Interview: United VP on specialty and European expansion

Scott says as jobsites and projects become more complex, customers rely on United to augment their general and specialty fleet. Photo: United Rentals

United Rentals is a name well established in the global equipment rental market, and, while its core business remains North America, the company has made big strides overseas in recent years.

In Australia the company acquired Orange Hire from its private equity owner Arcadia Capital earlier this year, adding eight branches across Queensland, Victoria and New South Wales and a fleet of earthmoving and traffic management equipment.

Just a few months later, it added Shore Hire to its footprint in Australia; a Sydney-based company that operates eight locations in NSW, Queensland and Victoria.

United has seen similar growth in Europe in recent years following its purchase of BakerCorp International Holdings back in 2018. This year it acquired Netherlands-based equipment rental business EQIN.

It also operates 30 branches across France, Germany, Benelux and the UK and is set to open a new branch in Frankfurt in the near future. Earlier this year the company also made its new depot in Bathgate, Scotland, operational.

Alongside expansion overseas, it’s core business in North America is seeing significant growth in its specialty division, offering solutions that include power & HVAC, fluid management, trench safety, onsite services, tools, communications, industrial blinds and more.

Earlier this year it acquired the Yak temporary matting business from its private equity owner for US$1.1 billion.

The deal included Yak Access, Yak Mat and New South Access & Environmental Solutions, and strengthens a division that accounted for 25% of total revenue in 2023 at $3.2 billion.

Here, David C. Scott, senior vice president – specialty division, United Rentals, discusses the company’s focus on specialty and its growing footprint outside of North America.

David C. Scott, senior vice president – specialty division, United Rentals.

IRN: Are you noting increased opportunities in specialty rentals compared to generalist?

DS: Specialty has always played a part in the rental industry and for years was dominated by independents.

As the rental industry has consolidated, specialty has gained more visibility in the marketplace, but generally, specialty and generalist have both experienced great opportunity for growth as the rental markets have matured and experienced the transformational shift from ownership to rental.

IRN: To what extend is specialty important for the company?

DS: I think regardless of the products and or services one defines as speciality, all are very important. Anytime you can solve more problems for customers and enhance the customer experience, it’s a win.

With jobsites and projects becoming more complex, our customers rely on us to augment their fleet – general and specialty. Our goal is to help our customers maximise efficiencies without compromising safety.

Offering a broad range of equipment, including specialty, helps us to do that, and helps our customers achieve their safety, productivity and sustainability goals.

IRN: Recent reports from the American Rental Association (ARA) predicted a time in which growth in the general business for rental companies becomes harder to come by, therefore leading to more companies looking at specialty opportunities. Is that something you agree with?

DS: I do agree that growth is very connected to the customer experience and if you can solve for more needs in the marketplace, it’s a recipe for success and has become an attractive path forward.

IRN: Specialty accounted for 25% of total revenue in 2023 at $3.2 billion. Do you envisage that split between specialty and general closing, potentially even going the other way?

DS: I believe the definition of specialty is still evolving which includes more products and services where organisations can create focus.

The specialty percentage will continue to grow into the future, but I don’t see it going the other way anytime soon.      

IRN: United has made some moves in Europe recently, in particular in the specialty segment. Is that something the company is targeting specifically, or will you investigate the general market as well?

DS: United Rentals acquired a European business unit through the larger acquisition of Baker Tank in the United States.

Our legacy teams as well as our new businesses in Europe are focused on the industrial markets in Europe, so we are very focused on the industrial vertical at present.      

Specialty rentals drives 7.5% increase in United Rentals’ third quarter revenues

Photo: United Rentals

Specialty rentals activity has driven a 7.5% increase in United Rentals’ third quarter revenues, with its general rental business almost flat year-on-year.

Specialty rentals, in areas such as trench shoring, power and pumps, saw a 23.9% increase to $1.13 billion, while its general rentals business rose by 0.9% to $2.32 billion.

Growth in specialty includes the impact of the acquisition of temporary roadway business Yak, which was concluded in March this year. Without that deal, specialty would still have grown by 14.8% year-on-year, while total equipment revenue growth would have been closer to 5%.

Gross profit for the period was up 3.8% to $1.65 billion, with EBITDA profit 2.9% higher at $1.90 billion.

The company has narrowed its full year forecast, with gross capital investment of fleet likely to be in the range of $3.55 billion to $3.75 billion - which compares to the previous guidance of $3.5-$3.8 billion.

Matthew Flannery, chief executive officer of United Rentals, said he was pleased with the results “which were in-line with our expectations and reflected continued growth across both our construction and industrial end-markets.”

He added; “As we enter the home-stretch of 2024, we’re happy to reaffirm the mid-points of our guidance across all metrics. Longer-term, we remain optimistic on the multiple secular tailwinds we see, particularly across large projects.”

In its results presentations United does not provide detailed information on the performance of its businesses in Europe or Australia/New Zealand, with 56 branches. It has 1571 locations in North America.

IRN: With regards to the activity in Europe, could you tell us the company’s plans there? Are you looking to increase the number of depots you operate?

DS: Generally, our organic growth plans do include expansion by geography, product/service, and or vertical and you can anticipate new locations moving forward. We do plan organic growth each year and look to be opportunistic in M&A as opportunities may present themselves.

We do have a high bar in M&A and want to make sure anything we may move forward with meets certain cultural, economic, and strategic goals for our company.     

The company also offers site access solutions as part of its specialty offering. Photo: United Rentals

IRN: What opportunities does the company see in Europe? How does it differ from your core market in North America?

DS: With a broad brush, we see more opportunity in North America, and elsewhere to include Europe. Generally speaking, the rental operating model is very similar regardless of geography.

Certainly, there are cultural differences and differences in markets, and operating structures are very nuanced by country, but they are also very similar in products and services that customers demand.

The obvious difference is that we started much earlier in the US and have a broader breadth of products and services in the marketplace.

Keeping the customer, our employees, and our investors at the forefront of our decision-making process will ultimately drive our plans for growth in each market.        

United Rentals to make Bauma debut

Photo: Messe München

United Rentals Europe is to exhibit at Bauma in Munich next year, the company has said. It will mark the first time the company has had a booth at the show. 

On its booth, 719/4, in the north outdoor area, United said it will showcase its “new product range tailored to the construction sector” that will comprise of its “comprehensive product portfolio” of fluid, power and tool equipment. 

Speaking to IRN, Andreas Rudolf, general manager Germany, United Rentals Europe, said, “We were looking at Bauma for many years. It is the biggest fair in that sector.

“I went there personally several times and you need days to see everything, so that was a bit where we were hesitating initially with our fluid solutions. If you can really reach the right target customer, they have it now with power rentals and generators as well as recently widening our scope in Europe with service power and tools.

“So, we said now it’s time to be there to show what we can do and let the market know that we are here, and we are expanding because United Rentals is a famous brand over the world, but in Europe we are educating the market.

“We have grown significantly over the last couple of years, expanding, investing and now showing our customer base what we are capable of doing.”

He added that the company is in conversations with Messe München as to what is doable in terms of conferences at the event “because it’s a huge fair and we are starting with an outside space because the equipment needs to be outside. Hopefully we can get a slot somewhere to present ourselves. That’s planned but not final.”

Returning to its familiar April slot, Bauma takes place from April 7 to April 13 at the Trade Fair Center Messe München in Munich, Germany. The event is the largest cosntruction trade show in the world and takes place every three years.