Good morning, and welcome to the United Rentals First Quarter 2014 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 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, 2013, as well as to subsequent filings with the SEC. You can access these filings on the Company's Web-site at www.ur.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 earnings release, investor presentation and today's call include references to free cash flow, adjusted EPS, EBITDA and adjusted EBITDA, each of which is a non-GAAP term. Speaking today for United Rentals is Michael Kneeland, Chief Executive Officer; William Plummer, Chief Financial Officer; and Matt Flannery, Chief Operating Officer. I will now turn the call over to Mr. Kneeland. Mr. Kneeland, you may begin.

Thanks, operator, and good morning, everyone, and welcome. I want to thank all of you for joining on today's call. We have three topics on the agenda this morning; first, our strong performance in the quarter; second, our external environment and how that's playing out in terms of demand; and third, we'll give you an update on National Pump and some of the other initiatives that we have underway to drive growth and efficiencies. Our goal is also to provide you as much visibility as possible into how we are thinking about the rest of the year will unfold. And then after that, we'll answer your questions. So let's get started. The first quarter is always about pushing forward against seasonal headwinds and driving year-over-year improvement, and I'm happy to say that we overcame an unusually harsh winter and generated solid numbers in every major metric. We did this by managing the business very strategically to capitalize on pockets of demand, and we saw that in the results last night. We had a sizable increase in rental revenue and our adjusted EBITDA dollars and margin were both first quarter records for us. We also increased our volume, time utilization and rates on larger fleet, and something that wasn't in the release, we improved our rate sequentially for every month in the quarter. Frankly, that was a little better than we expected. Now Bill will discuss the numbers in a minute but that gives you an idea of how we've turned a seasonal low point into a strong start of the year. And now, I want to turn our attention to the marketplace at large. Last year, I said that we were bullish about the impending recovery. In January, we confirmed that equipment rental appears to be in the early stages…

Thanks, Mike, and I'll offer my good morning to everyone as well. I'll try to add a little bit more color to the numbers that were in the press release last night and hopefully it would be helpful. If not, ask questions in Q&A. Starting with revenue and in particular rental revenue, a nice quarter for us in rental revenue growth. It was up 9.7% over last year. It's about $89 million of higher rental revenue, and that rental revenue growth was really driven by all components. Within that, our owned equipment rental revenues were up 9.1%, our re-rent was up 7.8%, and our ancillary and other items were up a robust 16% over last year. So, a very nice growth in all the components of rental revenue. Within the owned equipment revenue line, OER, Mike mentioned rental rate performance was good. We were up 4.3% on our rate metric for the quarter, very nice start to the year for us. The volume was also very strong in the quarter. We had an average of just under $5 billion of fleet on rent. That's up 7.6% compared to last year. So, a nice volume quarter for us as well. And to get those two lining up nicely in spite of the harsh winter that Mike mentioned and also in spite of what was a headwind from the Canadian exchange rate which was down about almost 9% year-over-year, it was a nice start for us. So, those were two nice drivers. Obviously inflation and mix were a headwind, call it 2.8% headwind, on the year-over-year growth for those two components combined. So, all in all, a very nice start to the year on a rental revenue basis and carries us nicely into the start of the second quarter. Fleet overall was…

(Operator Instructions) Our first question comes from the line of Seth Weber from RBC Capital Markets. Your question please.

I just wanted to go back to, in your prepared remarks you talked about this $100 million of cost initiatives. Can you talk about how much of that is embedded in your guidance for this year, it sounds like not a lot, and sort of how should we be thinking about that rolling through the model over the next couple of years and kind of helping the pull-through margin, is my first question?

Seth, it's Bill. We haven't given a number for 2014. What we said is that we'll make a nice down payment on that $100 million run rate impact. We certainly think that anybody who saw the number would agree that it would be a nice down payment, but that's as far as we've gone.

And do you think it should have been linear or you think it's more backend weighted?

You know, we're just starting to roll out the program, so logically it has to be more backend weighted. But I think we expect that it will build nice momentum as we get into the second half. I'd remind you also that it is built into the guidance that we've given, right. The assumption that we have for how much, we did put in. So it's not something that we are keeping in our back pocket, it's out there in the guidance.

