United Rentals, Inc. (URI) Earnings Call Transcript & Summary

Hi, everyone. We're ready to get started. So if you'd like to please take a seat. So good afternoon, and welcome to the United Rentals 2023 Investor Day. My name is Elizabeth Grenfell, and I recently joined to lead the Investor Relations role here at the company. I'm truly thrilled to be a part of this team and what lies ahead, as you'll learn more about today. Thank you to everyone who has joined us here in person at the New York Stock Exchange and for those of us joining via our webcast. Before we begin, please note that this presentation is being recorded. In addition, comments made today contain forward-looking statements. Please see the appropriate disclosures here. For those of you new to United Rentals, we are the world's largest equipment rental company with approximately $20 billion of original equipment costs and a diversified presence across North America, Europe, Australia and New Zealand. But this is only a piece of the company's story. United Rentals culture, team, some of whom you'll get to meet today and the significant opportunities for growth are all unique attributes, which set the company apart from others. As you can see on the agenda today, you'll hear in detail from the United Rentals executive team, what differentiates our company and sets it up for continued success going forward. We will take a short break after the initial presentations followed by 2 more presentations and closing remarks by Matt Flannery. We will then finish up the day with a Q&A session. And then finally, 2 pieces of housekeeping. Today's slides will be posted to our website at the conclusion of the presentations, and please silence your phones. So again, thank you for joining us, and I'd like to welcome Matt to the stage.

Thank you, Elizabeth, and welcome to the team. We're glad to have you. And thanks everyone for joining us today. For those of you who I haven't had a chance to meet, my name is Matt Flannery, I'm the CEO of United Rentals, and I joined the company in 1998 through the acquisition of McClinch Equipment. And then from there, I started as a branch manager and kind of rolled through the farm system of field management, so to speak, came up to corporate in 2008, and I haven't left. So all going well, and proud to represent the team today. And our team is excited to share with you all an in-depth look in our strategy and our vision for the future. And our hope is that when you leave here today, it's with a clear understanding that our relentless focus on our customers and our people are behind our industry leadership. We deploy solutions to a very broad set of customers and end markets. And this gives us a diversified portfolio that not only adds to the resiliency of our business, but when combined with the many advantages of scale, it gives us the ability to drive top line growth as well as bottom line growth and really good returns for all shareholders. So let me take a minute to share some stats with you. The business we've built over the past 25 years has grown our company to the industry leader in every way. We have over 1,500 branches and 25,000 dedicated employees, most of which are in the U.S. and Canada. When you combine this network with over $20 billion of fleet, our ability to serve our customer needs is unmatched in the industry. And the scale not only allows us to drive industry-leading revenue and profit, but it also allows us to drive differentiated value to the marketplace. But those of you following the story for a while know that this didn't happen overnight. As I mentioned earlier, I had the good fortune of joining on early in our journey, and I got to see the change firsthand. And each chapter of our story served its purpose to make us who we are today. From the early days of consolidation, where we bought 250 companies in 3 years, became the market leader in the first year of the company's existence, to then what I feel is the most pivotal time in our career, post great financial crisis, when we decided to transform the business from a focus on building scale to a focus on driving profitable growth and returns. And then we focused more on adding more products and services and got more to the resilient business that you see today with a diversified customer base, serving a broad set of customers and products and end markets. And -- pardon me. And this is all driven by an unbelievable culture. So how are we going to do this? We're going to do this because it starts with our people. You're going to hear that a lot today. That's a recurring theme. And our team feels strongly about our purpose to build a better future together. And that starts with our vision statement of being the best partner for worksite safety, productivity and sustainability. And this is underpinned by our pledge to live and work by our cultural values. And Craig will talk more about this in a little bit. But building a better future means a lot more to us than just building the physical structures that we assist our customers with. But it means building a better future for our employees and their families and for our customers, and for the communities that we live and work in. And to accomplish this, we have to make sure that we're leading in sustainability. And this is about more than just compliance. And I feel strongly that we can do well and do good at the same time. And Julie is going to discuss this in a little bit more detail later on. But we need to make sure we're a responsible operator and good stewards of the environment that we all share. And this is not just altruistic. This is good business, and this is responsive to our customers' needs. And in addition, if we truly are a people-first organization and we are, we need to be that for all people, and I couldn't be more proud of the company's inclusive culture and our all-for-one-and-one-for-all team mentality. So how do we convert this great culture and engage team into industry leadership? Well, it starts with having a go-to-market strategy to help lead them there. And we've long deployed this three-pronged approach framework to our growth. And when we think about this grow deepen and expand, it starts with our base business. We want to first want to focus on growing with our existing customers and our existing products. And this is something that we can never take for granted. This is our base, our right of weight to everything else we do. And then we want to deepen our penetration with customers and verticals and end markets where we don't think we've quite got our fair share. And that's a great opportunity for us. As big as we are, there's still a lot of opportunity there. And then we want to expand our offering, whether that's through additional products or additional end markets or even additional geographies that we can serve. Either way, we know that this is going to happen both organically and through M&A. You've seen the organic growth. We've had the ability, thanks to a great balance sheet, to invest in a lot of growth capital. But additionally, we've contributed through M&A. And if I think about the most recent Ahern acquisition that we did, that was both to play to grow in our core by adding capacity as well as taking penetration in markets where they might have had a little bit more depth in the marketplace than what we wanted in our share. And then if I think about the General Finance acquisition, which was very much an expand play, where we got to add a new portfolio for us to cross-sell to our customers, solve more problems for them as well as add geographies. Either way, it's great that we have a strong balance sheet to leverage this growth -- to leverage to serve this growth. So how do we bring this growth framework to life? Well, number one, the team has heard this a lot, we can never forget who pays bills around here, the customer. And our people know the customer needs to be at the center of everything we do. But we need to focus on earning that business one transaction at a time. And we have a lot of value that's enabled by our scale, whether it's the investment in the broad fleet that we've talked about, whether it's investment in technology, those are all positives that we bring to the table. But that first layer of value, that first layer of protection around the customer is the basics of rental execution. But we need to have the right equipment when they need it. We need to deliver it on time, and we need to make sure if something does go wrong, we're there to serve the customers immediately. They're counting on us to get their work done. But then we have to make sure that customer experience is as seamless as possible. Well, a firm believer that ease of doing business is a key indicator to getting repeat business. And this is something that our team focused on using technology to continue to ease that customer experience. And then when we layer on top, our one-stop shop, are trying to solve as many problems as we can for the customer. The more broader offering than the less of a need there is going to be for them to look towards other vendors to serve their needs and the job sites and the points that we serve. And then we can accentuate that by driving better worksite performance for them, whether it's through our proprietary total control technology or continue to leverage the investments that we've made in technology through scale and make sure that we can drive better productivity for them on the site. We're going to do better if they do better. And this creates a very symbiotic relationship and a sticky relationship with the customer. And when I think about these layers of value that we surround the customer with just make sure that we're not just the biggest in the industry, but also the best. Now as many of you know and you've heard before, we made a decision long ago to have a go-to-market structured focus on key accounts, key projects and national accounts. For a while, we were the biggest company that didn't lead with national accounts, and we changed that as we came out of the Great Recession in '08. And Mike and Dale will give you a little bit more on this, but we specifically have a value prop designed for those customers. And looking forward, we believe that, that large account focus, combined with leading scale expertise and technology uniquely positions us from any of the tailwinds that are ahead. And you've heard us talk about it before, but these tailwinds are plentiful. And most of these tailwinds are not macroeconomically reliant. But for example, when you think about the 2 publicly funded ones here on the slide, whether it's the Infrastructure Bill or the Inflation Reduction Act, but we believe that the stimulus is going to continue in any environment. And we feel equally confident that the manufacturing tailwinds that we spoke about, such as the electric vehicle plants, which I had the good fortune of visiting a couple of them last month. This is real opportunity. And this is more of a structural change in the automotive industry rather than worried about volume and not volume reliant. So we believe those jobs are going to continue, and these are long-term big projects or the semiconductor manufacturing plants. We were talking about one at lunch today, where we have quite a bit of fleet on this one project, and that's one of many that are going on and many that are on the books for later on in the year. And we don't -- we believe that's more of a geopolitical play, again, onshore that supply chain versus worrying about how many Xboxes are sold over the next 5 years. So we really believe that these tailwinds are going to continue and all combined, these tailwinds along with the continued opportunity for secular penetration will drive significant opportunity for the industry. And another reason why I feel very confident about our opportunity to capitalize on these tailwinds is our talent. And we have a group of key leaders here today that are going to present to you all. And I'm sure by the end of the day, you're going to see firsthand, their passion, their knowledge and their expertise. But we're just a tip of the iceberg, those of us who are presenting to you today. We're very fortunate to have a deep and experienced team in the field, making sure that we're supplying the customer service that's expected of us. And the leadership team here as well as leadership in the field knows that our job is to enable those folks. And I think about our organizational chart as an upside down pyramid and think about that top layer being the broadest part of those hourly folks touching the customer at the moment of need. And then the rest of us going down their pyramid are there to serve them. So I often say that I've worked 32 years to get to the bottom. And when I think about what's at the center of the success, and I told you earlier we hear a lot, it is our focus on people. It's unique. You'll probably hear more about people in this presentation than any investor presentation you've ever been to. And it's because we do believe this is a differentiator. We believe our culture, our ability to recruit, train and retain is a competitive advantage. And we hear that, and Craig will take you through this a little bit more later on. And when we stay true to that commitment to our people and our culture and execute on the strategic initiatives that you're going to hear about today, will create value for all stakeholders. And I feel strongly that our future is bright here in the United Rentals. And we'll continue to evolve and advance through worksite performance and drive that through our people, through a process and technology. And I think technology is an area that's going to ramp up speed even more over the next 5 years. And we have a lot of cool stuff going on. And you'll hear about some of it today, but rather than me talk about it, let me show you a video of what that future could look like, how technology could change it. [Presentation]

