Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the United Rentals Investor Conference Call. Please be advised that this call is being recorded.

Before we begin, please note that the company’s press release, comments made on today’s call and responses to your questions contain forward-looking statements. The company’s business and operations are subject to a variety of risks and uncertainties, many of which are beyond its control, and consequently, actual results may differ materially from those projected. A summary of these uncertainties is included in the Safe Harbor statement contained in the company’s press release.

XXXX, of company’s other XX-K the annual year December description refer risks, for SEC. complete as ended the well to report XX, a these filings possible and please the to For subsequent as with and on Form

that new no revisions You note reflect commitment order or or release filings any to forward-looking circumstances in www.unitedrentals.com. these no statements or to has access expectations. the company’s update Rentals can at subsequent events, obligation to in website information on Please United and makes changes publicly

press You the non-GAAP should to see also company’s most release cash and note to and from as to reconciliation measure. such the Please call that flow, to the non-GAAP the the references EBITDA. investor EPS, financial of measure EBITDA company’s comparable adjusted recent include presentations free each financial adjusted today’s GAAP terms, refer back

Matt and Financial and United for President Chief Flannery, today Officer; Executive Officer. Rentals Speaking Chief Grace, is Ted

now turn I Mr. Flannery, begin. the Mr. to will may you call over Flannery.

Matt Flannery

definitely XXXX operator, morning to XXXX. performance we to the it everyone. Yesterday joining call. quarter our fourth And record in intend again reported the good you, history. we our best bar full-year cap and in and Thanks financial we for Thank in raised raise results

of significantly moving with than lot year our larger at that’s footprint a sales a a a and larger and service and back We’re high fleet forward year demand. tailwind of expansive team, a in more ago, another that’s

that point margin, with of in our grew rental compared came XX%. through And quarter a total that by of year. results, grew a XX% and fourth trajectory. which and at quarter in kept XX% And XXX revenue both by on brought I’ll strong XX% we last start with the very a flow improvement quarter, a EBITDA us We strong a in basis margin solid to fourth recap with revenue and adjusted

cash. significant to continued also generate We

year, that’s none full people. delivered $X.X free flow, of been and fleet. the And this For possible our of cash have over investing in we after would billion $X.XX billion without

off, when employees. First our safety. year over know, first-class team XXXX we X,XXX a top always is priority recordable as onboarded And rate in new delivered you in another our

On can metric the and behind quality look the you financial just the side, mentioned every Team I at of see result. United

For front and in the example, keeping customers our field. growth comes revenue our from center

team’s but us people on Our are our cost ability leverage from flow-through stop customers laser-focused growth maintain discipline. our that very And the didn’t comes delivering good factor, succeed. a was helping our good margins. and from to Inflation

reported also including invested progress capital adoption We control our a vehicles ESG and front, investments we good it’s total in platform, sustainability, the record been tool emissions tracking This excellent. year-end. new an return the industry has of the we on is new first. of zero-emission made on our fleet. technology And at on XX.X% customer And with and launched

fleet by integration And the this same the already well. Another rest are with Ahern the the seamlessly. deal technology and new then branches X. were December We members the and sharing highlight pleased the on closed going XXth, on company operating the quarter say to very was system. of means I’m And of is customer our team information our acquisition, the

in the bullish is we it’s And And because first, One about on the capacity we And we’re three facilities. we people, focus the we M&A to get always like of and in gain. main this talent acquisition. comes really onboarded fleet the that forms: reasons critical that right. people

this glove. and raring and like of go. month, excited had a to United Annual We the they’re at managers in fit over hand part to Ahern our XXX they’re earlier And of be they Meeting

fleet the optimizing Now on we’re focused facilities. and

an capture at We’re time share. running on to ideal schedule, boosting resources and our it’s

year-over-year to diversity we And of broad-based, the up operating with environment, construction and specialty our a major in was that XX%; to The that ago tailwind into revenue out opportunity growth. all this We of well rental I’ll rent double continues up be year grew a verticals share total we how gen translated key regions top-line digits to to and in solid our demand XX%. up industrial, opportunity and true. in XX% of fourth data Demand into be quarter our non-res leaned across as as underscore and that board pointed businesses. turned by all our some

And solid XX% gain year-over-year. business. that Our it’s specialty our increase led notable an segment with line performance rental every business in mobile by another that revenue in of reported delivered strong segment storage

and Our plan in past to strategic XX of highly XX in another they’re our specialty business investments these opened XXXX. by cold for least line and locations And calls are generate we the targeted XX and starts attractive geography of returns. months, at in greenfield

XXXX. to us brings that So

environment. of operating plenty feel confident to about are there So reasons our

internal revenue. momentum terrific good visibility And external We we’ve help the fleet driving the have offset inflation job cost productivity experienced. into great a done to and team’s strong with of

the commercial Contractor indicate Momentum includes multi-year are business. in also the in of and show trends our healthcare projects. growth like strong continue trends And employment trends and number in be indicators backlogs institutional are There’s a to healthy for mode. which planning we expansion growing, U.S. sectors construction, Index the contractors projects to Dodge our education. in a like see and reports that Industry not surprisingly, this component future

