United Rentals (URI) 25 Jan 242023 Q4 Earnings call transcript

Good morning, and welcome to the United Rentals Investor Conference Call. Please be advised that this call is being recorded.

Before we begin, please note that the company's press release, comments made on today's call and responses to your questions contain forward-looking statements. The company's business and operations are subject to a variety of risks and uncertainties, many of which are beyond its control, and consequently, actual results may differ materially from those projected. A summary of these uncertainties is included in the safe harbor statement contained in the company's press release.

XX, description the and Form the company's the ended complete please possible XX-K SEC. more as year to well refer annual December a of filings other these risks, for to For subsequent as with XXXX, report on

that new no revisions You note reflect commitment order or or release filings any to forward-looking circumstances in www.unitedrentals.com. these no statements or to has access expectations. the company's update Rentals can at subsequent events, obligation to in website information on Please United and makes changes publicly

press You the non-GAAP and to see should company's most also cash and note to that from as to reconciliation measure. such the Please call the flow, to the non-GAAP company's the references EBITDA. investor EPS, financial of measure EBITDA release comparable adjusted recent include presentations free each financial adjusted today's GAAP terms refer back

Matt and turn Financial and United may for President Chief Flannery, begin. today over call the I Officer; Executive Mr. Officer. Mr. to Rentals Flannery, Speaking Flannery. you Chief Grace, will is Ted now

Thanks and you, everyone. joining our Thank morning, good call. operator, for

quarter team returns. Our capped notable raising and XXXX raise bar. fourth And theme this record a I'm pleased and our to past our record achievements indeed for number very by enabled us of bar the the with earnings revenue, discuss today, was which to year

and driving deployment XXXX commitment to recap our largest fourth integrating leverage and and did team results, what's capital while by full acquisition finally, continuing excellence our customers by a and operational updated this our Today, year with start The unmatched laser an ever. of our I'll to optimism second safety, focus with a for XXXX; strategies. followed our Ahern, quarter all on serve

highlights fourth So from let's with of quarter. the the some start

forma $X.X translating within of basis. EPS X.X% record. XX.X%. total revenue pro fourth billion, almost healthy increased XX% on increased Fleet Adjusted grew fourth productivity by XX% revenue quarter And grew XX%. year-over-year billion, $XX.XX. XX% by by $X.X to rental of a to adjusted by this, a to over a quarter to And a Our EBITDA grew record margin

line For of And CapEx closely supply the the we our that matched now guidance. was more add I'll chain in full year, quarterly the our cadence with historical largely $X.X be with billion spend to CapEx recovered, and rental to expect to free hallmark as cash cash free XXXX cycle we flexibility our exceeded the flow company to patterns. flow of our billion, generate a $X.X of business profitability view both throughout the a testament model. the ability and of strong

Moreover, long-term create be free The important and may value us our cash convey. of provides thing shareholders. tremendous this generation for durability to flexibility our most the to

Now let's activity. turn customer to

segments. healthy and geographies, continue customer demand see verticals growth, We power. broad-based across by end to saw industrial led manufacturing and markets Industrial

markets, our across the strength and plants, another revenue as rental nonres quarter, businesses. these and Geographically, a business strong infrastructure year-over-year show Within across see reflecting off growth range And year-on-year, with continued to we well our semiconductor-related construction both XX% continue specifically centers. as Specialty infrastructure include across projects customers growth kicked diverse markets. battery power, new jobs, of solid as double-digit to all data delivered up

opened year. full quarter, we for the Furthermore, cold-starts the XX XX in resulting during

turning Finally, capital allocation. to

our in made addition In to to over XXXX, $X.X shareholders. billion we the returned we investments

feedback most projects. teams. year expect by another supported ahead, to backlogs XXXX is from sentiment indicators, and large led importantly, solid be of field our Looking by we customer growth, This

X.Xx. our very Teds updated which plans to and to billion finally, a to an value. of $X This announcement towards too leverage even cash stronger work cover nearly year announce pleased thunder, shareholder but and and this shareholders I'll company want And deployment be our leverage our driving steal and here quick of to capital I reflects strategies, return to of X.Xx don't I'm reduced because much building target

what's comes And fully after funding more, growth. this

we is execute my competitive real you offered to Annual remarks, Management get all provided ourselves Rentals I to concluding hosted also hard an I and incredible strategy. Indianapolis the month. share opportunity gather our an for we work with over and maintain. want we It that as our before momentum Meeting strengthen our to and for of a this us to on highlighted differentiator team, earlier to leaders culture, X,XXX remind opportunity United Finally, This so which in build

see So repeat surprise accolades, I'll what Newsweek. including Wall say relevant me the win Street times from heard the recently true. action, everyone team it's and continues why in closing, you've In you many when it's When what before. be and to no continues to Journal

unmatched. our are customers, and our offering best and We building shop the go-to-market to scale, across GenRent serve business approach, are one-stop Specialty technology

giving puts center capitalize ahead us. confidence that well do, everything to and opportunities of continue industry team me to the the customers the outpace at we Our positioned of on we're

to for XXXX XXXX our to our our at And We you company. be Investor towards longer record aspirational that goals last year march May expect continue Day. we shared another term, we with

results. your our we'll I'll you. Ted, all Ted, to take us And that, the I'm questions. help so over with to over who'll hand these proud And teammates call then and of deliver

record numbers. good adding to strong into XXXX year points And reminder results before everyone. by more toward which the I'm our on Matt. pivoting for some going I to company. quick start another guidance, jump morning, fourth the comments color quarter One Thanks, before my

be As Except is is Ahern's results. to usual, them which adjusted to include are call forma, stand-alone pro discussing say the at where I is figures period prior as reported. I'll the

while That's million Fourth So and strength with markets average million let's increase XX.X%. year-over-year $XXX by that by said, XX.X% as-reported was supported increase the assumed of a diverse across revenue $XXX our productivity our numbers. offset strong increased a into get billion. revenue, fleet inflation fleet OER quarter or partially by added record $X.XX An our end rental X.X%, XX.X%, large projects. or in on of X.X%. positioning contributed size Within rental fleet

at were revenues which XX.X%, $X revenue ancillary which, with be higher is reflecting declined growth. year-on-year. our forma rental re-rent how fleet rate rental, within $XX I'll as million we rental X.X% know, environment On discipline. by basis, industry X.X%, by or you was increased million healthy revenue look a a add consistent that to good Also pro up results, year-on-year that with continues productivity supported

results. Turning by for recovering quarter our refresh original to XX% strong than attractive proceeds X% better as take retail of fleet at cost. $XXX roughly fleet returns advantage market million increased a to to to we continue used Fourth our

