Heavy-Equipment Rental & Leasing — A Histometrics Industry Primer

NAICS 2022 code 532412 — Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing (United States)

NAICS = North American Industry Classification System, the U.S. government's standard code for industries. Figures carry a numbered marker keyed to the Sources list at the end. Where a federal figure is genuinely unavailable it is flagged, not invented.

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1. Overview

When a contractor needs a bulldozer, an excavator, a crane, or a drill rig for a few weeks, they increasingly do not buy it — they rent it. The businesses that own those machines and rent them out, without supplying an operator, are what NAICS code 532412 counts. This is the "heavy iron" end of the equipment-rental economy.

A word of warning that shapes this entire primer. Code 532412 lives inside the Census Bureau's Sector 53, "Real Estate and Rental and Leasing." Because of that shared filing cabinet, it is easy to assume the industry works like real estate — collecting rent on property, structured as a REIT (real estate investment trust: a company that owns income property, pays little corporate tax, and must distribute ~90% of its taxable income to shareholders). It does not. There is no property, no occupancy, no NOI (net operating income), no cap rate (capitalization rate — a property's income divided by its price), and no FFO/AFFO (funds from operations / adjusted funds from operations — the cash-earnings measures REIT investors use instead of net income). The large operators here are ordinary C-corporations — taxed on their profits like any industrial company — and are valued on cash earnings and return on capital, not on FFO or price-to-NAV (net asset value). Both independent research reports underlying this primer make the same point emphatically; wherever the real-estate template and this industry diverge, we follow the industry.[1]

Why an investor cares. It is a large, capital-heavy, cyclical business riding a genuine long-term tailwind: contractors keep shifting from owning equipment to renting it. That gives the best operators a growth engine that works even when construction is flat — while making the whole group highly sensitive to the construction cycle and to interest rates.

Ways in. Public-market investors can buy a handful of large listed rental companies (United Rentals, Sunbelt, Herc, EquipmentShare, and the modular-space adjacency WillScot). Private investors can own a local rental yard or a specialty fleet, back a private-equity roll-up, or — the one clean real-estate angle — own the rental-branch property on a long lease to an operator.

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2. What it is, and what it isn't

Scope. 532412 covers establishments primarily engaged in renting or leasing heavy machinery without an operator for construction, mining, or forestry: bulldozers, excavators, loaders, graders, compactors, cranes (without operator), well-drilling and oilfield rigs, and logging equipment.[1]

The defining boundary is "without operators." Rent the same crane with a certified operator and the activity leaves 532412 and is reclassified as a construction or support service. This is the single most important classification rule, and it means the federal code deliberately excludes a lot of "equipment-plus-labor" work.[1]

Adjacent codes explicitly excluded from 532412:

The last row matters commercially: dealer rental desks (e.g., a Caterpillar or Deere dealer that also rents) may be classified under wholesale, and the big public renters carry general tools, aerial work platforms, and power equipment that straddle several codes at once. So no single company's revenue maps cleanly to 532412 — a caveat that recurs below.[1]

Ownership mix. The industry is a barbell: a few large, mostly-public national platforms on one end, and thousands of regional independents, family-owned yards, OEM-dealer rental arms, and specialty fleets (cranes, pumps, power/HVAC, trench safety) on the other. The American Rental Association (ARA), the industry's trade body, counts roughly 5,800 members, the vast majority of them independent, often family-owned businesses.[10] Private equity is an active consolidator of that long tail.

Where does WillScot fit? WillScot rents modular offices, classrooms, and portable storage — a recurring-fleet, utilization-and-resale business that behaves like equipment rental, but its assets are boxes and buildings, not bulldozers. Treat it as an adjacent comparable, not a pure play.[17]

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3. How big it is

There are two honest ways to size this industry, and they differ by roughly a factor of two — so both are given.

The narrow, code-precise federal measure (532412 only)

These are our authoritative ingested federal statistics:

The $36.4 billion 2022 receipts figure is worth flagging: both deep-research reports could not retrieve it and left it as a gap; our ingested Economic Census data fills it. It is up from roughly $24.5 billion in the 2017 Economic Census — a ~49% jump reflecting the post-pandemic rental boom and sharp equipment-price inflation.[3] Note that firms (2,592) are far fewer than establishments (5,495), because the multi-branch national chains each run dozens or hundreds of yards.

