Earnings call transcript Q2 2023

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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 differ materially from those projected.

A summary of these uncertainties is included in the Safe Harbor statement contained in the company's press release.

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

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.

Matthew Flannery

operator, morning, everyone. joining call. our good you, and Thanks for Thank

since profitability have evidence that. last beginning remains and is year you I'm the integration, second results, including with year's Ahern say across off is the the which provides on-track. us heard XXXX record of the of performance quarter how the our and about raising returns As growth, year, bar pleased of playing out

forefront that, company-wide an they second exceptional we wouldn't remained pleased our below our done key course, once report supporting be is results generate to our at Of with job to one safety have And consistently rate the all do of every again, I'm the the quarter. this who them, able as day. employees, to well recordable customers in deliver. Without we this

of market Importantly, our we service. leverage advantages shows a we underlying our as that, continue competitive our to superior customer outpace provide level to growth

So let's results. the into dig

grew $X.X X.X% productivity a rental billion. regions Total customer forma quarter fleet with pro broad-based demand almost across a of verticals, to record revenue Within increased XX% revenue rose on as by this, and second while basis. XX% reported segments year-on-year

new XX% $X.XX. $X.X margin Adjusted invested set to our record grew expansion. a quarter And XX.X%. increased EBITDA second driving short, another quarter on by record driven clinically, are billion in another increases on-track our XX% activity. Adjusted second capital return solid we a to full-year high robust at continued EPS record customer guidance And our watermark In customer reflects for to year by demand. the confidence

assets proceeds retail last another we as older Used we discussed we quarter. our in with the most chain, the quarter by market We have $XXX of million. equipment has rotating second very quarter. allowed were The strong, fleet remains seen a sales channel of highlight and we mix, record some the generated broadened Combined of us the to improvements supply our refresh would across this out. also

rental expectations and have saw, totaled today you with their support quarter, capacity to billion $X.XX the in line our need CapEx projects forward. that, we and to going As customers helping ensure in our

on-track. The the this be remains have results should their well point, efficiency I business. and quarter our earlier, and completed teams focused improvements of second the at end. on ongoing Ahern we branch which the by the integration together as to are come And in of fleet, optimizing network And alluded especially reflect combined year

stadium. out the a Buffalo new Within Key Bill by broad-based power. there, also projects board, led Non-res this, a second quarter including demand. growth, and industrial closer minerals, new saw double-digits. at customers take vertical semiconductor manufacturing, up and plants numerous kicked-off facilities, construction and across infrastructure metals projects and let's look was Now the the CV plants, power fans our solar for

basis. regions, business major categories. And on growth with all and XX Geographically, all delivered across excellent this saw rental gains opened the in revenue Within pro another our are we and cold on-track second organically starts XX% forma of for our double-digit up the specialty year-on-year and specialty, we in XX quarter both the quarter locations year. reported new

capital We returned $XXX allocation. during $X.X excellent quarter balance to shareholders to on-track dividends buybacks, to the and remains share to shape. year. return And Turning over our million sheet over of cash billion are in this through shareholders

and across XXXX, to record to variety year revenue, is EBITDA, ahead Looking KPIs, a another on-track EPS be including returns. of XXXX

and us We in to external are point and growth sentiment our confidence indicators, which guidance. encouraged by give updated customer

backlog the its For example, second the index. ABC's Contractor remained as across quarter, strong did Index Confidence

year-over-year construction their solid. remains reflect optimism. Index The was XX% up Dodge Momentum while non-res also our most Confidence importantly, own to continues And in June, Index employment growth Customer

Beyond XXXX, power. term energy tailwinds industrial longer driven including and key positive outlook, by manufacturing, we on infrastructure, remain and

of over As tailwinds we our capabilities trillion in diverse decade. construction for by underpinned unique and us May, that well we decade at building the dollars the shared the two Investor these Day projects spent last very next plus position

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

Finally, report, released our to sustainability we highlight I yesterday. want which new

done proud model out in that While that of our a rental to quantifying there would point the I especially how is of sustainability. aligns business team's this work year key we very lot the of, report content with great are aspects

our our does also our are the rental, example, For operating that efficiency. communities because it we clear the fuel age employees, of on benefits intensity in shareholders. And its have equipment our our while and emissions has manufactured in needs customers that only equipment younger we reduce benefit and benefits believe their also not less customers, helps which we be this fleet to based greater

is call Before are of delivering. is today We feel I with We by ahead pleased Ted, United hand year to about investors. XXXX up expectations, what see I'm the out. for our I rest how high the and is the sum with Rentals and will what we saying playing very as year entered you through that can and our good results, the over

before to open for you. hand Ted And Ted, call with line that, to we I over will over the the Q&A.