Our we decline adjusted reflected for the XX.X%, the been in was ongoing while several market that flat use last at the margin quarters. of about talking used have sequentially the normalization year-over-year margin

primarily $X the combined costs. on lines while quarter Outside a million Moving an to other $XXX reflecting EBITDA. includes year-on-year increase increased OER million The EBITDA XX%. increase rental, million due SG&A headwind in adjusted and variable were basis. $X.XX $XXX businesses ancillary $XX Adjusted a of added non-rental to of million million, a which up million. billion, to $XXX used quarter $X of were re-rent while million contributed for about $XX dollar within in or EBITDA, in the increases a record of was of change sales rental

to of As however, XXX basis SG&A revenue. total XX.X% points declined about of sales, a percentage

profitability. fourth at Looking quarter

translating basis decreased to our EBITDA points, earnings use Ahern to just supply to more points looked to basis. basis by seasonal adjusted you and forma XX% down XX an pro margin cadence return per rental of versus in XX.X% CapEx. to combined adjusted $XXX used ex for the When $XX.XX can reflecting finally, normalized supported XX% Our million, year-on-year EBITDA improvements XX% see impact was on to the to largely CapEx XXX due a increased share And as-reported margins. of at was margin, the chain. Gross a Shifting flow-through

see in also net our rental this CapEx, $X can million. which declined You

also return even good continues to very growth. of in basis flow, the cash significant a by year-on-year capital free exceeding with invested Free our absolute cash an flow to points at basis XX.X%, translating $X.X remains basis. Turning just average of free generate to on flow relative fund over XXX strong we free weighted both increased story cash business ROIC to over cost points. capital organic and and year cash XX.X%, as margin on coming The to billion, a XX continue

to Matt with growth our across this As investment capital us value More investors. a return bit. drive this said, provides lot flexibility shareholder on both a of in the excess and of the through to and cycle

balance to Moving the sheet.

in have no via at end. a $X.X quarter dividends. $X.X XXXX. shareholders of net was note $X end this million This XXXX. after turn while until share billion as $XX maturities included share Our our year. a the to year's during and ratio continue sequentially Notably, of through reminder, billion we to returning X.X improved all billion this And leverage total per $XXX return exceeded of repurchases the liquidity X.Xx the at over and to of long-term to the over translated Combined,

look core $XX.XX growth total implies our down has within basis, $X.X XXXX that slightly full rental guidance talk in Now a Total revenue, and billion, which year-on-year guidance. were the digits I'll roughly note our forward let's growth more on implying Within mid-single billion at revenue about revenue. billion of $XX.XX midpoint. X% year at to about of range sales our is used expected implied percentage better

XXXX, more add $X.X range. Within XX% XX% of in the rate are to billion of OEC in but versus sell XX% used, translating around we to norms to historical that about XX% I'll recovery that expect roughly a

Our is excluding as points of this impact and XX in margin year-on-year margins flattish billion. used, around XX% the flow EBITDA the of flow-through through compression $X.X midpoint versus at adjusted At guidance. the and approximately basis $X.XX XXs adjusted billion midpoint, of EBITDA reported of implies range to

billion. billion On in billion. cash guidance range $X.X our to $X.X of of billion of And with free strong to $X.X net $X.X billion is the $X.X $X CapEx we fleet another year gross guiding to flow are billion the side, finally, CapEx to

strategy. our and allocation capital Now updated let's shift to sheet balance

where First acquisitions. and on funding growth -- and through focused can generate we attract both foremost, returns, organically remain attractive we

value. to Beyond night, last several drive to And announced that, to we our cash this end, goal excess things. exciting is free flow shareholder allocate

are dividend we our introduced dividend a XX% our with or that grow consistent year our remains First, to to per by the shared with we long-term it annualized. payment consistently we $X.XX I'll quarterly share line $X.XX increasing per when plan in ago add our share intentions earnings.

Second, an of to $X.X $XXX we in in increase million of billion XXXX. common repurchase versus bought plan what XXXX, stock we

return or capital a based shareholders over share almost per to our In intend current $X.X share over this billion price. X% return total, $XX to of we to equating of year, yield on

our lowering X.Xx. range also full while this do to turn cycle X.X to able X.Xx leverage targeted to were we importantly, and Lastly, by

As this follows a reduction mid-XXXX. the half-turn reminder, production in similar announced we

of towards of know, As we've idea stronger been critically is most and this with working building driving shareholder company even value. an you something the

What's more? growth. been funding This all after achieved fully has

first share allocation strategy, to capital than our earnings EBITDA we ratio closer from Just leverage our end of more perspective. X.Xx at of the our XXXX, XX%, increased grown at more has revenues time, provide has while when XXX%, of enhanced X.Xx and same XXXX. per XXXX declined than has introduced leg to our some end to at the the Since by our XX%, the increased

on This sustaining. team is proud of shareholder our that strong combination very supported focused remains value and has very creation very results

over please with let line. turn the Operator, operator So call the the that, for me open to Q&A.

