United Rentals, Inc. · NYSE:URI
United Rentals — Investor Presentation (April 2017)
38 slides from United Rentals's investor presentation, April 2017
Slide 1: Executing for Growth and Returns
Executing for Growth and Returns Company and Industry Background First Quarter 2017
Slide 2: Introductory Information
Introductory Information Unless otherwise specified, the information in this presentation, including forward-looking statements related to our outlook, is as of our most recent earnings call held on April 20, 2017. We make no commitment to update any such information contained in this presentation.
Slide 3: Table of Contents
Table of Contents Introduction 2 Market Overview 9 Margin Enhancement 12 Specialty 16 Growth Through Customer Solutions 21 Fleet 25 Capital Structure 30 Appendix 36 3
Slide 4: Industry Leader Driving Growth and Returns Through the Cycle
is the Industry Leader, Creating a New Standard for Operational Execution to Drive Growth and Returns Through the Cycle 4
Slide 5: Equipment Rental Leader
Equipment Rental Leader #1 U.S. Market Share 968 locations across North America United Rentals Diversified mix 11%* Other HERC – Industrial/Non Construction – 52% 80% 3% – Non-Residential Construction – 44% Sunbelt 6% – Residential – 4% Team of approximately 13,600 employees Scale Creates Di
Slide 6: Creating a New Industry Standard
Creating a New Industry Standard Our Vision Deploying the best people, equipment and solutions to enable our customers to safely build a better and Superior stronger future returns to our stockholders by achieving Driven By These Values strong and consistent Safety First financial Leading By Exa
Slide 7: Our Four Pillar Strategy for Success
Our Four Pillar Strategy for Success New Standard Expand Specialty Fill Growth Grow the Core for Operational Businesses Pipeline Execution National Account Customer Grow cross-sell Invest in related Strategy Service model and customer adjacencies, such relevancy as pumps Total Control® M
Slide 8: Safety as a Core Value
Safety as a Core Value During Q1, 98% of locations were recordable free, demonstrating Building a Safety as a core value World-Class We continue to enhance our safety culture with a focus on primary Safety Culture leading indicators, which helped us achieve a .88 TRIR for the quarter The custo
Slide 9: Market Overview
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Slide 10: North American Rental Industry Expected to Remain Solid
North American Rental Industry Expected to Remain Solid $Bn IHS Markit Forecast 4% 60 5% 5% 4% 4% 50 7% 4% 7% -1% 8% 40 7% 8% 10% 12% 34% -18% 11% 30 9% 6% 6% 5% 0% 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 U. S. Constructio
Slide 11: Why Rent?
Why Rent? Reasons to Rent Manage risk Save disposable costs Control expenses and inventory Cost control The right equipment for the job Equipment tracking 24/7 customer care No licenses Save on storage/warehousing Conserve capital Reduce downtime No need for maintenance Renta
Slide 12: Margin Enhancement
Margin Enhancement Applying Powerful Tools to Deliver Further Margin Expansion
Slide 13: Unique Operating Advantages Support Further Margin Enhancement
Unique Operating Advantages Support Further Margin Enhancement Best Cost Continuous Structure Improvement Lean Scale Initiatives/ Advantage Operational Excellence Business Metro Mix Model Emphasizing Higher Utilization Contribution Margin Potential 13
Slide 14: Telematics
Telematics Commitment to Customer Benefits Internal Benefits Telematics Targeting 87% OEC Visibility into run- Performance time & equipment monitoring & service Telematics Standard utilization alerts on future deliveries Locating of off-rent Ability to locate equipment for pick-up Retr
Slide 15: Stronger Market, Customer & Fleet Mix
Stronger Market, Customer & Fleet Mix Diversified End Market Exposure Larger, More Stable Customers Residential 4% Non- Unassigned 29% Residential 44% Accounts Industrial/ Key Accounts 52% 71% Non-Construction Increasing Specialty Exposure Diversified Account Base(1) Specialty* Accounts % of Revenue
Slide 16: Specialty
Specialty Increases Customer Entanglement While Enhancing Returns
Slide 17: What is Specialty Rental?
What is Specialty Rental? Trench Safety Power & HVAC Pump Solutions Tool Solutions Excavation support Complete solutions for Full range of pumps, Tool trailers stocked with solutions, confined space mobile power and air flow hose, & fittings for fluid hoisting, torqueing, pipe entry equipmen
Slide 18: Strategy by Business
Strategy by Business Trench Safety Power & HVAC Pump Solutions Tool Solutions Strategy Lead in product Expand footprint and Expand footprint. Utilize Gen Rent sales innovation. product offering. force to gain share in Diversify end markets Increase compliance Focus on Industrial, Indus
Slide 19: Why is Specialty Rental an Attractive Business?
Why is Specialty Rental an Attractive Business? Customer Improve relationships with high-value industrial Loyalty and key accounts Competitive Offer customized solutions to customer verticals Advantage requiring deep expertise Grow via expanding markets, cross-selling Growth initiatives, etc.