William Grace

Thanks Matt, everyone. morning, and good

our you year. strong our as release, very feel were we about have prospects in our on-track record Investor quarter us based results our extensively. As XXXX for that team the another continue and with shared on discussed at expectations consistent to saw we second And we produced tailwinds keep Day, our good beyond

into jump One numbers. quick I reminder before the

be the reported, from results where As I to include usual, figures out which adjusted year. call are standalone them are except discussing forma, I as Ahern pro as will last

into get details. let's said, that with So the

record billion. That a supported XX% end year-over-year a diverse our was revenue $XXX million increase is markets. by of rental $X.XX quarter Second across or strength

revenue, OER or rental XX%. million $XXX Within increased by

$XXX usual X.X% providing XX.X%, offset a million. average fleet was size decline Our of by $XX million by benefit, million. in as inflation reported And fleet or partially X% increased which or of our fleet a productivity $XX

within rate that revenues increased support $XX rental a environment. additional a was continues Also, as an million on will pro discipline robust $X re-rent industry productivity I by forma X.X% ancillary were rental, basis, to and healthy and note year-over-year, higher million. a or XX.X% fleet provided revenue XX.X% up

XXX% to we pricing. have to Notably, volumes, reflected we higher mix more used to revenue margin to $XXX our our would, we million normalized continue support of volumes. quarter while as said quarter to second healthy second expanded used Turning return results, increased as channel we these adjusted our XX.X% used

During of consistent proportion its term XX% mix the with for retail accounted last quarter XX% longer our year. versus

very demand the we remains environment. shift, it a Within volume, strong doubled our retail

$XXX quarter million was dollar for record EBITDA the to $XXX another which increase just adjusted includes from XX%. Moving million. or rental within EBITDA, The quarter second $X.X increase billion, $XXX the change contributed of a under OER million reflecting

Outside rental, to was adjusted contributed million. use sales and down while three $X million $XX added non-real EBITDA, million of lines added another of million. Ancillary re-rent other businesses $XXX

in increases SG&A due increased higher such as commissions. million $XX variable costs, primarily to

however, declined percentage second a revenue. of basis low quarter year-on-year record XXX sales, XX.X% points to total a As of SG&A of

Some there. efficiency nice

profitability, basis to translates basis as XX% through basis points better quarter This of And pro to EBITDA of $X.XX. an a margin on on increased finally, increased XX% our a forma forma adjusted record than basis second second XX%. XX flow adjusted to through reported pro flow at XXX XX.X%. points in increased EPS an quarter as reported and of Looking

was $XXX million to of billion, an and gross our in year-over-year, rental $X.XX CapEx, net rental CapEx continued CapEx increase net XXXX. supporting This represents Shifting CapEx in million. was $XXX growth

which roughly where is is XX% Year-to-date, of guidance, expect gross totaled full-year of this about be it midpoint year. to time the our $X.XX at billion. to CapEx rental CapEx the we This equates of

points capital. weighted at continuing fund in remains basis critical good XX-month year-on-year, and XX-month Free on new free is invested well cash flow all of on return coming which $XXX basis. a significant XX.X%, of or record for know remains into you average Turning quarter cash XX.X% capital trailing metric cash as trailing and flow basis XXX a margin a million is while us, That growth. set XX our above with a ROIC, at to also a points free a cost and sequentially story

ratio of decline Moving or the net the points and XX leverage times all-time to X.X our quarter balance the sheet, at to of basis basis a low XX an year-over-year. improved sequentially points end of

the returning repurchases at exceeded quarter, no was until shareholders $XXX and XXX million dividends. of to XXXX. with through liquidity Notably, share $XXX June our long-term maturities after And $X.X billion the in million this including end million via

and implying look will $XX midpoint roughly forward and our which growth expected confidence $XXX record our billion, XX.X%, forma XX.X%. guidance, of that around range is a in growth pro continued Total million about of now XXXX the be let's to increase full-year a $XX.X of at So talk billion and revenue increased reflects year.

$X.XX stronger is better increase revenue, pricing than expected an at expected million now than reflecting sales billion implied used total our and around Within or of retail $XXX guidance demands.

million a of around our $X.X continues to flow XX% to of increased reported as and in to $XXX through the fifties. billion. flow at EBITDA for by have billion midpoint through imply $X.XX forma This guidance We pro mid adjusted range

billion have $XX in now gross sales billion. and expectations. and our CapEx range $X.X On This the between used side, the fleet narrowed $X.X net increase our billion million billion CapEx implies $X.XX by we between $X.XX given

of to cash repurchases billion better million $X.X investors cash at And billion, finally, over between $X.X we guidance than $X.X are should in to together or billion is share. increasing by $XX our return our that free flow midpoint and dividends which $XXX per before

for let open the turn over to please So with that, Operator, call the the me operator line. Q&A.

Operator

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

David Raso

help decline pro the for two Just from little what quarter. if five of the you drove on more second thinking year could and color you wondering us rest the about to forma the down are fleet productivity how maybe nine with a

Matthew Flannery

mean, we Matt, pro as is pleased what something. is concern it David, understand the Sure. of We with that forma telling So I the are X.X%. doing? far up the some as and how down, being street drove there pro forma the out you

So you a I since will few about numbers. whole clear the don't actually things give we be

We really good the qualitatively said, is talked a not industry remains rate still have in or demand we about it. you This to a issue, shape.

seeing are that. is rate you report think industry, the in numbers, discipline and demand the the actual the I strong others supporting that strong environment and frankly, through that is

off. first So,

really issue us. front utilizations. made fleet very, very a This down to We load is tampon time to aggressive this the for time the year decision

years. putting of responsive risk. customer's at we little We comfortable hand for mouth, with couple think have And big that. we been weren't it And was a too running to We needs. really bit much didn't doing a relationships were our to frankly

and So quarter top our loaded fleet. we of is in last year. back And on you that Ahern forth the remember, fleet, front bringing

it just although out. pleased I'm going very working And back how to is context, to put are in whole We numbers. revert it to not giving of

actual pre-COVID QX XXXX. was you time in Our averages guys gave higher time the time than utilization higher and we last utilization than in

utilization just issue inflated the very all So is. comp because that is compared we fleet almost frothy, and year timely use last couldn't time the It is this dragging we is a to this still that time get strong ran enough.