first from Raso David Instructions] with Evercore [Operator ISI. question come will Our

top I planned X.X to growth. growth how about With roughly that also that and some of year from fleet fleet think you this for to have wanted billion 'XX and look into on to the the to $X plus productivity carryover appear to that minus plus looking X%, in expect X% look roughly, fleet looks the gross right, say, 'XX. year, $X.X the like OEC this you're for you're It add you of growth you billion this sell

earmarked fleet is just to how are demand of versus people I'm that the trying into growth take calibrate growth? productivity on assumptions projects out you generally. essentially with And how fleet fleet you concerns just some top manage of about have some have some of So fleet then the how natural, there, of given type much think for would to that, that should lined up you the we argue the

it, Matt. And replacement. that fleet had you'd about This you is whatever to David. think then for out Sure, of growth, have you when inflation net the

what about depending think the all on of of $X we when about we original we're $X.X that, replace overall, fleet So and OEC billion to maybe and sales thinking that. buy almost billion

talking bolster Specialty. you're products invest we the general we're then And a to we'll XXX continue we we have using just there. growth. are the some your in of projects, to a point, some about on to Again, up So and in cold-starts of growth. business to going that going of know Within major support major that lot be our projects that,

So that to we point your we'll also have be some carryover utilize. to able

So we have. feel we the good about really positioning

And it time tough we last you've work from high exited couple on more How fleet way supply as through what to that we at during saw into as expect while there. in we 'XX, we're the acquisition chain some from turn all normalized Ahern really CapEx, this time all level, we year, a in cadence almost productivity? the utilizations talking unusually the probably will you about to of needed COVID. repaired our partners As have comps their little felt seen along about and XX% years be

off strong be than about industry serve. because we be And a the the We maybe think historically pay there. of leveled mix, a cost off that still the guy our continue out rate bit think in we the good the that of markets And will showing that of now inflation We've then if at we that XXXX. is were that environment. might in We think we drag over we fleet think productivity. put only and demand you there'll little level really be we There's pre-COVID X.X of discipline. positive can a that, in good XXXX, a throughout time higher think

to We be going more range. it's that, X% the know higher probably ] [ than to in X%

expectation. good but out, productivity into We fleet net that in you when forecasting guidance, about is our embedded that feel So don't XXXX. we positive throughout get

we target flow, this range. to thoughts? an large appreciating to on How helpful. also That's the guide shareholders. majority The free but a cash shareholders. returned M&A lastly, And a the M&A is should year lower then majority update landscape, you about last balance usage, sheet large the us Can year for give very the think

system allocation. the Ted touch have capital little M&A. M&A about Yes. talk the bit a None Sure. on for at that be Obviously, owner this of that we we a robust. I'll the We're remains specifically, a always add looking but the any always, and can for as We're at could expense of pipeline the bar, business. and open products assets we our better could of is high customers. new to

So repurchase turn still I mean turn mean, I just about one $X the billion lower the if capacity. you up even worth one with of the all and and leverage. think share is dividend

acquisitions So potential you and from before in. that that's you'd any add have EBITDA

leverage. to anything all. not So at It's opening lower this cash return don't is the in said shareholders. opportunity add. had our you to remarks, we at as And Ted have if to Ted, expense know his I

No.

key us the to where flexibility, great the kind us capital said, return within about in tremendous great And range to as investors value. gives we sit to and But currently, on a certainly, Matt touched always goal. shareholder puts think just our we points. excess that's be to going position feel optionality augment I we of

spoken we've lastly XX% the used it a the margins, understand lower? you incremental still bit some than that implied for that a Can looks like the XX% to there you activity XX%. me. It us lower of range if And year-over-year, about incremental That's bit little keep of it's the for inputs exclude help me, historically.

course. a And that's David, observation. of Yes, fair

about flat had in here and, of getting point use the it, key call a ex The several we to looking we is growth into for be what are thing XXs years. modestly I margins. than flow-through the think slower think would last experienced

XX% I and the were up before year XX% that. XX% we think last before up We're year. that year the

kind good growth think about of pretty absorption, So double-digit about talking absorption obviously, supports in environments. if that you cost nature really you're those the when fixed of

on year, it somewhat of a prior As still in you which year, optimism get margin, the looking kind to new as years. mid-single-digit outlook. have that about growth. weigh environment, critical view They do we And you X of plus inflationary multiyear we'll time, a investments same the more at great you dynamics core kind think the have Those and the key incrementals? a Matt didn't we At creates to this on in of heard obviously business, talk cold-starts you're At it's XX things kind and transition the do. investments. Specialty, We targeting make this year. like long-term they be are

a that's been want long about to want other surprise make core think about are business, whether there of aspects we area That's anybody. talk don't Technology. continue think to to you to to like the I telematics. And investments an areas

want of where mean we very talk continue kind of environment, have hit, we I want aspects some to those arbitrary be to target, focused. slower this if environment, that which to And those numbers. different to of don't current modestly very again You ROIs the about is in an respectively, flow-through forgo performance you optimization. are a strong will, investments areas

feel in going good outlook. really about continue because the we're So business investing our to we

else. Matt, I know don't So what

Absolutely.

these imagine internally. can we conversations You have

we So good are. feel about where we

question from next Wertheimer Melius Rob Our come will with Research.

how allocation. on about and questions you're new leverage range more couple a had I thinking the capital

you dipped a the everybody deleveraging on old on as of are think and had below maybe your journey, that. understood you multi-year, in recent been that of X-plus past, years and You've range sort I

below too save the hang much, acquisitions. the it? and range, -- kind end would of you've this upside but the to Will hang we the floor of for at low range and is more ] the you X.X% maybe should go reset be we out that of expect kind [ of you Now or a

As capacity. a mentioned, ton Matt that's of

it And upside take ton share I that -- about then range. get once. you use this I'll of capital year, all it, mean, know I to And [ go excess just think a allocation last for do buybacks? I question, so at generally, down think to within right if Is working that don't a you whole past to cash fleet ask you them do how just the X.X%. would ] there's potential add you

