Good morning, and welcome to the United Rentals Investor Conference Call. Please be advised that this call is being recorded. Before we begin, note that the company's press release, comments made on today's call and responses to your questions contain forward-looking statements. 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. A summary of these uncertainties is included in the safe harbor statement contained in the company's press release. 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 31, 2021 as well as to subsequent filings with the SEC. You can access the filings on the company's website at www.unitedrentals.com. 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 to non-GAAP terms such as free cash flow, adjusted EPS, EBITDA and adjusted EBITDA. Please refer back to the company's recent investor presentation to see the reconciliation for 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, Interim Chief Financial Officer. I will now turn the call over to Mr. Flannery. Mr. Flannery, you may begin.

Thanks, operator, and good morning, everyone. Thanks for joining our call. Well, the team has made my job pretty easy today. We reported another strong quarter in a positive operating environment in a record year. That's a great trifecta. And I know it sounds familiar because that's how the year has been going. This quarter was especially gratifying. We delivered a year-over-year increase in rental revenue of 20% with fleet productivity of almost 9%. Our people were definitely on top of that opportunity. We achieved good operating leverage in our business by working efficiently. And that's not easy to maintain during peak demand, especially in the current cost environment. So I applaud the team for meeting our customers' needs while staying mindful of profitability and, most of all, we are doing it safely. Our recordable rate for both the third quarter and year-to-date were well below 1, and that's with about 10% more headcount in the quarter versus last year. Against this backdrop, we grew our EBITDA margin by 240 basis points year-over-year to 49.9% in the quarter as we grew EBITDA dollars faster than revenue to over $1.5 billion. That's a record for us in any quarter, and flow-through was a very solid 63%. Importantly, we also delivered another improvement in return on invested capital to a record 12.2%. Given these results and the momentum we're seeing, we raised our full year 2022 guidance for total revenue and adjusted EBITDA as well as rental CapEx. I want to elaborate on the CapEx point before I move to our customers and our end markets. Our industry has continued to show good discipline in terms of supply and demand, which creates a healthy environment for attractive returns. We have two levers we can pull to capitalize on this demand. First, we intentionally held back on used equipment sales this year to make sure we had enough capacity for our customers. And even though we sold less fleet in the quarter on an OEC basis versus our original plan, our revenue from used sales in Q3 was essentially flat year-over-year, supported by very strong pricing. And secondly, we had the opportunity to pull forward some CapEx into the current quarter to ensure that we're set up for a strong start to 2023. Our updated guidance includes an increase of rental CapEx of about $350 million at the midpoint. And we think this is prudent as our OEM partners continue to work through supply chain challenges. So that's how we're thinking about CapEx at United Rentals. And on a related note, we're continuing to invest some of the CapEx and fleet that lowers carbon emissions on job sites, in line with our ESG initiatives. We recently announced an agreement to purchase all electric ride-on dumpsters from JCB, making us the first equipment rental provider to offer this product in our fleet. And on the innovation front, we just launched a sustainability tool in our total control platform that tracks greenhouse gas emissions data. This technology is an industry-first, and it's a good example of how we differentiate our company as a partner beyond the transaction. In this case, we're helping customers reach their own sustainability goals. Investments like these continue to add value to our offering and keep us growing faster than the industry. Now