United Rentals 2016 CapEx – timing is essential

Speaking during an earnings call discussing the company’s fourth quarter and full-year 2015 results, Mr Kneeland said, “What our outlook doesn't show is timing, and that’s a big part of our 2016 plan. We’re going to be very careful about the rollout of our CapEx.

“In the first quarter, we expect to spend less than half of the CapEx we spent in last year's first quarter. The CapEx we do spend will be focused on growth sectors and key customers. And from there we will test the waters.”

For this year, United Rentals said it expected to spend around US$700 million (€642 million) in net rental capital expenditure after gross purchases of US$1.2 billion (€1.1 billion).

Mr Kneeland explained, “We have the flexibility to move that number up or down based on the data that we see from our operations.”

And for the longer term, Mr Kneeland pointed out that North American construction and industrial rental market activity was solid, and in many cases trending upwards.

“Our customers are on a whole optimistic,” he said. “Our Southeast region had a strong finish to the year. The activity is coming from mix of sectors, including automotive plants, infrastructure and amusement parks.

“On the West Coast, commercial construction is going strong along with renewable. Our Pacific West region has launched some business on a number of solar projects. And more universally, we’re on large multiyear construction projects in industries ranging from ag business to biotech, to hotels and to sports arenas.

“The real standouts continue to be our specialty services of Trench Safety and Power & HVAC. For the full year combined, these services increased our rental revenue by 21% and a healthy 16% of that revenue increase came from same store.”

Mr Kneeland added that United Rentals had been expanding its pump footprint in new geographies and diversifying its customer base beyond upstream oil and gas. He said the company expected to realise some benefits from these actions in 2016.