Yes. Thanks Rob. question, for the

live the So to obviously range. within idea is that

that the for prior about with was obviously, our low at set case allocation January. As year, in the the We range, capital plans nothing religious the margin. end

boundary so EBITDA up just for in if hypothetically, ended think look should X.X, when the just and that the through We outperform we And don't sake programs. disciplined something on and I these for were planned that to us within being hadn't you suddenly staying argument getting, step sake we very to to you at otherwise for do. do of focus go

X% That X.X% X.X% every said, have in to ] of a [ X.X% do we I'll range. that remind people, there Sorry, living And intention is overlay. to cyclical

concept the you when of trough And end be is to lower the the at you're conversely, be EBITDA, obviously around want within want So that to at the you at boundary. peak, range. upper

So please remember there's cyclical overlay. a

that all with growth more firepower tremendous M&A. whether organic Even that with to we through use and other growth augment us acquisitions through initiatives, earnings it leaves said, can it's

answers cleanly. the And That that dividend. capital right. pretty on one then just last one All on allocation Perfect.

up obviously the payments. You took

over up took if And follow do would, more reiterate, been to earnings? trend there. that? Will there. and stop have how you time up do by policy Your it I'll you you just that line what Or earnings than just your

Yes.

in dividend, cash But want got to will. to a profile. idea, ago algorithmic, capacity flow we've the as we we So earnings. don't an with you that aspect share we support the get said think it growing certainly, We as was capacity a recognize the which to the growth attractive line of growth and grow long-term year if

really said be So of call intent. what dividend We've we benefited is say to that at that aristocrats it part I dividends, long aspire would we companies That's look that list. group. the from

with our get you'd of is growth grow of long-term earnings intent kind the formula absolutely we to think too to like, but there? a the up how what look want of don't caught about I power will in company. So consistent at anything Matt, dividend add

No. No.

I aligned, Directionally, won't mathematically It you won't it be. right. will be said exact. but it it think be

Sachs. question will Revich Our Goldman Jerry come next from with

that if magnitude and the Ahern the within update integration from the margin wondering what's through that on could that guidance a how and on you uplift plan X-year the for asset. I'm on that's separate integration halfway now we're just trending plan us 'XX, for of note is embedded versus GFN,

wondering years made EBITDA laid folks us growth I'm and just OEC on are when the to could on update X plan business we out where if you double you acquisition? that that the over you

Sure, Jerry.

of first, end the we to And of right? we We're get on Ahern the that acquisition, as all QX, XXXX. continue talked continue facilities. complete facilities technology, the to we the in in the processes out been the our to to We'll So pleased through about we that as that of then efficiencies integrations done. when to fleet about roll those our fairly Ahern was went talked work legacy people going all and some adopt that say has business did

to at can't and can't them You have drink stick fire everything once. hose at just X-inch them you

that as margin to separate get scrambled. improvement -- far those in pretty business. in contribution, So further as we'll But continue egg's the

networks all GFN And but what perspective, So and separately so you into say, that I a been we're pleased we've we blended think out calling out region data. capacity far. pleased Ted, that our district different unless added. specifically From are there, with what have seen we've these don't existing the some I'll about

is But we've ahead I'll say of X. been really from schedule what year

to achieve have expect Ted, don't the sooner specifics doubling mark. when years, in So that talked know, we given we X-year business X GFN. any about I that than we about

No, no.

frankly, specifically has complemented on our deal, about I one target. lapped of add exceptionally we gave of the say synergies ahead some thing the the ourselves of really well. and guess targeted we're I'll business can reached margin uplift that we months. in business 'XX. rest 'XX we've really Ahern that now Just Jerry -- we've XX the think asked The the The I versus

a got within way probably there We super XX. majority the of

much that benefit. synergies 'XX. able there So pretty minimis we because realize It be of really to carryover would kind quickly isn't de in incremental were the

ask you us [ help roughly within XX. planning one. what a if So give Trench 'XX. business get for Can then lines just cold-starts trajectory just sense just ] mix can a is one that I different and the us mix from you're any The last versus that of to other feel between you saw in

It's that But and Affordable team Yes. some broad. could have I our continuing Rollout we it's of Power adding pretty business, HVAC mean distribution right? on-site whether continued you penetration. necessarily maturity our the largest imagine, don't penetration, of products part different mobile to Trench. levels. but be to the that additional is reliable geographic Trench sensation, get areas, X right? storage, need the growth ironically, footprint. for not their would As we're

digits the opening my in all all the said product lines by in I businesses, specialty double those as -- quarter. remarks, grew all So

we're pleased in growth really headroom for So specialty. with that continued

Our comes with Michael from next question Bank America. of Feniger

past or -- in at much do of Do you gradual and with to this business conditions, different you we a we is recovery? Matt maybe see kind mix the through mix flowing come that financial how were verticals some some your last is the easing of really portfolio time big longer now, look Ted. If downturn see MRO versus your more if and exposure, it cut, for nonresidential believe after rates the different took back. environment back business construction,

So forecaster. We're still very we We've don't it's as the I'll there. And said, -- to be slower year impacts growth growth But growth think could double-digit be an out right? an pretty market rates, start growth. that of I seen Fed Or not as QX pretend about the opportunity in in broad-based when we easing the business. with local expert pleased exited economist, right? what we the but

while be starting And this maybe that's lower. why of market as we to We're go We and see funded, interest rates of guidance growth pipeline As that local our is. feel That's very business transition 'XX has built it right? been us the out X you local a future being that our to pleased, forward. while as to that of growth some out as throughout a year. talking that allowed for tailwinds we've and in slower way been come the about trumping a market hedge we've with growth 'XX against

but it our That's do plays majority continue that, experts customers The in feel out, in to thesis. not We're of always positive. customer we talk to How Michael? confidence been customers. our our index surveyed our

been the there's So have the don't I want back not their just growth local that will the or actions. ramp a think we paint market. in couple what problems picture do It's takes to once years, that we it negative it's for Fed last of and up

take while a will pipeline The we long. how fill, the to little but don't really have ability to forecast

free of just in you delivered billion cash flow just Matt, mean XXXX. $X.X And Great. I a Right. follow-up.

