United Rentals keeps riding positive momentum

Oct. 31, 2021

After reporting another double-digit increase in rental revenue for the third quarter — up 22 percent to $2.28 billion — United Rentals, Stamford, Conn., expects growth to continue for the foreseeable future.

“The numbers were driven by a combination of factors both inside and outside the company, including a favorable operating environment that continues to improve and a broad-based growth in customer demand. We fully expect our momentum from the third quarter to continue through the fourth quarter and into the coming years,” Matt Flannery, United Rentals president and CEO, told analysts in a conference call on Oct. 28.

“Clearly our people are executing well through the busy season. The integration of General Finance is going smoothly, and our team members are being supported by our technology,” Flannery said.

Specifically, he said the company’s general rental segment revenue was up almost 18 percent, year over year, with all regions showing growth, and that the specialty segment, as a whole, was up 36 percent with 21 percent growth in same-store rental revenue, higher than what the company reported in the second quarter.

“We also have opened 24 specialty locations through September, which keeps us on track for the 30 cold starts targeted for the year,” Flannery said.

He also cited the company’s continued focus on safety with a company-wide recordable rate below one for the quarter with 11 regions working injury-free in September.

“The best-in-class workplace culture we’ve built for more than a decade delivers tangible benefits because we’re known as an employer of choice. This is a strong competitive advantage particularly in tight labor markets,” Flannery said.

In addition, the company again increased its outlook for 2021 and now expects total revenue for the year to be between $9.6 billion and $9.75 billion. Net rental capital expenditures are expected to be $1.75 billion to $1.95 billion after gross purchases of $2.75 billion to $2.95 billion.

Flannery said the new figures mark the third time United Rentals has upped its guidance for capital expenditures.

“Each time, the increase has been warranted by customer needs. Our customers are optimistic. They’re busy and they continue to see more growth ahead and it is our job to be ready for that opportunity,” he said.

“Some of you have asked about the challenges of getting equipment delivered and it’s clearly a tight supply environment, but we have been able to secure additional fleet by leveraging our strong financial footing and our relationships with manufacturers. The increase in our capital expenditures also is based on our leading indicators, which echo customer sentiment,” Flannery said, adding that all indicators point to strong industry demand and increased fleet productivity.

In response to a question about mergers and acquisitions, Flannery said “the pipeline is still there. We think consolidation is still an opportunity in the industry, so stay tuned. It’s really more about what makes it through the end of the pipeline and making sure that it meets our criteria strategically, culturally and most importantly, financially.”

He also addressed a question about the demand for zero-emission products, the challenges of servicing that type of new equipment and the rate needed to justify the price point of the machines.

“We do segregate some of these really new innovative products that are electrified with historically combustible engines. But when you think about our fleet already as it is today, over 20 percent of our fleet is electrified and we think that will grow,” Flannery said.

“I think the OEMs (original equipment manufacturers) are doing a good job thinking about how they can continue to participate and assist because at the end of the, it’s really the OEMs that are going to drive it. Once they build that scale, it will be accepted even broader in the market once we get the economics of scale in line. It’s not a sea change yet, but you really feel it building,” he said.