PMI industrial the for and have activity But like strong. And indicators still the going construction room the improvement. manufacturing’s

the to that new of months. remains on And automotive with strong growth our of semiconductors our customers petrochem. shows a business and majority customer We’re including winning point own next the importantly, range sentiment batteries, XX and survey plant over construction wide

this and important and annual One in management two over final Houston leaders at front is people field indicator directly this guidance. X,XXX with into their of when the XXXX our mix into consideration the We our weeks market because strength we one meeting. from developed all an was extremely I’m coming had on And was positive. us took We take throwing that lines. ago,

new revenue free than us. our cash should invested billion, saw adjusted on high capital for And yesterday, be $X.X more hit including return to and EBITDA expect milestone another while of flow our marks, as we water you

we fleet. January, to continue equipment a the optimize at used And to this we we’ll more of capacity gross year. addition carried invest same advantage plan billion into time, In to strong $X.X than our market CapEx in to take the

spending, Longer-term continues the very things return before, tailwinds of outlook and our Inflation Reduction Act investments driven talked we’ve by are macro and And well infrastructure to we industry these America power. manufacturing as both conditions. believe to favorable be of that largely about independent several North in for as the like energy

to important announcements want capital yesterday mention Now, before wrap I allocation. we regarding up, two made I

billion totaling capital they’ll balance we’re billion $X.XX to decisions off, the $X.XX underscore our deal. $X buy billion return back confidence for durability year. announce shareholders year. Ahern per sheet. strength together, of two of of also the shareholders, reactivating $X.X stock share the dividends our And when we in We to our First repurchase quarterly XXXX. in our we’ll our be And cash plan this These share generation and the this that program we of pause instituting

Babe and runs through was know a But win open home circle, we to to with quote we wide tomorrow’s come that door Ruth, it. that demand record full ran for yesterday’s games. environment So also XXXX year don’t the a

now year. is accounts, start century be the quarter memorable business the will another Rentals, upwards. and of onwards all and So for it’s XXXX this next officially United in by

cover to Ted Ted, ask I’ll then go the that, with we’ll Q&A. to So you. results to and over

Ted Grace

everyone. morning, Thanks, Matt, good and

these in you we’ve are our you results the allocation can in the to importantly, to night, XXXX. the for job Combined trends see team a the that delivering confident expect did our full and creation year. the the continue will both enhancements in in our as we across with reported As drive for announced saw great meaningful we last we value that we And this board, guidance, quarter continue strategy long-term capital shareholders. to quarter,

was into or quarter first, record rental year-over-year. revenue increased this by increase XX% quarter. $X.XX nearly bit, OER I’ll or in dig Fourth million into revenue, more $XXX billion. dive an million Within let’s but of a XX.X%. That’s a $XXX the rental

fleet fleet $XX XX.X%, benefit size $XXX fleet by increased increased million. to productivity healthy offset our inflation average usual This million. was by partially million which revenue X.X%, our average by or $XXX another provided roughly a fleet and X.X% – Our added which of

Also within rental, million ancillary revenues year-over-year. XX.X% were by $XX higher or

While flat. was re-rent essentially

as by XX% in roughly quarter of million held $XXX XXX pricing. by The levels. we’ve to sold was To our to margins selling we rental, strong brought supported closer earlier this back Outside in channel increased used some use this, we help accomplish on in the fleet sales year. XX.X% used increased points normalized mix QX our by something for net of year-over-year to adjusted sales to basis fourth

EBITDA quarter and $X change a Ancillary the was contributed Adjusted was The EBITDA. record billion, $XX $XXX or to $XXX for dollar move $X.XX $XXX an re-rent increase which of OER million. year-on-year. million and rental million. increase included XX.X% million within, from added Let’s million another up

of Outside of another SG&A adjusted commissions rental, due certain non-rental to adjusted to normalization $XX businesses to of was $XX higher million million. discretionary and used sales EBITDA, continued a EBITDA the contributed headwind added while primarily million other about lines $XX costs.

was SG&A of percentage down however, sales, a As year-over-year. slightly

EBITDA margin basis points increased quarter XX.X%. fourth adjusted Looking at to profitability, XXX our

million sales, was used And per share. finally, increase line majority three healthy vast of in business at $XX adjusted the an revenue, or XX% in XX%. quarter that roughly owned Ahern, recent the of Excluding a almost about the share which $X.XX $XX results, within and the with flow-through total of I’ll was EBITDA. we was fourth $X.XX the fourth of That’s benefit year-on-year. roughly quarters add rental contributed million quarter of per EPS weeks

which This increase $XXX CapEx. us for million, see the CapEx we to gross was CapEx an growth in Fourth rental rental $XXX $XXX in net million. and well represents million Turning CapEx quarter XXXX. positions year-over-year, was net of

than another XX.X% Now, cash also to a on an a increase trailing points invested and let’s basis ROIC XX highlight $X.XX on flow continues basis. and record look fund flow. capital year strong, XXX continuing cash growth. of points at was basis sequentially up coming while free year-on-year. That’s better the a of in at be XX-month all to return at XX%, very with cash or free margin Free billion

the to balance Turning sheet.

of Our at basis, including the an of the was the Ahern as-reported times X.X impact quarter end ratio the on leverage acquisition.

basis, times. at long-term pro a robust billion X.X a forma $X.X our on the of note was with no year-end sequentially until flat XXXX. ratio liquidity maturities was importantly, leverage And quarter very our end finally, at More the

growth forma the XXXX and implying to from about in New reflects billion roughly Year, growth Now, XX% This $XX.X year-over-year I’ll talk particularly look supported sales at contribution total at of the billion range is with midpoint the we’ve and revenue used guidance. guidance forward pro of within carried by that billion, $XX.X OEC. in momentum $X things. increase about primarily our of Ahern. rental year expected Within that into of Total the let’s sell billion, is full XX%. is increase implied the we’ll expectation $X.X our and roughly sales two revenue used This note XX% revenue,

used Ahern of as First, the to second, continues to substantially of including our our addition supply sales is business. a chain And improve. larger the fleet, the normalization

to We converting growth focused bottom remain our efficiently line. this on

adjusted to basis, think points it, in and $X.X imply year is our flow at EBITDA $X.XX a to midpoint, through appropriate the of guidance however, roughly about an the we margin about basis, Ahern, and at way Our On is think this would flow-through as-reported basis pro On more range of including adjusted billion expansion XX the mid-XXs. of margins implies flat roughly impact forma EBITDA full XX%. billion. which

finally, gross the $X.XX billion cash to billion, repurchases. CapEx is CapEx to guidance side, free of net billion. fleet $X.XX is to is clear, And $X our On be our before initial with To guidance billion $X.X this $X.XX billion $X.X and billion. dividends

net reduce leaves use cash of that $XXX fund of $X.X growth to of these cash roughly factors Assuming remaining billion are two free debt. additional million flow or a