year flow you're billion another you baseline guiding the still that you're any XXXX, a new fleet. billion going new say line still level $X XXXX. why baseline reason in Like marker. and $X year the be Is transition saying transition this a XXXX forward, shouldn't a in this it safe we billion You're year see to URI growth. some kind In thinking if cash for that going is it's investing maybe is is free mean $X of I forward? a that

Mike this, never because through of that guidance. really thinking kind of I'm only given we've So, kind

great the long kind were that more So kind kind frame as of answer. of outlook, us feel our certainly, generation to saying a I heard thoughtful of construct function of business. if want again, things mean I We normalized you hesitate give tend we to you free And about to cash apply more think I to think cash give I characteristics you margin. reasonable you've and to a numbers. of through

seen do we think us something we in sustain. feel I historically is recent can history that continue to But what you've comfortable the

But I flow I and a And talked and think future you're through Ted X- been be evolution would we flow business while agree. change a want he in in doesn't cycle. way disagree. the Yes. just I a he make given to business -- us forecast, said driving this sure don't doesn't is want XX-year to cash the cash about something the thinking back about about the what's the free to positive

sentiment we're like with your I the just out been of way. the feel that out. I proving all agree forecast And question, sentiment not going we've to and Ted's And

one last in. Fair enough. And just to squeeze

going with disposal, where be guidance -- Just just where feel is your where do helpful. would maybe right age you pre-COVID? around relative were That guys it's your to -- to now with you fleet CapEx what year end how this

Yes. feel is. where fleet Great actually about question. the good We really age

we're think just we've -- into right look technically back longer-lived pre-COVID I the at storage, we're we're from XX some you months the mixed over mix this for that But a assets adjust fleet. tanks, when perspective, We mobile levels. of now. to at

So that some we're back doesn't It age. mean the to turning a assets. still want of we healthy level and keep don't to fleet refresh of

But of pre-COVID about are mix fleet. net-net, good levels we when adjust feel really where back and you we to for

that simple X CapEx, we're average, months would in mathematically, to XXXX, easiest improve the billion going XX fleet is $X.X assume we're assumptions on right? of to this you sell $X.X average. think And playing way say billion with can that And to just months convention on really will that going midyear of further old about is buy

how -- down imply kind of just see mathematically going you're just further. can to would So reage how you that

XX get adjusting the acquisitions, for going to levels a point, to those kind better. Matt's in back again, nominally of XXs and it's upper So to pre-COVID little

of that to of fleet back gets of optionality. balance just could sheet, strength strength the a gives it us lot the So

Thank you.

Ken Our next (sic) Citigroup. [ Stein question ] from Thein Tim with come will

Matt, your the each in much know quarterly, a too pose about that of is that but of and comment guide fleet the factors construct, I -- be able you out that -- with inflation. whichever. you goal was outrun to inflation -- Or challenge other will be think Tim Do when one. too came to productivity, should that? I target think I when the that Thein, back you Or thinking -- was much like don't of you quarter? to we that on about seasonality excess number a

if or we as that achieve pro target Whether year, at You every past quarter. how our did year. should at not, that is forma that X.X this about we which this right, actually think it it, our achieve look it is, past looked to goal exceed is you we even

we -- we but kind a pro of from So level, reported business. the is a forma, we did didn't which get as how we manage

towards. So that. think market we that's marching goal. be That's is And conducive doing our end we'll to what the

Got it.

tax but know think is we it 'XX then taxes go as of proposed -- of were cash -- implications, 'XX thought even of that? if it that, you implications cash what maybe about should through if in it to flow, or bonus through, at And the -- 'XX, potential can what notion if thought you then that looking how through depreciation don't doesn't there's cash from if a to it, restore on and go Congress the knows taxes, maybe but it who what would Okay. I passes, free when on actually specifically bill Ted, EBITDA -- XXX% conversion

yes. Yes,

I'll our If, So it's that it understanding big reverse and in even but would to were those pass, take if obviously actually order. be is if, retroactive. a

benefit certainly a in you to 'XX of our dollars worth the would see the question, forward, the us Taking have cash up as significant to 'XX. obviously that about part would going taxes think So given XXXX, cash step versus flow cash first in you taxes. be hundred several of incremental it million

million. million you about is if the I in $XXX look our cash We about $XXX investor think guidance presentation, at of paid taxes XXXX.

of you was a tax Ahern on basis. a step-up. $XXX this benefits we I the cash from had a That how number at So representative people, in of XXXX think the fleet about would remind million go-forward expensing one the to perspective of all not see is acquisition.

So worth up 'XX versus million. like apples-to-apples, $XXX $XXX benefit that about was million is of you step more the 'XX would say so

within don't about you gradual our that and XXXX so this forward, see, taxes sunsetting on that's provision income you reform, as assumptions And you going you CapEx, a that you stuck see would see there. we're passed as depending and tax cash your growth would obviously, pretax with think on have assuming increase this bill in

known the something in XXXX. obviously legislation manageable has was is we think But that very passed since and been

expectations something Tim? that that capital our strategy been a perspective, we've help, want. built you into from a planning a of from get all So perspective. balance I'm and aware Does happy sheet deeper of and forecasting it's to obviously if allocation

foreshadow of doing last noticed we're how Thank in services just within and K, that Specialty United. meant efficient. more things I to there within that's kind risks -- in? offering no, No, Specialty it just a something you you're the activity is then stool statement And made more maybe to in something adding that curious, about maybe time. you lawyers to here, of so was more one, maybe something Ted. the the more the drop terms call deep in an I'm risk introduces But or the legs and appropriate within

more latter. much it's structurally. nothing I changed the think that's just I latter. mean more there's the Yes,

from UBS. comes Our Steven next with question Fisher

of it is while to investments in sort dollar in the a yourself position of of it like is? make headwind long-term pretty So can And I'm or kind either to more you've be through the you these the just some if Or even the quantify impact in on ongoing making wondering put are XXXX? is like seems a growth slowing. you're just onetime good 'XX? kind of XXXX, what flow-through these in going terms investments then investments

