United Rentals, Inc. · NYSE:URI
United Rentals — Q4 2023 Earnings Presentation
55 slides from United Rentals's earnings presentation, Jan 25, 2024
Slide 1: Fourth Quarter and Full Year 2023 Investor Presentation
Fourth Quarter and Full Year 2023 Investor Presentation © 2023 United Rentals, Inc. All rights reserved. I 1
Slide 2: Introductory information
Introductory information Unless otherwise specified, the information in this presentation, including forward-looking statements, is as of our most recent earnings call held on January 25, 2024. We make no commitment to update any such information contained in this presentation. Certain statements in
Slide 3: Contents
Contents 1. Company Overview 2. End-Market Overview 3. Summary of Key Financial Data 4. Appendix I 3
Slide 4: Company Overview
Company 1 Overview I 4
Slide 5: Company Overview: key strengths
Company Overview 1 Market leader with size, scale, and strategy to sustain meaningful competitive advantages 2 Relentless focus on the customer, fueling deep and lasting relationships 3 Proven ability to win through excellence in people, process, and technology Resilient business model underpinned b
Slide 6: United Rentals at a Glance (NYSE: URI)
United Rentals at a Glance (NYSE: URI) #1 Market Share(1) 1997 ~26,300 Founded Employees(3) Other Stamford, CT ~$39B 70% 15% Headquarters Market Cap(3) ~$21B 1,584 Fleet Size(3) Global Branch Locations(3) $14.3B 2023 total revenue (+23.1% YoY) (2) $6.9B 2023 adjusted EBITDA (+22.1% YoY) ~4,800 1,504
Slide 7: Our purpose, vision, and values
Our purpose, vision, and values Purpose Vision To be the best partner for worksite Build a better future together safety, productivity, and sustainability Values Safety First Visible Customer- Absolute Community- Continuous Sustainability Passion for Leadership Driven Integrity Minded Innovation Peo
Slide 8: Continuing our strategic journey
Continuing our strategic journey 1997-2008 2009-2013 2014-2022 2023 & BEYOND Become a Transform Grow Leverage and Extend Market Leader the Core the Core Competitive Advantages Executed ~250 Improved returns Continued build-up of acquisitions to strengthen through financial and GenRent platform North
Slide 9: How we win | Our competitive advantages
How we win | Our competitive advantages Creating Layers of Value Around the Customer Relationship Enabled by… Breadth of Technology Solutions to Meet to Drive Seamless Customer Needs Experiences Data & Insights Deep Expertise to Foster Worksite Backed by People- Performance Focused Culture Tailored
Slide 10: Customers know we have the resources they need
Customers know we have the resources they need Industry-leading Fleet Enabling Profitable Growth at Scale ~$21B; ~1M units Solutions • Holistic product set, serving the most diverse customer base in the industry Aerial Forklifts • Comprehensive array of Specialty solutions Dirt meeting the needs of
Slide 11: Geographic breadth and flexibility to provide a one-stop shop
Geographic breadth and flexibility to provide a one-stop shop for customers Optimizing Location Strategy • Improving our operating footprint Industry’s Most Expansive Branch Network to enable faster response time • Enhancing operating processes to allow greater face-time with customers • Expanding S
Slide 12: Our customers and the benefits of renting vs. owning
Our customers and the benefits of renting vs. owning Customer Mix* Why Customers Rent Instead of Buy Residential construction • Conserve capital / focus on core business • Multi-Family Industrial • The right equipment for any job/availability & Other 5% • Reliability/reduce downtime • Power / Utilit
Slide 13: Diverse end-market exposure
Diverse end-market exposure Infrastructure Non - Residential Residential Downstream O&G Uptream O&G 2023 Revenue Midtream O&G by Vertical Chemicals Industrial Manufacturing Other Industrial Metals & Mining Power All Other Broad customer base helps reduce full-cycle volatility *Based on 2023 rental r
Slide 14: Well-positioned to drive growth across products, markets, and verticals
Well-positioned to drive growth across products, markets, and verticals (1) Full Solutions Concentrated in Growth Markets Focused Verticals General Rental • Chemical • Trucks • Data Centers • Flooring & Facility Solutions 984 600 (1) • Downstream O&G Specialty GenRent Specialty • Emergency Response
Slide 15: Growing specialty solutions to meet customer demand