The broad, economically meaningful measure (the whole rental market)

The public companies operate across the entire construction-and-industrial equipment rental market, which the ARA — the industry-standard estimator — sizes far larger because it includes general tools and spans multiple NAICS codes:

• ~$78 billion of U.S. rental revenue in 2024, forecast to reach ~$83.5 billion in 2026 (+3.6%), with continued low-to-mid single-digit growth projected into 2027–2028.[5]
• ARA members owned roughly $213 billion of equipment at original cost in 2024 — the industry's "asset stock."[10]

The undercount caveat — read this before trusting any single number

Census business statistics understate this industry's true footprint, for reasons specific to how rental is coded:

1. Employer-only counts. CBP and the Economic Census count employer establishments; sole-proprietor and non-employer yards fall outside them.
2. Code leakage. Dealer rental desks (Cat, Deere) may be booked under wholesale; general-tool and consumer rental sit in other 532 codes; equipment-plus-operator work is reclassified out entirely. Much real rental activity is scattered across neighboring codes.
3. Straddling. The big renters' fleets cross several codes, so their reported revenue is not the same universe as the narrow 532412 receipts.

The gap between the $36.4 billion narrow federal figure and the ~$78 billion broad ARA market is largely those excluded categories. Read the $36.4 billion as "the tightly-defined heavy-iron core," not as the whole rental economy.

(Unlike residential real estate — where small individual landlords own most units and escape business statistics entirely — the undercount here is driven more by code-boundary leakage than by pass-through ownership, but the direction is the same: the federal narrow figure is a floor.)

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4. The investable universe

There are only a handful of listed pure plays; below them sits a deep private field. Figures are the most recent full-year company disclosures (fiscal 2025, or FY ending April 2026 for Sunbelt). Market capitalizations are not carried in the source research and are not shown rather than guessed; the columns below are all drawn from company filings. "Fleet OEC" = fleet at Original Equipment Cost, the industry's asset-size yardstick.

*Yields are approximate, as of mid-July 2026, and move with share price and board decisions.[6][7][8]

Reading the table. These are not income stocks — yields are token (URI's is under 1%). The return case is earnings growth, consolidation, buybacks, and rising fleet value. URI alone returned $1.4 billion to shareholders in a recent year, but mostly through buybacks, not dividends.[6]

Major private and institutional owners. Below the listed names: large private/specialty operators such as Sunstate Equipment, BrandSafway, Maxim Crane Works, Bigge Crane and Rigging, and Aggreko's North American power/HVAC fleet; OEM-dealer rental networks (Caterpillar, Deere, Komatsu); private-equity roll-ups; and thousands of independent yards.[13] The equity of the public names, meanwhile, is overwhelmingly held by index funds and institutions — so the industry is operationally fragmented but its public float is institutionally owned.

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5. How the money works

Because this is a rental business, the economics are fleet economics, not property economics. Five levers matter.

1. The core equation. Rental revenue ≈ average fleet OEC × dollar utilization. You buy machines, keep as many as possible earning at good rates, then sell them and buy replacements.

2. The two utilizations.

• Time utilization — the share of the fleet physically out on rent. Higher is usually better, but 100% is not the goal: some idle time is needed for maintenance, transport, and having the right machine available when a customer calls.
• Dollar utilization — annual "pure" rental revenue ÷ average fleet OEC. This is the single best efficiency yardstick because it blends rate and time together. Reported figures are not comparable across companies (definitions differ): Sunbelt reported ~55% recently, Herc ~38.5% after absorbing H&E — a spread that reflects mix and accounting, not simple superiority.[7][8][11] Roughly, ~40% dollar utilization means a machine earns back its cost in about 2.5 years of rent while remaining a saleable asset.