I'll turn to the macro. While there are portions of the economy that are clearly slowing, in our industry, customer activity is still on the upswing, and demand for our equipment rental continues to be very strong. Customer sentiment and key industry indicators remain positive. We know this outlook may seem at odds with some views on the broader economy. If we saw a cause for concern in our markets, we'd be standing here talking about it. We would also be using the flexibility built into our model to pivot to a more conservative stance. Instead, we're investing in the tangible opportunities that we see ahead. Here are a few of the unique dynamics that should help our industry continue to outpace the macro in virtually any economic cycle. One is $550 billion of funding in the U.S. infrastructure bill, which will finally put shells in the ground starting in '23. This should trigger at least five years of opportunity. There's another $440 billion of federal tax incentives in the Inflation Reduction Act for clean energy and plant upgrades. We think these will have a five- to ten-year impact. In the manufacturing sector, there are multiple tailwinds that will play out on different timelines. This year alone, hundreds of billions of dollars of new investment in manufacturing have been announced. Investments are already underway in automotive electrification, microchip factories and the broader trend towards onshoring. There is also more focus on energy production to serve markets in North America and Europe. Many of these tailwinds are new to the construction and industrial sectors. And in combination, they present a major opportunity for our industry. Looking specifically at our business, the quarter played out even better than we anticipated. Both of our segments in every one of our regions grew rental revenue year-over-year by double digits. Rental revenue from non-residential construction was up 24%, infrastructure was up 11%, and industrial was up 13%. These are all consistent with the trends we've seen in recent quarters. Demand for specialty was strong across the segment with rental revenue up 23% year-over-year as a whole, led by our Mobile Storage and Fluid Solutions businesses. Our greenfield plans for specialty are moving forward with 25 cold starts opened through September and another 11 planned by year-end. Cold starts continue to be a valuable growth strategy for specialty, with a long-term benefit to our company's total performance. Looking at our markets by vertical, the big multi-year projects in Q3 continue to be data centers, distribution centers, and renewables, as well as the automotive and ship plants that I mentioned earlier. These projects span multiple regions, and most of them are mega-projects where our customer base, our technology, and our position as a one-stop shop give us a major competitive advantage. Contractors are managing to source the labor and the materials they need, but at the same time, they're dealing with cost inflation. They need to squeeze more productivity out of every dollar, and we have the digital solutions to help our customers get more utilization from the equipment they rent and own. Work sites are evolving into connected environments, and we're positioned as a leader in that space. Our customers assign real value to the data that we provide. Lastly, I want to mention the new share repurchase authorization we announced yesterday. This program will return $1.25 billion of excess capital to our investors by the end of 2023. We're proud to make this additional commitment to supporting shareholder value. In conclusion, our 25th year in business is also shaping up to be a record year of financial performance. We've got a great team in place, and we'll continue to explore every avenue for growth and returns. The construction and industrial sectors we serve had their own tailwinds, driving the historic demand for our services. Our customers are building a strong book of business for 2023 and adapting to the secular shift towards renting and expanding the market. In this environment, we'll continue to be good stewards of United Rentals. We'll focus on profitable growth as we have all year, and we'll remain flexible to act in the best interest of our shareholders. With that, Ted, it's over to you.