Thank you to you all. I'm Craig Pintoff, and I'm the Chief Administrative Officer of United Rentals. And in this role, I have the great privilege to provide leadership to quite a few functions at our company, including human capital, employee health and safety, sustainability and legal and corporate governance. And I've been in various leadership roles at our company for the past 20 years. And I'm really excited today to talk to you about our people, our business and our culture, as Matt talked about earlier. Now having had an inside seat to so much transformation over the past 2 decades at our company, I can promise you what we're going to talk about today is real, it's meaningful, and it really is a differentiator for us. So together with Cristina Madry and Joli Gross, we're going to talk to you today about our focus on culture and sustainability because we truly do believe it's the right thing to do, but also because we believe there are significant benefits to our business through data points, through case studies. We're going to show you some real examples of how our business is better by solving real customer issues with our customers and moving us forward down this leadership path. So let's dive in. So culture matters, and it's truly an enabler for our strategy at United. And there's no better place to start than what our people tell us. We've been doing surveys, full company surveys at our company for 15 years. And we've never had a great benchmark. Our results have always been outstanding. But we've never had a really good relative sense of how strong until this past year in December, we moved to a new survey platform. with hundreds of millions of employee data points across thousands of customers. And we confirmed what we already knew that our team and our culture is truly outstanding. We finished across every core category in the survey the top decile performer. And this is truly consistent with what we're seeing in the external world as well. We're really proud of our recognition. I'll point to the Glassdoor, Best Places to Work for 2023, Top 100 Company, once again, solely based on employee feedback. So our culture is real. Our employees are engaged and enthused. Well, why does that matter? Well, there's obviously so many reasons for that. I'm going to point to 3 today. We are -- we're a people -- sorry, we're a service business, and people make all the difference. And when our team is engaged and empowered, they provide outstanding customer service, and that is absolutely critical. Two, it enables us to scale. Matt talked about the demand tailwinds, the ability to scale retain our team and grow with demand is critical, especially in some of the challenging labor markets we're all facing. And then finally, we're able to integrate businesses very effectively through our culture. I'll point to the recent Ahern transaction. We just did a similar survey about a month ago at the Ahern team. And their feedback was very similar to what you see on the slide, highly engaged. They're bought in, and they're very positive about their future at United Rentals. So a very positive data point. Ultimately, we are, as I mentioned before, a people business, people connect to customers. And so I've always viewed turnover as a key metric for us, a key differentiator and a key metric. And I'm really proud that we reduced our turnover last year in one of the more challenging labor markets we've seen. But not only that, we reduced it from what I believe is the strongest retention rate in the industry, based on data we've seen, we believe our retention rate is 25% to 30% better than the industry, if not greater. It's absolutely critical when you're looking to scale your business and ultimately, customer service runs through our team. So retaining that team is critical. Last year, we were able to hire over 6,000 employees, our greatest hiring rate ever and once again, a challenging environment. And when you think about culture, our employee referral rate was once again our #1 source for talent, 30% of our hires came through that virtuous circle of talent. So very, very positive for us. and talent and culture plays through in other ways. One of the largest challenges really in industry, but in the equipment rental industry is getting a pool and talent of skilled hourly labor, drivers, service technicians. We recognize this issue for what it was a few years ago. And we set about creating a comprehensive skilled labor pipeline to make sure that we always have talent available. We have $20 billion of fleet, 7000 service technicians at our company, this is an absolutely critical focus for us and a resource for us, especially given the opportunities that lie ahead. Well, we tackled the issue. We created what we believe is the largest skilled labor pipeline in the industry. We have over 500 employees in the pipeline, and they are joining us through entry-level jobs at our company from the military, from high schools, tech schools. And honestly, today, we truly believe that this is no longer an impediment, but frankly, we see it as a source of strength for us going forward. So a real positive note for us. I'm just going to close on just some thoughts as to why is our culture is so strong. How do we get to this place? And I'm going to go back to what our employees told us. This question from the survey was our strongest benchmark question. And frankly, there couldn't have been a better question for us to be so strong. It's around meaningful work. And our employees overwhelmingly connect what they do to the customer. And that empowers them and that engages them. And there's so many things we've done as a company to the focus on our culture, the talent development and making sure we have the right leaders, obviously, rewards and recognition and doing the right thing for our team. But when I come back in to what's very special about us is this ownership mentality that we've created, 4x over the past decade we've granted shares to every employee in our company. There's an ownership mindset and mentality in our company that's very powerful. We feel it on our all-employee calls, the team is engaged, and I know our customers feel it. And when our employees are empowered to support our customers, that's truly -- that's truly what we're looking for. That's customer service. And so I'm going to show you a video that hammers that home a little bit more. And after the video, I'm going to welcome Cristina on to talk about health and safety at our company. [Presentation]

What a great video around empowerment at United Rentals. One of the areas that we want to be sure that our employees always feel always feel empowered around is safety. And so I want to take a few minutes today to talk to you a little bit about safety at United Rentals. My name is Cristina Madry. I've been with the company for 10 years. I am the Vice President of Health, Safety and Employee Relations. And in this role, I have the great pleasure of leading a team of highly credentialed safety professionals around the world and also developing the company's United for safety strategic road map. At United Rentals, it is our ultimate mission from a safety perspective to make sure that everyone returns home in the same condition that they left, if not better. And if there's anything that I hope that you take away from our time today, it should be that United Rental is a clear and recognized leader in health and safety. And this is something, as you'll hear a little bit more about today, that our metrics demonstrate our employees tell us and our customers seek us out for. In terms of our metrics, we drove last year alone, the equivalent of 775 trips to the moon and back. And to put that into a little perspective, that's like 2 round trips to the moon every single day of the year. We also had over 5 million customer touches, and we did all of this while continuing to significantly lower our preventable auto incidents as well as our injury rate. Notably, we enjoy very good reputation as being a leader in the industry in health and safety, and this really does help us win business. This is especially true in the industrial sector. We're having a good safety record is cost of entry to many of our customer job sites. On our journey to 0, we've set a goal to reduce our injury rate to 0.40 by 2030, if not sooner. And the team really could not be more excited about reaching that goal. Through our United for Safety program, which focuses on making sure that our employees are thinking about safety throughout the day, that they're working safely that when they're on the roadways, they're driving safely, and they're making healthy lifestyle choices and living safely, we believe we're enabling them to be more effective and more efficient. And as we just heard from Craig, we know that when we afford our employees with a good healthy safety work environment, they're able to bring their best to work each day and drive a more meaningful impact for our customers. So how does that translate out? Well, our culture runs so deep that even when our employees are away from their home branch location and they're at a customer job site, they feel comfortable and confident enough to speak up and say something when they see something. And this real-life example that's on the screen today, just one of thousands that we could point to, where employees took a moment of pause to make sure that the right thing is being done and the safest work practices were being utilized. And this tremendous sense of empowerment is not just good for us, but it's also good for our customers because it keeps our employees safe, it keeps our customers and employees safe. Our customers really do depend on us to be their partner in health and safety. And one really good example of this is our United Academy. Our United Academy creates an additional touch point and further entangles us with our customer. Through United Academy, we're able to meet the demand from our customers for safety, training and advice on the equipment that they rent from us and the equipment that they own. This helps us meet our customer where they are and also enables us to drive value to the business at the same time. To be clear, our customers request this training from us. And since the program's inception, we're proud to have offered over 0.5 million participants, best-in-class safety training, including [ OSHA ]. In terms of key takeaways and in conclusion, like I told you at the beginning, we really are a clear and recognized leader in health and safety and our very good reputation for safety excellence drives tremendous value internally but also to our customers. To put it very simply, our safety culture helps us win business. Thank you, and I'd like to introduce Joli to talk to us a little bit about the sustainability.

