Q4 2024 United Rentals Inc Earnings Call
Speaker Change: [music].
Speaker Change: Good morning, and welcome to the United Rentals Investor Conference call.
Speaker Change: Please be advised that this call is being recorded.
Speaker Change: Before we begin please note that the company's press release comments made on today's call and responses to your questions contain forward looking statements.
Speaker Change: The company's business and operations are subject to a variety of risks and uncertainties many of which are beyond its control and consequently actual results may differ materially from those projected.
Speaker Change: A summary of these uncertainties is included in the Safe Harbor statement contained in the company's press release.
Speaker Change: For a more complete description of these and other possible risks. Please refer to the company's annual report on Form 10-K for the year ended December 31st 2024, as well as to subsequent filings with the SEC.
Speaker Change: You can access these filings on the company's website at Www dot United Rentals Dot com.
Speaker Change: Please note that United Rentals has no obligation and makes no commitment to update or publicly release any revisions to forward looking statements in order to reflect new information or subsequent events circumstances or changes in expectations. You should also note that the company's press release and today's call include references.
Speaker Change: non-GAAP terms, such as free cash flow adjusted EPS EBITDA and adjusted EBITDA.
Speaker Change: Please refer to the back of the company's recent investor presentations to see the reconciliation from each non-GAAP financial measure to the most comparable GAAP financial measure.
Speaking today for United Rentals is Matt Flannery, President and Chief Executive Officer, and Ted Grace Chief Financial Officer, I will now turn the call over to Mr. Flannery.
Speaker Change: Mr. Flannery you may begin.
Speaker Change: Thank you operator, and good morning, everyone. Thanks for joining our call.
Speaker Change: We are pleased to report a solid fourth quarter results yesterday as the year culminated with record revenue EBITDA and EPS.
Speaker Change: We again saw growth across our construction and industrial end markets as well as continued strong demand for used equipment.
Speaker Change: Our team doubled down on being the best partner of choice for our customers, our diligence safety, coupled with unmatched service technology and operational excellence translated into the results we reported imports.
Speaker Change: Importantly, all of this sets the foundation for our future growth.
Speaker Change: Today I'll discuss our fourth quarter results, followed by our expectations for 2025, and finally recap why we are excited about the <unk> acquisition, we announced a few weeks ago net.
Speaker Change: And then Ted will discuss the financials in detail before we open up the call for Q&A, which we will keep focused on United rentals as a Standalone company.
Speaker Change: Our plan remains to update the investment community on the combined companies. After the transaction closes which is still expected by the end of our first quarter.
Speaker Change: So with that let's start with the fourth quarter results.
Speaker Change: Our total revenue grew nine 8% year over year to almost $4 1 billion.
Speaker Change: And within this rental revenue grew by nine 7% to $3 4 billion, both fourth quarter Records.
Speaker Change: Fleet productivity increased by four 3% as reported and 2% next year.
Speaker Change: Adjusted EBITDA increased to a fourth quarter record of $1 9 billion.
Speaker Change: Translating to a margin of over 46%.
Speaker Change: And finally, adjusted EPS grew year over year to $11 59.
Speaker Change: Another fourth quarter record.
Speaker Change: Now, let's turn to customer activity.
Speaker Change: We saw growth in both our gen rent and specialty businesses special.
Speaker Change: Specialty rental revenue impressively grew more than 30% year over year.
Speaker Change: Even without yet a strong 18%.
Speaker Change: Okay.
Speaker Change: These results were driven by rental revenue across all businesses with a combination of solid same store sales growth and an additional 15 cold starts putting us at 72 for the full year.
Speaker Change: And as a reminder, the specialty cold starts are a key element to accelerating our growth in this high return segment.
Speaker Change: By vertical we continue to see similar trends to the rest of the last year with nonresidential growth, helping to fuel construction and industrial growth driven by manufacturing and power.
Speaker Change: And we saw new projects across data centers chip manufacturing sports stadiums and power to name a few.
Speaker Change: Now turning to the us market, which continues to exhibit strong demand.
Speaker Change: We sold over $850 million of what we see in the quarter, which was a record for any quarter in our history.
Speaker Change: The depth and health of demand in the used market is allowing us to rotate our existing fleet to ensure we can serve our customers' needs efficiently.