Thanks, Matt. Good morning, everybody. As you saw in the results we reported last night, the team did a great job delivering across the board. We continue to take advantage of the market by supporting our customers with the fleet they need, driving healthy productivity, and converting that growth to our bottom line. This performance, combined with our updated outlook for the remainder of the year, is reflected in our new guidance, which I'll touch on later. But first, let's dive into the quarter. Rental revenue was a record $2.73 billion. That's up $455 million or 20% year-over-year, with strong contributions from both general rental and specialty. Within rental revenue, OER increased by $341 million or 18%. Our average fleet size increased by 10.6%, which provided a $201 million benefit to revenue, while fleet productivity increased a healthy 8.9%, adding $168 million. This was partially offset by our usual fleet inflation of about 1.5 points or roughly $28 million. Also within rental, third-quarter used sales were essentially flat at $181 million as we intentionally held on to fleet to ensure we could support stronger-than-expected rental demand in our peak season. The vast majority of these sales were in the high-margin retail channel. This, together with improved pricing, helped deliver a very healthy 64.6% adjusted use margin for the quarter and record proceeds as a percent of OEC of 83%. Let's move to EBITDA. Adjusted EBITDA for the quarter was $1.52 billion, another record and an increase of $288 million or 23.4% year-on-year. The dollar change includes a $288 million increase from rental, within which OER contributed $245 million, ancillary contributed $37 million and re-rent contributed $6 million. Outside of rental, used sales added about $25 million to adjusted EBITDA, while other non-rental lines of businesses contributed another $3 million. SG&A increased $28 million, primarily due to higher commissions related to volume and the normalization of certain discretionary costs. As a percent of revenue, however, SG&A showed good leverage, declining 90 basis points to 11.7% of sales. Looking at third-quarter profitability, our adjusted EBITDA margin increased 240 basis points to 49.9%, implying very healthy flow-through of around 63%. Excluding the benefit of used sales, flow-through was a still solid 58%, supported by robust rental growth, good fleet productivity, and vigilant cost management. Finally, third-quarter adjusted EPS was a record at $9.27. That's an increase of $2.69 per share or almost 41% year-on-year. Turning to CapEx, third-quarter gross rental CapEx of $1.1 billion and net rental CapEx of $921 million were both in line with year-ago levels. Now let's look at return on invested capital and free cash flow. As Matt mentioned, ROIC was another highlight of the quarter at a record 12.2% on a trailing 12-month basis. That's up 70 basis points sequentially and an increase of 270 basis points year-on-year. Free cash flow also continues to be very strong with $176 million generated in the quarter, reflecting normal seasonality and over $1.1 billion generated through the first nine months of the year, all while continuing to fund growth. Flipping to the balance sheet, our leverage ratio declined 10 basis points sequentially and 50 basis points year-on-year to 1.9x its lowest level in our history. Additionally, our liquidity at the end of the quarter was a very robust $2.8 billion with no long-term note maturities until 2027. Combined with our cash generation, this provides us with tremendous strength and flexibility to run the company and support shareholder value in any environment. Now let's look forward and talk about our updated guidance for the year. Total revenue is now expected in the range of $11.5 billion to $11.7 billion, or an increase of $50 million at midpoint, and implying full year growth of better than 19%. This increase is supported by the momentum we've seen across our business, particularly within rental revenue that we expect to carry into next year. Within total revenue, I'll note that we've reduced our used sales guidance by $50 million to $1 billion. As part of this change, we now expect to sell between $1.3 billion and $1.4 billion of OEC. As evident in our updated guidance, we remain focused on efficiently converting that additional rental revenue to the bottom line. Our adjusted EBITDA range is now $5.5 billion to $5.6 billion, which at midpoint is $75 million above the midpoint of our prior guidance. This implies a roughly 240 basis point increase in full year adjusted EBITDA margins and flow-through of about 60%. As Matt highlighted, we have also revised our outlook for gross CapEx by $350 million as we land delayed orders placed earlier in the year in select high-demand cat classes. In total, we now expect gross CapEx of between $3.25 billion and $3.45 billion. With these changes, we still expect to generate a very healthy $1.6 billion to $1.8 billion of free cash flow translating to a free cash margin of around 15%. Now before we go to Q&A, I'll finish with a few comments on our new share repurchase authorization. We view the $1.25 billion program as an indication of our confidence in our business, the strength of our balance sheet, and the durability of our cash generation. We’re proud of the fact that we’ve already returned $5 billion of excess capital to our investors since 2012 to support shareholder value while simultaneously getting our balance sheet to its strongest position in our 25 years. So with that, we’ll turn to Q&A.

And our first question comes from Timothy Thein from Citigroup.

There may be some feedback, and I hope it's coming from my end. But Matt, to start with the idea of these large projects, we are clearly seeing this reflected in the construction starts data, which indicates an increase in overall spending in the coming years. As we reach late October and look ahead to next year, can you provide insight into your overall visibility? Even though you don’t have a backlog, how is United positioned for 2023 in terms of work already in hand or upcoming projects?

Sure, Tim. So as far as the scale of it, we’ll work on if there’s some way that we can put a numerical value to it. But I can tell you that in my 33 years of business, we have never seen this amount of mega projects, specifically in the infrastructure and commercial space on the books. The manufacturing is an added bonus that we really didn't expect to see where there’s over $250 billion of funds already activated. This is very tangible to us. But when I think about our positioning there, as you can imagine, we've been focused on national accounts for many, many years. It's a big part of our strategy. These are the folks that are going to get the large share of this work. That, alongside our broader set of services, positions us very well in this space. We certainly expect to exceed our overall industry market share with these customers and projects. This is just another example of us thinking and believing strongly that the bigger will continue to get bigger and take share.

Yes. Got it. Okay. And then your point on the leverage range and what a change from, say, a decade or so ago and just in terms of how the balance sheet has evolved. But how are you thinking about the Board regarding the 2 to 3x target? Obviously, I'm sure you want to preserve some flexibility for M&A or other capital return opportunities. But with cash flows continuing to build, there's potential for that to go even lower. So how are you and the Board thinking about that overall 2 to 3x range?

I'll let Ted speak to the leverage. But we don't see this as preventing us from being able to continue to invest in growth of the business, which is our first filter for our capital allocation perspective. Ted, please?

Yes, Tim, thanks for the question. Certainly, it's something we talk about frequently, both as a management team and with the Board. Rewinding back to 2019, when we introduced the new balance sheet strategy, a key rationale was to ensure we had financial strength across the cycle. Where we sit today at 1.9x, as you heard us talk about in the call, we feel well positioned from that standpoint. It gives us a lot of freedom and flexibility to run the business as we see fit. We also said there's nothing religious about that low-end of 2x that we were comfortable going below to some degree, so again, kind of stockpiling firepower. If we were to decide to live structurally in a lower range, say 1.5 to 2.5, at that point, we'd feel obligated to update the Street. But for the time being, we feel like this range and the flexibility we have around it remains appropriate.

Next question comes from Steven Fisher from UBS.

Great. Just, Ted, you mentioned that the CapEx increase is targeted at select cat classes, but it sounds like you guys have a broadly positive view about a lot of end markets. I'm curious why it's only in select cat classes then, if I heard that correctly?

Steve, this is Matt. Let me put this in context regarding the increase. We had orders similar to last year that, because of some of the supply chain challenges, slipped towards the end of the year in more high-demand categories. The OEMs are doing their best to keep up, but there’s a lot of demand for these assets. We had to make a decision in mid-October whether to let this CapEx flow and raise our guidance, or cancel it and hope we can get high-demand assets in the spring. We made the decision to let this flow for two reasons. First, the surety of supply because these are assets that slipped quite a bit. Secondly, we'll get these at 2022 pricing instead of '23 pricing. The selectiveness wasn’t really our choice; it was due to those delayed assets.

Yes. That makes perfect sense. And then on the cold starts, I think you mentioned you've done 25 cold starts with another 11 or so planned for the fourth quarter. I think that's bit less than the 45 you had mentioned in Q2. I guess, do I have those numbers right? And what's caused the reduction in that cold start number? Is that, again, just equipment availability? And are you just planning to push those into '23?

Yes, Steve, I'll double-check those numbers, but I think the goal is 40 to 45 for the full year. I don't know if that's driving some confusion, but in terms of the pace at which we’re opening cold starts in specialty, we’re on track.

Yes. If there's anything that would hold it up, it’d probably be more about getting the right facilities and people rather than fleet in those sectors, specifically in specialty.

And our next question comes from Jerry Revich from Goldman Sachs.

I'm wondering if you could talk about how you're seeing performance at general finance, just give us an update for those asset classes and how do you view cyclicality considering that's not an asset class that United had in prior cycles? Would love to see how you're thinking about the opportunity for penetration for that category. And similarly, are there any other specialty cross-selling opportunities that could be emerging for additional categories as a result of general finance building out across your footprint?

Sure. As we think about the GFN business and the teams that came with that, we had a thesis, if you recall when we announced the deal, that we can double this business in the next five years. I can say that we’re ahead of schedule on that. We’re really getting robust growth out of this group. We’re very pleased not just with the team but with the cross-sell opportunities; our customer base has absorbed this remarkably well. It’s really been working well for us at an even faster pace than the lofty plans we had. We’re looking for opportunities to add to the portfolio where we see something that our customers are running that we don’t supply. The tricky part for us is we believe that pursuing M&A and buying a big enough platform to make the offering broadly is important for our national solution strategy towards our customers. We’ll continue to look for additional great opportunities like we did here with the GFN team.