Good afternoon. I'm Joli Gross, I'm the company's General Counsel, and I'm also Head of Sustainability. Like Craig, I've been in various leadership roles within the company for the past 20 years. I've been actively involved in developing our sustainability program and have overseen it since 2020. So in addition to being a leader in culture and safety, we are also a leader in sustainability. Why does this matter? Well, not only because it's the right thing to do, but it's also another way that we differentiate ourselves. With our customers, we believe it's good for business. With our employees, it creates additional engagement and retention and also with other stakeholders, including our investors and our communities. United Rentals was the first in the industry to set a GHG intensity reduction goal. And then we've since then set goals to divert waste from landfills and also to complete lighting retrofits at our branches in North America. So also, in addition to these goals, our sustainability program has led to national recognition, including with the Wall Street Journal, who's called us out as The Best Managed Company; with Newsweek, who's named us One of America's Most Responsible Companies for several years, and also with the Just 100. So all of this makes a difference because it helps us to win business and to be a valued partner to our customers. During the past few years, we've made a concerted effort to include more electric and hybrid equipment in our fleet. We've also made significant progress against our goals, including a 9% reduction in our GHG emissions and also 43% diversion of waste from landfills. A big important thing in addition to doing all this good work is to make sure that we get credit for it. So you'll see that we've enhanced our disclosures, including in our corporate responsibility report. And also this year, we've worked on our task force for climate financial disclosure responses, also known as TCFD. The results that we've done from enhancing our disclosures is that we've gotten a AA level ESG rating from MSCI. We're also a first tier on the CPA-Zicklin Index. Why is this important? Well, because it translates to revenue. Many of our larger customers partner with us to help them reach their goals around sustainability and to figure out how much equipment they should own. So we've heard from our stakeholders for years that they wanted to understand the benefit of the rental model. So last year and this year, we worked to quantify the benefits, and it's led to great results. The work proved out that by virtue of our existence, less equipment needs to be manufactured, and the equipment that we have in our fleet helps our customers to reduce their emissions intensity because it's younger and more fuel efficient. So let's take a minute to absorb what this means. Due to United Rentals' existence, 400,000 fewer pieces of equipment are needed today and because of our younger, more eco-friendly fleet, there's an equivalent emissions avoidance that's equal to 140,000 passenger vehicles driven in 1 year. So as a result of this, there are many large customers who seek our expertise and our advanced technologies for their job sites and projects. I'm going to go through one of the many examples, a large general contractor who was awarded a multiyear $1 billion contract to build a data center, came to us. They had goals to reduce their GHG intensity emissions, water consumption and also to complete a certain number of green building projects that customer partnered with us. We provided them with things like Ford F-150 Lightning's, battery tubes, hydrogen generator to charge their equipment in vehicles and to reduce their Scope 1 and 2 emissions. And also, they leveraged our total control platform to evaluate their costs and also environmental benefits of the sustainable equipment. Now also, we know that this equipment -- that the current equipment isn't quite there yet, right? So we are working with these large customers. We're hearing their feedback. We're providing it to the equipment manufacturers with whom we have good relationships, and we're also working collectively to figure out how to get to that next level. So in closing, our sustainability program helps because it solidifies our reputation as an industry leader. It's also a differentiator. Our customers want to partner with us to help them reach their goals. Craig, I'm going to turn it over back to you.

Okay. So our goal in this section was to demonstrate that our leadership and our focus in the areas of culture and sustainability really provide a benefit, right? We do believe it's the right thing to do. We know when our workforce is engaged and at their best. They're going to provide great customer service. And when we're working with our customers to solve complex problems as a leader in our space, that's what it's all about. So hopefully, we made that point to you today. And now I'm going to ask Dale to come on to the stage.

Thank you, Craig, and good afternoon, everyone. My name is Dale Asplund, for those of you who I haven't met. I've been with the company since 1998, and it's in my current role that I get to hopefully help all of our field people, service our customers better. So over the next few minutes, I want to cover three important topic. First of all, the size and scale that we've built and the importance of that. But even more [ important is the ] expertise that we offer our customers and what that is to them to be able to do their work safer and more efficiently. How through operations and through data, we can actually help our employees provide better customer service, and of course, our ability to get better capital returns from the point we buy an asset to when we dispose of an asset. So as you heard Matt mention and we look at our focus -- I guess my mic wasn't working. Matt always tries to play tricks on me. So -- I guess that one worked. So as Matt mentioned, and we look at our strategy, I'm going to focus on that middle wheel that's highlighted in this example. So how we can actually have one-stop shop for our customers. Our ability to continue to focus relentlessly on rental execution. And of course, how through people, process and technology, we can actually deliver a better customer experience. And all the things Joli and Cristina talked about in safety, sustainability and our ability to help our customers be more productive on a work site. So before I do that, I just want to take a minute to think about 1 day at United Rentals and what's going to happen today. Just to give you an idea of what's occurring. Today, we'll have over 15,000 face-to-face sales calls with customers. We'll take some 40,000 phone calls from our customers looking for support. We'll do 16,000 inspections of equipment to make sure it's safe to rent. Between pickups and delivery, we'll do over 34,000 different transportations. And up to 335,000 units that have telematics, we will produce 41 million data points for us that we can use in a single day with that equipment. On top of that, to support the business, we'll have to generate some 30,000 invoices and make the parts orders some 12,000 times in the course of 1 day. All of this, as you can see, produces a vast amount of data that we can use to help our business. So what do we hear from our customers. When our customers talk to us, they tell us a few things. First of all, they need to know we have the resources that they need when they need them. And we've done that. You've heard the number, we have over 1 million assets with a combined original equipment cost of $20 billion. But that's only part of it. Having the assets is helpful, but having the expertise, whether it's to support in a vertical or through our specialty solutions that our customers can count on to solve their problems. The second thing we hear from our customers is make sure we have responsiveness, make sure we can respond when they're in need of our support. And we've done that. We've done that by building a network of over 1,500 branches. But we've also done that by making sure our employees can react quicker to support that customer. The majority of our orders still come in with less than 24 hours' notice. So making sure our employees can say, yes, when those customers need us, it's the first step to being able to be more responsive. And then you can see how we continue to create value for our customers is the expansion of our specialty business. And our specialty business is an area that we've seen CAGR of almost 28% over the last 10 years. And this is a business that I will cover in a minute to show you why. This is much more than just the assets that we own. It's a solution that we offer. So how do we differentiate ourselves with our customers. In the past, many of our customers may have to interact with multiple branches, multiple companies, multiple different providers of service. We've taken that and changed it to a one-stop shop. By dealing with United Rentals, they can come to us regardless of the solution they need and we can help them with that solution, making a better customer experience for our customers today. We can also centralize functions like logistics, service and even sales support, making sure when the customer reaches out to us, they get a consistent experience. Now our specialty business, let me explain this to you because it's worth taking a moment. This is an area we continue to see huge growth and our customers value. So if you think about the start of a job site and our most recent acquisition with General Finance, we offer today a mobile storage and office solution. That, in conjunction with our on-site service business that offers sanitation helps us right at the beginning with the customer being first on the job as they start work. Our Trench and Safety business, whether they have excavation needs or confined space, how they can safely protect their employees is a key way for us to interact with our customers. Our Power HVAC and Temperature Control business allows us to work with customers when they know they have a need for temporary power heating or air conditioning, they come to us to provide them what product will actually provide the service they need. And of course, our Fluid Solutions business, it is a complete end-to-end from contain, transfer and treat. So when our customers come to us with the need, we can provide them the service regardless of what level they need. All in, our specialty business is a key advantage to United Rentals. So now let's think about what's changed and how our customers interact with us. And -- yes, the equipment industry may have lagged the industry a little bit on the technology curve, but we continue to see this ramping up. Today, we offer different levels of touch points for our customers, whether it's our online rental store that any customer can look to procure services through, bolstered by our web app that allows them remote access wherever they need to do work or our total control platform, which really when our customers grow with size, this enables them to be more productive. Now being in the rental business, this gets hard to hear. But our motto and our total control platform is to help our customers rent less. When you think about that in the business we're in, that might not make sense. But we believe with that platform, a customer that may be spending $10 million a year, of which imagine we get half of it, can actually save money and rent less if they just partner with us. In fact, if they could reduce that spend by 20%, it's $2 million of savings for them. And if they work with us to partner and they get all the fleet from us, it's actually a $3 million growth for us. So it can be a win-win. And then, of course, the last level, our largest customers that we work with, we've actually created a direct integration. They don't want to rely on somebody else's system. They want to place an order in their ERP system that directly transfers to one of our branches, and we can acknowledge that order. This area continues to grow. Q1 year-over-year, we saw a 57% increase in the number of users using our digital tools. We saw big increases in the number of payments we get. We saw our field service requests go up by 55%. And even the simple task of calling equipment offering continues to grow. This is an area we will continue to make investments in because this is all about making the customer experience better. Now technology is not just about the customer. We also use it internally. And we've taken what was once manual processes across our branch network and digitized it. So if you think about that from the point we start a transaction to the time that a customer pays it, what we can do with technology. So today, as our sales reps are out in the field visiting customers, they no longer need to call a branch all different locations to flying where fleet is available. They have the ability through a mobile app to find out what the price is what the availability is and what's the best way for us to source it and being able to say yes to a customer on site without ever reaching out to one of our facilities. In a minute, Erin is going to talk about some of the logistics, delivery and pickup. But I want to take a moment to talk about the topic of AI and what we see today. So for years, we've actually -- when we dropped equipment off, we take upwards of 10 photos. And when we pick it up, we take another 10 photos. This has always helped us when our customers may have had something that was a lot more usage, whether it was from painting and had overspray or perhaps was dirty, or had customer damage to go back to the customers to show them. But as you can imagine, this always required human intervention. Today, we take those 10 photos from when we drop it off and when we pick it up. And by the time we leave the job site, we've already notified our branch that somebody should inspect that asset that's coming in because it doesn't look the same as when it went out. This is a way we can take away that objectivity and just make it a simple process for our employees to find where a customer truly has damaged a piece of equipment. This is an area the more we invest with our employees, the more productive they'll be and the better the customer experience will be. But using data doesn't stop at in there. Better use of data means better decision support, as I've said. But it also drives capital efficiency for us. And I'm going to talk about that in a minute. Both internal data, as I told you, we produce a lot of data every day, and how we can use that, but also external data. And looking at data we can get from third parties and giving that to our reps. We're using it in our credit department. So today, I told you about the sourcing opportunity where we can find the best way to tell a customer what's available, but we can also do other things such as preventive maintenance. Think of a day where we don't have customer downtime because the equipment tells us it's going to need service before it breaks. Think of how that can improve the customer experience. Managing the fleet we have, this is critical. This is an area when we look at it by market, especially in an inflationary environment, we look at all of our assets in 1 of 4 quadrants. And let me walk you through this, simple math. If you look down the left side, we have the demand where we could have softness up to high demand. And across the bottom, we have our returns. Bar left is lower return, moves over to the right for our higher returns. If you look at that bottom left quadrant, in a market we may have excess fleet. We may not be getting the returns we want or see the demand. We can move that fleet or if it's at a certain age, we can sell the fleet. Either way, we can rightsize what fleet we have based on the demand we're seeing. You move immediately above that into our rate opportunity zone. We have products today that have huge demand. Unfortunately, we may not be getting the returns that we expect. So in that case, we work with our field personnel to make sure we're constantly managing the price that we're getting for those assets. You move to that bottom right, you can see we have the sales penetrations. These are assets we know we get good returns on. But perhaps we're not renting them as frequently in the market. But you'll hear from Mike in a little bit about how we want to focus our sales force to go after customers that typically rent these products. And then, of course, in the top right corner, we have our most attractive zone. That's when we see huge demand and we get adequate returns. This is where we want to continue to invest our capital as we grow our company. Our goal to support our customers is about having the right fleet at the right time, getting the right price and, yes, supporting our customers better. So as you can imagine, when we talk about our vendors, what we look at is partnerships. Today, a lot of vendors want to partner with United Rentals. The size and scale, the ability to give them orders in advance, are all benefits to our vendors. But there's other things that we do every day. It's evaluating where we should route fleet to as it's coming in on purchase orders. It's also how we should buy and who we should buy products from to our analysis of total cost of ownership. So let me just walk you through some of this math for a second. So this is an example of when we make a purchasing decision. This is a simplistic form. There's obviously downtime or perhaps cost of capital. But let me just walk you through this quick. I'll look at Brand 1, and we'll say this asset costs $115,000. And then over the course of that rental useful life or the time we plan to keep the asset, in a normal world, we can estimate how much we're going to see in parts and labor cost, we'd add that to the initial cost. And then at the end of life, we get an estimate based on our historic sales of what the residual value will be. So when you subtract that, it gives you that $53,000 total cost of ownership over the life of that asset. If you do that across all brands, you can see our decision to buy which product from which vendor is highlighted by either Brand 1 or Brand 2 being our best purchasing decision. And our avoidance would be to avoid Brand 3. This is how we use data to make sure we're buying the right products from the right suppliers. So what about at the end of life, when we go to dispose of assets. This is an area United Rentals has had a very strategic advantage in our industry for many years. It's about selling the assets, first of all, at the right time. Every one of our assets has a rental useful life. That rental useful life is determined by a lot of factors. Number one, if we keep that asset for one more year, what would the added maintenance cost be? If we sold it versus keeping it, what would we see the reduction in residual value be? Probably most importantly, over the last couple of years, what's the availability of new fleet to be able to replace that. So this is -- this is critical to determine when we dispose of it. And then how we dispose of it and at what price is where we really benefit. United Rentals has constantly believe through our sales force, we can leverage the retail channel versus using wholesale as a way of disposing the fleet we have. I often joke with all of our field people, and I say we are one of the largest manufacturers of used equipment in the world. And when you think about that, we produce a lot of assets every year that we have to find the most efficient way to dispose of. We do that, we apply some third-party data. And then through our algorithm, we apply what the utilization is we see, what's the condition of the asset, what's the hours the asset has. We set a fair market price that we can optimize the returns we get on assets. This is about buying assets the best way and disposing them the best way. And that is a big advantage for us with the data we have over 25 years. So I hope you see through the course of my presentation that, a, size and scale is a big advantage for us, but it's more about the expertise we can offer customers not just the amount of fleet we have. We've made a lot of technology investments and some of them are still early in the stage that we'll continue to invest. And the more we invest in technology, the more efficiently we can create our employees and the more productive our customers can be. And of course, we look to optimize those asset returns through the course of data analyzation. So with that, I'd like to introduce Erin Neumann to the stage. Thank you.