Q&A, our want some updated allocation capital I before strategy. go we to Now on additional comments to make

Specifically to plans cash excess around investors. to our return our

cash per to As in of XX% to our heard program say, approximately $X.XX in on dividend dividends are Based free very $XXX This yield Matt we pleased million to translate an this initial pay year be will you to we or mix. expect X.X%, share XXXX. of roughly adding a flow.

We expected payment will expect all quarterly made calendar February XX, with dividend be our first on within four that $X.XX of year. the payments

also last it’s of help that shareholder we Following will decade drive Not this add company the also we element confidence to provide the strategy expand it time cash expect will returns generate transformation means help in to in this of free our of to that enhancing feel investors, the to for reflects growth. operating the It over model our potential last universe the the return only or considerable value. have excess another our greater time. investing flow consistently investors over total after appropriate we so, capital

restart to we We’re the in program, announce of with also very the which Ahern. pleased paused November of share our announcement repurchase

authorization The restart ahead but intention to repurchase performance by billion billion start decision great calendar in is off financial XXXX. probably of a the It’s integration we is year. $X the this a bit expect of the our supported schedule, $X.XX is and well the to

we to share billion earnings. growth that As this our should per to these see at our two about approximately the year shareholders $X.X combined, or time $XX Matt continue substantial same in said, programs return

to clear these commitment being a continued sheet want in that announcements context are the of be I disciplined Finally, strategy. our balance to made

strength the served financial shareholders Our company well, has any and changes not there. we’re very planning its and

So line? the Q&A. we’ll you turn that, Operator, with please open could to

Operator

ISI. first take question with Raso We’ll our Instructions] David [Operator from Evercore

David Raso

there’s model. questions. Hi, structural the where and a on investors the business some about where there’s by minds of people’s worry One, time. thank clear you Two improvement cementing another for a

are What about their the OEM the and fleets get and the in equipment? market about equipment for suggesting dealers, think, suppliers hearing hearing And [indiscernible], what I to you First, share maybe this competitors up your taking adding overall you fleet the increased even of Just you ability availability know from you’re about equipment question. are what rental you this incremental side? I’ll versus Can seeing us include follow are their comment? availability, about regarding had last year. What in Matt, earlier let hearing year? mentioned area other that availability year? And some

Matt Flannery

Yes, sure.

tight be the better than supply expect a still slots it’s back market. to I’m as will as – hoping But year. it normal delivery last don’t got we So far a chain to little we fully be and the this are to year, maybe would There but back to fair, half, are thought saw I that have we half last niche year some being be back of to the still XXXX. quoted maybe out products we slippage.

brought than kind another some that see of rule. bit the challenges. year I you in think the we And QX, that’s and probably to season. chain a as in Now sure make But in the that build not exception, mitigating that by, we’re some of ready underlies QX supply little you’ll usual fleet we’re saw, us do more for

there, according then adjust to from demand we’ll And appropriately.

be challenge. think there a little I of will bit So, still a

a vendors they’ll remedy us I get work the challenges. to think supply to think in we and seeing fleet our chain XXXX, I’m a they this get hard, hard work not number. did David, to

David Raso

I’m cadence I’m just for the cadence for know asked fourth than normal. gross, you give midpoint. roughly a flat sense of of fourth for question because year, quarter, the I larger [ph] more you the down Can quarter quarter? the I just Is talking the us but Yes. X.XXX pulled curious, forward the is forward, the the on the Can some the year. – quarter idea of pull in just what CapEx to said first one little related you the gross

Matt Flannery

refer ready in do expectation is year, fleet. to and on the our of that to the forward you’ll What the And to rest making as we’re just doing time in we’re it here well really pretty the we’re fast brought it’s today, the will That’s pull that these far a spend us the to year, season, wanted as Ahern’s is and capital is Is that one for have XX%. challenged we ready in as really sure more chain high as of here been because the respond in really for sure our of referring that fleet be we to specifically QX that we probably spring with I to opposed that would the I categories what absorbing how David. maybe in QX cadence really to sit was the well as prop XX% how supply QX see get the most feel XX% to you’ll standard depend as customers. that about

So, past we’ll adjust we as the had accordingly. three years

David Raso

a project on just It’s to fourth pretty mean, first the quarter, I that we combine number about $X.X big I quarter in That’s that… follow quarter pretty seeing when This demand? this first need assume that and of taking really billion you’re fleet the focused certain projects. is quarter you equipment interesting. is not of the are is a for fourth backlogs the presumption two.

Matt Flannery

David. the absolutely And it right, talked as we’ve is Yes, in lot, mega the underlying a we last see demand, and the quarter that because about well projects.

this a of So time require lot assets. they’ll utilization high

more a have have. back, of year. hope Additionally, we’ll cadence also more this used than sales we don’t held we through get We normal and to we

more sales a We’re planning about normal on use selling back rotation. get XX% to fleet to

some fleet that to make losing don’t in their be have to so capital we that and ability confidence we that out of meet that to have sure the the still demand. So can we sell, will rotate ability team

David Raso

very – year strongly you’re demand very well. as sales strong used is going seeing with strong in the that months even obviously, the with fleet over a to Just the much start six

question. Second

Where end at get a implies if end which debt-to-EBITDA low leverage the below if we you capital it we of should low back think almost do net comfortable allocation, about with at [ph], of dividend, the the be at the Can end is how So your we look of you want to the range turn year you the it would the X.XX half of M&A? that? of the we the the guide, Or as repo you thus, and do to give sense us a range. leverage? think should the

Ted Grace

this said is times there was I’ll to no three that that longer-term of always times nothing Ted. We’d optimal change being the David, take we’ve framework one. two religious end. that to provided There’s about low level.

– some we’re we stockpile we If there articulated. for decide idea in that a so opportunities. for to us And would is kind code levels. to is with of the living at really these what comfortable the potential growth of for entirely, ZIP consistent powder future, we’ve certainly update time were immediate of amount dry something be live kind Street. to certainly But would different the The

David Raso

I time. appreciate it guys. for the Thanks

Ted Grace

Thanks, David.

Operator

you. Thank

next comes Fisher question UBS. Our of Steven from

Steven Fisher

Thanks. Good morning.

it’s in and fleet just and give? level it message and rate, into dynamics about So that? it’s just, Is in with what in to sort reported chat in QX? level, some inflation hurdle of do the productivity did productivity I’m kind curious still you but could compare the How how you of path. thought XXXX investors you a of Or note sort fleet Is that what’s we of the you just about message utilization would should they going more would fleet XXXX moderation as of you your of I give unusual you just the productivity above more into what the these seem beyond guess, moving of to lower how normalized year think that XXXX? frame progressed. to more normalized them steadily a in kind settling to want that how

Matt Flannery

think the just picked have that you shown was from with we’re those that, you output, were out see way Ahern, that out up, I for industry X.X% may And when we pleased of our productivity. And and going to expected. very discipline though the fair, the heck is even perspective. the is individually. whole I what for don’t clarity So, QX characterize we fleet would that manage it the that It we of right? But all, be I’m in rate think it doing as it X.X%. is reported take and out not an industry that’s report pleased the this time we – first

three that’s about built quarter. So the into Ahern fourth weeks of

forma fleet drive be number comfortably with as you this fleet that’s And next report reported a we’ll a the And impact. basis time making measuring any value basis, will as doing against see really you we what their forma a of on we’re the out exceeds So, for be we that on – sure to of entirety that do net and on threshold and productivity more it. pro pro baseline is see expect will the next so could Ahern our year And focused we year fleet on gain. what we’ll take well.

Steven Fisher

more you down, cadence compared on your during the you you’re have in wondering slowing expect how because rent actually the I’m if I’m what the And plays is these could project there type two are lead that some you next year to loaded. at stages – business taking large than wondering of activity the or there’s actually the on seeing with the stages think some in year I general as planning large in then the guess of projects that, I’m that CapEx if you but planning if to rent, wondering the what’s investors out? on acceleration Obviously, about – large more all Okay. projects. moment I’m about and wondering talked where compare these you what’s are still front-end I projects extra

Matt Flannery

quarterly build obviously, to it stay we away cadence, the pulp We’ll fleet gets expect held up. need by from but more that spring our Yes. come

June even to really and then continue local but we quarter ramp up big going starts slowest stuff expect once strong the We’re to today, the be all once and projects. popping. always you And not get the QX see demand – is you peak to market get past we to season, here seasonally, from May, that

to hear in forward, normally that’s the the the be that we in mobilize April. be more going we is, enough out to these get need, have need is dirt don’t going pretends had to ready are And to QX, going for to or So fleet the we would what when that we’re this spring. to ground build for coming of that really focus all fleet in about are you projects focus, when build, isn’t the in real ready pull we’re we scratching the season that be going the really to feel

Steven Fisher

Okay.

you quick on XXXX? business a or? XX% the compared clarification, I got the through? Ahern Just Ahern the What’s have in XXXX, And pro that if legacy flow flow-through to could. What’s for embedded you a forma

Matt Flannery

to Yes. frame function rent, Steve, the forma. just that especially is way gen that’s one pro a acquisitions, and to harder integrate in speak of we because to why it’s as easier of

you kind the nail on pro but So XX I flow-through look or the reported reported, hard as like like head, me, break discretely forma think do we it’s achieve about – would million hit the to cost looks savings one of, to excuse as The of $XX about. XX%, remind note, think certainly just million would $XX out we’ll I the of thing the apart businesses. talked people of XX% we

of in million, that. share $XX in we’ll only as but get expectations. to it $XX certainly can million XXXX, we we XXXX So about hold Yes, our

Operator

Thank you.

comes question with Rob next Our Melius Wertheimer Research. from

Rob Wertheimer

the side Hi, of the the back to thanks. support I at wanted there market least kind long-term. in short to that’s morning end Good circle demand out everybody. the or and

or the have interest if that rates or recession cause project we you the potential fear I the the dynamics, that the people have about at so delays talk rising you mega And risk look and guess, projects will

the that semiconductors bill, chips in. stuff have of which of you is will flow different then and infrastructure and some from the cancellations? kind And

are Are if The the good on I infrastructure the of assume cetera? you any flow? delays, wonder could you are to in? et you assume bill set of I on So, pretty level us stuff. flowing I those. some mega any starting projects And duration seeing there’s cancellations, seeing And

I visibility So, versus your past comments the on errors what history. you wonder have any in if is now