Growing specialty solutions to meet customer demand while expanding profitability Trench Safety Portable Storage & Modular Space • Excavation support solutions, confined space • Portable storage, mobile offices, and modular entry equipment, and customer training space solutions • Used for constructi
Slide 16: Specialty provides strong growth opportunities
Specialty provides strong growth opportunities Specialty Revenue(1) ($M) $4,122 $3,445 2013-2023 CAGR: 24.2% $2,692 $2,165 $2,089 $1,720 $1,254 $931 $1,021 $823 $471 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (2) 9.5% 14.5% 16.0% 17.7% 18.9% 21.4% 23.2% 24.5% 27.7% 29.6% 28.8% Specialty
Slide 17: Online digital strategy and results: 2023
Online digital strategy and results: 2023 Increase Demand Through Enhance the Customer Digital Marketplace + Experience + Extend Service offerings Rental and used equipment Access real-time account and equipment Conduct Safety training and manage Generate awareness and interest telematics in
Slide 18: Elevating worksite performance through greater customer control
Elevating worksite performance through greater customer control Proactively Addressing Needs… …Drives Positive Business Impacts(1) Online Simplicity and ease of placing an order 53% 97% Rental Growth in Digital Users Growth in Online Payments 40% 68% Mobile Quick and convenient capabilities Growth i
Slide 19: Telematics & FAST
Telematics & FAST Field Automation Telematics & Related Technologies Systems & Technologies (FAST) Internal Benefits: Internal Benefits: – Performance monitoring and service alerts – Increased driver and dispatcher productivity – More efficient location and pick-up capabilities – Improved fleet
Slide 20: Differentiation through a focus on sustainability
Differentiation through a focus on sustainability… Selected Highlights Emissions Goal: Reduce greenhouse gas (GHG) emissions intensity by 35% by 2030 vs. 2018 baseline Progress to date includes a 16.8% reduction in GHG emissions intensity in 2022 vs. 2018 baseline GHG Emissions Intensity (MT CO2
Slide 21: Safety, diversity and culture
… safety, diversity and culture… Selected Highlights TRIR (Safety Measurement) 1.00 0.95 Safety 0.78 0.79 0.76 0.75 0.80 Aspirational goal: On journey to zero injuries, aim to reduce our Total Recordable Incident Rate (TRIR) to 0.40 by 2030 0.60 2023 TRIR of 0.75, a 1.3% reduction against strong
Slide 22: Corporate governance
…and corporate governance Corporate Governance Highlights Board of Directors Overview Board Independence Board Performance The strength of our Board is highlighted by our directors' skills and expertise, as illustrated by the • 9 of 11 Directors are independent • Risk oversight following matrix pres
Slide 23: End-market overview
2 End-market overview I 23
Slide 24: U.S. equipment rental industry overview
U.S. equipment rental industry overview Combined U.S. General Rental and Construction Growth of the U.S. equipment rental market has & Industrial Equipment Rental Market Size ($bn) sharply outpaced underlying total non-res activity 400% Indexed growth: US Equipment Rental Market $60 Peak-to- 350% 25
Slide 25: Growth: Strategy supports meaningful outperformance of industry
Growth: Strategy supports meaningful outperformance of industry Growth Drivers 180% Smart M&A Indexed Growth: URI Rental Revenue (10.7% CAGR) Secular shift towards rental over 160% ownership Indexed Growth: NAM Industry ex-URI (6.0% CAGR) Increased cross-selling to capture wallet 140% share an
Slide 26: Real total U.S. non-res construction spend per capita
Real total U.S. non-res construction spend per capita $4,000 Real Total U.S. Non-Res Construction per Capita (Public + Private) 40 Yr avg 30 Yr avg 20 Yr avg 10 Yr avg $3,800 $3,600 $3,400 $3,200 $3,000 $2,800 $2,600 $2,400 $2,200 $2,000 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 19
Slide 27: Summary of key financial data
Summary of 3 key financial data I 27
Slide 28: Strong track record of powerful financial performance
Strong track record of powerful financial performance Total Revenue ($M) Adjusted EBITDA(1) ($M) Adjusted EPS(1) +12.2% +4.0% +12.2% +2.5% +20.2% +23.6% 2023 5-Year CAGR 2024 Implied Growth 2023 5-Year CAGR 2024 Implied Growth 2023 5-Year CAGR 2023 10-Year CAGR $15,000 $8,000 $35 $30 $6,000 $25 $10,
Slide 29: Profitability: Focus on efficiency supports improved margins
Profitability: Focus on efficiency supports improved margins Key Drivers of Margin Gains 50% 25% Strong Fixed-Cost Absorption 40% 20% • Cyclical leverage (e.g., SG&A) • M&A cost synergies 30% 15% Increased Operational Efficiency • Process improvements (e.g., LEAN) 20% 10% • Technology investments (e
