p15113 dale asplund final - united rentals · management to improve roic purchase best tco assets...

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


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

2


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%

3


Fleet management to improve ROIC

Fleet

management

to improve

ROIC

Purchase

best

TCO

assets

4


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 strategic suppliers

6


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%

7



Fleet

management

to improve

ROIC

Purchase

best

TCO

assets

Mix of

rental fleet

8


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%

9


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

10



Fleet

management

to improve

ROIC

Purchase

best

TCO

assets

Time

utilization

Mix of

rental fleet

11


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


$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 (%)



Fleet

management

to improve

ROIC

Purchase

best

TCO

assets

Time

utilization

Rental

rate

management

Mix of

rental fleet

14


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

15

(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



Fleet

management

to improve

ROIC

Purchase

best

TCO

assets

Time

utilization

Rental

rate

management

Mix of

rental fleet

Maximize

rental

useful

life

16


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%

17



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

18


Used equipment pricing

19

Age

Asset past Rental Useful Life

(RUL)?

Hours < or > target hours??

Utilization > target level??

Hours

Utilization


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

20

p15113 dale asplund final - united rentals · management to improve roic purchase best tco assets...

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