David Raso

that guide? productivity of baked how is regarding should rest we year-over-year And the into about the think fleet the year,

Matthew Flannery

think these QX through what to similar they in I you in play Yes, did will QX. dynamics see

seasonal We will, well. continue as were we there the builds, will to seasonal but builds have in comps

through play very will dynamics these think we are comfortable. we and So

rate continue see a to We strong environment.

we QXand We dynamics think to continue support bring demand this fleet the in similar. be so to will to in

David Raso

still that you we comment in is as where the of the time So if mute. the that think back XXXX? productivity leave a about year second full-year mute, similar Is fleet is end time as how about the half average. above of just quarter, a the basis now sort of the the you on You does at historical made year, see

starting where for Just this on for conversations we in rates about mute history? time our XXXX, trying versus think thoughts are level exiting to confidence the your

Matthew Flannery

started that when want Yes. the May year. don't this But the get we do To far. going demand. clear, view start support we more do the We end we gave strong will be you to we at to the we ahead in a said year, growth this guide Investor I the And as forecasting to exit do on fleet and into at capital we math Day, where believe that. growth. of an tell out still you XXXX rate if market end year come with think will markets are the We year

of build this our there, we our will the from up process - through And year. end planning then towards

will more growth CapEx. We this be will do we a what build more from that will CapEx. We we expect normalized need we replacement continue think up

that this of as well. center we want XX% new as somewhere seeing to think target. quarter and right XX% I puts per number that well, in that the and do to our next in this are fleet year, to us You around year place We expect of

William Grace

have is, The David, one quarter second thing comment you the I Matt is might about made history. add this time Ted. altered

XXXX Just to same full-year, clear, time. for be the a would to we will true. to history, Relative be expect be strong the

David Raso

half a half I'm the down this Okay. your EBITDA were in That the But than And is implied higher the helpful. reported, EBITDA ago. of bps year are last the little year, rest year XX first the of bit on from of year. margins guide, second a margins talking

half curious having down the this would be margins first of half, just been So second year. the why year-over-year in in but up the

William Grace

Yes.

to really year-on-year. and second say things the of that would with there, is midpoint. thinking we the factor a people kind half Ahern, I So about, it half But against of always dynamics think as be need David. One, about anchoring people couple they caution first

We have pro mid-XXs. been through flow the clear forma in to talk about

back about delivering been year, we have which to driving our half expansion of We be that said on way we that forma pro think the as the in a business. is expect basis, would Matt and this will be true margin which

David Raso

leverage, call would And last is EBITDA. cash you the the quick leverage imply that But one, Apologies. the sorry end to of financial X.X. free are of year pause the at flow It here. rest at implied your year and the the the

$X.X low to to of just end target X% work, back to your get would X% put imply So the even to the get leverage of to low for billion you have to end. to about

couple are Just million of $XXX counts again, that? year. repo curious million a And how the that for you rest already thinking about $XXX dividends. the for of deploying

above beyond and is this that. you. Thank So

Matthew Flannery

further on things Correct, we will it is of progresses. does. this the working we And been on have internally work it one the and year as

allocation our kind of capital of XXXX, as committed For you know. is

certainly, we with But to we we up come relates are make. January, these options, expect. have a And end about year, we will I and decisions talked we update for will where it would publicly. left have to have As couple next an

working the on, value. potential allocate those On out it could best drive about we one shareholder to way trying is when we capital keep talked figure is or could we things what are allocation that the hand, introduced strategy range, the That we in of where is the it which there you XXXX, one new is. is capital to to lower something

is thinking you not know, how So it. specific about we can right certainly, now, add is more I but are there much that

David Raso

appreciate it. Alright, thank I you very much.

Matthew Flannery

Thanks David.

Operator

with from our Melius Rob will take We question Research. Wertheimer next

Rob Wertheimer

everybody. Hi. Good morning,

invested general. presumably got the of you of under sort acquisitions up I talk but in. in how Ahern I on still that was had sort you you ongoing can't fleet and a a I unscramble repair and you assume know as that you about scramble just egg the So And of maturation maintenance and question always some it, have fix

then so much, up have process, and guys training so also just so of many And a there you is and forth. much have you assume so forth people so you have process cause I SKUs

if or three Are going differential maturation big any or I how So wonder is or know, and two that is drags how just up we or now take or is there that comments long be, how margin for margins. that years helpful. on you going or acquisition a it it that you commentary three to two around to tailwind any would have be

Matthew Flannery

Matt. Sure, Rob, is it

We the train everybody, we to everything same operating the jobs point, sure everybody's start we comfortable them on your off system. time takes them with you done. with to sure people, So the systems, get working and secure their know, first it foremost, get and always make make