Thanks, good afternoon. My name is Erin Neumann, and I have the privilege of leading Operations Excellence at United Rentals. Our function supports that branch network through automation of the repeatable tasks and continuous improvement efforts that help us better serve our customers. We measure success in OpEx through efficiency and driving capacity to grow the business. My own background prior to joining United is in lean manufacturing and strategy in aerospace and defense. So coming from an OEM environment myself, it's been really exciting to see United apply these core lean and Six Sigma concepts to drive value in the industry we operate in. So let's talk a bit about our approach. At United, operations excellence is not a separate initiative. It's woven into the way we do business every day. And there are a few key themes that I believe differentiate our program. First of all, we always start with the customer. Everything we do in OpEx is driving toward improving that customer experience. Second, our customers work across our broad network of branches. So process is what gives us consistency to better leverage our scale and serve those large customers. And third, as we continue to expand our digital tool kit, it creates real capacity to grow, and that efficiency supports profitable margin growth. You've seen this graphic a few times today. I'm going to drill into the customer experience piece and talk a bit about people, process and technology. So let's talk first about people. We anchor on growth and customer satisfaction as measures of success in United Rentals. And it's important to realize that in our business, the customer experience happens in the moments all those little things that have to go right to give the customer a seamless experience. As Dale shared earlier the volume of transactions in a single day in our company. Everything we do in operations excellence drives toward improving the ability to say, yes, when we pick up the phone, the utilization of our trucks so that every delivery and pickup is on time, and supporting over 2,000 service techs on the road every day, keeping our customers up and running. It's our collective success in these moments that leads to a best-in-class Net Promoter Score. And when we talk about Net Promoter Score as a company, we don't benchmark our peers. We talk about companies like Amazon and Apple and Starbucks, and how do we create an ease of doing business that draws our customers back and deepens our partnership. And that's how we benchmark customer experience. I'm going to drill down into some enablers of our approach, people, process and technology. Earlier, Craig referenced our customer-centric culture at United Rentals. And I want to recognize that this doesn't happen by accident. It's very intentional. So a few events just recently that we've wrapped up, I'd like to share. First, this month, we completed our all-employee workshop. This is a full day, it's an 8-hour workshop every single employee at United Rentals sat through -- or experience, I should say. That's 850 workshops. We took every employee out of the business for a day to sit down and talk about teamwork and further elevating the customer experience. Now if you do the math, that's 200,000 hours invested in keeping this conversation alive and driving us forward. And the feedback was outstanding. The real value to employees coming out of that day when you read survey comments, is that they understand whatever their role is, if they're an equipment associate, a driver, a branch leader, a sales rep, they know how what they do in their day impacts the customer. And you heard that from Craig earlier, it shows up in our large survey results as well. Another event that we've been hosting twice a year since 2018 is our customer deck. This isn't a big customer appreciation event. This is actually one customer invited to every single branch on the same day. It just happened last Tuesday, actually. And what we're doing here during that day is sit down and the customer gets to talk to the team that serves them. They talk about what we do well, they talk about our opportunities to improve. And we ask all 12,000 of those customers -- sorry, 1,200 of those customers. What are your priorities? This keeps us grounded. And you could see on the page here, price matters, but it's not #1. The customers tell us we need fleet available to serve our needs and responsiveness of your team and ability to communicate with us throughout the process. I myself read hundreds of comments from customers and whether they're national accounts or local customers, it's those abilities to serve their needs that keeps them coming back. The important thing about these events is that they create a sense of alignment across our most powerful asset, our team. So how does this play into our future. This is what allows us as a distributed organization to implement change quickly. Everyone is aligned on a common purpose, which lets us move forward together. Like any other OpEx program, we are rooted in a foundation of 5S, good process, good organization to enable rental flow. We have a practical training program that you can see on the map here, 5S specialists have been certified down on the front lines. This embeds this culture with the people that are doing the work and serving the customers. They own it. To support that, we also have a corporate team and regional leaders that are working on solving the more complex problems and driving transformation. This approach from both sides is what really allows us to surface best practices. But here's the important thing, we execute. So we have 1,500 branches that some of them are solving the same problems and the answers are out there. Let me give you an example. Recently, we found a branch in Southern California was turning fleet through the repair process days faster than other branches in the market. So we went and talked to them. We visited. We learned from their mechanics and their service leaders, what is it that you're doing that's driving this result. And we found that they were staging parts in a way that we hadn't seen elsewhere. So today, we've implemented that same process in 35% of our locations, and we have a plan to get to 100%. This is a network that really generates our to do list and operations to build a better future internally. Our teams work diligently to take waste out of the business, and this has been a key enabler to profitable growth at United Rentals. When we started the OpEx journey just 10 years ago, we did 800 Kaizen events in a single year, and this really generated a list of best practices that have evolved into the way we do business. If you think about a less mature organization, local leaders are firefighting. They're muscling through their day. And don't get me wrong, things go wrong at United Rentals. We have a branch leadership team that is the most responsive in the industry. But we have taken waste out of the repeatable things that has allowed us to actually grow the span of control of a leader. In the last 10 years, the size of an average GenRent branch has grown by 45%. In that same time period, we've expanded the count of locations by 82%. So whether it's a cold start or an acquisition, having strong processes lets us get a team up to speed and up and running quickly. And maybe more importantly, it creates consistency for our customers. In a single day, a national account can be operating in 10 different states across United Rentals. And whether they have 2 job sites that are 5 miles away or 500, they're expecting that same consistent customer experience. And that's what we drive toward with everything we work on in OpEx. Now we can't talk about efficiency without acknowledging the impact of automation. Dale shared this graphic earlier to give you an overview of our broad digital toolkit. And bear with me, I want to take you in the weeds for a minute to share how this shows up in every day. First of all, our dispatch tool will give us insight into every single truckload, the capacity that we've used on that truck. So not only how much area but how much weight of that truck space have we used. So that means this morning, we sent 8 trucks into service Manhattan and, Stewart, our dispatcher in Ridgefield Park, could tell you exactly how much empty space was on those trucks. That's really empowering the frontline to own the business and drive those results. Another example, we have a mantra here called drivers drive. So we measure by the minute, how much time it takes a branch team to get a driver in the branch, unloaded and loaded with their next run and back out. This process is really enabled by the handheld devices we have for people to complete the work on the spot without paper. And lastly, our digital toolkit helps us make decisions. We operate in a high time utilization environment. So when a customer calls, we might not have that piece of equipment sitting in the yard ready to go. But the person who picks up the phone has instant visibility into where we can service that customer from and what the most cost-effective solution would be. The punchline here is that technology for us translates into time for United Rentals and for our customers. And frankly, time is money. To wrap up, here's what this means for the business. First of all, we can be responsive to the customer. We have the fleet availability to meet their needs and the trucking capacity to get it to them. And we can operate as a single organization at scale with that local partner customer experience backed by the resources of the largest player in our space. And Matt kicked off the day by referencing our people and our customer-centric culture. And we thought who better to tell you about it than the team themselves. So please enjoy this video. [Presentation]