Super. And just to shift gears, I know you look at scenario planning a lot. In the COVID recession, margin degradation was really minimal in your business. Can you talk about your scenarios for the next downturn, given the uncertainty in the market? How do you think about the leverage you would pull? Any updated thoughts on whether the level of performance we saw in that very different cycle is repeatable and to what extent?

Jerry, I'll take that one. As you're right, we do a lot of scenario analysis and COVID certainly had its unique dynamics. More than anything, it highlighted the flexibility of the business on both a CapEx and an OpEx standpoint. Regarding margins, much of the operations' cash costs are highly correlated to volume. This allows us to flex pretty rapidly and protect those semi-variable costs, such as labor. That’s always going to be the goal in any downside scenario – to take care of our people and retain capacity, which is the hardest to replace. This would be the approach we’d take in virtually any scenario while looking at different severity and duration scenarios. But the playbook itself is consistent across all types of modeling.

Yes. I would agree. The nice thing about in-sourcing our own labor is that we can reduce our highest costs. This worked very well during COVID, and Ted explained it well. We kept that capacity for the ramp-up, giving us a great opportunity as we move forward in any cycle.

And our next question comes from David Raso from Evercore ISI.

I was just curious, trying to think about '23, and I'm not looking for exact guidance, just trying to think through the growth drivers. Where are your fleet going to end the year? If we just assume the fleet doesn't grow at all, it will be on average about 5% bigger than it was in '22. When we think of the drivers for '23, nothing inorganic, but just curious if you can give a sense of where do you still see room for growth, whether it’s contracts coming due for a price increase, or where you see rates? Just trying to prioritize across those three buckets as we sit here today?

Sure, David. To your point, we’ll have some natural carryover fleet growth and add whatever number we communicate in January after our planning process. Continued fleet productivity will be above our hurdle rate. Year-over-year metrics that show fleet productivity above 1.5% indicate growing revenue faster than fleet size, which adds value to margins. We foresee these trends continuing. The wildcard will be how much, and we're working through that planning alongside our partners to see capital situations while being very flexible. We do see '23 as a growth year because of some natural carryovers we're bringing into the year.

When it comes to the rate momentum, can we expect further rate increases for '23? I know you don’t like speaking about exact rates. I’m just trying to get a sense from where we sit today. I know there’s some carryover, but how are you thinking about the ability to raise rates to start '23?

If I think about the last few years and the industry discipline that has emerged, we all have cost of goods increase, and our customers are too. They understand this, leading to a balanced understanding regarding rate adjustments amid inflation. As a leader in the industry, we'll continue to play our part in that. We expect the environment for 2023 to remain conducive to driving that component of fleet productivity.

And our next question comes from Seth Weber from Wells Fargo.

Matt, I wanted to go back to your pull-forward CapEx comment. I’m trying to tie that together. Should we think about that as a governor on 2023 gross CapEx growth if you’re ‘pulling some of that forward’? Also, should we expect used equipment sales to really pick up next year as well?

Absolutely, as far as a governor on growth—yes, you will see that netting affect once we finish our planning process. Because we’ll have it in hand, it should be part of the planning. As for used sales, as long as supply and demand can establish an appropriate level as opposed to almost 2 unbalanced this year—we hope for a more normalized fleet rotation next year similar to pre-COVID levels. Fourth quarter and first quarter usually have heavier volume, and we’d expect that to continue.

That's perfect. As a follow-up, Matt, in prior periods of rising interest rates, do you typically see the independent rental companies being less able to buy a fleet? Are you hearing anything about the independents being more restricted here? Or do you feel like the CapEx coming into the market is pretty much across the board?

I think everybody across the board has an opportunity to grow. Strong, solid companies with the financial capacity are doing that. The OEMs will sell out their inventory, engaging in discipline regarding clients. With that said, I don’t want to homogenize the independent group, but some are better capitalized than others. Those that aren’t well capitalized may find the inflationary environment challenging. We think this performance environment will drive larger players to gain market share.

