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United Rentals Refreshes Fleet, Adds Cold Starts and Positions for Infrastructure Tailwinds, Flannery Says

July 31, 2023
Taking a closer look at second quarter demand, Flannery said there was broad-based growth, led by industrial manufacturing, metal and minerals and power.

One of the highlights of the second quarter for United Rentals was the ability to refresh its fleet and replenish inventory for a busy period ahead. “Used equipment sales were another highlight in the quarter,” said United Rentals CEO Matthew Flannery. “We generated a record second quarter proceeds of $382 million. The retail market remains very strong, and we also broadened our channel mix, as we discussed we would last quarter. Combined with the improvements we have seen across most of the supply chain, this has allowed us to refresh our fleet by rotating some of the older assets out.”

Flannery added that rental CapEx totaled $1.25 billion during the second quarter, in line with United’s expectations and helping to ensure that it has the capacity to support customers’ projects. Flannery also said the integration of Ahern Rentals’ organization remains on track.

“The teams have come together especially well and our second quarter results reflect the ongoing improvements in the efficiency of their business,” Flannery noted. “And at this point, we are focused on optimizing the combined branch network and fleet, which should be completed by year end.”

Taking a closer look at second quarter demand, Flannery said there was broad-based growth, led by industrial manufacturing, metal and minerals and power.

“Non-res construction was also up double digits,” he said. “Within this, our customers kicked off new projects across the board, including numerous CV plants and semiconductor plants, solar power facilities, infrastructure projects and for the Buffalo Bills fans out there, a new stadium. Geographically, we saw growth in all of our regions, on both the reported and pro forma basis. And our specialty business delivered another excellent quarter with rental revenue up 17 percent year-on-year organically and double-digit gains across all major categories. Within specialty, we opened 19 new locations in the second quarter and are on-track for the 40 cold starts this year.”

Flannery expects continued big results for the balance of the year. “2023 is on track to be another record year across a variety of KPIs, including revenue, EBITDA, EPS and returns,” he said. “We are encouraged by customer sentiment and external indicators, which point to growth and give us confidence in our updated guidance. For example, the ABC’s Contractor Confidence Index remained strong across the second quarter, as did its backlog index.

“The Dodge Momentum Index was up 19 percent year-over-year in June, while non-res construction employment growth also remains solid. And most importantly, our own Customer Confidence Index continues to reflect their optimism. Beyond 2023, we remain positive on longer term outlook, driven by key tailwinds including infrastructure, industrial manufacturing, and energy and power.”

Flannery expressed optimism about United’s diverse capabilities positioning the company well for the $2 trillion-plus worth of construction projects over the next decade.

“Put simply our advantages across scale, complex solutions, technology, and people put us in a first-call position and we believe this provides a platform for leveraging our resilient business model and pursuing continued growth both organically and through M&A,” Flannery added.

Flannery also noted the company’s just released sustainability report, and how the rental business model aligns with key aspects of sustainability.

“For example, less equipment needs to be manufactured because of rental, which has clear benefits while the equipment that we have in our fleet also helps our customers reduce their emissions intensity based on its younger age and greater fuel efficiency,” he said. 

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