Matt, So at start. that I'll take one, least

another say, of like to operating in isolation EBITDA for X% the or to be materially is argument, at headwinds the perspective XX you something sake are. if it framing cost ] to wanted from million an is hard get this Maybe be you'd the EBITDA, way XX less which from looking would cash just what's So what about dimensionalize cost a think perspective, to our cost. it than $XX [ to is difference

that margin cold-start of So net is. investments year we that the into the don't of which, of drag what are again, is get kind showing profile excellent one -- the effect cold-starts, from

of surprises speed both kind perspective. But perspective revenue as you anybody drag efficiency to it's it a that think an and I don't get those a fully from up

not we going move needle $XX of of the of not It's out On the context the technology insignificant. a call It's I side, in billion investing there, the again, in understand people move to think dramatically. can technology. but company it revenue specifics again, with that don't cost

let's parties, look If smart think But say, going fees do leveraging investments, you get when on stretch but AI that right? be you in optimization into saying a work term, if you pro about great can just even of far I'll at you the -- we think are the as lot I these things substantial, AI, investment. bring certainly, but third learning don't machine we around get and for those you want as to -- return

And is headwind so this that short-term be it expectation. again, a could our Yes, year?

what incremental function in the at point, of 'XX? that you? In growth of to we make what not decisions it terms it and like may or it be would may address we around We'll Matt, looks need will investments make. a

said. Yes. No, I think well

not to have, a I real something to we're year, have so That's growth. in it. continue that we think transition run the between environment, the footprint run right? we really a a we future There's that and austerity we the tools as systems conversation. different improve and us Which the to is to playbook. it the we have going for XX% grow were why in an tone have cause program, say, the that we the of would difference flow-through XX% make If business

saw play, it expect different COVID. for few nowhere bit to during be near and years. guys run a Then we that nor do a you'd world little we're of a You

maybe into Obviously, in just you how looking XXXX be very of are what for 'XX. Can and going Kind still last market Got vertical you sense of an semiconductors kind EVs, different a you will That's going to bit. telling still you're customers if managers that for just strength. to is talk be relative know industrial your versus your that year look it year. about 'XX and but helpful. field is and than dig this just 'XX? how strong mentioned to how was very in And 'XX? Obviously, little I about manufacturing then curious I the it's area different it. could some

carry think thinking it part will QX this in projects. where about manufacturing. We saw a onshoring play talked it growth be that QX, of good largest vertical we the Well, industrial I of about the in sector of way in you're strong, and manufacturing. industrial to part growing plants the was mega When think continue through and was it I that the specifically big the we a our all the track year, will

has a really big LNG off the yet even nor haven't in That's yet. We space. in on kicked way touched opportunity industrial it another

about and really good I markets. really end the oil mean feel the outside we down. upstream. of So gas Which and industrial was

we that in be industrial Outside in mines. rig it's strong down of count. the was think to and continue You expect year That guys next all to probably see another down year. in and be we the going QX, to that,

Our Seth from next Weber Wells comes Fargo. question with

dig to Matt, I bit. in just about I wanted the normalizing that comment CapEx. appreciate on a little

of sort the be thinking So that right percentages Because total. for CapEx. gross year that we CapEx is you're for quarter how that should Is kind about? first the double-digit like down of first quarter your of in thinking I about low suggest -- CapEx the think historically, number it? would Is

Yes.

of As get QX have the we've be process it. to bigger, be that that to have and QX the have the little years just gotten bit fair, it to to -- and to a quarters partners year our to bigger, deliver fair branches

year the way, So XX% still is we will of in think more our XX% QX. a down like be to in by believe. That kind norm I new that range

load in bring is difference didn't flattish. we're we wow, that in QX. But the But

be if of being we'd looks to year XX% And what of So the outside quarters X/X because of to think at range QX even the and like. on to about in variable bigger want we the more in QX about it think and say our quarters depend. then that the but way the would cadence, what it it. XX% QX, to do, look the kind depend way without that's about exact, forecast we CapEx we middle in couldn't right, exactly is those

to percent go in question we your full on had XX-plus first down We quarter. to just Seth, our if of CapEx quarter, the year strategy the last So the you took year. implement to back first certainly

It's was XX%. I think XX%, $XXX it million. about

year, is CapEx the up will fraction. 'XX, have of and CapEx we had fractionally actions to given landed this down the smaller quarter in be think chain you of of but to 'XX challenges the should be supply we faced. you're because if going So fourth the unusual quarter the first thinking a People the make

Yes. right. That's exactly

be maybe on just starting And even environment an maybe give some those like seeing just are these these projects that. projects appreciate forward? XXXX? can debate are moving Okay. the of that and you talk those to going because impact think projects on shovels the of forward maybe there's are in around can just this those forward that go and for kind to to get process? dirt just I where these Are lot to seeing are skepticism projects I And of sort we think, that win you're of to just comfortable on of anything mega of then commentary, lot dimensionalize stuff project of to projects? in United sort and you and competitive or you you a just activity can you that us move Your talk a help rate this -- touch of, some projects will

first And from of any So right? our we're... skepticism perspective, not all, there's Yes. certainly. Yes,

I understand. No.

