End market are improving, albeit at a moderate pace, United Rentals CEO Matt Flannery told listeners on a conference call for investors Thursday, the day after the company released its third quarter results. And, he said, for the first quarter since COVID hit, the trends were in line with normal seasonality, although volumes were still down year over year.
“Market activity looks positive and customer sentiment is trending up,” Flannery said. “Longer term, we expect that future events, including a potential vaccine, are likely to have a significant impact on demand.”
Flannery said the company has its arms around the things it can control. “And we’re showing discipline and agility in our daily operations. We outperformed our own expectations for the third quarter and we did it safely. It’s a different world out there right now.”
Flannery said the company’s activities are guided by its safety protocols, which helped the company to a recordable rate below 1. “And that was a hard-fought win when you factor in the fires in California or the storms in the Gulf, or just simply the daily challenges of COVID.”
Flannery noted that in the third quarter the company continued to gain ground with rental revenue increasing sequentially in 15 of its 16 regions. “The standout verticals so far have been power, biotech and pharmaceuticals, and we see solid activity from warehousing and distribution, data centers, hospitals and other facilities in the healthcare and technology sectors. Food and beverage is an example of a vertical that’s edged back to historical levels.”
The United CEO said the individual verticals within non-res showed mild improvements as a whole, while retail, hospitality and entertainment remained largely on pause. “And there's also a broad range of new projects starting up across our operating landscape,” he said. “And this was true in our second and third quarters, and we're seeing the same thing this quarter. And this activity spans multiple markets, including manufacturing, automotive and road and bridge work, as examples, as well as the other positive verticals I mentioned earlier. And the team is doing a great job of getting in the door with these projects at an early stage.”
Flannery remained bullish about the company’s Specialty segment.
“Our power and HVAC business, in particular, had another strong performance in the quarter. And all of our specialty offerings are poised to capture incremental demand. And we're continuing to make strategic investments in the growth of this segment. Through September, we've opened a total of 13 new specialty locations, and we're on track with our plan for 15 openings for this year.”
Regarding 2021, Flannery said, “As we think about next year, we expect to sell about the same amount of used equipment that we will this year. And then from there, we're going to look at demand and say, alright, do we replace all of that fleet? Hopefully, that answer is yes. And then if so, how much extra capacity do we have in our existing fleet to serve any incremental demand? And then depending on how robust the demand is, will be if we get up into growth CapEx.”
For more on United Rentals’ third quarter earnings, click on: https://www.rermag.com/rental-news/article/21146220/united-rentals-rental-revenue-declines-133-percent-in-the-third-quarter