3. Residual (resale) value — the recovery engine. Rental machines are depreciating hard assets with a liquid second-hand market. Operators run a machine ~5–8 years, then sell it, recovering a meaningful residual (URI assumes a ~12% weighted-average salvage value, depreciating over 2–20 years).[14] This makes used-equipment prices a critical earnings variable: when auction values are high, renters sell fleet at a gain and returns look great; when values fall, disposal gains shrink and salvage assumptions can prove too rosy. Used heavy-equipment values fell roughly 9% in 2024, stabilized in early 2025, then softened again into late 2025 — a genuine watch item.[12]

4. Capital intensity and cash flow. This is the opposite of asset-light. URI spent about $4.1 billion buying rental equipment in 2025 (against ~$1.4 billion of used-fleet sale proceeds).[14] The redeeming feature: capex is discretionary. When demand slows, renters simply stop buying and let the fleet age — and free cash flow surges precisely when growth stalls. That counter-cyclical cash generation is why the best operators survive downturns. Margins are high for an industrial — adjusted EBITDA (earnings before interest, tax, depreciation and amortization) margins run in the mid-40s percent — but EBITDA flatters the picture because it adds back depreciation the business must keep spending to replace fleet. Judge these companies on free cash flow and return on invested capital (ROIC), not EBITDA alone.[14]

5. Rental-vs-ownership penetration — the secular story. The structural thesis is penetration: the share of on-site equipment that is rented rather than owned. ARA puts U.S. construction-equipment penetration at roughly 57–60% and at or near a record, up several years running.[10][5] Every point of penetration shifts spending from ownership to rental independent of construction volume — a growth vector layered on top of the construction cycle. Contractors rent to avoid tying up capital, dodge maintenance and residual-value risk, flex capacity by project, and access newer, emissions-compliant machines.

The one real real-estate angle. The rental branches themselves — freestanding equipment yards — are emerging as a net-lease property class: an investor can own the yard and lease it back to the operator on a long triple-net lease, earning property rent with no fleet or residual-value risk. That is the cleanest bridge to a traditional landlord/REIT strategy.[16]

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6. What drives demand

• Non-residential and infrastructure construction — the primary base. Rental revenue swings more than construction spending (high "beta"). URI's mix is illustrative: roughly 48% industrial/other, 48% commercial construction, only ~4% residential — this is not a housing play.[14]
• Megaprojects — data centers, semiconductor fabs (aided by the CHIPS Act — the 2022 federal law subsidizing U.S. chip manufacturing), battery plants, and reshored factories. Data-center construction was running ~$47 billion in early 2026, up ~31% year-over-year, offsetting softer conventional nonresidential work.[18]
• Federal infrastructure — the IIJA (Infrastructure Investment and Jobs Act, the 2021 federal infrastructure package) is in peak spending phase.[5]
• Rental penetration — the secular ownership-to-rental shift (Section 5).[10]
• Emissions rules — tighter engine standards push contractors to rent newer, compliant machines rather than own aging fleet.
• Maintenance, storm response, and industrial turnarounds — non-discretionary demand that partly offsets new-build cyclicality.[14]

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7. Regulation

Lightly rent-regulated, but several regimes bite:

• Taxation — C-corp, not REIT. No ~90%-distribution rule, no pass-through treatment; profits are taxed at the corporate level. Federal 100% bonus depreciation (for qualifying equipment placed in service after January 19, 2025) is a meaningful after-tax tailwind for fleet buyers — though it accelerates deductions, it does not reduce the real cash cost of replacing machines.[21]
• Emissions. EPA (Environmental Protection Agency) nonroad-diesel rules, culminating in Tier 4 standards, add cost and drive fleet replacement; state/city low-emission zones can be stricter.[19]
• Safety. OSHA (Occupational Safety and Health Administration) governs crane-operator certification and equipment operation; note that supplying an operator would reclassify the activity out of 532412.[20]
• Transport. DOT/FMCSA (Department of Transportation / Federal Motor Carrier Safety Administration) rules on oversize loads, permits, and securement make delivery density a competitive advantage.
• State/local taxes — sales, use, gross-receipts, and personal-property taxes on rentals, varying widely by jurisdiction.
• Antitrust. HSR (Hart-Scott-Rodino) merger review applies to the industry's active consolidation — the H&E acquisition cleared review before closing.[8]
• Small-business definition. The SBA (Small Business Administration) size standard for 532412 is $40 million in average annual receipts, for federal-contracting purposes.[4]