Right, but if it's accelerating going forward, could that in theory support a pull-through margin north of 60% next year, say in 2015?

I'm not ready to say that just yet, Seth. I think what we need to do is to make sure that we've got a handle on all the components that will impact pull-through next year. We certainly over the longer haul think that 60% is a good way to think about things. This could be a way to get higher flow-through, but it's maybe what we need to do in order to get to the 60% consistently. So, let us reserve comment on 2015's pull-through until we get a little closer.

This is Mike. There is a level of transparency that we have with everybody in, and as I mentioned in my opening comments that as we go through the year, we'll be able to communicate more. There are several factors, it's not just the cost initiative, it's also our revenue initiative as well. So we want to be able to quantify and be able to speak clearly to everybody. So, expect to hear more as we go through the year.

Okay, thank you. And then, Mike, if I could just follow up on National Pump, I know we're only a short time into the transaction but can you characterize any conversations you've had with customers about cross-selling between the two, any opportunities that have come up in the short time that you've owned the company?

I will say that I did spend a day out at one of the branch right after we closed and I walked away very excited about the opportunities there ahead of us and also the management that we have brought on board, but I'll ask Matt to speak specifically to your question.

Thanks, Mike. Hi, Seth. So, we obviously were very excited about the deal before we closed or we wouldn't have made that investment, but we've been even more pleasantly surprised by the reaction from our employees and our customer base. We've had strategy meeting over the last few days where Paul McDonnell and his team leading the specialty business and our national accounts team have been strategizing on cross-sell because the customers are pulling us in immediately. So, once we're all on the same platform, which will happen by the end of the second quarter, that will be even easier to do but we already are working on plans on cross-selling. Our customer base has really received very positively us filling this gap in our product offering.

Okay, thank you very much, guys.

Before we go to the next question, I just wanted to correct one thing I said on our outlook for the full year. The total revenue range will be $5.45 billion at the bottom, $5.65 billion at the top. I think I misstated that previously. I just wanted to get it straight. So, operator, next question.

Our next question comes from the line of Jerry Revich from Goldman Sachs. Your question please.

Can you gentlemen just talk about the action that you took to manage the fleet in the quarter? You alluded to it in your prepared remarks. I'm wondering if you could flush that out because you outperformed the typical seasonality from a utilization standpoint, 1Q versus 4Q, in what should have been a really challenging quarter, and then if you apply typical seasonality from here, I guess you'd get well above your utilization target for the year. So I'm just wondering if you could just step us through what went right in the quarter.

Sure, Jerry. It's Matt. Obviously, we really were focused on not putting any undue pressure on the areas that we're having a bad weather impact, and re-shifting fleet, both new fleet and existing fleet, to the markets where we had opportunities. With that being said, the Midwest had quite a harsh winter and was one of our highest growing region at 18% growth. So there is some of this that's just penetration and the continued growth of the build we've been doing since the integration of RSC. But I would say from a macro perspective broad-based, it was how we managed our opportunities and make sure we funded our opportunities, and the rate impact came as a result of us not putting undue stress on the impacted markets. So, we're very happy with the way the team managed that.

And given that, Bill, at which point did you start thinking about taking up your CapEx outlook for the year in the context of how strong the start has been from a utilization standpoint or which utilization level on a full-year basis would you say we probably have enough fleet on hand?

There's not a magic number on utilization where we would say, it's time to spend some more. I think it's fair to say that we have an ongoing conversation about how much we spend daily, and the question is, what's the set of circumstances that get us comfortable enough to say, yes, we'll put more fleet into the business. I think it's also fair to say that we probably want to have a good look at how the season is building, and that means that you want to see April, you probably want to see May before you start having any serious conversation about possibly raising CapEx. So, stay tuned. I think we'll talk more about it in the second quarter earnings call and have a tighter view at that point.

Our next question comes from the line of Steven Fisher from UBS. Your question please.