Speaker Change: This is evident through our full year capex of over $3 $7 billion and as a result, we drove free cash flow of nearly $2 1 billion with.
Speaker Change: Which translated to a very healthy free cash flow margin of over 13%.
Speaker Change: The combination of our industry, leading profitability capital efficiency and the flexibility of our business model enables us to generate meaningful free cash flow throughout the cycle and in turn create long term shareholder value.
Speaker Change: To that end, we returned over $1 9 billion to shareholders last year through a combination of share buybacks and our dividend.
Speaker Change: And while we have paused our share repurchase plan ahead of the <unk> closing.
Speaker Change: I am pleased to announce we'll be raising our quarterly dividend by 10% year over year to $1 79 per share.
Speaker Change: Now, let's turn to 2025, which we expect to be another year of growth again led by large project growth.
Speaker Change: Customer optimism backlogs and feedback from our field team combined with the demand we're carrying into the new year all support our guidance.
Speaker Change: This was reinforced at our annual management meeting, which we held earlier this month in Houston, Texas.
Speaker Change: Well, we discussed how a key element of our culture is a quality people who work for United rentals.
Speaker Change: And this was on full display in Houston as well.
Speaker Change: 2600 team members came together to focus and engage on being the partners of choice for our customers through our differentiated value proposition.
Speaker Change: Finally I'd.
Speaker Change: I'd like to reiterate what I said two weeks ago, when we announced our intent to acquire <unk>.
Speaker Change: We're very excited to combine two complementary businesses.
Speaker Change: The transaction checks all three boxes, we require when evaluating M&A.
Speaker Change: Strategic financial and cultural.
Speaker Change: Growing our core is a key component of our strategy and I'm really thrilled to have the opportunity to add high quality capacity, meaning people fleet and real estate to the United rentals team.
Speaker Change: This will allow us to better serve customer demand over the long term.
Speaker Change: It will also accelerate our growth all while generating compelling returns for our shareholders. It's really a win win outcome.
Speaker Change: So things remain on track for a first quarter close and there are no further updates to provide you today.
Speaker Change: In closing and building upon what I just discussed with our latest acquisition announcement.
Speaker Change: We remain focused on being the best rental company in the industry.
Speaker Change: Our unique value offering industry, leading technology and our go to market approach combined with our capital discipline gives me confidence that we're well positioned for both customers and shareholders for the long term.
Speaker Change: We continue to progress towards our 2028 aspirational financial goals, which we laid out in may of 'twenty, three and look forward to delivering on these results as we continue to execute our strategy.
Speaker Change: With that I'll hand, the call over to Ted and then we'll take your questions Ted over to you.
Ted: Thanks, Matt and good morning, everyone.
Ted: It's not just shared we had a strong finish to the year setting both fourth quarter and full year records for total revenue rental revenue EBITDA and EPS, which supported the attractive returns and significant free cash flow. We also generated in 2024.
Ted: So with that said, let's jump into the numbers fourth quarter rental revenue was a record at $3 $42 billion.
Ted: That's a year on year increase of $303 million or nine 7% supported again by growth from large projects and key verticals.
Ted: Within rental revenue increased.
<unk> increased by $177 million or six 9% breaking.
Ted: Breaking this down growth in our average fleet size contributed four 1% to <unk>, while fleet productivity added another four 3%, partially offset by assumed fleet inflation of one 5%.
Ted: Also within rental ancillary and re rent grew by 22, and 30% respectively, adding a combined $126 million to revenue driven primarily by strong growth in specialty and hurricane related work in the quarter.
Speaker Change: Turning to our used results as Matt mentioned, we took advantage of a strong market to sell a record amount of fleet in the fourth quarter generating proceeds of $452 million and an adjusted margin of 48, 9% and a recovery rate of 53% on assets that were almost eight years old on average.
Speaker Change: Moving to EBITDA as I mentioned adjusted EBITDA was a fourth quarter record $1 9 billion.
Speaker Change: Translating to an increase of $91 million or 5%.
Speaker Change: Within this rental gross profit increased 7% contributing an additional $136 million year on year.
Speaker Change: This was partially offset by used where the ongoing normalization of the market drove a 9% decline in used gross profit dollars translating to a $21 million headwind to adjusted EBITDA in the quarter.