And our next question comes from Rob Wertheimer from Melius Research.

I wanted to ask about mega projects. You’ve spent significant time focusing on national accounts and serving big clients. The market is shifting towards big projects in a way that we haven’t seen before. Can you provide some insight on what you’ve done, what market share looks like on big projects serviced by big national contractors who can provide the capabilities, and if you could provide a tangible example like your market share at LaGuardia being higher than 15%?

Yes. When you think about large projects, any project of scale needs multiple products. This is why a broad offering is crucial; it enhances the security and safety of the site that construction managers prioritize. They are held responsible and accountable for security and safety, so fewer suppliers streamline operations, ensuring more consistency. We feel safety is important, and larger firms that can invest in tools and maintain a safety-centric culture have a competitive advantage. As far as market share, it varies by project because very few contracts are sole-sourced. Typically, multiple contractors are involved, and better performance leads to a larger share for those who do the job well.

If you could briefly touch on technology, do large projects use it more aggressively? What is most attractive to projects from a technology perspective?

Certainly. The visibility we provide through our connected assets is a substantial investment that yields rewards for us and our clients. With over 250,000 telematics-enabled assets, we can offer real-time data for location, utilization, fuel alerts, and other unique insights. For large, complex projects, that visibility aids the project leaders in operating more efficiently and maximizing profitability. Rental has always focused on safety and productivity, and our data-driven technology enhances that.

And our next question comes from Ken Newman from KeyBanc Capital Markets.

I may have missed it, but could you provide any color on how your internal customer survey is trending this quarter relative to last quarter?

Yes, Kenneth, good question. It’s remarkably in line. There hasn’t been any deviation in our customer optimism. As you may recall, we utilize Net Promoter Scores and ask for forward 12-month outlooks. That feedback coincides with the consistency we get in the field, which is good news.

That makes sense. For my follow-up, given how tight the fleet has been, do you have any estimate regarding revenue opportunities you may have passed on due to fleet limitations? Or do you think all available fleet would have been rented out as soon as it hit?

Certainly, in a booming market like we've experienced, some transactions will likely be missed, especially in peak season. There’s a learning curve for customers in planning. Some customers may hold the fleet longer, and jobs may shift. With our key accounts, we managed well, fulfilling their expectations. Despite losing some opportunities, we're pleased with 20% growth and won't dwell too much on that.

And our next question comes from Stephen Volkmann from Jefferies.

A lot of discussions about mega projects and tailwinds from infrastructure. I’m trying to gauge how significant this will be for your business in the next two or three years as these projects ramp up. How much of your business will be driven by those projects?

Stephen, that’s a good question. It’s hard to quantify how much of the total business comes from those opportunities. However, we can provide absolute dimensions. For example, the infrastructure bill suggests, nominally, $550 billion over 5 years, which is about $110 billion annualized against an $800 billion total non-residential construction market. This represents a 12% tailwind, all else equal. Beyond infrastructure, the other programs can’t be precisely quantified but have substantial potential revenue contributions over time.

That’s great context. For my follow-up, Ted, could you provide insight on how to understand SG&A trends in 2023? I assume there’s a fair amount of incentive comp in there that probably resets and may not recur next year. Any clarity on that?

Yes, it’s too early to get into the specifics surrounding headwinds or tailwinds, particularly regarding incentive comp reset. However, given the growth tone we discussed, we aim to leverage SG&A in 2023, which we will incorporate into our operational guidance for EBITDA.

And with that, there appear to be no further questions over the line. I'd like to go ahead and turn it back to Matt for any closing remarks.

Thank you, operator, and thanks, everyone, for joining the call. We're very proud to deliver such strong profitable growth in our busiest season. Now we have to look forward. We’re deep into the planning process for '23. Stay tuned for our new guidance on the January call. Until then, if you have any questions, feel free to reach out to Ted anytime. That will be very helpful. So with that, operator, please end the call.

This concludes today's program. Thank you for your participation. You may disconnect at any time.