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Continuing Education

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Lincoln Bell
Lincoln Bell

United Rentals Buys Nes

United Rentals serves primarily three end markets, a) Industrial and other non-construction rentals, c. 50% of rental revenue, b) Commercial construction rentals, c. 46% of rental revenue and c) Residential construction rentals, c. 4% of rental revenue.

united rentals buys nes


Equipment rentals make 87% of URI\u2019s total revenue for the trailing twelve months ended 30 September 2022. Other sources of revenue include sales of rental equipment, sales of new equipment, contractor supplies sales and service and other revenues. We think of those revenue streams as by-products of the rental equipment revenue.

Customers can choose to own or rent equipment. Rentals made up just 20% of consumption in 1998, but a preference to rent vs own has increased dramatically with rental penetration now at 60% in U.S. This has been driven by a growing focus on core operations, minimization of capital intensity, improved availability of rental equipment, reduced downtime associated with rented equipment and lower expenses as maintenance, pick-up/delivery and storage are all effectively outsourced. Exhibit F illustrates the longer term penetration trends in the US and compares the industry position to the UK which has effectively matured at 80% rentals.

The best example of how URI could better manage through a cycle would be to look at Canadian Industry Data, show in Exhibit T. The Canadian rentals industry had peak margins in 2014 then went through a 2-year downturn where industry margins fell by 830 bps. During this period, URI used its relocation and repurposing expertise to move equipment out of Canada and into stronger markets while demand was depressed. This highlights another dynamic where subscale regional peers would not have this option and may have been forced to sell assets into a weaker demand environment to generate cash flow. 041b061a72


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