Matt Flannery

Yes. Rob. Sure,

broadly, many are – we’re not – relining. believe these we of macro that these So projects

comments, say about about. good heard talking really and You projects opening we’re mega of that. me we’re We our that about type the in feel talking

coming this as the we taking saying be are event, been seeing pleased we we’ve and speak. that XXXX projects expected to ground infrastructure, as far I’m a of we all fleet that projects to along, are and say As out

or be think you’re whether Mostly, it airports, looking remodels. expansions bridges, at

and So multiyear beyond, and and this we will a event. out be we’re accelerate right, pleased, think year carry through that

that. very to Ted, don’t So, anything with we’re pleased add? I if had know you

Ted Grace

anything as where more Yes. maybe really seen just mean No. Rob. we’ve I Probably stuff been one we it, there’s some those some we’ve in publicly. talked been I delays power and about about alternative lines, along area the think have this seen has not the side, written

Solar And within that All Power quarter seen wind, issues. of year, has in we’re for supply had permitting chain up up some couple our And business a issues. the X%. we’ve the XX%. said, was about about

about, on That are mega out all while you us that breadth continued kind we’ve seeing strong seeing starts. us we’re projects in this for throughout right, just this delays for the and talking while guidance that So very growth but tone hear broadness that project projects, on you’re with, we have coming clarity of the been really seen business mega the the kicker, we’re reports has to be robust. just And geographies.

but to reliant, commercial project kicker of mega you think they’re maybe not offset could is retail that to it’s drop. if space office the or drop a So kind is going going

So we you here this bullishness balance really appropriate type feel that the and the is guide October. of in for –

Rob Wertheimer

to we lot you’re kind throughout a was industrial side? construction, clarify And seeing going just of have verticals non-construction all but strength on the I anyway, of that, ask you talk to

Matt Flannery

has even very mean, the up through you and verticals verticals everything the been of the consistent mean been of the exception I midstream, all been across us, with really the for those years, though yes. it’s really are, go We rate which year. across the change you’ve throughout if is only negligible. down I vertical

Rob Wertheimer

Thank you. Perfect.

Matt Flannery

Thanks, Rob.

Operator

you. Thank

Seth with Our Fargo. comes Weber next question Wells from

Seth Weber

Good morning. guys. Hey

think fleet concerns some pricing fleet details You selling used something planning fleet? I us more Matt, kind what kind whatnot. are? of used about year. how a expectations embedded give Can for you your about starting Thanks. your on to you’re I mix guys expectations And this – used broad What’s you heard a are something or reference obviously of lot more some sell I equipment And mix just this or channel XXXX? over. rolling in obviously used there’s your mean what pricing different for

Matt Flannery

Sure.

been we’ve volume saw up three enough little And And – we the the of – to bit strictly some because to in I we XXXX. getting the So, was to QX. just retail eyes could XX% first a two our fall definitely going the we options; of about, retain one is the replacement the years, off but things good out. a find But what the last set we’ve on market used we’ll including capital increase bit, over we we’re weren’t talking do it that all supply in pricing. more up that for is lose when quarters of you historic there maybe we effect see a going think chain to about or wasn’t fleet get fast And it pricing. the were little end to to feel we’re open Because We’ll wasn’t fleet have us rent. that way costs channels about halo what then customers. think

embedded in can what’s we guidance. that channel is expectation XXXX, a normalized go that’s in more mix our our hoping back We’re to and

probably we’ll this something We’ll have So, trades. repair. much auction you really broker chain. We the do in some up open do won’t unless that’s

will that retail, $X allow and hopefully. above just We’re of us to opening a over that up mix billion rotate and channel auction about big worth out not player. really the But

Seth Weber

it. Got

the year-to-year. particular it just in on supporting changes And – the or helpful. was happened specialty was there? – That’s it’s it think out that the something Thanks. Is pretty big Okay. general Thanks. is is strength clicking call notable basis there you’d Is some in finance margin points business, there year-over-year? anything XXX I is step jump then that

Matt Flannery

Yes.

I you think And couple beneficial helped things there that, But quarter. I a absorption. certainly, has basis good segments some flow also specialty so project in fixed control cost both mix benefited really on you good, of the that and growth that’s drive through. had are been that cost the a Seth. beyond mean within there, had

Seth Weber

very Thank much. guys. right All Okay. you

Matt Flannery

Seth. Thanks,

Operator

you. Thank

Citigroup. with Thein question next Our from comes Timothy

Timothy Thein

morning. Good Thanks.

group fleet maybe think that sure first that Matt, XXXX, you’re thinking rate Just within you time and make demand on two the in of on in about you met fleet together and just maybe time. to hot presuming running held the pretty this how maybe is you just given the longer the just productivity components here. year on

potentially, you, starts rate. on to wrong interplay on kind So the then And against run I’m just that but of maybe that.

you how in And have for then just to taxes. cash that? interest EBITDA say, on the cash is question, second Ted, Any any terms Thank operating we think help flows, maybe about, help you. and cash should of

Matt Flannery

Tim. Sure,

customers. reported in hot rate headwind is We’ll pro some we X.X% level market a are a up at even even goes And may running running we to we it to to you end running we basis have On productivity. fleet a headwind. key exceed if our that if we become to talk have of our make said, that and continue as to Or point, fleet some about still raise we so and ample because it, that. being categories, of the time constructive have feel hot, to comfortable look pointed bit environment feel We will be at our Can constructive appropriate fleet time? been time With does that it? still the reality need becomes But think X%. availability opportunity for we out, positive forma drive that the going sure have just positive very you the we’re both that of the drive productivity, that hurdle for but in is to productivity. so

good can take And you question. it. EBITDA Ted, we the about So, feel

Ted Grace

Yes.