because -- required, planning jobs because These have than that's market no. no, we the the No, do this to frankly, visibility more we business. of local

well. I I that, think in that feel the large Nationals about participate we as the our solid our So And peers prospects do can of projects. really actually most think on

hear now. you'll And projects But their commentary. ongoing right continue that are think I to

know gear EVs. a for example, I people I largest least hasn't cancellation of have talk a in today use, at about been Some talk been but ever this did yet, the 'XX, on multiyear them an half tailwind. we'll projects and EV of There right? there've on we've been lot back is

paused one was is smaller project little rescoped, now back and was a online. because needs think I X and environmental So

a coming. seeing we're think but major work risk. seeing So idiosyncratic then a And reasons, as lot in -- we bill We aren't of for few just infrastructure isn't the really the mentioned projects. cancellations not LNG earlier, at I delays there's that's at all

regardless business with the term, more a really tail today, country. support what to more showing And but manifested debate, multiple it discussing hasn't and we've even That and the in years. you that's up one a bipartisan longer longer our I happens are we importantly, and as it that's got need But to fully is IRA, that could the That election. was been the then tailwinds that of guess we for which was yet. one expect

you'd there these getting And guys add you on you anything been is win rate how on projects? -- can Okay. successful or have

of mega national provider type No. a We people and the view say and for term. new can these to projects years, became before the do jobs long that discuss. as equipment competitive, is many, not we've we been many, that All of do I many it's largest something that accounts

feel good our about we So position.

next question comes Bank. DeBlase with from Nicole Our Deutsche

lot on So I been I that ground here. covered sales. equipment left had ask of a just has to wanted used one

are wholesale I thoughts of any level guys long elevated in how So you of can than mix talk versus normal auction about of guess kind expected will forecasting. you on equipment higher year also that sales another of used investment last? the And 'XX?

Yes.

that mean, RUL an I OEC replacement where should data. you exactly line from not context that think with perspective. So the knowing be how about in to that it right is sold us,

the are bigger, it's on while a So bigger numbers base.

how approach returns. cycle So we by driven that a is systematic and fleet to the manage very replacement

but not -- basis. interpret exactly dig this into to that it's question how Nicole, tough we to sure can I'm on know So that further,

good feel that. we about So

in like of or would broker, you'd going distribution. would time, kind you to that terms These we'd XX-ish to of X/X doubles channel of low numbers. something retail, kind expect mid-single In to But and see back auction packages, that trade rough digit. you'd leave through in go that something see over so mix, are normal see like going

especially difference in of ] to half. we the clear Ahern out that talked the compare XX%, we was you some about, [ really, big to that inventory second If used auction

seen that have margins. would You

recovery that in You too. seen rates would have the

don't So I that Did miss if anything? know the second I answer part. helps

historical what about coming think mid-XXs to just a would an Nicole, you we that percentage see as we of when above off as pricing number rise. to recovery new add, rate, of coverage. And that umbrella forecasting from a we're of think you but acts the still let's continued used that highs the talk as is about. That -- as do right, equipment I No, bit down OEC, use could the

implied back we guidance. think this So we're way don't to is all nor mid-XXs in going that

the mid-XXs So up to we low we'll think somewhere still peaked where we the level things think between where XXs out. in is historical

good to boss, to but like correct your It's XX never more XX.

appreciate I that.

Newman with Ken Markets. KeyBanc Our next question from Capital comes

going the mega So the touch an driven the projects bit to primarily growth the and back don't just Matt, XXXX. visibility manufacturing from project thinking of first to I expectation little lot that visibility we're you a a guys multiple on for think talked forward fab see side. your wanted amazing your talked on I'm as power year But side? semi and are you obviously, the customers. question, to any of another kind by 'XX Obviously, about is there's the obviously, not see had $XX billion-plus infrastructure I activity about, like -- that manufacturing Because

in growth 'XX? what's So of driving here weight that kind of

what have there. verticals growth caught get really I means about projects specifically think up -- completely no Yes. definitions. start opportunity. mega of not We've a to What trying this it we and talked number means. different kiddingly projects, would we guess, mega there's talk I'll I whatever use one's I'm and even I mean, where sure term on about

that at But If projects." is be infrastructure, our manufacturing Certainly, are all we've elements XXXX, in good at sustain is top then team or list. look think seen strong. think you XXXX. about are into these not may very about which and of areas healthcare, you will from where may "mega that field the momentum that, and itself of Power education, the indications you customers

mega but kind us. this they are important -- qualify benefit don't could them of but as that something if know of add. very projects, I are of some don't maybe term, areas strategies be -- those many that verticals Matt, they're maybe that we've where still to So got strong

said. Well it. covered You

because, beginning then, disagree that's a year. I'm think this guide No, being equipment about that could rates at curious good us you, year. Matt, comment of with is assuming I you rental if were And the square helpful. productivity chains the with for are I drag the but just margins guide talked on fleet and us call, optimism obviously, this help maybe sales for to going supply normalizing you used Okay. be don't a

where for kind staying the here year? support So positive is of rates the for

couple environment, discipline, the That's a foremost. and right? one, industry Number has you that whether So want things. there's caused has growth of shown discipline still But say a first to in that this latest more in the equipment prices, versus cycle robust of demand of information it but need information demand rising because also was a because we're previously. so much that or

And going would consider or that industry negative even assume probably for us, even the industry, a rising on I imagine now. it's want overall, can't go about industry reasonable how feasible. more to buys industry. the at that mature different and need best people But be now, pricing see financially different it happened, the and to always but There's we it's a a a anyone -- what It's prices, information would there. back think pre-'XX would in I world more if definitely the thesis the

feel then our it obviously, every about in we all and business why are reasons really what we that these So we day. also, feel good see

comes question next Scott Our Schneeberger with from Oppenheimer.

first the had I parter. X X, of kind

with you little I done customers. surveys I your you talked compare your largest X customers, Matt, could a do about So assume when about just I being maybe -- XXX thought the referenced -- and bit talk with contrast you you've surveys mean weakness those categories? that earlier always you smaller surveys. local and

see you demand at seeing the lot customers? a projects your there's where but do you question of second part know let bill, of I funds -- do infrastructure -- is are long? funds per those this flowing you And

little I'll let the Ted talk give on details infrastructure. set you customer and a the bit Yes, survey to and some

mid- are see. digits talk that our we to business, local we single we When that local low some market about when were places. see So in markets we growing it's growing digits what segment customers slowing double

that what see when the we see. it's of So we reality slowing,

overall, get of than towards to that to be And I The discussing the think we'll we've projects mistaken. do is on major historically. tailwinds that the survey more just have positive but you that, we didn't still want to and and Ted Ted, putting our want will touch be we been the fleet survey?