Thanks for your attention. We're going to take a short break now, and we'll get started again at 20 after. [Break]

All right. I think we're going to get started. If everyone can take a seat, and we'll wrap up with the Q&A at the end. [Presentation]

Welcome back from the break. Hope everybody got a chance to catch a glass water and get settled in for the rest of the day. I'm Mike Durand and I'm privileged to lead the sales and operations for the company, which includes all facets of our go-to-market approach and aspects of our operational strategy. And I've been with the company for over 20 years, and I can truly stand here in front of you today and tell you that I have never been more excited to be with the company. As you've heard many of our colleagues talk about today, our go-to-market approach starts and ends with the customer at the center. So I'm excited to tell you a little bit more about our approach, which we believe is second to none in the industry. Here's what I want you to take away from the presentation today. We've got a great, robust go-to-market strategy that's driving continued momentum across products, markets and verticals. As Matt and Dale mentioned earlier, we believe our size and our scale, combined with the breadth of solutions that we offer uniquely position us for success, particularly with our largest and most complex customers. We believe that we can bring solutions to the table that our customers -- to our customers that many of our competitors cannot. And while our aggressive specialty growth is certainly a benefit to our national accounts, we believe our local accounts can share that same benefit. And finally, the industry, as you've heard, is poised to benefit from some great tailwinds, which we believe will drive outsized growth over the next few years. Now I mentioned we're driving growth across products, markets and verticals. Those 3 different lenses that we use when we think about evaluating and pursuing growth opportunities. And candidly, it's not always easy to think about these aspects in 3 different compartments. But we believe it's critical to make sure that we're thinking about all the advantages and how we optimize for our size and scale. Ultimately, the goal is to create value for our customers. And we believe value is created when we match our full suite of solutions to the unique needs of our customers, in particular markets and verticals. When we do an effective job of this, we can leverage the benefits of our size and scale to drive growth across our footprint and our portfolio. Now just to make this a little bit more tangible, let me give you an example of one area where we've seen growth recently. And that's in the power vertical. It's an area of focus for us as a sales organization and something we've talked publicly about in the past. And there's a solid opportunity for growth here across solar, wind, normal power generation and of course, power distribution. And Matt talked a little bit earlier about the fact that these investments are already funded. And we feel like we've got clear line of sight for this opportunity. Now keeping customers at the center of what we do is critical to our approach. We recently rolled out an enhanced sales coverage model to improve our ability to connect with customers and do it consistently. Dale and Erin mentioned the many tools that we use to offer support after the sale, but we're doing this on the sales side as well. And let's dive a little bit deeper to see what that looks like. Key accounts remains a fundamental focus and continued growth here is critical. As Matt mentioned, we have intentionally built the business that is designed to meet the needs of our large key account customers, which in turn creates better resiliency in our business. We grow with these customers by deepening our relationships with them, which is largely supported by our dedicated account managers who serve as a single point of contact for the customers. But this effort is also supported by our regional product development managers who are dedicated to their specific specialty business and focused on pulling their products through the national account platform. Now likewise, our national account focus is complemented by growth efforts in specific target verticals like the power vertical I just mentioned. These teams have significant knowledge of the verticals as well as deep relationships within each of the customer segments that they're responsible for. But not every customer needs that high-touch approach. We know customers have different needs. And it's imperative that these needs get met by the best channel. Some are happy to connect on a mobile app or engage with us digitally. Some more infrequent renters may simply need a phone number to call when they need a product or service. And those we can operate centrally. To be clear, face-to-face selling remains a very critical part of our go-to-market strategy and our outside sales team plays an important role in building relationships and supporting that growth. But meeting customers where they are is a critical success factor in our new and more optimized sales strategy is positioning us to grow our revenue and share while ensuring we are aligning the right resources to the right customers. Now Matt took you through the grow, deepen and expand framework earlier today, and nowhere has this been more prevalent than within our specialty business unit expansion. And Dale took you through the products. And it's important to understand the capabilities we have with those products, but as I stated a little bit ago. The real value is connecting the customer with the product and service in the right place at the right time. When it comes to our specialty solutions, bringing the right solutions to the table allows us to leverage our conversations with the customers to take us from being simply a vendor to a partner. The breadth and depth of our GenRent business forms the foundation for successful engagement with our customers, but our growing suite of specialty products allows us to drive deeper entanglement with these customers and taking our relationship to that next level. Now the right-hand side of this slide provides a result that we see when we introduce all business units in a more consultative approach. This is an actual example of a customer who we've been able to implement our go, deepen and expand framework with over the last few years. And while out of respect for their privacy, I won't share their name, I will say that we've seen a fantastic growth by building on those base level GenRent capabilities and bringing all the specialty business units to play. Working hand with our -- hand-in-hand with our customers, delivering solutions rather there's been simply products is right where we need to be and in support of our strategic framework. Now when we apply this kind of methodology and thought across our footprint and our customer base, the results are outstanding. Building a strong Specialty business has been at the forefront of our go-to-market approach for over 10 years, and we think the results speak for themselves. Doing so has allowed us to create tremendous value for our customers. But as you can see from this slide, it's also created some pretty nice results for our shareholders. Our Specialty business has seen robust growth, as Dale said, at nearly 28% over the last 10 years, becoming nearly 30% of our business in 2022, and a cornerstone of revenue resiliency and margin expansion. Now finally, just as important as expansion has been to our performance, implementing Specialty solutions help us drive deep and lasting relationships with our customers. Earlier, Matt discussed those key demand tailwinds that we see in our business. In fact, these are very well documented. I want to reiterate that we have several sustainable commercial advantages that we believe will allow us to generate significant growth from these tailwinds. And we've -- as we've discussed throughout the day, our comprehensive GenRent portfolio, combined with our differentiated suite of Specialty solutions, allows us to provide one-stop shopping for our customers. We've built what we believe is a premier brand in the industry, and we have the reputation to continue our strong sales momentum with large national accounts. Our scale, our geographic footprint and fleet architecture create unique competitive advantages, allowing us to effectively serve the largest and most complex clients. And our unique digital capabilities that we've discussed today help to ensure that all customers will have a seamless, empowered interaction with United Rentals. But just to put these demand tailwinds into context, there are mega projects tied to these, and Matt talked a little bit about some of those earlier today. In many cases, our customers are undertaking projects of this scale for the very first time. When you're talking about a plant down in Savannah, Georgia that's 4,400 acres, that's a significant plant. That's a significant opportunity. And that takes a lot of different scale and a lot of different levers to be able to pull. But simply put, our scale, our expertise, combined with the depth of our client relationships, puts us at the front of the line as customers identify full service solution providers. Our go-to-market model, built on the strength of our footprint, our full suite of solutions and our relentless customer focus, ensures that United Rentals is the clear choice for customers operating within and across these opportunities. Now before I wrap up, let me share the slide with you that I'm most excited about. There's a lot of great opportunities referenced here on this slide, but the takeaway is this: we're not done yet. In my conversations with customers, many are eager to hear and contribute to the conversation around, okay, what's next? That means a couple of things to me. First and foremost, we've moved from being simply a vendor to a partner, and that's an important transition, but it also is an indication that we have additional right of way, additional white space. And one of the hallmarks of our growth in recent years is that we've remained flexible as our industry and the needs of our customers have changed. It's this flexibility that will give us the ability to respond to whatever trends emerge in the future. It will allow us to grow, deepen and expand with our customers even as their needs continue to change. So whether it's the current mega projects, the trends or whatever might be on that next horizon, we have plenty of additional white space in our industry. And we're excited about what the future opportunities mean for our employees, our customers and our shareholders. I'll wrap up right where I started. As a leader in the equipment industry, we are excited about the growth opportunities we see throughout the business. That's why we're continuing to invest in our business, always looking for ways to strengthen our offering, bringing new and different solutions to address our customers' increasingly complex problems. And we couldn't be more excited about the growth potential ahead of us. We think we are uniquely positioned to capitalize on the key demand trends that we've discussed with you today. But as we've said throughout the day, the growth starts and ends by putting customers at the very center of what we do. Now Ted is up next. But before he comes up to speak, I want you to hear from some of our customers and some key team members. Thank you. [Presentation]