Speaker Change: SG&A increased by $36 million year over year, which was in line with revenue growth. So good efficiency there.
Speaker Change: And finally, the EBITDA contribution from other non rental lines of businesses increased $12 million.
Speaker Change: Driven largely by strong new equipment sales.
Speaker Change: Looking at profitability, our fourth quarter adjusted EBITDA margin was 46, 4%, implying 210 basis points of compression.
Speaker Change: I'm sure we will dig into this during Q&A. So I thought it might be helpful to frame some of the key factors here.
Speaker Change: The combination of used and stronger than expected new equipment sales were together about 80 basis points of year on year headwinds.
Speaker Change: Said another way excluding these two factors our adjusted EBITDA margin would have been down about 130 basis points with flow through a little better than 33%.
Speaker Change: Closer to the core and as you just heard me highlight we had higher growth in ancillary and re rent revenue that as you know come with lower margins.
Speaker Change: We also adjust for these our EBITDA margin would have been down about 60 basis points with implied flow through of roughly 40%.
Speaker Change: Well this is modestly below our long term goal.
Speaker Change: Our continued investment in key aspects of our strategy, including specialty technology and capacity to support the long term growth of our business during what we view as a slower phase of the cycle.
Speaker Change: And lastly, our adjusted earnings per share it was a fourth quarter record at $11 59.
Speaker Change: Shifting to Capex fourth quarter gross rental capex was $469 million.
Speaker Change: Moving to returns and free cash flow our return on invested capital of 13% remained well above our weighted average cost of capital while full year free cash flow totaled a robust $2.06 billion.
Speaker Change: Our balance sheet remains very strong with net leverage of one eight times at the end of December and total liquidity of over $2 8 billion.
I will note. This was after returning a record of over $1 9 billion to.
Speaker Change: To shareholders in 2024, including $434 million via dividend.
Speaker Change: And $1 5 billion to repurchases that reduced our share count by over $2 1 million shares.
Speaker Change: So to wrap up the quarter and the full year, we were very pleased with the results our team achieved in 2024.
Speaker Change: Now, let's look forward and talk about our 2025 guidance, which I'll remind you as standalone, meaning it does not include any contribution from <unk>.
Speaker Change: As you've seen from the press release, we anticipate another record year.
Speaker Change: Total revenue is expected in the range of $15 six to $16 1 billion.
Speaker Change: Implying full year growth of three 3% at midpoint.
Speaker Change: Within total revenue I will note that our used sales guidance has implied roughly $1 $4 5 billion.
Speaker Change: Or a mid single digit year on year decline on a percentage basis.
Speaker Change: This in turn implies a little faster growth within our core rental revenue.
Speaker Change: All at mid single digits on a percentage basis.
Speaker Change: We then used I'll add that we expect to sell around $2 8 billion about we see translating to recovery rate in the low fifties versus the mid fifties in 2024, but in line with pre pandemic norms.
Speaker Change: Our adjusted EBITDA range of seven two to $7 $45 billion.
Speaker Change: At the midpoint, excluding the impacted used this implies flow through in the forties and flattish adjusted EBITDA margins versus as reported flow through of around 30% and approximately 50 basis points of margin compression at the midpoint of guidance.
Speaker Change: On the fleet side, our gross Capex guidance is $3 65 to $3 95 billion.
Speaker Change: With net capex of $2 to $2 5 billion.
Speaker Change: Within this we take our 2025 maintenance capex at around $3 3 billion.
Speaker Change: Implying growth capex of roughly $500 million at midpoint.
Speaker Change: And finally, we are guiding to another year of strong free cash flow in the range of two to $2 2 billion.
Speaker Change: Turning to capital allocation, one of the benefits of our balance sheet strategy and free cash generation or the flexibility they provide to invest in growth opportunities when they arise.
Speaker Change: As you know we intend to capitalize on this through the pending acquisition of HD.
Speaker Change: We will invest almost $5 billion at targeted returns well above our cost of capital.
Speaker Change: As previously shared we are pausing, our buyback program at <unk>, and we intend to utilize our free cash flow in 2025 to reduce our leverage from roughly two three times on a pro forma basis to a goal of around two times within 12 months of close.
