United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Fleet Management Dale Asplund, Senior Vice President – Business Services & CIO
United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Introduction
Dale Asplund Senior Vice President, Business Services / CIO
• Joined the company in 1998. Currently responsible for Fleet Management, Procurement, Shared Services, and Information Technology functions
• Various responsibilities for the company's information technology systems
• Served as director-operations support, and then vice president-supply chain, before being promoted to his current position
• Divisional Manager, United Waste Systems
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United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Fleet mix
Note: Percentages based on ending balance as of 9/30/2016.
Customers know we have the fleet they need
$9.2 billion of fleet comprised of approximately 450,000 units
Serves diverse customer base
38%
2% 3%
12% 3%
18%
2%
10%
4% 5%
Aerial
Compaction
Compressors
Earth Moving Forks – Industrial
Forks – Reach
Forks – Rough <1%
Light
Other
Power
Trench 1% Trucks Welders 1%
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United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Fleet management to improve ROIC
Fleet
management
to improve
ROIC
Purchase
best
TCO
assets
4
United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Vendor negotiation topics
5
Lead Times Freight
Pricing (Mileage,
Labor Rate, Travel Time, Down Time)
Warranty
Duration & Coverage
EDI Capabilities
Payment Terms
Technical Support
Parts, Pricing
& Discounts
ePro – SmartEquip
Retail Ability
Training Support
Trade Options
United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
United Rentals strategic suppliers
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United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
55
89
10
8
(52)
60
95
9
9
(53)
Total cost of ownership
Note: Sample data only, in $ thousands less percentages.
Brand C has a 8%–9% total cost advantage
Brand A Brand B Brand C
59.5
93
9
7.5
(50)
Acquisition cost
Maintenance cost over life (parts)
Maintenance cost over life (labor)
Resale value after 7 years (retail)
Total cost of ownership
Gap vs. Best of Best +8% +9%
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United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Fleet management to improve ROIC
Fleet
management
to improve
ROIC
Purchase
best
TCO
assets
Mix of
rental fleet
8
United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Improving Fleet Mix returns
Estimated annual revenue
= $48,539
Purchase one excavator
= $178,000
Est. annual ROI= 27.3%
Estimated annual revenue
= $123,102
Blended Fleet Mix Investment
= $178,000
Est. annual ROI= 69.2%
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United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Focused Fleet plan to improve margin
High
Low
Low High
Fleet growth zone
Fleet reduction zone
Rate opportunity zone
Sales penetration zone
40%
4%
31%
25%
CONTRIBUTION MARGIN
TIM
E U
TIL
IZA
TIO
N 48%
9%
30%
13%
Focused on profitable growth with capital expenditures
2014 mix
Current mix
2014 mix
Current mix
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United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Fleet management to improve ROIC
Fleet
management
to improve
ROIC
Purchase
best
TCO
assets
Time
utilization
Mix of
rental fleet
11
United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Time utilization
12
56.0%
58.0%
60.0%
62.0%
64.0%
66.0%
68.0%
70.0%
72.0%
74.0%
Jan Feb Mar Apr May June July Aug Sept
2015 2016
• Review units available for transfer
• Reduce fleet not available
• Balance rate with time utilization
• Capital allocation done based on market and customer demands
• Goal is profitable growth
United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
$0
$200
$400
$600
$800
$1,000
$1,200
$ in
Mil
lio
ns
Fleet change & time utilization in oil & gas markets
13
67
.9%
70
.1%
71
.6%
73
.5%
63
.0%
59
.9%
63
.3%
61
.6%
57
.1%
58
.7%
63
.2%
Q1 Q2 Q3 Q4
2014 2015 2016
Gen Rent branches time utilization for Q3, 2014 – 70.9%, 2015 – 66.6%, 2016 – 69.8%
Time Utilization (%)
United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Fleet management to improve ROIC
Fleet
management
to improve
ROIC
Purchase
best
TCO
assets
Time
utilization
Rental
rate
management
Mix of
rental fleet
14
United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Sequential rental rate trends
• Rates are analytically based with market input from management
• Consistent pricing practices across the sales network
• Support for customer segmentation
• Balance rate with time utilization
• Goal is profitable growth
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(1.0%)
(0.8%)
(0.6%)
(0.4%)
(0.2%)
0.0 %
0.2 %
0.4 %
0.6 %
0.8 %
Jan Feb Mar Apr May Jun Jul Aug Sep
2015 2016
United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Fleet management to improve ROIC
Fleet
management
to improve
ROIC
Purchase
best
TCO
assets
Time
utilization
Rental
rate
management
Mix of
rental fleet
Maximize
rental
useful
life
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United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Rental useful life evaluation
0%
20%
40%
60%
80%
100%
120%
1 2 3 4 5 6 7 8 9 10 11 12
Rental revenue % of average
0%
20%
40%
60%
80%
100%
120%
140%
1 2 3 4 5 6 7 8 9 10 11 12
Resale value % of replacement cost
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
1 2 3 4 5 6 7 8 9 10 11 12
R&M cost of replacement cost (est)
• Rental useful life evaluated to set optimal age to sell an asset
• Extending the life of our booms by 2 to 3 years can increase our IRR by 33%
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United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Fleet management to improve ROIC
Fleet
management
to improve
ROIC
Purchase
best
TCO
assets
Sell
assets at
optimum
price
Time
utilization
Rental
rate
management
Mix of
rental fleet
Maximize
rental
useful
life
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United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Used equipment pricing
19
Age
Asset past Rental Useful Life
(RUL)?
Hours < or > target hours??
Utilization > target level??
Hours
Utilization
United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2016 United Rentals, Inc. All rights reserved.
Summary
• Fleet purchases focused on best total cost of ownership
• Fleet mix focused on profitable growth
• Focused on balanced time and rate improvements to optimize returns
• Assets are sold at optimal time for replacement and returns
• Analytics used to sell used assets at optimal price
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