cash interest So million roughly in would million. be $XXX about That’s XXXX of million, absolute, to increase of in $XXX about just or taxes million. an would look Cash at increase for be the Tim, $XXX an we so. $XXX about which

change when working And that against bridge a be roughly increase capital. kind million $X.X free EBITDA so flow, the is $XXX in in billion delta that you the going of in cash increase to really

Timothy Thein

Ted. did as SG&A – bridge to merit about it. about how Thanks, should this kind Got that increase think a an as you – you year? think And year-over-year. have we quantified Any usually we to for you of speak that

Matt Flannery

We them, care But employees plan. we’re built of don’t got taking that. ready know it. doing into always certainly, into and supporting our that important quantify to just Yes. our about and and we’ve operating the that’s if aspect guidance built our I talked an of of importance

built So do. merit in But to increase there this is absolutely guidance. we’re into it’s not something a quantifying it, terms of I prepared think

Timothy Thein

Fair right. All you. Thank enough.

Matt Flannery

Tim. Thanks,

Operator

Thank you.

question Revich Jerry Our with comes from Sachs. next Goldman

Jerry Revich

transition the that what of versus industry I’m When the on is I’m pricing you and that industry had the price higher the the Tier equipment pricing saw wondering see could, you folks Tier How the higher I through pricing for about a to new it? X would the impact Hi. Yes. transition a pricing as OEMs. in terms umbrella by roll early rental on driving just January this a of know post the contrast fleet. we you if pricing And new extent it’s opportunity entire the marketplace. morning, increases upside? on nice talk X wondering, everyone. for But Thanks. compare Good

Matt Flannery

maturity saw price the before discipline been fair, which just Well, and more a would it used has this I And think and in the That’s be replacement CapEx pricing, this an increases, across the the about on residuals, your one, absorbed as industry But number kind it even the point umbrella having feel inflation been is bolstered I the has we’ve increased. comfortable, the seeing. some of think – positive. gets is we talk to board, whole pricing industry. Sure. I about we used to that of be

– talking just sophistication heard the and and getting industry. in about more bigs the You’ve bigger information us

pricing increased those more all helping and OEM think important. certainly makes I even that are

well the think And industry. bolster It point of will some your the so in probably behavior I is taken.

Jerry Revich

early Super. And demand that and where you’re on and how you the obviously versus the the any to just through of supply you between industry’s about just look I’m managing we’ve cycle et industry’s oversupply. today match Can but supply/demand curious, balance? you analog XXXX you a availability environment, XXXX supply draw the of the lots wondering demand if that cycle, as cetera, terms and currency talk of cross ability view XXXX in data, at would matched position in touch well, how today discussed, pretty

Matt Flannery

Yes.

is opportunities has route biggest understanding metrics is that to, focus These the industry. the on of – exist the of covered access differences data, three and a industry top companies, right, that important everybody type by information whether whether So it’s the it’s gives everybody the one and the visibility access third of now information over the in to right? public more that

So – in scale us – get scale to way. through different the us, and next let’s our things so and competitor, for allows say, specifically largest a

And so a really draw comparison. I wouldn’t don’t

the the years, industry I and peers I’m for even my And differently, we shareholder. do think the and changed of think sure manifest XX do. that I XX, significantly overall things in performance but in customer better our you’re for last in the seeing some

Jerry Revich

party? if on feels guidance sneak And Super. there And might is you embedded in talk folks lastly, transportation, you just could more if about like of tailwinds for just you wondering inflation where on if there. I could it overall? Ted, level one some just in third Thanks. be I’m what specifically touch can

Ted Grace

Yes.

out that as year, when year, been levels, able across into flow-through you in significant the an not yet, been have it terms XX%, manage use elevated probably XX%. our example, last right? to if XXXX. very historical through that’s flow So inflation In what And effectively, saw of expectations, you the we’ve would back as full versus probably certainly we look built as at

So of ability manage clearly very that our to indicative inflation effectively.

pointing level think on you pro forma when towards a that about similar what basis. flow-through we’re in of And XXXX,

elements managing feel in companies our it ability but – managing, all are still cost it’s to not we very to manage say environment. in we’re of So and There’s that comfortable we’re effectively. benign a inflation that

terms where, pickup to trying frankly, In delivery, not make and that’s money. we’re area of an

as ebb as is impact price minimis. and flow, margins So the of the you on diesel, de see, relatively an example, our

great in don’t to a XXXX when that think has dynamic appreciable. So it’s obviously, XXXX, diesel But job very prices a about substantial it team companies. headwind in something will be think were if through the you I done managing

Jerry Revich

Super. Thanks.

Operator

you. Thank

with Feniger Bank comes from Michael question of America. next Our

Michael Feniger

for taking my Hey guys. Thanks question.

Just projects. mega I there’s we We of talk plants see – Nevada. in in been know of $X.X investments announcing two a battery lot of new billion Tesla a

Can fleet of the and different terms Just Are office your versus required. visibility or non-res you it – projects help we think rent in retail. mega the type projects, of structures retail? for much fleet there, sensitive we like economically us how Is just these these office the more terms multiyear of typical think when of areas the different on and about understand different?

the XX should if how months, over next we of trade-off that? see Just we view curious kind that months, XX

Matt Flannery

structure pretty our Yes. you when building, about it. type these hard would Michael, great thinking product more attribute models, of have opportunity so volume as the whether the all I those of the creating that early outside as the really which then All fleet from we building. to type infrastructure to And projects rent thing the then towers, wouldn’t needs, do. creating do But be mean if different would to We’ve he predictive. places that in on be into what needs. line something far rely needs vary about dirt, office limited whether say off needs. large can scratching trench you projects it’s to to much got the towers, hard they’re be right, really I the that finishing on. you’re they’re may cross-sell it’s is

project. term is That everything fast-track they to were it something meant And fleet going to to there, the do think how I is now to every more a a XX project do nowadays and be fast-track. seems quicker project the variation the years much and material men, speed that and they’re on the ago, of right? used like drives put time probably sensitivity it’s going

think that driving rental than I implications of has So, more anything else.

