United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals; and Trench, Power, and Pump. The General Rentals segment engages in the rental of general construction and industrial equipment, such as backhoes, skid-steer loaders, forklifts, earthmoving equipment, and material handling equipment; aerial work platforms, such as boom lifts and scissor lifts; and general tools and light equipment comprising pressure washers, water pumps, and power tools. This segment serves construction and industrial companies, manufacturers, utilities, municipalities, and homeowners. The Trench, Power, and Pump segment is involved in the rental of specialty construction products, including trench safety equipment, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers, and line testing equipment for underground work; power and HVAC equipment, which consists of portable diesel generators, electrical distribution equipment, and temperature control equipment; and pumps primarily used by energy and petrochemical customers. It serves construction companies involved in infrastructure projects, municipalities, and industrial companies. The company also sells new equipment, such as aerial lifts, reach forklifts, telehandlers, compressors, and generators; contractor supplies, including construction consumables, tools, small equipment, and safety supplies; and parts for equipment that are owned by the company's customers, as well as provides repair and maintenance services. It sells its used equipment through its sales force, brokers, and Website, as well as at auctions and directly to manufacturers. As of January 1, 2017, the company operated 887 rental locations in the United States and Canada. United Rentals, Inc. was founded in 1997 and is headquartered in Stamford, Connecticut.
Business Analysis of United Rentals
The Industrial Support Services Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how United Rentals compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by United Rentals to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of United Rentals with an interactive chart.
- Revenue Growth: United Rentals reported a revenue growth of -0.9% year-on-year during 2016. Business Services Industry grew at 2.8% in the same period
- COGS share of Revenues: As a percentage of revenue, United Rentals spent 58.3% of its total revenues on COGS. Business Services industry average (COGS share of revenue) in the same period was 67.3%
- R&D share of Revenues: United Rentals R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, United Rentals spent 12.5% of its total revenues on Sales, Marketing, and General Administration (SG&A). Business Services industry average SG&A spending in the same period was 17.2%
- Inventory share of Revenues: As a percentage of revenue, United Rentals spent 1.2% of its total revenues on Inventories. Business Services industry average Inventory spending in the same period was 2.2%
- Accounts Payable share of Revenues: As a percentage of revenue, United Rentals invested 4.2% of its total revenues on Accounts Payable (A/P) Business Services industry average Accounts Payable investment in the same period was 7.0%
- Accounts Receivable share of Revenues: As a percentage of revenue, United Rentals invested 16.0% of its total revenues on Accounts Receivable (A/R). Business Services industry average Accounts Receivable investment in the same period was 17.2%
- PP&E share of Revenues: As a percentage of revenue, United Rentals invested 114.9% of its total revenues on Property, Plants, and Equipments (PP&E). Business Services industry average PPE investment in the same period was 39.9%
- Intangibles share of Revenues: As a percentage of revenue, United Rentals invested 69.5% of its total revenues on Intangibles. Business Services industry average Intangibles investment in the same period was 43.0%
- Net Margins: United Rentals Net Margins in the year 2016 were 9.8%. Business Services industry average Net Margins in the same period were 5.0%
Sector and Industry Association of United Rentals
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
United Rentals is associated with Industrials Sector Group, Industrial Support Services Sector, and Business Services Industry.
Industrial Support Services sector is comprised of the following industries: Business Services; Consulting Services, Training and Professional Services; Staffing & Outsourcing Services; Environmental Services. The definitions for each of the industries is as follows:
- Business Services industry includes providers of non financial services to a wide range of industrial enterprises and governments. This industry includes providers of uniform companies, Staffing and Outsourcing companies, office cleaning services, and companies that install, service and monitor alarm and security systems.
- Consulting Services, Training and Professional Services industry includes companies that offer management consulting services to both public and Governmental agencies.
- Staffing & Outsourcing Services industry includes companies providing contract, temporary, as well as permanent staff to clients with specific employment requirements. These companies also provide payroll and human resources outsourcing solutions for small and medium-sized businesses.
- Environmental Services industry includes companies that provide consulting and services for pollution reduction and control, recycling, waste-to-energy conversion, and hazardous waste management.
Industry Ranking of United Rentals
With $5.8 billion revenues, United Rentals ranked number 3 of all the companies in the US Business Services industry. There were a total of 67 public companies in the US Business Services industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Business Services industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.
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