Slide 20: Economics of Specialty: High Returns on Initial OEC Investment
Economics of Specialty: High Returns on Initial OEC Investment Multiple of Cash Flows Earned Over Asset Life / OEC 8.8x 4.6x 4.5x 3.9x Trench Tools Pumps Power & HVAC Asset Life: 10-15 yrs ~7 yrs 7-10 yrs ~10 yrs EBITDA/OEC: 62% 56% 48% 35% Specialty is Accretive to Overall ROIC 20
Slide 21: Growth Through Customer Solutions
Growth Through Customer Solutions Achieve Superior Performance by Leveraging Unique Advantages
Slide 22: Customer Solutions Drive Revenue Growth and Capital Efficiency
Customer Solutions Drive Revenue Growth and Capital Efficiency Tailored engagement strategies to meet the specific needs of different customers – from large enterprises Engagement to small, local businesses Strategy Focus dialogue on solutions to increase productive ―wrench time‖ for customers
Slide 23: A Meaningful Competitive Edge
A Meaningful Competitive Edge 6304 5708 4892 4655 3750 3510 3265 2963 2294 1885 1607 1691 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Total Control® Installations Customers Value Total Control® 23
Slide 24: Digital Channel Launched
Digital Channel Launched Convenience – search and browse the largest rental fleet in the industry Availability – have equipment delivered or pick it up from a local store Flexibility – pay online with a credit card or a UR credit account 1,100 Customers Added Through the Digital Channel 24
Slide 25: Fleet
Fleet ) United Rentals:
Slide 26: Fleet Mix
Fleet Mix Customers Know We Have the Fleet They Need Trucks Welders 1% Trench 1% Power 5% 4% Other 10% $9.0 Billion of Fleet Light 2% 38% Aerial Comprised of Forks – Rough <1% Approximately 440,000 Units 18% Forks – Reach 2% 3% 3% 12% Compaction Forks – Industrial Compressors Earth Moving Serves Div
Slide 27: Total Cost of Ownership
Total Cost of Ownership $ Thousands Brand A Brand B Brand C Acquisition cost 93 95 89 Maintenance cost over life (parts) 7.5 9 8 Maintenance cost 9 9 10 over life (labor) Resale value (50) (53) (52) after 7 years (retail) Total Cost of 59.5 60 55 Ownership Gap vs. Best of Best +8% +9% Note: Sample d
Slide 28: Rental Useful Life Evaluation
Rental Useful Life Evaluation Rental Revenue % of Average R&M Cost % of Replacement Cost (est) 120% 2.5% 100% 2.0% 80% 1.5% 60% 1.0% 40% 20% 0.5% 0% 0.0% 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Resale Value % of Replacement Cost 140% Rental useful life evaluated to set 120% optimal a
Slide 29: Maintenance and Growth CapEx
Maintenance and Growth CapEx 2011 2012 Combined Combined 2013 2014 2015 2016 Pro-forma Pro-forma OEC Sold** $752 $933 $941 $1,016 $1,007 $917 Inflation Factor* 14% 14% 14% 14% 14% 14% Inflation Uplift 104 129 133 142 141 128 Total Maintenance $856 $1,062 $1,074 $1,158 $1,148 $1,045 CapEx Growth CapE
Slide 30: Capital Structure
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Slide 31: Our Principles: Maximizing Financial Flexibility
Our Principles: Maximizing Financial Flexibility Valuable asset base supports reasonable amount of debt – High operating margins generate significant cash flow/dollar of revenue – Asset base can be monetized to support cash flow requirements Debt maturities timed to avoid excessive refinancing n
Slide 32: Ample Liquidity to Fund Business
Ample Liquidity to Fund Business $ Millions $2,500 $1,736 ABL Unused $1,925 $1,000 4.625% Senior Secured Notes $1,000 $1,000 $850 $800 $625 $925 5.875% 5.5% $74 A/R Unused $475 6.125% 5.75% 5.5% Senior Senior 7.625% Senior Senior Senior Unsecured Unsecured $551 A/R $764* Unsecured Unsecured Senior U
Slide 33: Capital Allocation Strategy
Capital Allocation Strategy Invest in Growth Return Cash Managing to Leverage Organic M&A Stockholders Target leverage Continued organic Balanced strategy Completed $627M of range over the cycle investments to creates flexibility to $1B share repurchase of 2.5x–3.5x support growth and pursue
Slide 34: Consistent Free Cash Flow Generation Over Cycle
Consistent Free Cash Flow Generation Over Cycle Cash Flow 2008–2017 ($M)** 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD EBITDA ($117) $589 $649 $879 $1,772 $2,181 $2,599 $2,774 $2,665 $565 Cash Interest (218) (234) (229) (203) (371) (461) (457) (447) (415) (90) Cash Taxes (Paid) Received (4
Slide 35: Historical Capital Allocation 2010–Q1 2017
Historical Capital Allocation 2010–Q1 2017 Priorities Organic Investment Share Debt Issuance 10% 20% Repurchases Manage Leverage Cash Targets 22% Acquisitions (2.5x–3.5x) Cash from Operations 90% CapEx Strategic M&A 58% Return to Net Sources Net Uses Stockholders of Capital of Capital 100% Equals $1
Slide 36: Appendix
Appendix © United a?
Slide 37: Corporate Governance
Corporate Governance Focus on Best Practices Amended Company charter to eliminate Board classes Roles of Chairman and CEO are separated and the Chairman is an independent director 10 of 11 current directors are independent; 8 of 9 director nominees are independent Board and each committee ha
Slide 38: Glossary of Terms
Glossary of Terms 1. Capex: Capital expenditures represent the amount reported in our statements of cash flows for the purchase of rental and non-rental equipment. 2. Dollar Utilization: Annualized rental revenue, excluding re-rent and ancillary revenue, divided by the average original equipment cos