Michael Feniger

takes through prepare And of should you was kind of as some Just number that directionally? the we decelerate know But I view were throughout fleet for puts productivity continues finds year there’s could of we through we you there curious how decelerate. through guys year anything all kind more of the that point? us XXXX. gave some kind prepare at XXXX clear if to go stability Could quarter? kind that is XXXX or number the for you going highlighted and to Thanks. guys

Matt Flannery

see Yes, our be would guidance number. even I on different you within anywhere. the what’s number embedded reported that in range I say right? a won’t basis, mean, And as

the that’s work. what I fleet positive the You will even really is a points be But it. reported doesn’t drag the the for XXX And continue a report us productivity, that is. forma thing report on out we’ll this part is that’ll but bringing pro what drive couple there, the could matters. as do And little a if bit differentiation we forma important from important even good and reported go in of as fleet, They’ll – time to XXX our that and up. utilization environment’s most to be think basis. the really pro That’s of expectation between

[indiscernible] our all what don’t really our try for So, want we’ll output we to embedded it’s – are an within predict. that to But are expectations guidance.

Michael Feniger

one. And just, Great. sneak I’ll last one

are Just, the you Is just I’m of activity I just on curious midstream, more there? side, exposure, accelerating? actually the kind alternative traditional seeing touch that you on traditional upstream, we the know downstream, if side? about power energy, just talked

Matt Flannery

quickly, It’s progression. sec. terms Yes. Mike. Hold pretty bit just something turning consistent in me of that one I’m Give on,

year. would So has sector that headwind been our midstream to of Chemical in and it mix the this for been X% a us total has the mentioned relatively pretty steady processing one small, momentum of certainly see strong upstream. been well. I same. has They’re continue as kind it’s be call downstream –

about it’s we business been business, total the across if year. our look consistently at of the So XX%

Michael Feniger

you. Thank

Matt Flannery

Thank Mike. you,

Operator

you. Thank

from question Markets. with KeyBanc Newman next Ken Capital Our comes

Ken Newman

squeezing for guys. good Thanks in me Hey, morning, here.

Matt Flannery

Good morning, Ken.

Ken Newman

infrastructure that back opportunities the of earlier spend to call. in to a go Good Obviously, I your gave on you wanted a made. of comments couple morning. Matt, good lot color you

restoring the Ahern. your double-digit implies, try you I are maybe, or the what of projects? size guide a in growth us way infrastructure from we’re visibility any it guide midpoint out the benefits you strip help industrial think to after trends there low But call can the assumes organic seeing is on

Matt Flannery

but that and we after really fact. the have when the out don’t assign versus capital look, the we’re then planning, we by really it verticals as broken way. more I track verticals frankly region We

view We to little I for that. don’t that’ll we right, trying and the too – work accelerate as right? spend, accelerating, – into of that’s We actually seeing infrastructure think something But generally, it’s of Generally, Ken. number multi we’re a do and to that back you So XXXX vetted. I view we can get haven’t it the get have you, without beginnings numbers that and that pegged on years. through just on beyond

there’s overall we mentioned on don’t fleet to far against those in have the But some the big say of mega ground will really how that earlier, continue lot year. someone plants are think going right we coming lay of rent totality. I’d I manufacturing, the But projects. projects multi-year acceleration infrastructure But infrastructure some also throughout the projects certainly each as As out outpace work other. work now on a as mega the that speak. will know there’s

Ken Newman

Understood.

sharper little talk demand start some the MRO cracks we Maybe mix, a know little end customer the for on business. a to the For seen is the in broader this industrial a industrial turn embedded of the see really there MRO What’s bit, touched built assumption the your little a industrial you conservatism the range. especially and to in your but about follow-up, you the obviously environment? in less in that’s of we’ve prepared than how do guide PMI space, emerge I remarks. the much of bit bottom part on to – about us talked XX% if

Ted Grace

Ken, that Yes, take I’ll one.

ultimately. As divisions, Matt regions, built to really branches do by forecasting, we districts, when the mentioned, corporate it’s up our and

down it’s really We don’t by by look So kind kind top at the it of field. vertical. of looking set

well. business So our mentioned, as very has in held industrial I

the have or cracks, We’re metrics concerns. PMI not people and it’s it’s whether looked other raise signs I know and at seeing any of

not of seeing those. signs We’re

about We’ve prepared autos remarks, even frankly, in talked kicking and And that. talked these about of his it’s but as semis, projects industrial off lot stuff. this broader a mentioned We’ve Matt than we also year. related see

an on the if MRO from construction this we offsets answer pointedly, there industrial is confident forecast based the a within the just And offset verticals. kind headwind there’s so don’t see if think business – side. on you’ll But I industrial question these we’re very to on of side, our

Ken Newman

expect curious the you just M&A in doesn’t if sound capacity but here. think go new could any and It repo, Got here it. if certainly after term? Maybe to even there’s guys with share management one a enough constraints the capital am dividend sneak the you from more near I perspective, in like I

Matt Flannery

Ken. Yes,

getting anything that Ahern, of overlap the a in So the sales integrating outside they’re those lot markets a So reps together, on significant work teams ground. right? with right, that’s the of together, has where