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8. Competitive dynamics and consolidation

How concentrated is it, really? Two data points look contradictory and both are true — they measure different universes:

• On the narrow federal 532412 code, concentration is meaningful: the top 4 firms hold 40.3% of receipts, the top 8 hold 46.3%, the top 20 hold 57.1%, and the top 50 hold 66.5% (2022 Economic Census; the HHI concentration index is suppressed).[3]
• On the broad ARA market (which adds the huge general-tool long tail), United Rentals estimates only ~15% share, and the three largest operators together roughly 30%.[14][17]

The reconciliation: within the tightly-defined heavy-iron code the leaders loom large, but across the whole rental economy — thousands of yards, general tools, dealer desks — the majority of the market still sits with regional, specialty, dealer, and independent fleets. Industry rankings tell the same story: the 2025 RER 100 listed $46.2 billion of member rental volume, of which the five biggest firms accounted for roughly $31 billion.[13]

Scale advantages are real: cheaper equipment purchasing, fleet-sharing across a dense branch network, national-account contracts, telematics/data, and organized used-equipment remarketing. Local advantages persist too — because heavy machines are costly to transport, a small operator with deep local relationships and niche inventory can dominate a metro or a specialty.

Consolidation is the defining trend. The signature event: Herc outbid United Rentals for H&E Equipment Services in 2025, closing the ~$4.8 billion deal in June 2025 and lifting Herc's fleet toward ~$9.5 billion OEC — but also its leverage.[8] The majors grow by serially acquiring independents and converting fragmented share into scale share; Sunbelt's move of its primary listing from London to New York in March 2026 is part of the same tilt toward U.S. scale.[7] Specialty categories (power/HVAC, pumps, trench safety, matting) are the margin frontier all three chase.

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9. Risks

• Cyclicality and operating leverage — the master risk. Depreciation, branch costs, labor, and interest do not fall as fast as revenue when construction slows. A modest drop in rates and utilization can compress profit and cash flow sharply; rental revenue can swing 30–40% peak-to-trough in a severe downturn.
• Residual-value risk — the fleet-specific risk. Weak used-equipment markets (values softened again into late 2025) shrink disposal gains and can force write-downs, hitting the whole "rent-then-sell" model. In a downturn this bites twice: operators discount rental rates and dump excess fleet into a falling used market at the same time.[12]
• Fleet oversupply. In up-cycles the industry collectively over-orders; when demand rolls over, excess fleet crushes both utilization and rates industry-wide.
• Interest-rate sensitivity — but not the real-estate mechanism. There is no cap-rate-to-NAV channel here. Higher rates hit through (a) demand — they delay construction and industrial projects — and (b) cost of capital — these are leveraged, capex-heavy balance sheets, so financing gets dearer and equity multiples compress. (Higher rates can also push contractors to rent rather than buy, a partial offset.)
• Leverage and integration. Debt-funded fleet and M&A raise refinancing risk; Herc's post-H&E net leverage (~3.95×) sits well above URI (~1.9×) and Sunbelt (~1.6×), making its deleveraging and integration execution central to its story.[8][14][7]
• Equipment inflation and tariffs. Rising machine prices can support rental rates and used values, but they lift replacement capex and can make OEC growth look stronger than real fleet growth — if rates lag, returns on new fleet fall.
• Concentration in megaprojects. Data-center and semiconductor capex is now a key growth engine; a pullback there would remove a major support.[18]
• Theft, fraud, and damage. Heavy equipment is portable, valuable, and hard to recover — a real operating risk, especially for smaller yards without telematics controls.

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10. How to invest, and the outlook

Public-market routes

The clean listed exposures are URI and SUNB (scale, resilient balance sheets, strongest free cash flow), HRI (a more leveraged consolidation/integration bet with more upside and downside), and EQPT (higher-growth, telematics-led, part-asset-light). WSC is the adjacent modular-rental play. Value these on EV/EBITDA, price-to-free-cash-flow, ROIC, net-debt/EBITDA, and EV/fleet-OEC — not FFO, AFFO, cap rates, or price-to-NAV, which do not apply to operating companies. Because these are high-beta to the construction cycle, entry point in the cycle matters more than for a REIT.

