United Rentals' Flannery Sees Normalizing Supply Chains, Strong Demand Going Forward
In United Rentals’ third quarter conference call with investors, CEO Matthew Flannery said supply chains are now approximately 90 percent normalized through most channels, thus enabling the company to normalize its fleet expenditures. Also used equipment sales more than doubled year over year to $366 million as the company normalized its volumes and rotated out older fleet after holding back before because of difficulty obtaining equipment.
On the subject of capex, chief financial officer Ted Grace said gross rental CapEx through the third quarter has totaled almost $3.1 billion, representing about 90 percent of the company’s full year CapEx plan, “in line with both our expectations and historical year-to-date levels.”
While Flannery said it was too early to give CapEx guidance for 2024 – United typically gives those number during its January conference call – Flannery did say the company expects 2024 to be a growth year and he expected solid spending on both replacement and growth fleet CapEx.
Flannery said that as United approached the first anniversary of its acquisition of Ahern Rentals, the integration remains on track. “A highlight continues to be the quality of the team,” he noted. “People are one of the key components we add when we bring companies on board and integrating them into United Rentals. Ahern is another great example of the strength we have in leveraging our balance sheet as a way to benefit both our customers and our shareholders.”
Flannery continues to be bullish on the rental market and performance and customer demand.
“Key verticals saw broad-based growth led by industrial, manufacturing, metal and mining, and power,” he said. “Non-res construction grew 9 percent year over year, and within this, our customers kicked off new projects across the board, including numerous EV and semiconductor-related jobs, solar power facilities, infrastructure projects, data centers and healthcare. Geographically, we continued to see growth across all GenRent regions, and our specialty business delivered another excellent quarter, with organic rental revenue up 16 percent year on year and double-digit gains in most regions.
“Within specialty, we opened 14 cold starts during the quarter, resulting in 39 new specialty location openings this year.”
Confident outlook
Flannery continued to express confidence about customer demand moving forward.
“As we look ahead, we feel confident in our outlook,” he said. “This is supported by the ABC’s Contractor Confidence Index, which remained strong across the third quarter, as did its backlog indicator, the Dodge Momentum Index, which advanced sequentially in September. Furthermore, non-res construction spending and non-res construction employment both remained solid. And most importantly, our own Customer Confidence Index continues to reflect optimism, while early indications from our field team on their expectations for ’24 are also encouraging.”
Flannery said United is also expecting an increase in mega projects, which will benefit United but smaller companies as well.
“Mostly the larger companies are going to be supplying these jobs,” he said. “And we’ll all mobilize the fleet to get there to take care of the customers. And then the other part of a lot of these plants, especially the ones that are built in more rural markets, is you’ll have infrastructure built around them, whether that be feeder plants, whether that be residential, and then the retail and the schools that go with it. So these are big boons for these markets overall that we certainly expect to get our fair share plus, but that the whole area will benefit from [those jobs.]”
Flannery added that the company remains open to acquisition opportunities if good deals become available.
For an overview of United Rentals’ third quarter results, go to: https://www.rermag.com/home/article/21276222/united-rentals-posts-234-percent-total-revenue-growth-in-third-quarter
