Rob Sannen

Rob Sannen asked for context on rental customer trends, distinguishing between FMS customers needing surge capacity and standalone rental customers. He also inquired if January storms impacted rental seasonality and about the potential for upside in DTS and SCS margins given current market conditions and internal initiatives.

Answer

John Diez, Executive Vice President and Chief Financial Officer, noted that leading indicators like used vehicle sales, rental, and leased power miles haven't shown meaningful movement. Thomas Havens, President of Fleet Management Solutions, detailed that December utilization was 74%, dropping to 66% in January, worse than historical seasonal trends, and confirmed weather did not impact utilization. He added that demand impact primarily stems from lease customers downsizing, not needing rental extras, while standalone rental business has been stable. John Diez stated that long-term margin targets for DTS and SCS remain appropriate, with SCS showing margin expansion within its high single-digit target. DTS margins typically fluctuate, climbing to the high end in weak environments and facing pressure from higher driver costs during growth.

Rob Sannen asked for context on rental customer trends, distinguishing between FMS customers and standalone rental customers, and inquired if January's worse-than-normal seasonality was weather-adjusted. He also questioned potential upside for DTS and SCS margins relative to long-term targets given internal initiatives.

Answer

John Diez, Executive Vice President and Chief Financial Officer, and Thomas Havens, President of Fleet Management Solutions, noted that leading indicators (used vehicle sales, rental, leased power miles) haven't shown meaningful movement. Tom Havens detailed that January's rental utilization was down more than historical seasonal trends, but weather did not seem to be a factor. He explained that standalone rental business has been stable, but lease customers downsizing their fleets have reduced demand for rental extras. John Diez stated that long-term margin targets for DTS and SCS remain appropriate, with SCS showing margin expansion within its high single-digit target, while DTS margins fluctuate with the cycle, typically seeing headwinds during growth and climbing in weaker environments.