As you've been exhibiting a greater level of discipline on CapEx, as you were just talking about, but I'm curious what kind of discipline, or if relevant lack of thereof, are you seeing in the marketplace from competitors both large and small?

I'll talk about the high-level. First and foremost, I think when you look at all the companies that report publicly, they are all very prudent in the way in which they are approaching the markets. They have different strategies but they are putting in the appropriate capital for their strategy, but [indiscernible] you're seeing rental rates improvement. We also subscribe to [a route] (ph), we've mentioned this before, there's about 84, 85 good companies that report as you look in the rear-view mirror for legal reasons, about a 90 day lag on it, and it gives you a sense of different [MSAs] (ph). When we look at how we're raising our rental rates over time, we're seeing kind of the whole industry come up. So that would tell you that everyone is appropriately trying to apply rental rates wherever they can. So that's the best market data I have. Matt?

I think Mike covered it well, and I do think more importantly the OEMs are – I think that the combination of the OEM participation and the credit markets are making people to be more responsible than maybe they did going all the way in through 2008 and spending money and OEMs producing a lot of products. So, I think the growth is smooth, steady and appropriate for the level of demand that's out there.

That's helpful. And then maybe just a question about the agility of your business model. You made a decision to focus on rates as you talked about [to enable to] (ph) make adjustments for weather in the quarter. Just curious, at what point in the quarter did you make those adjustments and set that strategy, and I guess the broad question is, how quickly can your ship be turned to address market conditions, and then how would you say, how would you describe what your focus is for the second quarter?

I would tell you that when you look at our fleet management process, there's an evolution of the best of both worlds when we went through the RSC transaction. We took some of their operating principles, we took some of our operating principles, we bonded them together and we developed a very disciplined approach in the way in which we are going to apply it, and this is the end result. So, I think that as Matt mentioned, we have the ability to fund pockets where they were needed. Conversely, we didn't put undue pressure in areas where it wasn't required, and I think that will be an ongoing process. As far as our agility to move, it's very difficult to move things from say Canada down to say Florida, but you can sell and you can repurpose that capital. Those are the things that we do and all of these things are how we manage the fleet on a go forward basis. And by the way, it's not just a snapshot of where we are today, we have to think about it, where are we going to be six months to a year down the road because we don't want to be moving this capital on a continuous basis in that format.

I think the additional good news is that we have broad-based demand now. We got through the winter by maybe being a little more selective about our opportunities, but as a Mike stated in his prepared remarks, we have growth in every region except for one geographically and half of them are double-digit growth. So I don't think we'll be as challenged with where we meet the demand from a rate perspective, it will be which ones we choose to fund at a higher level than others.

Great, thank you.

Our next question comes from the line of Scott Schneeberger from Oppenheimer. Your question please.

What I would like to tackle is your sales force. You added I think 100 folks mostly unassigned accounts last year. Want to get an update on productivity there and then your plans for 2014 and which areas are you adding, the number and productivity and areas of focus.

Sure, Scott, this is Matt. We actually have 153 more field sales reps on a year-over-year basis. So we had 100 for our goal for the second quarter last year but we built that up to 150 throughout the year, and that's where we sit today. We think that's appropriate level for OSRs other than additional reps we may bring in for our 18 cold starts, and you'll see some more there. So, we feel pretty good about the level of our sales team and we've got very good productivity out of them. As you see, our unassigned accounts grew faster than the overall Company growth in the back half of the year and for the first quarter this year, and that was really us reconnecting with some of the business we felt we lost during the RSC integration.

Thanks. And then I have a follow-up. I noticed from the presentation pack this time around, you're focusing on the specialty rental categories that you have. Historically you've also – you've been focusing on those that you were targeting and [I was just wondering] (ph) now you've achieved it. So I'm just curious, how are you thinking, is it going to be time spent on integrating or are you looking still actively perhaps at M&A and some of the other categories, liquid storage tank rental or others that you had listed previously?

