With a 25.1-percent year over year rental revenue increase and 27.9 percent total volume hike,attributes its solid growth and outlook to four primary “buckets,” according to president and chief operating officer Matt Flannery.
“One is a widespread strength in non-residential construction, particularly in the commercial and infrastructure sectors,” Flannery told an investor’s conference call as the company announced its first quarter results. “Second, is the rebound in industrial activity, including the improvement of oil and gas; and third, is our Specialty segment, which continues to deliver impressive results; fourth, is our scale.”
On the topic of non-residential construction, Flannery said, the leading U.S. indicators have almost all been positive for a while and United is seeing this echoed in its monthly surveys where customer confidence continues to trend upward.
“The most active geographies are the ones with the most diverse project mix,” Flannery said. “Along the Eastern Seaboard and the Gulf States are good examples. They both had double-digit increase in rental revenue in the quarter and the wins came from a broad range of projects, including infrastructure, power, retail, and commercial work.
"Now looking at the industrial sector, we're encouraged by the fact that we're seeing widespread activity across multiple verticals and we're tracking a number of large projects slated to start up in the back half of the year that will carry over into 2019. Also, the oil and gas sector continues to be a pleasant surprise. The rise in oil prices has encouraged drilling and production companies to bring rigs back online and this adds to the broader industrial demand for our equipment.”
Turning to United’s Specialty segment, rental revenue from its Trench, Power and Pump operations jumped more than 36 percent year over year in the quarter and Specialty segment gross margin improved by 170 basis points. And, Flannery noted, the company plans to open 18 specialty cold-starts in 2018, and may increase that number if the pace continues.
On the topic of scale, Flannery said, it provides benefits under any set of conditions including the current environment of growth.
“I can tell you firsthand that equipment availability is proving to be a challenge for some rental companies,” he added. “Customers worry about being able to find the equipment they need to keep their projects on track and we're very fortunate to be able to give them that assurance. We entered 2018 with a much larger fleet and footprint. Our fleet stands at almost $11.4 billion and we have about 15,000 employees serving our customers. Additionally, our digital capabilities are reaching more customers every day. All of this scale is beneficial, but it's our ability to leverage our scale that gives our customers the assurance I mentioned.
“And one of the most important ways we leverage our scale is by cross-selling. When you see the rapid growth of our Specialty segment for example, it's not just because each branch operates strongly, independently. There's a significant benefit that comes from giving our customers access to our entire network of offerings.”
Flannery noted that on a company-wide basis, there was a 29-percent increase in cross-selling.
Flannery added that business in Canada was turning around. First quarter rental revenue in Canada was up 11 percent year over year with positive rate growth
“Ontario and Quebec both have big plans for infrastructure, including a massive public transit project in Montreal, and Western Canada continues to rebound, so it’s a good overall story for our Canadian operations.”
For more on United Rentals’ first quarter results, click on: http://rermag.com/headline-news/first-quarter-rental-revenue-leaps-251-percent-united-rentals