Good afternoon. Thanks, Mike. I hope you guys enjoyed that video, and it provides a little taste of how we deliver for customers every day. For those of you who don't know me, my name is Ted Grace, I'm the company's CFO. I've been in this position since last July. Prior to that, I ran Investor Relations for 6 years. And in that capacity, I had really broad exposure to all areas of corporate finance. Prior to joining the company, I spent about 22 years on Wall Street, mostly as an investment banker and research analyst. And during that time, I covered the company for the better part of a decade. I'm going to talk about a few things today, but the common thread will be bridging the ways we drive customer value to the ways we drive shareholder value. And we do this by focusing on 5 things: first, driving above-market growth. We've done that historically, and we're confident we'll continue to do so. Secondly, delivering industry-leading profitability. You see that in our historical margins, and our goal is to get better from here. Next, we want to drive higher returns and strong free cash generation across the cycle. And finally, we're going to allocate that excess capital in the most advantageous ways possible to add value to our shareholders. This to us is the recipe for driving strong TSR. So this is a slide you've seen throughout the day. Matt, Dale and Erin all talked about the center of it and our relentless focus on both customers and employees. I'm going to focus more on the outer ring, which expresses our model for leveraging the inner ring to drive strong financial performance. The 2 most important things we hope you walk away with today are: a, the power of this flywheel to continue to drive strong compound value for our shareholders; and two, that the best is yet to come, in our opinion. So let's take a step back and look at our results over the last decade. On the left side of this slide, you can see the strong double-digit growth we have delivered over both the last 5 and 10 years on a compounding basis. And in the middle, you can see that we have driven profit growth at an even faster rate. Together, this has driven very powerful earnings growth that you can see on the right. And the punchline here is a 10-year compound annual growth rate in adjusted EPS of more than 24%. Now to put that in perspective, that is 3x the rate of the S&P 500 over that same period of time. And what's more, we've actually achieved this with less relative volatility. So let's dig into growth a bit more. Let me start by explaining this slide. The gray bar you see at the bottom of the slide represents the industry's growth ex United Rentals over the last decade. And the key highlight is about a 4% compound annual growth rate in the industry's revenue. The blue line, on the other hand, represents our growth over that same period. Notice that we've compounded better than 11% over that same 10-year period. Now the call-out bar really makes my point, but it is the substantial outgrowth that we have driven over a sustained period, call it about 3x on a compounding basis. Now acquisitions have been part of this, and those are a critical part of our strategy. But if you look at our pro forma growth over this period, it's averaged better than 6%, and that's been driven by the strategies you've heard our whole team talk about today. And if there's one thing I'd want to emphasize here is that we think going forward, that combination of strategy and tailwinds we've talked about all day will continue to help us outperform the industry. Now let's turn to profitability. What you can see here are our industry-leading margins that we have worked very hard to achieve. But this chart doesn't really show our entire history and tell the story. So I'm going to reframe it a little differently. If you go back to where Matt started, he talked about the 3 chapters of our company's existence. And that first chapter was, call it, between 1997 and 2008, that was the hyper-growth phase of our company. Our average adjusted EBITDA margin over that period was about 30%. And then he talked about the transformation that started in 2009 and went through, call it, 2013. Over that period, we increased our EBITDA margin to about 37%. And that's really we've embraced a lot of best practices and the things you've heard the team talk about today and for a while. And since 2014, which is this kind of current chapter, if you will, our EBITDA margins have averaged better than 47%, even as we've absorbed several lower-margin acquisitions over that period. Now there have been a lot of factors that have driven this, but the 2 most important are going to be leveraging scale, which you've seen us deliver through growth; and driving operating efficiencies, which you've heard us talk about today, and Erin did a great job highlighting many of the small things we do every day to drive higher margins. But the most important thing to convey on this slide is we are focused on getting better in driving further margin expansion. So I'll leave it with the thought that we continue to focus on driving flow-through of 50% to 60% annually across the cycle. We're also very proud of the improvements -- sorry, also very proud of the improvements to our returns that have been supported by both improved profitability and a focus on capital efficiency. As you've long heard us say, returns underpin all aspects of our strategy. It drives how we think about organic growth, acquisitions, capital allocation and all other investments we make across the business. And as you can see on this slide, we set a new high watermark for the fiscal year in 2022, reaching a return on invested capital of 12.7%. What's more, 2023 is shaping up to set a new record. And the most important thing to convey here is we don't plan to stop here. And finally, cash flow, which we view as the hallmark of our company. Now this is a busy slide, so I'm going to do my best to walk you through it. But if you look at the upper left-hand corner of this page, you can see cumulatively, we've generated almost $9 billion of excess free cash flow in the last 5 years and almost $13 billion over the last decade. Now to put that in perspective, $13 billion is equivalent to about 55% of our current market capitalization. I also want to point out the upper right-hand side of this page. You can see very strong cash conversion that has comfortably exceeded 100% over the last decade, and our free cash margin has exceeded 16%. In both regards, very strong results that we think help support our efforts to maximize shareholder value. So that gets us through our results over the last decade. Now what I want to do is provide some relative perspective. I think as many of you know, we are a very competitive group here, and we like to measure things a lot of different ways. Now this, again, is a very busy slide. So let me unpack it a bit as it relates to the next 3 or 4 slides after this. This illustrates our performance over the last decade and in 2022 versus the entirety of the S&P 500 Industrials sleeve, about 73 companies, including United Rentals. The gray boxes you see on this slide reflect the median statistic for the sector for each measurement. The blue boxes, on the other hand, represent our results for that same period. We've then ranked each metric within quartiles. And at the bottom of this page, in orange, you can see our force ranked position across, again, all 73 components of the S&P -- industrial components of the S&P 500. So I'll give you a couple of seconds to process this because I know that was a lot to walk through. But looking at this page, we've measured growth on 2 metrics: one, total revenue; and on the other hand, diluted EPS. And looking at total revenue on the left, you'll see that we've delivered top quintile results, both over a 10-year basis and last year, we think very strong results. And on the right-hand side, you'll see that same comparison on diluted EPS, where we've actually done a little better, delivering consistent top decile results. So let's now turn to profitability and look at this 2 other ways. On the left, you can see operating margins; and on the right, our net income margin. The punchline, however, is the same with the prior slides, very strong results. Looking at operating income margin, you can see basically top decile on a sustained basis. And on the right, you can see similarly strong net income margins ranking in the 73rd and 83rd percentile, respectively, over these time periods. So let's look at returns, again, same universe, 73 companies. Here, again, we've measured it 2 ways. Now we know we won't outperform on every metric, and that certainly wasn't the intent with this presentation. But one of the things you've heard us talk about today and for a long time is a focus on continual improvement, and this has certainly been the case with the returns. Now with all that said, we are very proud of the gains we've made on return on invested capital over the last decade, and you saw that highlighted a few slides ago. We're now closing in on the 60th percentile on ROIC, which is well above our 10-year average. And on this slide, the most important thing I'd want to emphasize is we are committed to continuing to push higher returns on invested capital. And on the right, you can see return on equity, obviously, a metric that does matter to shareholders. And when you look at those results again versus this universe, we think very respectable 81st percentile, 72nd percentile. And finally, cash flow. As I said earlier, we view this as the hallmark of our company. And on the left side, you can see the strength of our free cash margin. In both timetables, top quartile performance. And on the right, cash conversion, which has exceeded 100% over the longer term, ranking us on the top decile of the industrial sector. And while cash conversion is not something we guide to, I will say our goal is to convert at 100% or better on a normalized basis. Now we always talk about areas of opportunity, and this is an example of one. I'm guessing it won't surprise this crowd that this is not an area we don't rank as well as valuation. Now to be clear, I am absolutely not here to debate what our valuation should be. We'll leave that to the market. Rather, we simply wanted to illustrate the disconnect between the fundamentals we've delivered on a sustained basis and the multiple we've gotten thus far. Now this is an area that is largely outside our control. We acknowledge that. But our hope is that our focus on growth, profitability, returns, cash generation and capital allocation will help unlock more of our potential. So a few more things to touch on. Certainly, the balance sheet is towards the top of the list. It's been an important centerpiece of our capital allocation strategy since at least 2019. And it's another area where we are very proud of the results. The key takeaway here is the fact that our balance sheet has never been stronger. On this page, we express that through a leverage ratio. You can see we exited last year at 2.0x LTM EBITDA. And at the midpoint of our '23 guidance, we'll finish this year at about 1.6. Now this gives us a lot of flexibility for anything. And I'll share a few other highlights on the balance sheet. From a maturity standpoint, I'll note that we have no long-term maturities until 2027. And we do have a fairly even distribution of those towers when we get to that point. You can also see our liquidity, which exceeded $2.6 billion at March. And you can see the balance of fixed versus floating rate exposure, call it, 70-30, which we think is both appropriate and manageable. So when you take this all in combination, we have never been in a better position measured across leverage, liquidity and maturities, which again positions us really well for any environment. Now I just want to pivot quickly to capital allocation. The core of our foundation has always been a strong balance sheet that allows us to invest in growth, both organic and acquisition. But once we funded that growth, our focus is on deploying excess capital in the most advantageous way to our shareholders. And that's really what you see on the right-hand end side of this page. In January, as most of you know, we introduced our dividend, which we view as a very important milestone. And the early feedback has been exceptional, really everything we'd hoped to hear from the market. And finally, share repurchases that have long been a very important part of our capital allocation strategy. Since 2012, we've spent about $5 billion buying almost 46 million shares back of the company. That equates to about 40% of our fully diluted share count over that period. Now based on today's share price, those shares are worth about $16 billion. That translates to better than a 20% internal rate of return over that period on that investment, which frankly is your capital. It remains our plan to repurchase $1 billion of shares this year. And going forward, we certainly expect that share repurchase will remain an important tool for us to return excess capital to our shareholders. I also want to touch on M&A, which, as you know, has been a critical element of our strategy and an important means of us creating value for our investors. You can see on this page the larger deals we've done since 2012. They've added key capabilities across fleet, product, solutions, technology and real estate. Combined, we spent $12 billion on these acquisitions that have benefited both our customers and our shareholders. Now we often get the question, how did a certain deal perform? And we talk about how difficult it is to kind of peel apart the [ taffy ]. But what I can tell you confidently is we look at each of these deals, they have at least met and in almost every case exceeded the intended internal rate of return that we shared at deal time. And those are results we are very proud of. What's more, we still think there's a lot of runway in this area. We think that we have a lot of opportunity to drive further consolidation and to augment both our GenRent business and our Specialty business to benefit both our customers and our shareholders. And we'll always do this with a very sharp focus on capital discipline. So coming back to where we started, I hope I was able to share some insights in the way we've created value for our shareholders and where we think we're heading. We feel very good about our ability to drive above-market growth, supported both by our strategy and the tailwinds you've heard us talk about today. We will continue to focus on driving improved profitability and higher returns. We will continue to manage our capital in a smart, prudent and disciplined manner. And we will continue to leverage the flexibility of our model across all aspects of the cycle. And in doing so, we are very confident that we'll reward our shareholders with a very compelling total shareholder return over the long term. So finally, I just want to close by reaffirming our 2023 guidance. As we shared last month, the year is off to a strong start, and I'm pleased that we remain on track. I'll spare you all the details as they're highlighted on this page, but here again, we're reiterating all aspects of guidance. And the last thing I want to mention is we will be reporting earnings on July 26 and hosting our call on July 27. And so with that, I will hand the call -- hand the meeting back to Matt.