Speaker Change: Finally, consistent with our strategy to return excess capital to our shareholders I am very pleased to reiterate that we are increasing our quarterly dividend by 10% to $1 79 per share translating to an annualized dividend of $7.16.
Speaker Change: So with that let me turn the call over to the operator for Q&A operator, Please open the line.
Speaker Change: The floor is now open for your questions. If you would like to ask a question at this time. Please press star one on your telephone keypad.
Speaker Change: If you find your question has been answered you may remove yourself by pressing star two.
Speaker Change: Once again, if you would like to ask a question at this time, Please press star one.
Speaker Change: Our first question will come from Steven Fisher with UBS. Please go ahead. Your line is open.
Steven Fisher: Thank you and congratulations on a nice year, maybe you could just touch upon that.
Speaker Change: Bigger than a new bigger.
Speaker Change: Bigger than usual ancillary and re rent whats the main activity driving that was that sort of more shifting of of equipment around that you got.
Speaker Change: Fees on.
Speaker Change: And maybe what's the next the expectation for the next few quarters on that if you could even forecasted and I suppose the bigger picture question here is what on the margin side, what would you have to see in order to get flow through back into that kind of 50% plus range.
Speaker Change: Sure I'll start Stephen and Matt.
Speaker Change: <unk>, so on ancillary and re rent I think there are a couple of things certainly the storm related.
Speaker Change: <unk>, a big part of that.
Speaker Change: Both.
Speaker Change: More so in re rent and ancillary although there was definitely benefit in ancillary and then with an ancillary the other thing we've talked about all year.
Speaker Change: <unk>.
Speaker Change: Some of the benefits we've had in specialty so in terms of setting things up breaking them down.
Speaker Change: And those kinds of services that relate to some of the new businesses. We're in those obviously, you've seen kind of sharp growth in 'twenty four.
Speaker Change: And that has contributed to that outperformance versus call. It <unk>.
Speaker Change: That helped on the first question yes.
Speaker Change: On the second question I think there are a couple of things I mean, certainly relative growth rates matter.
Speaker Change: I think I made the comment just a couple of minutes ago that we think we are in the slower growth phase of the cycle.
Speaker Change: And the reason that's important is it drives.
Speaker Change: Relative fixed cost absorption.
Speaker Change: So as we get through 25, and we do expect to accelerate thereafter that obviously drives good absorption that helps drive better flow through at the same time in this environment, we've talked about making very intentional investments in things like cold starts and technology that have been marginal drags.
Speaker Change: We think those have been excellent investments with great ROI, that's why we've called them out and been pretty clear that we don't want to forego those opportunities just for the sake of an arbitrary flow through golf, So Matt anything you'd add there no I, just we still always drive towards holding strong margins in <unk> and.
Ted: And Ted can take you through it but within within this guide right ex US sales, we expect to have margins alright, similar to year over year comps.
Speaker Change: Pumps, yes, and Thats a good point just I'm not sure you asked it specifically, but.
Speaker Change: Yes, my comments they made the point that if you back out use flow through would be in the mid 40%, we'd have flat margins, which we view as very good performance in this environment I'll remind people as much as inflation has subsided, it's certainly not going backwards. So we still have a decent amount of inflation, we're absorbing so.
Speaker Change: To deliver these kinds of result does take hard work.
Speaker Change: Great. That's helpful. And then just maybe on the pipeline of large projects I'm curious how that looks today relative to a year ago, what do you see as the <unk>.
Speaker Change: The difference is in the large project landscape.
Speaker Change: This year versus last year.
Speaker Change: Yeah, I would call it very similar.
Speaker Change: With the addition of that we're carrying in demand from projects that are ongoing so.
Speaker Change: When you add that to some of the newer projects that are planned to come out of the ground. We feel good about this segment and certainly feel good about our alignment to serve in that part of the business. So I would call. It overall really the all demand environment very similar to what we experienced 24 and our guide right. So we feel good about the year going.
Speaker Change: All of them.
Speaker Change: Terrific. Thank you very much.
Speaker Change: Thanks.
Speaker Change: Thank you. Our next question will come from Blake Greenhorn with Bank of America. Please go ahead. Your line is open.
Blake Greenhorn: Yeah first one would be the cadence of growth in <unk>, you guys baking anything that's more second half weighted.