So we’re overlap if to bit big we and have we for But anything have have years couple little the past pause to field. that opportunities for capacity the don’t we on a going and overlap. large would as a have a in that we continue work have pipeline the

final that if clear makes the – hurdle absolutely sense. We’re they finance financial of

where deal with powder, capability gen a in have certainly not that now. have be any rent issues would M&A or tuck-in they’re a it dealing we integration product the wasn’t and consider the line Ahern dry right a that we in specialty whether market We

our So, rather issues. than integration work

us allocation, drove, flow and the of M&A, years do you a free And and significant a would. now to of of we the this past look kind to growth say is dividend right expense time it the we one touch have two would still dividend. absolutely the capital the cash give reasons I at including is growth. at just the not capacity because When So we to why on was the for

you question the cash because a strong because that’s flow prospects? of that cash asked of excess contrary, growth have someone dividend our are growth, push by it’s we quite to to had given even the supporting points and cycle. after less we earlier, So No, free resiliency return through

Ken Newman

Congrats. helpful. Very

Matt Flannery

you, Ken. Thank

Operator

from Stifel. question Thank you. Stanley next Elliott with We’ll take our

StanleyElliott

in. in now. now, a Matt, inflection step guys you might about the getting it’s outgrown seeing reasonable bigger X% be talked right broader in point Xx the up you with the growth guys consistently mean, big have North of sort you mentioned what the K growth able past American you’re guys and the do Hey up have the and about for industry’s scale are me fitting I rental we you to the Thank talking – XX% you that think that specialty put guys have, But now that an you industry? at? growing to guys.

Matt Flannery

certainly Well, implies. what that’s guidance yes, because our

number X% I well. that think you’d locked as would to be think have in that

in we don’t last I limiting Xx. do we what that the throughout focus think year, could the year. what we coming see from front ourself. they as implied out on we know number hear what But focus we I was of that. during don’t And So, We our raised barometer us, ARA for our our in it but this guide people as know on But do the field. do process as is and we what planning customers well in a

faster additional adding continue. gives I opportunity grow as of is think gives and to industry. you bigger before, think than end And I think, gives well to is this getting see that talked about think the cross the we and biggest the top going to – continue. we’ll scale I’ve we some customers as service how a And are trend the and options better product lines that you business, selling the that opportunities an

StanleyElliott

That’s for guys. it Great me. Thanks.

Matt Flannery

Thanks.

Operator

Thank you.

comes question with from Schneeberger Oppenheimer. Scott next Our

Scott Schneeberger

and duration for last likely I going an it Good that this, mega you best could feels Have have you rent might we lot that out guys. out probably, rent expand expansion specifically, speak Thanks. gen the like expand? the and matter days seen period may are Thanks, bill coming we’re company? morning. equipment that I benefit My over staying a Ted on of that a first is to how the be length that may infrastructure of rental see assets of projects is in here. margin positive on your the to is with of XXXX rent question, but to few But be performed years? and talking know a should, guess,

Ted Grace

so part question. the of Yes, first I’ll the there. I’ll start touch

contract but of the duration of at way really which daily, look you’re between not the mix monthly, moved meaningfully. the this. have maybe terms In way we measure those and We weekly, kind Scott, asking is would numbers don’t

modest to point. the and monthly point very a seen the You’ve of about to of shift between daily a – tune

and So, time numbers digits have been we’d on XXXX kind on appreciable daily remarkably it those for and or And long of we’d an be really been change in prior of versus a mid-single XX% years. be hasn’t monthly. terms a XXXX consistent about

margin more of to the of your be what we’re do trying In efficiently. more impact, mindful of volume terms certainly getting always you and serve is

importantly so efficiently. fleet have we’re And margins on And some know benefits and change projects that get huge a more degree but to we don’t get projects, to as this certainly more last that do there, I customer longer benefit we certainly, do serve that larger able and we that there’s returns. that

Scott Schneeberger

should of Ted the a still program, And think I kind new United Appreciate your story? Board looking be Rentals dividend then, about with thoughts the growth XX% Thanks. to we for that. referenced an payout. kind Great. is anticipate you you, how of at and dividend

we’d If to take vis-a-vis to share on this, ratio? payout quantify there is higher comfort high thoughts of a you just kind a Thanks. repurchase, going expect Is direction there? that level but want

Ted Grace

Yes, intention dividend Board, the absolutely. ahead time. we Don’t want over have the to but absolutely, of growing of the get

there yet, In looks don’t you’re payout in absolutely know terms net We’ll the to I fully we’d of the that continue expand that cash. continue but relative dividend to grow time. more just about continue the We’ll to income a over time. because like locked intent is It’s to over growth margins. ratio. We’ll asking generate what relative to company get our expectation. to grow continue

do of return the dividend have cash is to things us one keep so And allows investors we another excess as to to growing. tool that that

over grow I to in the will very that that like, tuned. fair dividend looks yes, and what think it’s assume stay rate So time of we terms

Scott Schneeberger

Fair enough. Thanks a lot guys.

Ted Grace

Thanks.

Operator

our back Matt question-and-answer Flannery closing call you. turn session. any concludes the to remarks. I’ll or Thank additional for That now

Matt Flannery

and go we operator. questions, Operator, strong Thanks, then, to growth And you if for of year that Until call. you for kick great a quarter to up to please day. have we to wraps for reporting the say our April. today. a in Ted. everyone look you forward want for another to reach end I us as it shareholders. thank And Have ahead feel any joining please free off out And

Operator

Thank today’s Thank you. This participation. concludes you call. for your

You time. may disconnect at any

United Rentals (URI) 26 Jan 232022 Q4 Earnings call transcript