Thanks, Ted. Thanks, everyone, for your attention today. I think you're all pretty familiar with this flywheel. Hopefully, you all got a taste of how excited we are about what the future can bring for United Rentals and how much passion and knowledge and experience the team brings to the table to support the broader team network. And we feel strongly that if we stay true to our culture and continue to support the people at the center of this flywheel, stay focused on our people, stay focused on our customers, that it's truly will be a bright future for United Rentals. And we're very proud of the company that we've built over 25 years, but we're even more excited about the opportunity ahead. So with that, I ask the team, what's possible? What can we do? Well, we believe we can be a $20 billion company. We believe that our focus on continuing to outpace our specialty growth to serve more of our customers' needs and continue to be that one-stop shop is part of that path. And we believe that we could drive approximately $10 billion of EBITDA. And more importantly, true to that pivotal period I talked about earlier in our history about pivoting to profitable growth, we believe we can drive 15% return on invested capital. And these are all aggressive aspirations, but ones that we see a path to and ones that we know will take or require some aggressive organic growth as well as some M&A. But if we look at our history, what the reality of this says is we'll need to outpace the industry growth. We have a long history of doing that. If you recall Ted's slides earlier about the 11% growth, well, this would take us outgrowing the industry by about 3x over this time period. So this isn't multiyear guidance that we're giving here, but we see a path and we wouldn't be presenting it to you all. And then we just wanted to use some numbers, which I'm sure you're all happy to see, to just kind of show you what is the future. We've talked about a lot of exciting things. We've got a great team, and we have a great history, but I think the better days are ahead. So with that, I'm going to have Ted and Dale come up on the stage. We're just going to do a little working around here, and we're going to move into Q&A. So thank you very much. Maybe we could have found a more graceful way to do that. We could -- thought about it all day yesterday, that's the best we got. But fortunately, we save all that logistical prowess for our business, for our day jobs. So this isn't known to be a shy group. We've got some -- [ Morel ] and [ Donna ] has some microphones out there to help, and we're here as well as the team to answer any Q&A.

I want to start with David. Donna?

Morel, come on over here.

So with those targets, it looks like a revenue CAGR of 7.5% between this year and '28 and EBITDA at [ $8.3 billion ]. So I guess 2 questions. Do you see -- I mean, obviously, we're thinking about '24 and all the macro risk, do you see in that path a down year within that 5-year run? And why would that level of top line would the EBITDA not grow much faster than the revenue?

So you may not have noticed the squiggly lines here. So this is not exact guidance. But to be fair to the point of your question, how we really think about this, David, is a couple of things. Number one, that outpacing of the industry growth is a starting point. And I believe that our number, and correct me if I'm wrong, Ted, was a little bit over 9%, like 9.4% CAGR.

'22 to '28, he's saying.

Oh, he's saying -- you're taking the midpoint of this year's guidance. Thank you very much. So we're calculating that from the '22. But to your point, that $10 billion is basically assuming that we continue to target 50% to 60% flow-through, right? And I think it connotes about low 50s flow-through on that business, and that's how you get to about a $10 billion EBITDA target.

The idea of growth [ piece comment or how it evolves for you guys ] and also maybe comments of [ brand-new M&A ].

So we don't -- the reason why it's not multiyear guidance because we don't know who the M&A targets are. As you guys all know, we never budget for M&A, but the reality is we're probably going to do some M&A between now and 2028. It really depends on the attributes of what M&A we buy, and you all know that the different asset attributes come at different multiples. So we'll say we'll get most of the way there through our organic growth plan. And it doesn't require M&A, but we do think there's a task there to fill in with some M&A. We're not putting a number out there publicly of how much. It's going to depend on as we progress and what the opportunities are. And one thing I will say, even though we put out this number, we're not going to chase that number by doing bad deals. I think you all know that already. That's why we don't put M&A targets out there. We see -- view M&A as a way to accelerate our strategy and not the strategy itself. It's just a lever to use to accelerate it. So I'd say the majority of that by '28 will be organic, David. But certainly, if we can accelerate it with some M&A, we'll do that.

So I think there's one more part of the question, which -- I mean, David, we don't have a crystal ball that tells you where the economy is going. We're obviously very pleased to reaffirm guidance today. You heard what we said in April. If you look across our business, every vertical is up, every region was up, every customer segment was up, our customer sentiment survey is very positive. So make no bones about it, we feel very good about '23, but we don't have a crystal ball. So a lot of what we've talked about is trying to understand history, looking at the nature of downturns and then putting that in the context of these tailwinds we've talked about. And I'm happy to get into the weeds. It's a long diatribe. Many of you heard me do this. But the punchline is we do think we can very positively grow through, call it, an average recession, so which would mean not just a mild recession, which seems to be kind of what many of the market experts think could happen. If that happens, we'd be better positioned. But when we think about the nature of drawdowns in the average recession and how we think these tailwinds could play out, we do think we could actually grow through a classic non-res recession. Jerry?

I'm wondering if you could just talk about, given the company size, given all the organic and M&A success you've had, how does that change the profile of the type of acquisitions we should be looking for going forward because it's going to take a lot to move the needle for you today compared to 5 or 10 years ago? And maybe if you could just talk about Specialty, in particular, what sort of areas could be interesting for you folks thinking about the next 5 years?

Yes, we're aware, right? So the scale of our success creates challenges on counting on M&A, which was why we build a very aggressive organic growth plan. So we still think that's important. But there are still opportunities, and we just did a tuck-in last quarter. There's still opportunities even within the base business to generate space, to continue to add capacity, and we do believe that consolidation is good for the industry. And you've heard us say before the big is getting bigger is good for the industry. Just a little fact that I think I might have shared with you all before, the top 3 in the industry just over the last year went from 29% to 34% market share, and we think that that's going to continue. So we're not exhausted, but we do -- there are less targets of scale than there used to be. With that being said, the Specialty focus is as much about finding more solutions and having that broad portfolio. So we have opportunities in some of the newer Specialty businesses that we have to fill out that footprint, both organically or through M&A. But there's also -- think about any product and service that's temporarily there on a site, whether it be a plant or a work site, something that's not going to stay with the physical plant, we see it right away to an opportunity to supply those products and services. So we don't really talk about too much openly for competitive reasons of what they're going to be, but I can tell you that we looked at the mobile storage business for quite a while before we found the right partner. And once we find it, we're going to move, execute quickly and then grow the heck out of it. And that's how we look at how we'll use M&A in the future.

And from a free cash flow standpoint, since the model doesn't assume acquisitions, you're going to be generating a lot of cash in that scenario that you laid out. How should we think about -- is there going to be a standard allocation of X percent of CFFO to stock buyback or anything along those lines, given how steady the free cash generation has been for you folks?

