United Rentals added 27 cold starts in the second quarter, evidence of its expectations for continuing strong growth the rest of this year and into the foreseeable future, CEO Matthew Flannery told a conference call with investors last week.
“We remain on track to open at least 50 this year,” Flannery said. “We saw growth across both construction led by non-res and our industrial end markets with particular strength in manufacturing. We saw multiple new projects in the quarter across data centers, utilities, healthcare, battery manufacturing and infrastructure. And if you’re a soccer fan, you’ll be excited to know that Freedom Park in Miami kicked off as well. And we believe that demand for used equipment will remain strong and still expect to generate around $1.5 billion of proceeds this year.”
After discussing the forecast for the remainder of 2024, Flannery looked ahead to the prospects further out.
“The outlook for large infrastructure projects, chip manufacturing, autos, and energy and power all remain positive,” he noted. “Data center construction has also been an area of focus, and we continue to win in this vertical as well. All of these types of projects play into our one-stop-shop offering, and are great examples of United Rentals having all business units counted for, as we help solve more of our customers' problems.”
Flannery was positive in discussing United Rentals’ second quarter performance. “Fleet productivity increased by 4.6 percent, supported by continued industry discipline. Adjusted EBITDA increased to a second quarter record of almost $1.8 billion, translating to a margin of nearly 47 percent. And Adjusted EPS grew by 8 percent to $10.70, another second quarter record.”
He was also positive in discussing customer activity. “We saw growth in both our general and specialty businesses,” he said. “And within specialty, we continue to see growth across all product offerings. In fact, even excluding the benefit of Yak [Access], specialty rental grew 18 percent year over year.”
In discussing United Rentals’ capex, Flannery said the company spent $1.4 billion in the second quarter, in line with United’s expectations. “We added fleet to meet the seasonal uptick in customer activity. For the full year, our Capex guidance remains unchanged. Subsequently, year to date, free cash flow was nearly $1.1 billion. We continue to see our strong cash generation as a key differentiator and remain confident in our ability to produce over $2 billion this year. As you’ve heard me say before, our flexible business model, coupled with our industry-leading profitability, enables us to drive positive free cash flow throughout the cycle and support long-term value creation.”
Additional strengths
Flannery said United Rentals’ contribution to jobsites goes beyond providing equipment.
“As an example, last month I visited a large data center project we'd recently won. Beyond providing products that might immediately jump through your mind, whether that be dirt, aerial, power, or trench, we're also supporting their safety and security requirements. We're providing secured access to the site with our advanced turnstiles and access control system, in addition to educating workers with our United Academy safety training. Our experience and ability to help them solve their logistics differentiate us in the marketplace and allow us to further strengthen our customer relationships.
“Second, we continue to grow with new products. Our acquisition of Yak, which has now been part of the United Rentals family for over four months, is a perfect example of this. The integration is well underway and progressing on track, and this is a textbook example of how we can leverage our existing customer relationships to accelerate growth with a new product.”
Flannery added that many of the mega projects currently coming out of the ground are multi-year projects, some of which began as early as 2022 and others that will extend for several more years.
“I see this as a multiyear tailwind,” he said. Flannery added that United Rentals' acquisition pipeline is continuing.
To read more about United Rentals second quarter results, go here:
