2025 Growth Outlook
Q: What's your view on 2025 growth drivers?
A: We see continued momentum into 2025, with growth in both Specialty and General Rentals. Demand remains strong with a good pipeline of large projects, and we aim to drive fleet productivity by growing revenue more than fleet size. Specialty has been growing over 20% each year for over 8 years, and we believe it has significant opportunities ahead, especially with tailwinds from megaprojects and infrastructure.

Pricing Power in Deflation
Q: Can you maintain rate increases if equipment prices soften?
A: Absolutely, we can continue to drive rates even in a deflationary environment. It's about delivering value to customers and offsetting ongoing cost inflation, including significant past fleet inflation and regular expenses like employee raises. Industry discipline supports price increases, as everyone needs to absorb inflation.

M&A Strategy
Q: How are you approaching M&A opportunities?
A: We're pleased with our acquisition of General Finance, on track to double its size in five years. We aim to grow off that platform but don't need to be the largest provider overall—just the biggest with our customers. Our M&A pipeline is active, but the bar is high; we require strategic fit, cultural alignment, and financial viability. When something is imminent, we'll let you know.

Fleet Productivity and Inflation
Q: How is fleet productivity trending amid inflation?
A: Time utilization is holding steady at 2023 levels, which is an achievement back to pre-COVID levels. Rate remains positive, and although we're absorbing extra fleet inflation above our 1.5% peg—around 2.5% to 3% this year—we're pleased with the team's execution. The tail of fleet inflation will last a couple more years as we layer in equipment purchases over multiple years.

Capital Deployment in 2025
Q: Will you adjust CapEx timing next year?
A: We expect a similar CapEx cadence in 2025, returning to a more normalized pattern as the supply chain is nearly fully repaired. We'll discuss specifics after our budgeting process is complete, but we're in good shape and anticipate following a cadence similar to this year.

Technology Investments
Q: What's the plan for your technology investments?
A: We're making additional investments in areas like AI and advanced telematics to improve efficiency and customer experience. These initiatives involve proof of concepts, pilots, and change management, aiming for attractive returns. Despite slower growth, we're not holding back on long-term investments, as they are crucial for our future success.

Profit Margin Prospects
Q: Can margins improve next year?
A: Margin improvement in 2025 depends on several factors, including growth rate, ongoing investments, and costs like cold starts. We've opened 57 cold starts this year, exceeding 2023's total, which initially burden costs before revenue scales up over two years. We'll provide guidance in January, but overall, we're pleased with how 2024 has played out.

Local Market Demand
Q: Are you optimistic about local market demand?
A: Yes, our customer confidence index remains positive. With interest rates pivoting, customers are considering new projects. While we can't quantify when sentiment turns into actual work, our flexible business model allows us to react quickly to demand shifts.

Specialty Growth in Power
Q: What's driving growth in Specialty, particularly power?
A: Power remains a very strong area for us, with growth across all Specialty segments. We're introducing additional products and deepening offerings to existing customers, which allows us to enter new verticals. The team's innovation and focus on penetration rather than just expansion are fueling this growth.

Industry Pricing Discipline
Q: How is industry discipline on rental rates?
A: The industry has matured, and there's broader recognition that absorbing inflation without pricing adjustments isn't sustainable. Across the market, including independents, there's improved discipline in maintaining rental rates, which is crucial for delivering value and sustaining our businesses.

Fleet Age and Growth Capacity
Q: Is your fleet ready to support growth?
A: Our fleet age is a little over 50 months, the lowest since pre-COVID, even after incorporating longer-lived assets from recent acquisitions. We feel really good about our position, with plenty of headroom to support future growth without needing significant changes.

Cold Starts Impact
Q: How do cold starts affect margins?
A: Cold starts initially burden margins as the new branches carry full costs before revenue ramps up over about two years. This year, we've opened 57 cold starts, more than in 2023. While they impact flow-through in the short term, they are strategic investments for future growth, particularly in Specialty where we see significant headroom.

Industrial End Markets
Q: What trends are you seeing in industrial markets?
A: We've faced headwinds in petrochemical sectors—upstream, midstream, refining, and chemical processing have been down, likely due to timing and deferred maintenance. However, industrial manufacturing remains very strong for us, balancing out the challenges in other industrial areas.

Ancillary Revenue Growth
Q: Will ancillary revenue growth continue?
A: Ancillary and re-rent revenue was up 15% in the quarter, partly due to the Yak acquisition. As we anniversary Yak, that tailwind will lessen, but ongoing growth in Specialty should continue to contribute positively to ancillary revenues.

Hurricanes Impact
Q: Are hurricanes affecting your guidance?
A: The storms, while devastating locally, have a minimal financial impact at our scale. There's no change to our guidance due to hurricanes, and any potential rebuilding efforts would likely influence 2025, though even then, the effect would be modest.