So as you know, this is something we take annually. So I don't know that I'd want to put out a specific rule of thumb. We've got this year laid out. We'll buy back $1 billion of equity. We've got about $400 million being returned via dividend. And in terms of where we go in '24 and beyond, that's certainly something we'll talk about later this year as a team, and we will update The Street when the time is right. But I think your point is spot on, Jerry, which the high-class problem of this company is what to do with all the excess cash. Rob Wertheimer in the front. Rob?

You guys have executed very well in an industry that's had some -- obviously, a ton of volatility in the last couple of years, but supply chain -- constrained supply of new equipment, and that maybe has contributed to fleet productivity, whether the time or user pricing kind of even better. And Ted, I think you said your ambition is to grow margins. So I guess one question is, to the extent you're willing to talk about time, I mean, do we expect that to normalize back downwards? Or are you continuing to reach new levels that you didn't think you could have reached maybe 3 or 4 years ago? And then just with all the operational improvements that Erin and others talked about, what is the outlook for some of those productivity drivers over the next 5 years? Do they get better and better and better?

So I'll touch on the fleet productivity quickly and then maybe Dale takes the operational improvement. So when I think about the fleet productivity, once again, and I know during the first quarter, there's a lot of conversation about this, maybe I could have done a better job, but we're really going to look at it pro forma, right? And that's the way we're going to look at it. That gap between the as reported and pro forma is going to remain steady throughout the year because that's what was there. But to be clear, we're going to improve the productivity of those assets. It's how we knew we could be a better owner. It's going to take a while. We'd probably, in an ideal world, wouldn't close deals in December and think about the BlueLine acquisition. We had a similar challenge, but that's when the opportunity was there, and that's the one when we know we're going to take it. So there may be a drag on the metric for a little while. But by year-end, you will see these assets fully integrated into our system, operating like United assets, and whatever assets we feel can't will be sold and discarded. And then as far as the future of efficiency and productivity in the business.

Yes, I think we shared a lot with you today of improvements we've made and where the opportunities still exist. We've actually started to look at ways we can utilize our facilities, our branches in a much greater amount of time each day. Today, we don't operate a lot of facilities in multiple shifts. But we believe that with the technology we've enabled and the demand we're seeing, we can continue to push more volume through our existing footprint, drive more hours of availability, getting assets picked up, serviced at all hours of the day, allowing us to create more capacity through existing branches. We've got a lot of upside in what we've built today just by trying to leverage that footprint and the products that we offer. So there's a lot that we can do. I mentioned some of the AI opportunities. You see how many customer touches we get every day. Technology will continue to enable us to make those 25,000 people that Craig talked about more productive every day.

Rob, I didn't answer your point about fleet productivity, time you cap. So I wouldn't call it a cap, but one of the things we did mention in April that I want to reiterate is there's a couple of categories over the past 2 years, and I think our peers have actually reported this as well, they just ran too hot, we couldn't be the responsive customer service company that we want to be a partner we want to be. But we always strive, and we offset those by categories that have opportunity. So what -- whether we hit a ceiling long term, I think there's a couple of things that matter. The efficiency that we can drive through density in our network is one of them. And then the opportunity to take maybe less time productive assets that we have and maybe change them, right? But at the end of the day, we're going to look at it as the output of what's the return on that asset category and not necessarily the individual metric, but the return on that asset.

Steve Fisher?

Donna, Steve is right there.

So thinking back over the last couple of cycles over the last 10 years, some of the challenges that have been presented are when some of your end markets turned down very quickly. And thinking specifically about oil and gas and because it's a commodity market and the commodity changes quickly, the customers react quickly. You changed your strategy by not working with the customers that are likely to turn on and off that quickly to mitigate that risk. What are the areas within your business today that still carry some of that risk of things turning relatively more quickly? Because the fleet in general, it's a very big fleet, it doesn't turn that quickly. But what are the areas that you could still improve upon, if there are any, to kind of mitigate needing to turn that ship very quickly when things turn down?

Well, it's a great question. That was a very unique dislocation coming out of 2015 in the oil and gas because it wasn't only products that we had set aside from, but it was at the highest relative rate, if you recall. I mean it was just a gold rush out there, and it was the highest rate. So we had 2 dilutive issues. We had the volume dilute and then we had the highest rate dilute. So that was really why we got out of that. We wanted to get off that rollercoaster. We're still in there a little bit. Probably about 2%, 2.5% of our business is in upstream, but it's strategic. It's with customers that we want to be with. So that would be the only one I would point to you. I don't really see us having that type of issue. One of the most resilient things about our model is the end markets that we serve are with the very same fungible assets. So we don't really see that. The oil and gas were hard on the assets. They were price premium, and there was a lot of waste in the system that I think they've done better. But I don't really see a parallel to that right now. Dale, I don't know if...

Yes. I would remind everybody, we have never, in our industry, seen a violent downturn like what we saw with the pandemic. And that was a bigger disruption to our end markets than anything, and it wasn't specific to any product, it was across the board. As a group, we found ways to internalize work, leverage our employee base, eliminate third-party repairs and hauling and maintain margins through that time. Granted, maybe it didn't have the longevity that a downturn can have. But I think when you look at that period of 2020 and how we reacted, it showed the flexibility we have in this model. And I think we're always going to get some type of ups and downs on the revenue side. It's how well we position ourselves to manage the cost side to adjust the business. So I think we're positioned well, and we're in a good place for whatever comes ahead, strong growth or some type of slowdown.

Steve, the thing I might add just to put some numbers around what Steve was getting at, if you went back to 2014, we probably had 11% to 12% of our business that was directly exposed to the upstream business, so drilling completion and production. And we went through that painful downturn. We had even more exposure that was indirect, right? It was that stimulus by high oil and gas prices in Texas, Oklahoma, the Dakotas and elsewhere. When we came out of that episode, we re-scoped the business to about 5% or 6%, thinking that, that was a more manageable exposure. And then 2019 came, and the rig count kind of collapsed again. And so we've re-scoped it to about 2% to 2.5% of our business. That would absolutely be kind of the highest beta exposure we have. Now if you think about where we've grown and how we've replaced and backfilled that, you go back to 2016, we talked about the power vertical strategy, at that time, meaning utilities. We were probably about 5% exposed to utilities. We're now 10% exposed to utilities. That is obviously very low beta work. You think about infrastructure, we introduced the infrastructure vertical strategy at that same time. At that point, it probably would have been a mid- to high-single-digit percent of the business; it's now low teens. And obviously, both of those are verticals where you've got very strong secular outlooks such that, with the exception of that 2%, 2.5%, I really can't think of a truly high beta end market that we have any like the exposure to...

Great. And my follow-up is Mike Durand mentioned some of the -- that there is white space areas out there. Are you prepared to talk today about what some of those white spaces are that you could move into? Are they some of the things that you've talked about over the past handful of years? Anything you can kind of share with us about where those white spaces might be?

Yes. So as I mentioned earlier, whether it's continued -- deepen the penetration in some of our Specialty products, right? So even in power and trench, which are 2 most mature Specialty business units, they continue to spin off 20% growth, right, really strong growth. But then there's others like mobile storage, reliable on-site, which is portable sanitation, that we haven't even filled out our full footprint yet from the GFN deal. So we still have a lot of white space there. And then additionally, in some verticals, there are still some verticals, manufacturing M&A, I think there's still -- I'm sorry, run and maintain, R&N, there's still opportunities to replace embedded owned units there. I think municipal is an end market where there's areas for rental to get further penetration. So there's white space for us internally because we're not as penetrated. There's white space because there's end markets, not many left, but if you -- that have not really gone to rental yet, that haven't bought into rental yet. And then lastly, just deeper penetration in the markets that we're serving.

Mike in the back right, please?

Just wondering, when you showed the slide how you're outperforming metrics against S&P Industrials, you highlighted the one slide where it's valuation and you highlight how there's only so much you can do about that. But I am curious, when you think of that valuation slide, how does that factor into the M&A paradigm? Because Specialty, 30% of your business, some of those public peers are trading at 10 to 14x EBITDA, way higher multiples than the market is trading on you now. So just with where you've gone URI today, how do you kind of think of that valuation slide and how that influences your M&A decisions going forward?

Do you want to start?

So I think it may influence what we could pay for assets, but not necessarily what assets we're going to go after. We don't want to continue to grow our Specialty because of some multiple change, that would be great. We're going to do it because our customers need it. And if we continue to build upon customer service and what our customers need, we really feel the financial part will take care of the rest as long as we're making smart purchase decisions. There's a reality of what we trade at and what some of those assets trade at that you have a point of reality that I'd say, okay, is this going to change our multiple? Are we going to make -- be a better owner of this deal? And sometimes that answer is going to be yes, sometimes it's going to be no. But it's always going to start with, would we be a better owner of this asset? Do our customers need this?

So I guess the thing I'd add, right, not to bore people with kind of corporate finance, but I will. If you think about a multiple, that's the short-handed view of cash flow-based valuation, right? And so we talk about multiples externally. Internally, we don't talk about multiples. When we look at deals, they're all based on internal rates of returns, really cash-on-cash measurements. So the question is, what do we pay for an asset? But then, what can we do with that asset, both under our management and then as we grow it? And it's really that is essentially how we think about where we've got the right to own assets is what kind of returns can we achieve with your capital. And when they meet the hurdles, right, then we can get a deal, then we're excited about it. And when they don't meet those hurdles, that's when we're going to be good and disciplined and good stewards of your capital, and we're going to walk away.

That's a great point. We paid one of the highest multiples we ever paid for General Finance. And we're going to crush the model on that deal, right? So it's what can we do with it more than [ anything ].