United Rentals, Ahern, & Equipment Rental M&A

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Sunbelt and URI are saying they're going to keep growing at double digits.

Double digits is bullish but it depends how you look at it. Those companies are positioned to do whatever they please because they're so far ahead of the others. Their free cash flow allows them to do things which other companies simply cannot do. They will continue to grow that specialty sector and a lot of that growth will come from new locations. The rental industry will grow 4% to 6% ahead of construction, but United and Sunbelt will grow more because of their power. They will absorb those who have a tough time, which makes the price look better in an M&A deal.

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What is the biggest industry cycle risk today for Sunbelt and United?

Other regional players, such as Equipment Share, have added a lot of fleet, but United and Sunbelt also have a lot of fleet on order for 2023, so they're pushing the pedal hard. One difficulty is whether they have the labor to keep up with growth. They need mechanics, drivers and skilled labor no matter what the price, to keep up with their pace on the equipment side. Real estate prices have been extremely high so it's difficult to find outside storage space with big shops in any given city. Austin, Texas want you to move away because you're seen as a dusty business in some cases, depending on your model and what you put forward. They are diversified and heavily invested in industrial fragmented markets, which have all come back.

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