Private routes

• Own a rental yard or specialty fleet — buy machines and rent them locally; returns hinge on realistic on-rent days (not theoretical availability), disciplined disposal, and control of transport, maintenance, and financing costs.
• Private-equity roll-ups — the private mirror of the public consolidation.
• Managed-fleet / sale-leaseback structures — own the iron while an operator handles dispatch and customers (EquipmentShare's "OWN" program institutionalizes this).[9]
• The landlord angle — own the net-lease rental-yard real estate, the one route that gives property-style income without fleet or residual risk.[16]

A private buyer must underwrite from the asset up — purchase price, realistic utilization, maintenance, insurance, transport, debt, resale, and downside scenarios — not from a simple revenue-over-OEC yield.

Outlook

The near-term picture is modest growth on top of a solid secular tailwind. ARA projects the broad U.S. rental market at ~$83.5 billion in 2026 (+3.6%), decelerating from the 2022–2024 boom but still positive, with megaprojects strong and conventional construction soft.[5] Penetration at a record ~57–60% and still rising, plus infrastructure spending and the data-center/CHIPS build-out, support multi-year demand.[10][18] Consolidation continues.

The swing factors to watch: the interest-rate path (demand and financing cost), used-equipment values (softening into late 2025), and whether the megaproject pipeline holds. A construction downturn is the dominant downside — but the offset, unique to this model, is that free cash flow rises when capex is cut, so even the down-leg is cash-generative.

Bottom line. NAICS 532412 is a cyclical, capital-intensive, consolidating industrial rental business with a real secular penetration tailwind — high-quality compounders for investors who can stomach construction-cycle volatility, and a fragmented operating opportunity (plus a genuine net-lease real-estate angle) for private capital. Despite its home in the "Real Estate and Rental and Leasing" sector, it is not a REIT or a real-estate income play.

