United Rentals, Inc. (NYSE:URI) Q2 2019 Earnings Conference Call - Final Transcript

Jul 18, 2019 • 11:00 am ET


United Rentals, Inc. (NYSE:URI) Q2 2019 Earnings Conference Call - Final Transcript


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Matthew J. Flannery

Blueline is an excellent strategic move for us, one that will drive profitable growth and attractive returns for many years to come. We gained great people and increased our capacity in key geographies, and we'll update you on the integration progress again in October.

The other short-term headwind we had throughout the quarter was project delays. Long stretches of heavy rainfall caused a number of large starts to be pushed later, but we haven't seen any cancellations. The delays were more about customers waiting out the bad weather before moving ahead. What we're not seeing, I'm happy to say, are any indications that demand is stalling.

Non-residential construction of core end market for us continues to be strong, and our regions broadly cite infrastructure and power as major opportunities. Our sales teams have focused on the infrastructure vertical for several years now. In addition to a positive trajectory, the nature of infrastructure makes it right for cross-selling our gen-rent and specialty products, and we're making good inroads there.

I'll share a few additional insights from our regions. Demand on both coasts continued to trend up in Q2, as it has for the past several years. Business hubs like the Carolinas are also strong with online retailers building large distribution centers. Out west, the momentum is being driven by data centers and infrastructure, especially transportation. And power is another tailwind.

The worst of the weather seems to be behind us in the hard hit areas. We expect large projects to start back up in the central US, the Gulf, the Southeast and the mid-Atlantic. And it's important to note that the customers remain broadly optimistic about their business, regardless of geography.

Turning to Specialty, our trench, power and fluid solutions segment continues to deliver robust growth. In the second quarter, the segment generated a 45% increase in rental revenue versus a year ago, and this includes organic growth of almost 13%. And embedded in our specialty growth is a significant contribution from cross-selling, which is a way to strengthen our customer relationships. It also moves the needle higher on returns.

Customers want a partner capable of solving multiple challenges on a job site and our ability to provide a full range of solutions is a competitive advantage for us. As we've discussed in the past, Specialty is also key to our commitment to drive superior returns for our investors. It warrants ongoing investment in acquisitions, new equipment technologies and cold starts. And year-to-date through June, we've opened 24 specialty cold starts, bringing that network's total to 351 locations. And we're tracking just over 30 cold starts by December, which is an increase over our original forecast.

Another area where we're forging ahead is safety. Three months ago, I told you all that our recordable rate through March was well below one, and some companies would be thrilled with that rate, but we've improved it again through June and turned it -- turned in the 18th straight quarter with a recordable rate