Blake Greenhorn: So we won't get into quarterly guidance, but if you just think about capex as a starting point right. We expect to spend capex on a similar cadence more historically normal cadence that we did in 'twenty four from there theres nothing nothing that I would call out certainly not back weighted we think it will flow with <unk>.
Blake Greenhorn: Seasonality of our of our business.
Blake Greenhorn: And more importantly, our customers demand right.
Blake Greenhorn: Great and then on power there's been a lot of discussion this week about renewables grid data centers.
Blake Greenhorn: Can you remind us how big that business for you guys and anything you're hearing 25 that you want to talk about.
Blake Greenhorn: Yes, so in its entirety power is call it about 10% of our total revenue within that.
Blake Greenhorn: We're in winter.
Speaker Change: Relatively small fraction.
Blake Greenhorn: So those.
Blake Greenhorn: Those are not markets that that moved the needle terribly in our power business.
Blake Greenhorn: So hopefully that helps give you some sense.
Blake Greenhorn: Regardless of the political environment and all the all the pontificating on what's going to happen, but there is a need for that credit to continue to be upgraded there was long before chips in data centers and theres going to be going forward with or without the same level of chips that data says we're not concerned about this.
Blake Greenhorn: Segment, we focused on and we feel really really good about.
Speaker Change: Thank you. Our next question will come from Jerry Revich with Goldman Sachs. Please go ahead.
Speaker Change: Hi, this is clay on for Jay.
Speaker Change: First question here, what was the specialty organic growth in the quarter and if you could talk to as you know the color on the dispersion between the individual business lines within specialty that that'd be great. Thanks.
Speaker Change: We don't really get into the individual business lines too much I'll say specialty as you saw great growth of 30%, but as I said in my opening remarks, even ex yack, 18% and that would be the what we call organic growth immediately theres. Some cold starts in there so.
Speaker Change: That's inclusive of that but really strong growth there.
Speaker Change: We feel good about and this has been going on for quite a few years. This double digit growth in specialty and as we add new products as we have in the last couple of years through acquisitions getting further dispersion of that footprint another big driver of growth.
Speaker Change: And we think that will continue on and we'll probably do another 50 plus cold starts in 2025.
Speaker Change: To add to that opportunity.
Speaker Change: Great Super helpful and then.
Speaker Change: I guess he had just expanded on them.
Speaker Change: For 2025 at a not wanting to speak directly to the individual product lines, but im just curious if there is you know which ones are performing stronger.
Speaker Change: Relative to that to that average.
Speaker Change: Well I wouldn't say performing stronger theyre, all growing growing strong I would say that you can think about where the growth is more pronounced specifically in the cold starts is the products that we've added over the last couple of years. So think about that general finance acquisition and specifically here in the U S with Pac van we continue to exceed those goals that we had.
Speaker Change: The double that business in five years and cold starts will be a part of that as well continue and expand their footprint with <unk>. Our most recent new product line there.
Speaker Change: They are ahead of schedule on our goals to double their business in five years. So they are really doing well in and thats been a lot of organic growth, we haven't even broadly gotten to.
Speaker Change: Growing the footprint, so that's future opportunity that we're going to do there.
Speaker Change: And Ross business right, our reliable on site business continues to grow.
Speaker Change: Organically and through Cold starts. So those are the three I would point out, but with all that being said one of our most mature ones as power and theyre growing tremendously by adding new products and just continuing to grow their footprint. So it's pretty much.
Speaker Change: Across the board.
Speaker Change: Thanks, I really appreciate the color.
Speaker Change: No worries thanks.
Thank you. Our next question will come from Tim Thein with Raymond James. Please go ahead.
Tim Thein: Good morning, Matt maybe just starting.
Speaker Change: Starting on fleet productivity.
Speaker Change: The target outlined in terms of the ability to outrun it.
Speaker Change: Inflation of one 5%.
Speaker Change: We still believe in that in terms of a realistic target for 25, and then maybe as part of that is there an area, where maybe that there is a.
Speaker Change: And no better opportunity in terms of whether it's time or rate.
And maybe you can speak to that in terms of how youre thinking about just the broader fleet productivity center for 25.
Speaker Change: Yes, so we feel really good about the performance of the team and as you know we won't do it quantitatively, but qualitatively we talked about back. This time last year. If we were able to repeat 2023 time utilization, we feel really good and we were able to do that.
Speaker Change: The team executed well and thats embedded in our expectations for 2025 and in the guidance and then from there you look at the other two variables. We still believe this is a constructive rate environment really out of necessity. When you think about.
Speaker Change: The amount of fleet inflation that we've all absorbed the whole industry's absorbed over the last couple of years the industry needs to get price to continue to eat into that so I think you've seen that and I think that will continue on and then the variable is mix, which is really an output depending on the amount of products that grow faster, what we deal with different business lines and.
Speaker Change: There's a bunch of things in there you guys have gone over them before but that'll be the variable and we do believe it'll be.
Speaker Change: Positive, meaning we will be able to exceed that inflation in its simplest form fleet productivity is can you grow your rent revenue faster than you can grow your fleet growth.
Speaker Change: And that's embedded in our guidance that we will do that again this year.
Speaker Change: Got it Okay, and then just with the impact of M&A obviously.
Speaker Change: The company has grown at a.
Speaker Change: Couple of hundred million dollars isn't what it used to be United but is there a way to just to think about that in terms of the contribution.
Speaker Change: Alright.
Speaker Change: What we can expect from the deals down in the back half of the year.
Speaker Change: Presumably that's driving some benefit.
Speaker Change: Any way to help us in terms of what that May translate from a revenue perspective in 'twenty five and you annualize that.
Speaker Change: So we don't get too specific breaking out obviously.
The smaller deals, but you would have seen there was something on the order of $300 million of deals we did.
Speaker Change: Most hit late in the quarter. So there really wasn't much benefit in the fourth in terms of rolling forward.
Speaker Change: It was combination of Gen rent and specialty so.
Speaker Change: You can think about what multiple you would want to play to EBITDA and and.
Speaker Change: Figure out what kind of margin that would imply it's not a huge part of the growth that it will contribute. These are nice deals. We're excited about them, but it's not going to be very impactful in the scheme of our guidance more important thats all embedded within our guidance. So yes.
Speaker Change: Okay, alright, thanks for the time.
Speaker Change: Thanks.
Speaker Change: Thank you. Our next question will come from Kyle Mingus with Citigroup. Please go ahead.
Speaker Change: Hi, Good morning, this is Randy on for Kyle.
Speaker Change: Looking at the Guy with gross GAAP gross Capex up a little in 2025 could you give some color on what areas youre growing OCC during the year and any areas you plan to pull back a little bit.
Speaker Change: Yes, so we're not really expecting.
Speaker Change: The pullback on any Randy as we can.
Speaker Change: Told you we had really strong utilization of our fleet and we think the demand environment is going to <unk>.
Speaker Change: Similar so no reason to pull back on anything you could imagine when you think about our growth Capex, we talked about specialty growth and specifically the cold starts they'll get an overweighted amount of the growth Capex, which just to take you through that math since we haven't talked about it yet we plan to sell about $2 8 billion.
Speaker Change: Worth of always see this year.
Speaker Change: Placement on that if you think about the.
Speaker Change: The stuff that we bought eight years ago was about 20% more now will be about $3 3 billion that leaves at the mid point about 500 million in growth Capex and you can imagine.
Speaker Change: As we think about it more than its fair share of that will go to us to support our specialty growth.
Speaker Change: Got it and then another quick one can you just give some color on what kind of changes you've seen in customer behavior and sentiment. Following the election, and then maybe more recently on some of Trump's executive voters.
Speaker Change: So I'll take the first part tend to take the second we could.
Speaker Change: We had strong customer sentiment and more importantly, our field teams been feeling good about the year all throughout 24, that's why we came out with the guide we did even though maybe there.
Speaker Change: Winds blow any other way from some folks we see the same thing coming into this year. So our customers feel good about it our leadership team feels good about it and we're really not going to overreact to the new cycle of the day I think having that extra touches into the customer really gives us confidence.
Speaker Change: In our guide and what our plans are to add you could touch on the other part if you like in terms of any impact of executive orders I mean aside from people may have whiplash I don't think theres been too much.
Speaker Change: I do think at the end of the day you look at our customers you look at their sentiment I would say, it's improved since the election and I think Thats peoples perception that you have got a government thats going to be pro growth wanting to invest in America <unk> been pretty clear about that certainly our customers are well positioned to support that growth.
Speaker Change: We are well positioned to support them in that endeavor. So.
Speaker Change: Whether it's areas of infrastructure Onshoring, certainly power energy, obviously star Gate was the big announcement, there is a lot of different things that will continue <unk> incremental debt.
Speaker Change: So we think it can be exciting opportunities in 'twenty five and beyond so.
Speaker Change: In a matter of sharing I think covered it well.
Speaker Change: Got it that's helpful. Thank you guys.
Speaker Change: You got it right.
Speaker Change: Thank you. Our next question will come from Angel Castillo with Morgan Stanley. Please go ahead.
Speaker Change: Hi, Thanks. This is Brendan on for Angel in your press release, right just diving more into that customer optimism. So you noted that in your press release, we've talked about it here today on the call.
Speaker Change: Just curious how much of that is actually translating to greater activity today.
Speaker Change: And then in any areas, where it hasn't resulted in an uptick in activity. Yet can you describe maybe what customers are waiting for whether it's greater certainty around interest rates policy labor availability or just anything else that you would like to call out. Please.
Speaker Change: Yes, I'll do my best there, but just to be clear, it's a sentiment.
Speaker Change: Measurement right. So it's not measuring kind of what theyre doing today, what it is on a forward 12 month basis, what are your expectations for your own growth and from that standpoint, you have got an improvement in net responses right at the diffusion based index. So it's certainly something that would support the the guidance we've introduced.
Speaker Change: It's hard to say.
Speaker Change: Too much more because we don't get granular beyond that.
Speaker Change: <unk> kind of survey.
Speaker Change: Okay, but I guess the other thing is.
Speaker Change: People feel good about I think just the broader environment.
Speaker Change: Beyond the election I think.
Speaker Change: Sure.
Speaker Change: I think people are expecting more accommodative monetary policy out of the fed that'll be good for the economy and a lot of things that people then positive on remain on track and so that.
Speaker Change: I guess, it's the culmination of all those things coming together that drive the economy, but it certainly feels like things are heading in a positive direction.
Speaker Change: Okay. Thank you I guess dovetailing on that so you noticed that you'd rather noted that you have a similar pipeline for new large projects.
Speaker Change: What does your guidance contemplate for the small kind of local markets that have been more interest rate challenged.
Speaker Change: Well I would say.
Generally speaking generality similar.
Speaker Change: Some markets have more growth opportunities than others no different than in 'twenty four whereas the previous years, we had talked so much about broad based we're really selecting who we wanted to send the fleet too not who didn't need it. So the great thing about our model and really the rental model overall is the fungibility of these assets to move.
Speaker Change: Not just from vertical but from geography, and that's what we're doing and I think we do it pretty effectively which is why we were able to keep these high levels of time utilization over the past two years and we expect to do the same this year.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question will come from Ken Newman with Keybanc capital markets. Please go ahead.
Speaker Change: Hey, good morning, guys.
Speaker Change: Hey, Ken.
Speaker Change: Hey, Good morning, I know you guys don't want to talk too deep on the segments. In particular by 2024 was a bit of a softer rental revenue growth year for Gen rent I'm curious the guide assumes a similar growth profile of 25 and I guess Additionally on top of that if there is any way to quantify what you think the impacts from.
Speaker Change: Mix are that's implied in the margin guide.
Speaker Change: So when we think about gen rent for a specialty growth I mean, you guys have seen the numbers and we talked about 25 being similar so yeah at the outset you could assume similar the great news is we have flexibility within within our let's call. It three eight at the midpoint within that Capex not just the 500.
Speaker Change: Growth, but even the rest of it the $3 three models replacement. So we can move the appropriate assets to the appropriate markets defeat whatever growth. There is and that's really about all the color I can give you.
Speaker Change: Other than that we will continue to feed the specialty footprint growth in cold start growth and really they are double digit growth they've had for 10 years plus.
Ken: On the second part of your question, Ken I think from a mix standpoint to Matt's point.
Ken: 25 is likely to look similar to <unk> 24, So I don't think were looking for an appreciable shift in mix.
Ken: If that helps answer the question.
Ken: Yes, that's very helpful.
Ken: And then maybe just.
Ken: Dovetailing off the prior question here right before me.
Ken: Is there a way to talk about the magnitude of demand between the national and the local accounts.
Ken: Particularly as I think about just the rate differential between those two.
Ken: Obviously, I know you don't want to talk about fees, but they've had a little bit more challenges on the rate side.
Ken: Curious, if youre kind of seeing a similar dynamic.
Speaker Change: Yeah as you know, we don't get into the specific components of of rate time and mix, but we've had we've driven positive fleet productivity and Thats really why we put them altogether because it shows up in different ways with different products and with different customers.
Ken: We've talked about.
Ken: National accounts have do they leverage their spend of course, they do but the truth is everybody. It's a competitive market out there and we participate actively in it appropriately for each level. So there's nothing I'd call out specifically to any customer segment.
Ken: It's just not something that's differentiated that's maybe what people think about on the outside.
Speaker Change: Understood very helpful guys. Thanks.
Ken: Yes.
Speaker Change: Thank you. Our next question will come from Scott Schneeberger with Oppenheimer. Please go ahead.
Scott Schneeberger: Thanks, very much hey, guys.
Speaker Change: Infrastructure, Bill and those funds flowing.
Speaker Change: When you talk high level about the large projects and I think that would be in both but more large.
Speaker Change: What are you seeing there are you seeing those funds flow it sounds like youre expecting the same in 'twenty five as you were in 2004, but wanted to carve out that piece specifically out of away from Mega projects away from a small local projects. Thanks.
Speaker Change: Yes, Scott ill take a crack at that.
Speaker Change: Yes, certainly we continue to see nice growth in infrastructure in terms of figure out where the funding is coming from that's a much more difficult process. I think if you look at some of the information that that had been released right ahead of the change in administration I think there was still something like $300 billion from IAA that had yet to be allocated so.
Speaker Change: Theres 200 that has been allocated I think it's a fraction of that that's actually been spent.
Speaker Change: So we continue to feel really good about the opportunity that's underpinned by a lot of that spending that.
Speaker Change: God knows the country needs the investment and it's certainly had bipartisan support so our expectation that will continue to be.
Good area for us.
Speaker Change: Thanks, I appreciate that and just to.
Speaker Change: To the extent you can answer.
Speaker Change: What.
Speaker Change: I assume you just made a large acquisition theres going to be integration time on that should we now and you said you wanted to do with leverage and everything and paused our stock buybacks could we assume that there won't be any more sizable activity prior to the end of the year and just maybe some commentary on what the pipeline.
Speaker Change: Line look like for M&A.
Speaker Change: Obviously.
Speaker Change: With <unk>, but.
Speaker Change: Do you have a very still a very large and existing pipeline and any any additional thoughts on that thanks.
Speaker Change: Yes, I mean, we have we have a very strong team that's constantly working that pipeline and I would say it's been consistent.
Speaker Change: <unk> strong right for a couple of years now and as you see we only we only executed on a few of them you could imagine this is a pretty big deal will have a lot to absorb here and that'll be our focus and as Ted mentioned, we're going to focus on getting that leverage back to the midpoint, so that'll be the priority.
Speaker Change: If if a nice deals tuck in comes in Thats, where the new product line.
Speaker Change: We will have to look at that and see how that fits into the overall strategy and would we want to do that we will always work the pipeline and then we'll make the appropriate decision that what makes sense for our business at that given time and Theres certainly is a period here, where we're going to absorb we're going to be focused on absorbing this large acquisition.
Scott Schneeberger: Alright, Thanks, Scott Thanks, guys.
Speaker Change: Yes.
Speaker Change: Thank you and at this time. It appears we have no further questions in queue I will now turn the call back to Matt Flannery for any additional or closing remarks.
Matt Flannery: Well, thank you operator and to everyone on the call. We appreciate your time glad you could join US today on our Q4 investor deck has the latest and greatest updates and as always Elizabeth available to answer your questions. So until we talk again in April Stacey.
Speaker Change: Operator, you can now in the call.
Matt Flannery: Okay.
Matt Flannery: This does conclude today's call. Thank you for your participation you may disconnect at any time.
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