The non-residential construction portion of United Rentals’ business grew 18 percent in the third quarter, and non-res demand is becoming increasingly diverse, CEO Matthew Flannery told a conference call with investors this past week.
“On the Industrial side, we saw widespread growth in rental revenue led by double-digit increases from manufacturing, chemical, processing, metals and mining and entertainment,” said Flannery. “Warehouse and data center work remains strong and we’re also starting to see a recovery in verticals that have been sluggish like hospitality and education.
“The Power vertical continues to be an important one for us with wind and solar projects on the rise across multiple regions. We’re also seeing work build across the entire EV supply chain. Plant maintenance is another big driver for us and we’re seeing that work start up again after being paused for COVID. And the most encouraging trend is project diversity. We’re starting to see a healthy mix of new projects like casinos, highway work, hospitals, military bases and more. That signals a return to business confidence.”
The specialty portion of United Rentals’ business continued strong. “In the third quarter, rental revenue on our gen rent segment was up almost 18 percent year over year with all regions showing growth,” Flannery said. “All of our Specialty businesses grew by double digits. Our Specialty segment as a whole was up 36 percent year over year with 21 percent growth in same-store rental revenue. And that’s higher than the same-store growth rate we reported in the second quarter. We’ve also opened 24 specialty locations through September, which keeps us on track for the 30 cold starts targeted for the year. When you pivot to our end markets, the picture looks similar, broad-based growth across a range of verticals.”
Flannery said virtually all of the indicators point to strong industry demand, which bodes well for fleet productivity. “The used equipment market is another one of those positive indicators,” he said. “In the third quarter pricing in our retail channels was up 7 percent sequentially and up by double digits year over year. Used proceeds were 60 percent of original costs which is a new high watermark for us.”
Flannery expressed optimism about the business going into 2022 ascustomers have projects lined up stretching well into next year. “The industry remains disciplined and our team is getting equipment out to job sites,” he said. “Internally, we're focused on controlling costs and expanding our margins as we lean into growth.
“We're leveraging our scale to deliver a combination of organic growth, targeted cold starts and accretive acquisitions all with long-term synergies for value creation. And in the near term we reported quarter after quarter of profitable growth driven by tailwinds that show every indication of enduring. We see a lot of potential for attractive returns and it gets better from here.”
Flannery also expressed optimism about the continuing growth in usage in zero-emission equipment in the rental industry. “Our fleet already as it is today is over 20 percent electrified,” Flannery noted. “We think that will grow. And I think the OEMs are doing a good job thinking about how they can continue to participate and assist because it’s really them that will drive it. And once they build that scale, it will be accepted even broader in the market once we get the economies of scale in line.”
For an overview of United Rentals’ third quarter results, visit https://www.rermag.com/news-analysis/headline-news/article/21179696/united-rentals-third-quarter-rental-revenue-climbs-224-percent