are getting leaner by buying new capital goods that deliver efficiency gains. For 31% of those who made an acquisition in the past year report that the capital good delivered efficiency gains.

Individuals interested in receiving corporate news releases can register at cit.com/newsalerts or subscribe to the RSS feed at cit.com/rssfeed.

EDITOR'S NOTE: Complimentary copies of the study are available at cit.com/equipmentfinancingstudy. In addition, individuals can view and listen to executive interviews from CIT's award-winning CIT Executive Insights Video and Podcast Series at cit.com/executiveinsights.

About the Report

The insights and commentary found in this report are derived from both a survey instrument and personal interviews. The survey was completed by 279 executives from middle market companies with annual revenue between $10 million and $1 billion. Industries represented include industrial/manufacturing (19%); communications (16%); technology (15%); office equipment (15%); logistics and trucking (12%); energy, mining and construction (12%); and healthcare (11%).

About Forbes Insights

Forbes Insights is the strategic research practice of Forbes Media, publisher of Forbes magazine and Forbes.com, whose combined media properties reach nearly 50 million business decision makers worldwide on a monthly basis. Taking advantage of a proprietary database of senior-level executives in the Forbes community, Forbes Insights' research covers a wide range of vital business issues, including talent management, corporate social responsibility, financial benchmarking, risk and regulation, and doing business in emerging markets. forbes.com/insights

About CIT Vendor Finance

CIT Vendor Finance is a leader in developing business solutions for small businesses and middle market companies for the acquisition of equipment and value-added services. It creates tailored equipment financing and leasing programs for manufacturers, distributors, and product resellers across industries that are designed to help them increase sales. Through these programs, it provides equipment financing and value-added services, from invoicing to asset disposition, to meet its customers' needs. cit.com/vendorfinance

CIT Capital Equipment Finance

CIT Capital Equipment Finance is a leading provider of equipment financing solutions for middle market companies in a wide range of industries. Its experienced sales and underwriting professionals work with companies to structure transactions that consider unique requirements and industry characteristics. CIT designs specific solutions that take into consideration business cycles, seasonal needs, specialized equipment requirements, and other factors to provide sophisticated solutions that add value to its customers' businesses. cit.com/equipmentfinance

About CIT

Founded in 1908, CIT (NYSE: CIT) is a bank holding company with more than $34 billion in financing and leasing assets. A member of the Fortune 500, it provides financing and leasing capital to its more than one million small business and middle market clients and their customers across more than 30 industries. CIT maintains leadership positions in small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and global vendor finance. CIT also operates CIT Bank (Member FDIC), BankOnCIT.com, its primary bank subsidiary, which offers a suite of online savings options designed to help customers achieve a range of financial goals. cit.com

Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50324172&lang=en

CIT MEDIA RELATIONS:
C. Curtis Ritter, 973-740-5390
Director of Corporate Communications
Curt.Ritter@cit.com
or
Matt Klein, 973-597-2020
Vice President, Media Relations
Matt.Klein@cit.com
or
CIT INVESTOR RELATIONS:
Ken Brause, 212-771-9650
Executive Vice President
Ken.Brause@cit.com
or
Barbara Callahan, 973-740-5058
Senior Vice President
Barbara.Callahan@cit.com
or
FORBES INSIGHTS:
Debbie Weathers, 212-366-8848
Senior Director of Communications
dweathers@forbes.com


© Business Wire 2012
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