This is Mike. I would tell you that we are clearly focused on integrating the pump business and we've dedicated ourselves to growing our specialty business and we want to grow it, double the size of the business over the next five years. That is our main strategy. With regards to looking at other possibilities, I think it's prudent for us to always look at what the future may bring us and that is a big laundry list. So again, going back to the discipline that we've talked about numerous times, we look at a strategy, we look at the returns and then we also look at the culture, and all of those will always play into our decision-making, but right now we're focused on integrating the pump business and we see a significant upside opportunity for us to – like I said, it's got the hallmarks of a home run and that's what we're focused on.

Our next question comes from the line of Philip Volpicelli from Deutsche Bank. Your question please.

With the goal of doubling the specialty business, how much of that is going to come from acquisition and how much of that would come from just organic growth and capital spending?

It's Bill, Phil. Most of it is going to be organic growth. That's the way we're targeting the initiatives for the business. So if there is an acquisition, we'll re-evaluate whether we should raise that target, change that target to add on the acquired growth on top of the organic growth.

Okay, as the last question, you answered the question on the liquid storage tank, obviously with National Pump you get into more of the oil and gas, is that an area of focus that you'll either spend CapEx or look to make an acquisition to kind of broaden out that pump portfolio?

So oil and gas is an area of focus just as an industry vertical for the business overall. I don't know that I'd say it's particularly a focus for acquisition as much as a focus for how do we build relationships with customers and how do we make sure that we can offer value to them. If an acquisition makes sense, right, then we certainly will look at it but it's got to hit our criteria and we're not going to do it just because we want to plan a bigger flag in the oil and gas sector. But Matt, Mike, if you want to add anything to that?

No, I think Bill covered it well.

Great, and just the last one for me. I think, Bill, on the last call you mentioned 2.7 to 2.8 net leverage by the end of the year. Is that still part of the guidance?

Yes, I mean that's still in the neighborhood. It might be a touch higher. We put in the investor deck a slide that shows 2.9 at the end of this year. I think as we've gone through some of the refinance actions, as we've gone through finalizing the Pump acquisition and just looking at how the cash flow will play out over the year, it may be just a touch higher but it's still in that neighborhood.

Our next question comes from the line of George Tong from Piper Jaffray. Your question please.

Just wanted to get some color on your capital allocation strategy. You're generating attractive free cash flows of north of $450 million per year. Once you complete your delevering plan of 2.9 by the end of this year and your share purchase of $500 million by April of 2015, what's your priority for use of excess cash beyond that?

I'm sorry, George, can you ask that question again?

So just want to understand what your priority for capital allocation is once you completed your delevering plans and share purchases to the targets that you have already issued?

Once we complete our delevering plan, that's interesting. I'd say we still believe in the leverage range that we talked about, 2.5x to 3.5x. If we get down to the 2.5x level and have completed the share repurchase program at that point and we don't have an acquisition that hits all of our criteria, then I think it's legitimate that we would talk about whether further share repurchase makes sense. That's certainly not something that we're afraid of. But we got to get through that priority of cash flow use that I just walked through. And we've put a slide in our investor deck just trying to highlight the priority of thinking around cash flow allocation that very much reflects that order, right. First, you got to fund the organic growth of the business, but yes, that's before free cash flow. And then, once you have that free cash flow, we want to make sure that if there are acquisitions out there that make sense, that we will take a hard look at them, but if they are not lined up, share repurchase makes a lot of sense. That helps?

Yes, very helpful, thank you.

Let me go back to Phil's question just real quickly. The 2.7, 2.8 leverage ratio was before Pump. So when you include the acquisition of National Pump, the 2.9 is our view currently of where we'll end the year, just to clarify that.

Our next question comes from the line of David Raso from ISI Group.

Quick question on the guidance what's implied. It sounds like you're pretty focused on pushing rate and the rate started the year above the full-year guide. It appears April is off to where you run – you're running even higher above the guide on rate, and obviously your rate is pretty powerful on drop-through for incremental EBITDA margin. So just so I'm clear, the rest of the year, let's say the high end of the range for EBITDA and that means 2.625, just for argument sake, it implies the rest of the year incremental EBITDA margin base of only 50. If you want to pull out National Pump, 51. And I'm just trying to make sure I understand, is the focus still on pushing rates, because if it is, the 51 would be one of your lower incrementals in a while, so I'm just trying to understand is there something implied in that incremental margin that there is a little more of a utilization push versus rate, I'm just trying to understand what does it imply?