Slide 30: Long-term growth and margin opportunities
Long-term growth and margin opportunities Revenue Related Vision Cost and Margin Related • Capitalize on ongoing secular shift To be the best partner for worksite • Further leveraging of LEAN towards rental over ownership safety, productivity, and sustainability • Optimization of operating costs • L
Slide 31: Returns: Higher profitability supports ROIC
Returns: Higher profitability and focus on capital efficiency supports ROIC 16% 13.6% 14% ~600 bps 12.7% 12% improvement 10% Key Return Drivers 8% 7.5% Increased Profitability 6% Positive Fleet Productivity 4% Aggressive Fleet Management 2% Smart Capital Allocation 0% 2013 2014 2015 2016 2017 2018 2
Slide 32: Cash Flow: Strong and resilient free cash flow generation
Cash Flow: Strong and resilient free cash flow generation (1) Cumulative FCF Cumulative FCF 10-Year Average 10-Year Average Last 5-years(2) Last 10-years(3) Cash Conversion(4) FCF Margin(5) $9.7B $14.7B 144.8% 17.1% $2,500 $2,454 $2,314 $2,000 $2,100 $1,500 $1,592 $1,768 $1,527 $1,334 $1,000 $1,195
Slide 33: Financial strength: Managing the balance sheet
Financial strength: Managing the balance sheet Leverage Ratio(1) Capital Allocation Strategy Supports Strong Balance Sheet 3.6x 3.0x 3.0x 2.9x 2.8x 2.9x 2.7x 2.6x 2.4x 2.2x 2.0x 1.6x (2) (3) (4) (5) (6) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Aggressive Balance Sheet and Liquidit
Slide 34: Financial strength: Ensuring flexibility & optionality
Financial strength: Ensuring flexibility & optionality $M No Long-term Note Maturities Until 2027 $6,000 $5,500 $5,000 Total Liquidity of $3.330B(1) $2,967 Unused ABL $4,000 Facility Fixed vs. Floating Ratio: 69%/31% $3,000 $1,283 Used ABL $2,000 Facility(2) $1,400 $1,673 $1,500 $1,500 $1,100 $948 $
Slide 35: Prudent capital deployment execution with clear priorities
Prudent capital deployment execution with clear priorities Invest in Growth Return Excess Cash to Investors Dividends Organic Growth • Initiated dividend program in 1Q2023 with quarterly dividend of $1.48 per share • Continued investment in GenRent and Specialty to support customers • Dividends of $
Slide 36: Proven ability to create value through M&A
Proven ability to create value through M&A Key Acquisitions 2012 / GenRent 2014 / Specialty 2017 / GenRent 2017 / GenRent 2018 / Specialty 2018 / GenRent 2021 / Specialty 2022 / GenRent Strategic Value Positions URI as Expand Strengthened aerial New capabilities in Bolstered NA Expanded offering; Bo
Slide 37: M&A strategy: Disciplined and opportunistic
M&A strategy: Disciplined and opportunistic Strategic Financial Cultural • Proactively supports growth in • Invest capital at attractive returns • Safety attractive markets over cycle • Talent • Difficult to replicate organically • Revenue growth • Margin opportunities • Ethics and integrity • Acces
Slide 38: Fleet productivity: overview
Fleet productivity: overview Fleet Productivity provides greater insight into the interplay and combined impact of key decisions made by managers every day across (a) rental rates, (b) time utilization, and (c) changes in mix on our Owned Equipment Rental Revenue (3) (i.e., the revenue we generate w
Slide 39: Fleet productivity: historical results
Fleet productivity: historical results (1) Actual YoY Change in Assumed YoY Impact of OEC Fleet Contribution from Reported YoY Change in Average OEC Inflation on Rent Rev Productivity(2) Ancillary and Re-Rent Rental Revenue 1Q 2020 2.2% (1.5%) (1.2%) (0.2%) (0.7%) 2Q 2020 (0.7%) (1.5%) (13.6%)(4) (0
Slide 40: Q4 2023 Results
Q4 2023 Results $3.728 billion (+13.1% Y/Y as reported; Total Revenue 7.5% on a pro forma basis*) $679 million (18.2% margin; -120 bps Net Income Y/Y as reported; -40 bps on a pro forma basis*) $1.809 billion (48.5% margin; -150 bps Adjusted EBITDA** Y/Y as reported; -90 bps on a pro forma basis*) *
Slide 41: Full Year 2023 Results
Full Year 2023 Results $14.332 billion (+23.1% Y/Y as Total Revenue reported; 14.9% on a pro forma basis*) $2.424 billion (16.9% margin; -120 Net Income bps Y/Y as reported; flat on a pro forma basis*) $6.857 billion (47.8% margin; -50 bps Adjusted EBITDA** Y/Y as reported; +40 bps on a pro forma ba
Slide 42: 2024 Financial Outlook
2024 Financial Outlook Total Revenue $14.65 billion to $15.15 billion Adjusted EBITDA* $6.9 billion to $7.15 billion $1.9 billion to $2.2 billion, after gross Net/Gross Rental Capital Expenditures purchases of $3.4 billion to $3.7 billion Net Cash Provided by Operating Activities $4.15 billion to $4