All that done. has been

the From continue then the any any that we kind deal and end front the there, fleet branch do. changes, through through balance in is work will we So facilities. of whether to whether of year. any and is through fleet we always it facilities repurposing working we And and this start is consolidations, are

know, game just that. we are talk a will fully Ted to far have execution through let margins matter as us working you it, I got one. Then it expect as year in to the we be the maturation, wouldn't So, certainly by mature, is plan, but and of I

add other this done some the in with past some color. may Ted have in you deals. work want We But to

William Grace

margin gets kind there. quarter it chance out Rob, the Yes, get and question that it in to those good a some this good is to kind the a of dynamics of is of

improvement from an margin, down reported points look look the was a That the at on in would slight basis down XXX basis, So XXX the if first were you like year it it quarter. to gross rental as is equipment on year.

through see can of playing benefits there. you some So those

basis a expanded our But forma margin gross XX pro basis, on actually points. importantly

just Ahern see year the ago the can impact and putting numbers. of you that period into So

points we So talked acquired valuation rental this got adjust gross talking margin in the gross in which expansion we from quarter were drag that increase fleet, related you this we investment the depreciation there have line assets, ongoing margin equipment about that margins to are about basis the continuing quarter. and the assets, includes the actually in last have if XX for of the up

is standards expensed it get as our do to like are in will investments assume things continue it facilities. second get think we I half reasonable that making up fleet other the and and that we to

So to are numbers these very from hitting perspective. that these see in well, shared. costs that us are you us in playing P&L things even of additional spite out And I can just

Rob Wertheimer

led And has and are two, the it perfect. can more, sneak I there margins and on if of and in strength I use ideas? versus bit of me, means of excuse in those equipment one when those and I you every everything? you of others mean, end there. to two better normalization get maybe getting tie to want you supply relation in that you thought, Okay, any vertical the are of rental Thanks are seeing plus able any the know, that still you some net more kind coming guess sale Is when fleet you between a the to CapEx normalization, will demand? stop little chain some market I

Matthew Flannery

Yes, sure. Thanks.

chain half right. get of off, first so which the is not remedied, fully in is why this we year, clear. much front Supply load first So CapEx let's

talked that XX at of have are XX% about to in And categories, in we range. if We have. in some we full-year So XX. our upfront would specific at we the end could top had the pulled probably more spend, of

in the about probably said there to really and remedies a the is CapEx, that to make that CapEx what opportunity like, entirety. more its look next think when in more the have of year's that normalized going back were this we to can cadence if If hopefully to raise say an would slots chain forward, supply in get year, QX. we was didn't beginning pull really we we would We had decision

having just old time opportunity rotate are So on smart stuff that. the this And retail wanted just change the for sell $X.XX through is XX-month fleet about is we in at more business. talking fleet net us out, to CapEx we to It dollars, the channel. and strictly to that normalize

the make that not CapEx really there may forward could we pulled getting some number the better, right yet. done answers more just chains if net didn't because So supply have XXX% maybe more have in it to but that whole, categories. Hopefully your that a we question. have We option,

Rob Wertheimer

you. Thank

Operator

Thank you.

will our We Fisher from Steven next take question with UBS.

Steven Fisher

Thanks, good morning.

lower some of is are you be of too that design, those availability to you extent product to now like are to that you you still your the your say utilization some I is think be So what wasn't would utilization you mentioned. or do its because run wanted service back lower where serve system where more you hot, running design? of to need are key guess and by and you customers But slack to understand to course level you by now in so them sort have the intentional seeing

Matthew Flannery

to No, I to haven't want Listen, are comfortable - year continue years, three we a we at think a was level. It trend. normal right. over the long-term just utilization in improve had we

cadence, overall, as able at we to COVID So metrics proper goofy think fleet had not about will then years the done. was continuing just when year, to better to from always drive back to and on revert XX just of you get two being we the which the try

we So on work able saying fleet, being we a be with, out, just customers have I'm continuing the are are major now saying with on not are to utilization these opportunities through right big capped responsive time pretty Ahern we I'm big we projects. to especially healthy with to and

So categorize how that Steve. is I that,

Steven Fisher

year trajectory, so the is margin on in basis of had kind XXX is by that should sort we or year-over-year that That year? that decline. drag rental ends your of And year-over-year you you are little in in basis. margins think about at gross get a QX QX, we a then of basis so narrower reported of pace, point terms And start the How just smaller points it and Should next maybe Okay. should decline really a and helpful. XXX gross on the that trajectory? extrapolate growing pace basis this even faster

William Grace

Yes.

So direction. gap we continue there to that kind because There was less going guide a not but on to would margins, we certainly basis, best is do heading our the a structurally, in profitable we business gross would expect directionally a then legacy it right. to of to be what have right

So - we that. and have about talked

an on whereas there, think I basis were XX%. LTM ours were margins XX%, EBITDA

in so should that'll we as I across think to to year, a obviously the And next And would narrow. be be these expansion dynamic reported that numbers, assume then be it but cap definitely business. certainly that margin we get looking reasonable would for as

Steven Fisher

Terrific, thank you.

Operator

Thank you.

our Wells Weber will We take Seth from question Securities. next Fargo with

Seth Weber

gets? guys SG&A good it on answer. basis. morning. just this comment as surprisingly Maybe the Can your going dollar percentage was operating on for is down company Or sequentially Great the good Ted to as just, forward? here following-up SG&A on still come - this line quarter, of leverage revenue. a as Hey margin leverage it you was a more is there good

William Grace

we So this example here, don't typically things towards. is again, guide of an

all be I through the careful given. within guidance and to we So have EBITDA It flow margin EBITDA want there. and is embedded

precise handholding, give not So of something efficiency would have done. more Very But continue driving. is people kind there. trying to we of just to in certainly it expect we good terms

it certainly would to be and efficient. about don’t I continue we really but know feel expect good So, helps, very if that to Seth, we

Seth Weber

and just picture that to on a the on you the all question Matt, time all stuff. color Maybe bigger supply. industry appreciate Maybe Okay. just

competitors heard industry Industry talk to utilization We CapEx it you like? have a leave just moderating like? think some looks just companies from some there, are what can guess. of looks recently, of have reported are different kind your few Yes, raising some supply you CapEx, I

Matthew Flannery

about more I which so get we think all companies, little from. information Yes, large a the let's talk

I in a are think boat. similar we

industry that to of rate is points I still you discipline. hear a that good think I still will environment, think from environment. this them demand a good the And most solid

think too everybody's remedy not in I the seeing specifically think that to, are reported the I I that. big to think And but so a leverage some scale same I a curve. to try you ahead running it guys And to the was their hot. yet, challenge had lot people think capital load of of ability that time everybody's that had the little front And demand just bring you had of us

we you get or same in for box So last in stuck two. the were that didn't year

think dynamics industry you we already going are think to heard what talking about. hear the similar - report I solid, to So, the really of trends are couple are a I we and have

supply in industry all think rate time is solid the in way good a historically, it is we shape, So think around. that environment good shape, demand is and good the strong utilizations so

Seth Weber

you. Thank Got it. guys. it appreciate I

Operator

We will with from next take our question Revich Jerry Goldman Sachs.

Jerry Revich

in XXXX talk better utilization seeing How that mo distinctions then? used rouse equipment new and what price now market-by-market where other information? are the and inventories big moment I'm equipment better factor just just and a are of gave significant wondering you inventories we versus can availability actually XQ is time industry is versus the XQ? a there others soft of price and rising if So ago? driving industry than if back we XXXX, a was years about distinctions ago, discipline so some Any made folks look back the in seven today we much expand on you you that the comment spot from

Matthew Flannery

to Well, be Sure. specific.

will, of a Rates serving you board. quickly of right. we was highest problem double it really that If it dislocation, it. portfolio the oil that gas rate away were dip, that call went kind was really rate just value company's was Which high of because remember and and drove XXXX there every the across about

have point people fleet what then there when very now happened in too make industry your was made in dropped levels The The time is to That that the But is system. to still decisions. time you the different was fair. much healthy.

are it able the price healthy running these So but goods discipline, reason is higher everybody different to good industry utilization, behavior for you though levels and margins good make the even is dropped returns, rate. part are so understand inflated utilization at at People time people also is from of is why utilizations. seeing time necessity

note it the and people utilizations that important totally to in is case is So reading not is is problem. some a through think that because reported different I time are a whatsoever. demand That dynamic, the may drop be

So help make thanks point. that for to

Jerry Revich

of And guidance if Obviously, just the implication the to given year-over-year pieces natural not XXXX. the first all terms quarter right, are industry the yet, half pull CapEx these as way implication to XXXX first is you are an to that but that we just how as be tie gear lower XXXX of in that, in reasonable in industry XXXX for are first together? going of hard to up in running just looking of mathematically is giving together that half in not a the we of

Matthew Flannery

Maybe normalized not cadence. are of that I even but we lower, yet, wouldn’t sure right. say

OEMs. talk have as We have got to the you to They working be go from remedy, hopeful. folks They the make to slide I these these but are to all get channel commitments. slots are wouldn't they yet. way know there hard. well. able I That the know I

and right, But the metric than the our spring. what output we are P&L. of do what to is a we hold customers, need through that the the and little can't it have to in the hopefully, can either do stuff normalized manage not a are happens, business get we through because more for to hopefully, cadence winter going not and the But, we more we way, afraid get

Jerry Revich

I appreciate the discussion. Thanks.

Operator

you. Thank

from come Cook Our with next Credit question will Suisse. Jamie

Jamie Cook

on the will questions how what quarter. saying mean, it have - work how going for about their Nice But first asked. with are most you of customers I and been forward. just XXXX implications my your

you we equipment if is do sort want or above going in lock could better, longer-term there is in So getting because know there supply to earlier to feel like out with they sticky visibility, have, business capitalize you out have they spend market? get chains to sure, contracts less average the multiyear make that of more are the and they potentially to with there customers do on able be

the assuming specialty there M&A? I'm you. the year-over-year. And margins continue question, any my that M&A would the is improve year. specialty trajectory is front then on more the opportunity for back And second be that half Thank to end of

Matthew Flannery

I take Ted to talk side. the part Jamie, of and the that, first could will specialty

still amount have So projects, the it about even of of they the labor though project, material it big on major making surety has activated. sure are right, can't is and a especially get couple small major the when they of points spend concerned, applications, still supply, percentage customers right, concerned spend,

this those we will a in phases. year we different next and all So are of carry and today talking are about and through they the lot kick-off year having conversations, projects hit

