Strong Construction Fundamentals, Ahern Rentals Integration Fuels Positive 2023 Results, United’s Flannery Says
The year 2023 is off to a strong start for United Rentals, with vibrant construction activity in all sectors and the integration of the Ahern Rentals business well on track, United Rentals CEO Matt Flannery told a conference call of investors. And once again, Flannery said the company’s recordable safety rate was below one.
“This execution and the continued strength of our end markets give us the confidence to reaffirm our full year 2023 guidance for substantial growth, solid margin expansion and significant free cash generation,” Flannery said. “During the first quarter, we invested $797 million in gross CapEx. And year-to-date, we've closed two local acquisitions that nicely complement our strategy. Combined with the actions that we took during the first quarter and fourth quarter of last year, we're well positioned to support the demand our customers expect.”
Looking more closely at first quarter results, Flannery was optimistic. “Key verticals saw growth across the board, led by nonres construction, industrial manufacturing and power,” he said. “Geographically, we saw much of the same, including double-digit growth in all of our regions. Our specialty business delivered another excellent quarter with rental revenue up 24 percent year-on-year and strong growth across all lines of business, led by our mobile storage team.
“Within specialty, we opened six new locations and are on track for around 40 cold starts this year. Used sales were another positive in the quarter, with revenue up 84 percent year-on-year, largely due to the normalized volumes after holding back on sales in 2022. And not only were we seeing recovery rates and margins strong, but the level of demand provides another positive indication of how our customers are feeling about their outlook and the need for equipment.”
Strong balance sheet
Flannery said the company returned more than $350 million to its shareholders, supported by the strength of its balance sheet and free cash flow generation. Looking ahead, he noted, United feels optimism through 2023 and beyond, encouraged by a variety of positive industry indicators.
“Longer term, we remain confident in our ability to capitalize on several significant multiyear tailwinds for our industry that we view as resilient in any economic environment,” he said. “First is infrastructure. It remains early, but we continue to see a ramp in spending from the federal infrastructure bill across a variety of project types, including airports, bridges and road and highway. We're also well positioned to support our customers as they undertake projects across clean energy and advanced manufacturing funded by the Inflation Reduction Act.
“Within private construction, we continue to see strong investments across manufacturing, led by autos, semiconductors and energy and power. Combined reports indicate that these tailwinds hold the potential for over $2 trillion of project spend in the U.S. over the next decade. We're very well positioned to leverage our competitive advantages on these projects. Whether through the size of our network or the breadth and depth of our products and services, our team is prepared to serve our customers and drive value creation for our shareholders.”
For more complete United Rentals first quarter results, go to: https://www.rermag.com/home/article/21264785/total-revenue-rises-301-percent-for-united-rentals-in-q1-rental-leaps-26-percent