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Sources

1. U.S. Census Bureau, 2022 North American Industry Classification System (NAICS) Manual — definition and cross-references for 532412 (238910, 238990, 21311, 115310, 532310, 532490, 531, 533110), 2022. https://www.census.gov/naics/reference_files_tools/2022_NAICS_Manual.pdf
2. U.S. Census Bureau, County Business Patterns 2023 — establishments (5,495), employment (74,730), annual payroll (~$6.8B) for NAICS 532412, 2025. https://api.census.gov/data/2023/cbp.html
3. U.S. Census Bureau, 2022 Economic Census / Economic Census Concentration — NAICS 532412 (receipts $36.4B; 2,592 firms; CR4 40.3%, CR8 46.3%, CR20 57.1%, CR50 66.5%; HHI suppressed), 2024–2025. https://data.census.gov/table/ECNBASIC2022.EC2253BASIC
4. U.S. Small Business Administration, Table of Small Business Size Standards (532412 = $40.0M average annual receipts), effective March 2023. https://www.sba.gov/document/support-table-size-standards
5. American Rental Association / Rental Management, North American equipment-rental economic forecast — ~$78B U.S. (2024), ~$83.5B (2026, +3.6%), 2025–2026. https://www.forconstructionpros.com/rental/rental-business/press-release/22967194/american-rental-association-36-growth-expected-in-aras-q2-rental-economic-forecast
6. United Rentals, Inc., 2025 Annual Report / Form 10-K — revenue $16.1B, fleet OEC $22.5B, ~15% North American share, capex/returns, 2026. https://www.sec.gov/Archives/edgar/data/1067701/000119312526124155/uri_ars_fye_2025.pdf
7. Sunbelt Rentals Holdings, FY2026 (year-to-April) Results and Completion of Ashtead Group Reorganization and U.S. Listing — revenue $11.2B, fleet OEC $19.2B, NYSE primary listing from March 2, 2026, 2026. https://ir.sunbeltrentals.com/news-events/press-releases
8. Herc Holdings, Fourth-Quarter and Full-Year 2025 Results and H&E acquisition disclosures — total revenue $4.4B, ~$9.5B OEC, ~3.95× net leverage; H&E deal closed June 2025, 2026. https://www.sec.gov/Archives/edgar/data/1364479/000136447926000049/herc2025q4-pressrelease.htm
9. EquipmentShare, Fourth-Quarter and Full-Year 2025 Results — rental-segment revenue $2.7B, $8.8B OEC under management (incl. third-party "OWN" fleet), 2026. https://ir.equipmentshare.com/news-releases
10. American Rental Association, Depreciation and Expensing Position Paper and rental-market data — ~$213B member fleet OEC, ~57–60% construction-equipment penetration, ~5,800 members, 2024. https://cloud.ararental.org/Portals/0/XF/GovernmentAffairs/ARA_DepreciationandExpensing_2024PositionPaper.pdf
11. American Rental Association, Rental Market Metrics: Financial Standards for the Equipment Rental Industry (definitions of time and dollar utilization), accessed 2026. https://www.ararental.org/Portals/0/Documents/MembershipPrograms/ARA%20Rental%20Market%20Metrics_AB.pdf
12. Sandhills Global / Machinery Trader / Engineering News-Record, used heavy-equipment value trends (~-9% in 2024; stabilized early 2025; softened late 2025), 2024–2025. https://www.machinerytrader.com/blog/sandhills-news/2025/12/inventory-prices-slide-in-the-used-heavyduty-construction-equipment-market
13. Rental Equipment Register, The RER 100 Top $46 Billion in 2025 Rental Volume (rankings; private/specialty operators), 2026. https://www.rermag.com/news-analysis/headline-news/article/55385016/the-rer-100-top-46-billion-in-2025-rental-volume
14. United Rentals, Inc., 2025 Form 10-K — fleet depreciation (2–20 years, ~12% salvage), end-market mix (~48% industrial / ~48% commercial / ~4% residential), rental capex ~$4.1B, ancillary fees ~18%, 2026. https://www.sec.gov/Archives/edgar/data/1067701/000119312526124155/uri_ars_fye_2025.pdf
15. Northmarq, The Equipment Rental Industry: Where Net Lease Industrial and Retail Converge (rental branches as a net-lease real-estate asset class), 2024. https://www.northmarq.com/insights/research/equipment-rental-industry-where-net-lease-industrial-and-retail-converge
16. Ashtead Group / Sunbelt Rentals, 2025 Strategic Report (three-largest-operators ~30% market share estimate), 2025. https://ir.sunbeltrentals.com
17. WillScot Holdings, 2025 Form 10-K (modular space and portable-storage fleet economics), 2026. https://www.sec.gov/Archives/edgar/data/1647088/000164708826000011/wsc-20251231.htm
18. U.S. Census Bureau, Value of Construction Put in Place, December 2025 / January 2026 (private nonresidential ~$728B; data-center ~$47B, +31%), 2026. https://www.census.gov/construction/c30/pdf/privsa.pdf
19. U.S. Environmental Protection Agency, Regulations for Emissions from Heavy Equipment with Compression-Ignition (Diesel) Engines (Tier 4 nonroad standards), accessed 2026. https://www.epa.gov/regulations-emissions-vehicles-and-engines
20. Occupational Safety and Health Administration, 29 CFR 1926.1427 — Crane Operator Training, Certification, and Evaluation, accessed 2026. https://www.osha.gov/laws-regs/regulations/standardnumber/1926/1926.1427
21. Internal Revenue Service, Publication 946 — How to Depreciate Property (100% bonus depreciation for qualifying property placed in service after Jan 19, 2025), 2026. https://www.irs.gov/publications/p946

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Sourcing note: company financials are from SEC filings and results releases (primary). Market-size, penetration, fleet-OEC, and share figures are American Rental Association and trade-press estimates spanning a broader market than the six-digit NAICS code — industry-standard but not federal — and should not be substituted for the Census 532412 totals. The narrow federal statistics (Section 3) and the concentration ratios (Section 8) are our authoritative ingested Census figures. Forward-looking statements in Sections 9–10 are editorial judgment, not reported fact. Where the two underlying research reports diverged on vintage, the more current (fiscal-2025 / mid-2026) figures were used.