And crunch sure So have want large we regular in to are years, it planning felt they them. to that, supply make important with on the projects, of of couple because the mega and they customers is really our is these last surety over there.

they it wait. way than So that is thinking definitely more can

is customers, an they think because have ways, last with making factor situation. better realize our it is it sure important planning an big some two-years a important, to win-win both it I the is we more us for

Ted, second to touch do part? on want you the

William Grace

margins. I a to outlet sure the just heard half question the specific I it for I second third, three, sounded there the quickly, Jamie, general wanted - the to questions. like It answered like if that know understood was And first, M&A. specialty Matt be specialty. sounded I were the didn't Yes, or and

Jamie Cook

Yes, both and it The specific in to of was specialty, margin opportunity. M&A question specific. in terms terms was both of

William Grace

the embedded kind is of segment not specific have So unit. guidance all do into given, of here giving by we kind again, get best or our you we know, guidance to so it in

good performing the and you is certainly, the in I sides you heard and second way any business outlook I'm feel can of for the specific. sure the know, half, not be true that say, more about margins as both business. very be So we have us we, the on would

the within of a M&A, for In terms robust broadly both very it and remains outlook market. specialty

we and We kind we to date shoppers. active what of to done continue have, be you know, have year seen

us is In when Discipline job to one of, terms for say. know, capital. number allocating you we is are that success, harder always

we some So, well. the optimistic as are certainly that to things M&A will more generally, within do in know, back but half, specialty and you we in hopeful have

front? on would add anything Matt, you that

Matthew Flannery

meets inquisitive opportunistic, you have. that I no, it. and are high covered we very No, think it bar going but mean, we you are know that folks I all sure make we to

Jamie Cook

you. Thank

William Grace

Thank you.

Operator

Thank you.

comes next Citigroup. from Our with question Thein Tim

Tim Thein

Thanks. Good morning.

super that. Matt, out earlier to the Ahern you I given you presumably into does of just that talked you I that act that perspective, love the XXXX seen realize or a that you have category as you you don't just, for, we you, on that from on that is but does does just know recently so components know, you I talk I that we you that business, high product areas, start productivity. inflation pieces, and go you granularity were productivity these the a as as level, in know, away? to fade big follow-up fleet are be that looking about, thinking continue as to does But first Just as that as they continue but cycle multiple, into I'm to know, the headwind, and fleet I of are to wanted again that I'm on know, from refreshing in discussion more dissecting are pieces about, you just fleet all not, know, there or but just fleet not mix wanted drag and realize a this, follow-up on

Matthew Flannery

with fleet, right. than more deal our in significant not own No, what we

our you that that manage was to fleet But inflation power buying productivity. to would better. going always we are think we I why So have is little a track bit imagine

the why and of have some forma. you those pro reported and between of difference part OECs as is So that

as are buy OECs as well little little of They us. higher Some than up, those a pumped didn't a ours.

little trade of a a off is there there So a bit as replace.

- as or won't one high own you on replacement years incrementally was, our that it So eight of maybe nine incrementally assets, be would years assets know, won't be the old old old. our as it be

through So the of nothing manage course that business. would we normal call nothing in can't out, we that

Tim Thein

then some maybe know, know, over And a or know, Alright. amount more of, conversations banking the Okay. is fellow, but that you lending nothing are know, these C-Suite just with, last months it folks, those pushing curious that tighten recently. just much concern is the, to up, you projects your is of board that Thanks. the regional that, disruption, there seeing system Obviously, out banks a get maybe about. a lines. occurred standpoint do several that, you anything are know, been seeing haven't you concerns just regional on is some the you picture, again were you hearing you availability and, to you are that if bigger it I'm that or or know, is just drawing you I'm of around much heard, would and along that know, if your for something curious flag from is as or you you fair hearing

Matthew Flannery

No, robust. as pipeline a of matter project fact remains our

We good are some not and is about was chain related, on We they more actually coming seeing on are solar than news. cancellations. quicker supply back delays that think so projects which talked we were, those

you you use significantly. value, mega between talking XXX%. mega can projects are look project, decide all of a XXX somewhere and overall, million, we are right, is worth you XXX define over at these up And depending cut a when on million, we whether million But XXX it which and XX% it how

projects right size the pipeline the is these doubling amount So and that of now. of what like looks

good feel really actually about pipeline. we the So

issues. any kind any of deterioration financing seen haven't We of or because interest

add might to Ted want something.

William Grace

is I banks, tell, it I Tim. banks, can remains the specific we local are guess I to smaller capital add, but our I availability not either abundant we but frankly for level. seeing things customers. said best think you more it Yes, as mean, regional

Cost of capital remains reasonable.

middle when is the by look at our confidence, we if And all really our it look if performance And this customer so unaffected. segment, at we going really right. started, March customer back to

strategic you in local, you et look but performing. real difference seeing account, are So any are assigned, not those at cetera, national how

a So closely sensing and be you no obviously on is about quarter we but certainly, watching is through talking going something the would customers terms what aren't as may there an it are expect. it really it impact discernible and - are the is of forward in we not or potential second issue,

Tim Thein

good. Thank Very you.