Yes.

Scott, can responses. what we the of and survey call on look we at the And can slices. look is the XXX constructed way at And we trailing different look we accounts, more national at to So like as are average the X-week strategic then customer XXX. and certainly, total responses kind

think size. survey living a in. pretty are our that large it's it's representative pretty customers So the We of world

those diffusion-based the a I relative -- are basis, results, it's strongest would a say, certainly, index. on

bigger categories pointing into the So going the to that to fall are those growth customers. definitely be

people talk would a what the total underpins are this the mean that's in but lot that infer think not heard what today what should are to of us accounts you've about composite I be negative. other

They're just not still positive. as positive,

in fraction continue We That's the still being the see that very actually an low small We've exceptionally see down. that true. world talked going ranges. about single-digit to

any consistent confidence kind with talked for seeing way you from expectations like customer not are our It's seeing -- kind we're just are about responses kind of of we've 'XX. So indication. more our the of bearish indications that are

and guys? And then loan funds Great. anything infrastructure bill to specific

those seen awards, So we've too.

it's of big XXXX. awards those So good made see to been lot a in

ground. at look list website, few broken the you of that's have If the White top on those House very XX

an You've a that it's New large would I 'XX. New between York 'XX tunnel exceptionally project got obviously and maybe event, be assume Jersey

But and see in could But there's dollars started but we I It to tertiary engineering definitely highway the that we've said across secondary a see We very 'XX more really lot and awful airports that wasn't year, ones, We in an We the you suspect didn't it of there projects in this. some. attribution rodent number there big seen saw into much 'XX, we permitting. ground. was break saw 'XX, that just IIJA. world see in certainly to airports. 'XX. the anecdotally flow where of late

about heard that. You've us talk

You've that seen some restoration and won. projects in the Everglades elsewhere we've

summary more government some that provided audit of gaining aware again, anecdotal feedback ends or but There the has certainly the team. up that great we're from momentum. So isn't it being

I'd use ready certainly. agree. been shovel there's word us work I'd say a more lot behind there's your ahead, to and

in good I those And our But fourth the for we're who while. just the everyone infrastructure we is as something this. growth. remind in innings even So we've to growth in early had quarter, had of sector as really want we've focusing on early started years the this with have XXXX couple been covering And acquisition past the of plus. us NEF for for a

ahead the active more next And point, think, to infrastructure us far this. So comments, Ted's of shovel-ready as we on we over what years. about as work the good in feel room few your

that. Good color. Appreciate

follow-up, probably you. Ted, the For more for

of EBITDA of on summary the is higher your for technology on level but a I that kind my guidance lot you'd add? little hey, accurate? a think than Just a cold-starts of I heard growth And we've call, summary a revenue for guidance this little growth of what same heard less revenue, investment. and anything takeaway, That's

make last about do, a understand, who's one the the but talked sure think the anybody listening, is used we prospective normalization else that piece Scott, for used to of I several the and market. have So critical you you years

'XX. to in see versus that started 'XX You

dollar we time, and those and an the those about driven recovery right? that years cash not was we flow went extraordinarily You to economic of in $X.XX, would rates, of be on an out depreciation. recovery it our get -- to we X.X XX-month In is think people, then everybody didn't only for that equipment. have XX% Historically, tell wouldn't $X.XX to expect by way sell easiest asset, to way buy were remembers. the Probably unusual really this that XXXX, $X.XX express as recovered environment we rate. selling At old sustainable

fast forward to you the XXXX, dollar. back So got we $X.XX on about

our part what's to $X.X OEC billion billion think about sold. in expect guidance, normalization. was if for that So of XXXX we it's of you $X.X to proceeds embedded getting that at of And and about what $X.XX, relative It's right?

still but 'XX, from those down above So historical well norms.

expect, still of As will that are I XX%. we very you'd impact margins. XX, Margins think high. about In the entirety were

went you pre-pandemic of XXs. back If levels, the was to in upper more normal kind

'XX argument, XXs margins, used margins if used you -- really assume get to, to you you recovery markets let's But that in if margins. for that way dimensionalize the to the that that will through there low a a all normalization continue and very guys you what right, as recovery revenue as EBITDA say, of apply that, between strong normalize. we and linear facing impact and see adjusted say, there to overcoming that we're give margin your rate, said, you'd I you normalize the is headwind that that as sake When well. was on play you So as relationship will all

that's kind kind add a flat you how about those think this there? ex you do where margins So Matt, that, of when numbers, you'd used. to we play anything year-on-year to of you with handholding -- gave see you quantify

We're good. Very thorough.

call closing for conclude turn And additional does you. Thank to question-and-answer will this any the Matt now our Flannery remarks. back I or session.

your you to join latest site, always, Thank appreciate as We glad remind time, could I'd our has questions. our call. available And to just of everyone thanks the answer us updates. you, operator, the I'm on is any go your to everyone, and deck today. And and investor can QX you Elizabeth

the all call. look and April. seeing now you So you safe, stay can to I Operator, in end forward

participation. call. you for This We your today's conclude thank does

You may time. at disconnect any