Slide 43: 2028 aspirational targets
2028 aspirational targets ~$20B ~$7B ~$10B 15%+ Key Assumptions Total Specialty Adjusted Return on • Continued long-term growth in non- residential construction, including support Revenue Revenue EBITDA Invested from key tailwinds across North America Capital infrastructure and reindustrialization a
Slide 44: Appendix
4 Appendix I 44
Slide 45: Adjusted Earnings Per Share GAAP Reconciliation
Adjusted Earnings Per Share GAAP Reconciliation We define “earnings per share – adjusted” as the sum of earnings per share – GAAP, as reported plus the impact of the following special items: merger related intangible asset amortization, impact on depreciation related to acquired fleet and property a
Slide 46: EBITDA and Adjusted EBITDA GAAP Reconciliations
EBITDA and Adjusted EBITDA GAAP Reconciliations EBITDA represents the sum of net income, provision for income taxes, interest expense, net, depreciation of rental equipment, and non-rental depreciation and amortization. Adjusted EBITDA represents EBITDA plus the sum of the restructuring charges, sto
Slide 47: EBITDA and Adjusted EBITDA GAAP Reconciliations (cont'd)
EBITDA and Adjusted EBITDA GAAP Reconciliations (cont’d) The table below provides a reconciliation between net cash provided by operating activities and EBITDA and adjusted EBITDA. Three Months Ended Year Ended $ millions December 31, December 31, 2023 2022 2023 2022 Net cash provided by operating a
Slide 48: EBITDA and Adjusted EBITDA GAAP Reconciliations (cont'd)
EBITDA and Adjusted EBITDA GAAP Reconciliations (cont’d) The pro forma information below reflects the combination of United Rentals and Ahern Rentals. Prior to the acquisition, Ahern Rentals management used different EBITDA and adjusted EBITDA definitions than those used by United Rentals. The infor
Slide 49: Free Cash Flow GAAP Reconciliation
Free Cash Flow GAAP Reconciliation (In millions, except footnotes) We define “free cash flow” as net cash provided by operating activities less payments for purchases of, and plus proceeds from, equipment and intangible assets. The equipment and intangible asset items are included in cash flows from
Slide 50: Historical Adjusted Earnings Per Share GAAP Reconciliation
Historical Adjusted Earnings Per Share GAAP Reconciliation Adjusted EPS (earnings per share) is a non-GAAP measure that reflects diluted earnings (loss) per share from continuing operations excluding the impact of the special items described below. Management believes that adjusted EPS provides usef
Slide 51: Historical Adjusted EPS GAAP Reconciliation (cont'd)
Historical Adjusted Earnings Per Share GAAP Reconciliation (cont’d) (1) We have made a number of acquisitions in the past and may continue to make acquisitions in the future. Merger related costs only include costs associated with major acquisitions that significantly impacted our operations (the "m
Slide 52: Historical EBITDA and Adjusted EBITDA GAAP Reconciliations
Historical EBITDA and Adjusted EBITDA GAAP Reconciliations ($M) EBITDA represents the sum of net income (loss), loss on discontinued operations, net of tax, provision (benefit) for income taxes, interest expense, subordinated convertible debentures, net, depreciation of rental equipment, and non-ren
Slide 53: Historical EBITDA and Adjusted EBITDA Reconciliations (cont'd)
Historical EBITDA and Adjusted EBITDA GAAP Reconciliations ($M) (cont’d) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Net cash provided by operating activities (9) $ 438 $ 452 $ 612 $ 721 $ 1,551 $ 1,801 $ 1,987 $ 1,941 $ 2,209 $ 2,853 $ 3,024 $ 2,658 $ 3,689 $4,433 $ 4
Slide 54: Historical EBITDA and Adjusted EBITDA Reconciliations (cont'd)
Historical EBITDA and Adjusted EBITDA GAAP Reconciliations ($M) (cont’d) (1) In 2013, we retired all outstanding subordinated convertible debentures. (2) We have made a number of acquisitions in the past and may continue to make acquisitions in the future. Merger related costs only include costs ass
Slide 55: Historical Free Cash Flow GAAP Reconciliation
Historical Free Cash Flow GAAP Reconciliation ($M) We define “free cash flow” as net cash provided by operating activities less payments for purchases of, and plus proceeds from, equipment and intangible assets, and plus excess tax benefits from share-based payment arrangements. The equipment and in