Matthew Flannery

Thanks Tim.

Operator

you. Thank

Capital We will Newman Markets. next take question our with from Ken KeyBank

Ken Newman

quarter, think of so obviously obviously signs are between local am right? accounts moves is like it of still what give in But sounds or your your any sentiment which accounts. I national seems two Because and a like if just customer national tied you demand internal with very to survey last is environment little it feel Matt, your confident on you more color curious strong here. pretty I accounts? in your between seeing bit you sets, line your the material

Matthew Flannery

that We don't we now. anything of warrior type Harry do weekend Not a type lot are seeing homeowner work.

doing. I business. any definitely And contractor, towards skew local big segment So contractor, that large job our delineation not don't know what business is more versus our seeing market are but we we and the in

pretty good talking when we earlier. talked about numbers We the res shape. We non actually were that about are in

the are in areas where seeing is are are as actually customer we well. it would delineation and we we up, that it and seeing any results not is of confidence - one the So - would not you think it not show index

Ken Newman

demand if My if of to And follow-up you half too curious margin manufacturing impact some you to non-res industrial And obviously it. how talked being that in a think could back half? I accelerate was you XXXX. here bit. the the non-res, here last on do category civil quarter, you so, about on infrastructure comment, then for if that didn't just that I the we starting up here Got I projects. said about Is just is I'm expecting about a hear the to double much into back in dissect that Here understanding those strong accelerate little couple of that any? projects, months. mean, think digits. these of are

William Grace

I one. will that Ken, take

schedule. of it So track as those a terms to were by projects cadence the expect be would bill to that funded Act is is of would you Inflation It know. and not yes, that infrastructure easy we a I there great if civil the are that what looks start Reduction of say momentum the things like. do exactly lot intuitively, prospectively gaining one in

is right. We that found infrastructure the positive, outlook but one, have not certainly for

XX-years be strategy the developed have positioned well next are in contractors the given executing remarks. have over of great unique spend partner to made and is of the last for, us prepared let's But that over are to say, a and had those spend value the added trillion years, puts in projects. You got position Matt comment $X.X very we north that we XX his this the most

Ken Newman

your Thanks time. sense. for Makes

Operator

Thank you.

question comes next Our from Oppenheimer. with Scott Schneeberger

Scott Schneeberger

and I'm have going heard call. we this weak on common A is non-res within to question follow-up about feel we question. non-res spots everything, last that

Sounds good very, non-res. across very

the like or insight you So estate, concern and you commercial office any one other broad real hone to Matt, very in non-manufacturing areas and points want I any might on is good. be it buildings, just is it just sounds that very of can of areas of share any based seeing. there weakness? trouble

Matthew Flannery

usually all some know done this rates the mean, on No, are I our I data. don't are Ted Yes. as that a it bigger vertical, may work know part share. have vertical has to real big but of opposed we business. to and is need vacancy rental information and we know some ever know versus was issues, Ted a I what those horizontals but that

William Grace

it non-res, you questions nicely. the certainly granular continues We Yes, as grow call we at if don't what are as we look get asking. to quite

continued look year at you is in the most it they and commercial growth. which think so looking were place date is certainly to, would Scott, - you I to the data, construction office if to data, put both or June, recent So look at show whether

construction about one, those given work forward-looking would return more have, to those the say office from and Now in verticals of think a asking And XX% we and about that, is we put and are total, you when non-res I total two on were about in place. And worry things. home I part people think office basis.

we not two huge areas at those reasonably wherever are much I is being the is Commercial think have malls broader. talked is so a But that segment, it risk. about It strip live. people

see the then strong strong and pipelines are optimistic, where we talk where see areas Now growth. to where about you continue we you

and public about you power total, ones highlight communication, be manufacturing which the highway And and we total those well are XX% have would healthcare of non-res. in all road as transportation performing are would of talked

any markets office our is those going combination. really growth we And anticipate in offset would be reasonably the commercial the to headwinds in would contention

year So is our what of and back that half optimism forward. logically looking this going drives out the across

Scott Schneeberger

going or For a quick It specialty sounds could very that follow-up rental, been well just a the like you is categories? speak asset sounds old well, anyone pulling just asset commentary was as The to things GFN. lagging behind double goal curious is bit if any have and little X broad it like category based ahead years. but or that to on within and also

Thanks Just that to of an update acquisition, that, now much. close that past the that we so years where stands? two are

William Grace

Yes.

part the of fallen for question, nobody's first So behind. your

and all said, growth great. specialty XX% organic double-digits, I is business prepared had segments were which the As remarks, in

GFN, the faster Now, than the but little rest, which that. a to, we would growing bit you pointed expect certainly,

growing But to of are grow we sector schedule, continuing I very that we ahead well. as we are all tell. ahead open we and of five our But goal two we double the year as years to of schedule. are of a size where we that this time segments. of will Whether year ahead cold schedule we the are start the earlier that pleased far with they are in specialty And or the shared think years, are as in to business to continuing are

there. pleased is really are team work doing with the the We

Scott Schneeberger

Sounds Thanks Matt. good.

Operator

you. Thank

with Our Tyler comes Neil from Redburn. next question

Neil Tyler

you. Two left, Thank please. guys. Hi,

or But notion I of and the on on by CapEx you competitors inflated don't improves. been notion that likely hear not please. perspective would I availability, or a first availability fleet your are perspective. prices certainty all, one Obviously, may away your if or is that things is the surcharges considering, had whether a that to ticket well that ticket a floated recently a love of of topic Firstly, fall and should that like prices.

Matthew Flannery

Sure.

open negotiations on talk mic. we So about don't our

associated is Just of with are when the certainly comment the vendors. our we surcharges a are we comment costs creating fair the one of the surcharges discussing good of But some partners. with partners those and with our

about that We characterization just is is fair think don't partners publicly. with capitalization I negotiations the really don't But our So enough. talk wrong. our

Neil Tyler

and is a understand I so mute would you. categories but first move am between to the of rest for timing And year. That want just, and that to I you would then back will is earlier, fair? the apologies, lower or Thank two Is quickly come time just the Great. those year-on-year that viewed? thinking this. still splits to of more arrivals comments the normalize right second time The time made behind us, the deliberate fleet less mute persist of And to helpful. just of I

Matthew Flannery

the second, mean, we the be we I right. down. wouldn't bring able camp Yes. to first If in even can do the it enabled us fleet,

they the we much hand-in-hand. is going as bring what in capital year. just are - very So growth, for have a for CapEx are QX by the how the But would of expect our amount good the here much of balance you the definition left to of balance year in for of left we going of

like people when to forecast think, productivity trying said I number. if I see we And earlier, the could

they in we but think to We similar to are dynamics grow, see saw will year QX. year sequentially going over what

we good feel here CapEx have demand, we to continue QX. it, in about will good feel we about So and rolling

Neil Tyler

you, Matt. Super. helpful. That really Thank is

Operator

you. Thank

Baird. with Dobre Mig from comes question final Our

Mig Dobre

know, this put ask right? Thank XX%. are non-res appreciate of has would question. people fleet that. context at growing Tougher to you And topic here, trying of some me and not you you the to business? If something the in understand I we about for again, to are What to all terms How wanted react that I'm manage I'm non-res, morning. are your of do is growth hypothetically how fitting manage you how like But mid-single guidance, comps of you lot back of CapEx, disposals? about. year, talking you just north sort of looking for XXXX, asking covered in maybe worried in growth in. been If digit. terms a to on are private hypothetical pockets maybe we place Ted, does in the flows mean A to that or provided. Good reverting that And, weakness the low but going

William Grace

of talking a is so to we question, got year dollar, it we It go course the that in are convert nominal to relates we this really all good how it is so every as Megan. approach something you volume, but Yes, is forward year, CapEx. have to through

will fourth think their As we into process sense our get fall what us and the the a for customers start our quarter, at up we will like planning growth XXXX. much will into look bottoms That process. better help get

we that what need support about would incremental OEC CapEx next our fleet on to point, replacement plan then then environment. needs we year, sell think be, that and in we At will the can would to based growth the

As Matt to we back have said, we of this where year. be reset want the baseline think kind we to

is state, steady at as the a is less next time do just then OEC. manage let's how that know, are you of there we this. function year, of So about And your more it we think a into comes in of you then dynamic say kind growth that

that is Matt, fair?

Matthew Flannery

Yes, well. no, covered you I it think

William Grace

that hypothetically answer your does question? Okay. And

Mig Dobre

that what the exiting if still So, Well, are that I out. is That mean growth year still tease CapEx with to mode? kind are fact towards of just Right? fleet that in it are year scratching my helps. head over of year trying on pivoting pure growth fleet. replacement be was in, does sort know, you know, you you or going slows, growth I'm to significant you you the

Matthew Flannery

tell process. on is our a a we the for will but tone go negative have. it we what and growth and on depend appropriately but environment sharing, manage see and Yes, to are the what you fair we we adjust and, it as maybe through you as we your, are going certainly know planning not time question, will the demand as are business whatever as But

we to this and All that outpace dynamic getting growth, is overall bigger that'll big industry the for expect, being seeing think a to do said, with are players of continue play. big the think is us most you I we

I work lends to And the itself of about the have that a talked players. would we everyone say type larger to lot

we point we So a even the it. in outpace But industry, I wouldn't ability slower have will there even the think growth to we through will and I do overall your that. - manage is if get

William Grace

gets what that end into doing capacity Alright, growth the be know is our good And back of shareholders' factor very carryover stewards CapEx our year to to it spend that then we us allows be. that is to and continuing which will thing this about will capital. is, whatever

Mig Dobre

gentlemen. you, Understood. Thank

Matthew Flannery

Mig. it, got You Thanks.

Operator

Thank you. I to or will time Matt additional the turn back any over call this Flannery closing At for remarks.

Matthew Flannery

Thanks no it for today. that operator. up additional And remarks wraps

So in the Elizabeth I us free look please you you thank reach end any and ahead and all with in any out again meantime, the joining at have to want to to Thanks forward again. Operator, everyone for questions. if late October please and call. we go speaking to time feel

Operator

you. today's participation. you for We Thank your This does thank conclude call.

disconnect may time. You at any

United Rentals (URI) 27 Jul 232023 Q2 Earnings call transcript