So we don't spend a lot of time thinking about the incrementals by quarter or by half. And so, it's not something that I'm as faceted with the numbers as maybe you are, David. I think as we do think about the full-year, we think that we want to make sure that the 60% or so flow-through that we've been talking about is a high probability, we believe that it is, and there are some things that in the second half may represent a little bit more of a challenge than we saw in the first quarter of the year. So for example, we're going to ramp up our used sales activity. As we add more used sales in the back two quarters of the year, we're going to be adding revenue dollars at something like 50% EBITDA dollars. That will weigh out us a little bit more than it did in that first quarter. I don't see anything in particular that's a concern for the remaining part of the year, but I do think that we want to be a little cautious in terms of how we guide you to think about flow-through. One other thing I'd point to as well is that bad debt expense, it was a very nice experience in the first quarter, $4 million benefit year-over-year. As we think about the full-year, we don't expect to see that kind of a benefit in every quarter this year. We're doing a lot of good work around bad debt to reduce the amount of aged receivables but as we sit here today we're not forecasting that benefit to continue at the level that it started out the year. So, it's things like that that as we think through the remainder of the year in more detail, we say let's just make sure that we've got a handle on it before we get too aggressive in where we're going to end up for the full year.

I appreciate that, Bill, but even if you pull out the $4 million benefit from bad debt, the incremental goes from 87 for the quarter to 82. I mean obviously it wasn't that big a number. So again, I'm just trying, bigger picture, trying to understand, are you implying something or is it, it is what it is and we can model as we choose, but I'm just trying to understand, is there a shift in what you're focusing on or would you argue, no, it's still a little more rate than it is utilization as your focus the rest of the year?

I think it's fair to say that we think about it more of it is what it is. We certainly are going to push rate. We think that we've got an opportunity. Whether we'd actually be able to execute and get better than the above 4% rate that we are talking about, we'll see how it plays out as the year goes on. Let me go back to the first quarter flow-through, that 87% was really aided by a few things, and if you take out the bad debt, if you take out the impact of those one-offs that we had last year, and if you restate used sales revenue to the same level as we had last year, so by taking out those special items that I mentioned earlier, that drops that flow-through down into the high 60s, low 70s kind of area. So, it's those kind of things that we look at and we say, okay, let's just make sure that we've got a good handle on things before we start changing and raising our guidance on EBITDA or flow-through or any of the other measures.

I can appreciate that. Okay, thank you very much for the detail.

Our next question comes from the line of Nick Coppola from Thompson Research Group.

End markets, what are your customers telling you about their expectations for 2014, and I saw your slide showing your customer survey results were very positive, so any further color you can add there about what they are saying and also what type of [indiscernible] activity maybe picks up after you rebound through this tough weather [indiscernible]?

This is Mike. Let me just give you a few data points, one of which would be the AGC which is the Associated General Contractors came out with an outlook survey recently and they compared it to 2013 and they broke it down into numerous categories for manufacturing, retail, private office, all the way down through to marine construction. And then after that was they had how were you rating it, expect your dollar, volume or project you complete in 2014 to be either higher, lower or the same. When you aggregate all those numbers, it's a pretty interesting chart that they mapped out where manufacturing, retail, private office, hospital, power, sewer and highway were all double-digit in comparison to 2013. So that would be one data point. The other one would be Global Insight. Global Insight is another one that we work with, particularly with the American Rental Association, and they are seeing spending in commercial construction, office construction, lodging, retail, manufacturing and healthcare. Again, when you compare the two different ones, there are some similarities that kind of all fall altogether. So again, it's not a perfect science, it's another data point that we look at in comparison with [indiscernible] reports and all the other reports that come out. But those are the things that we're seeing as far as our end markets and the optimism in what our customers are telling us.

Okay, that makes sense, that's helpful. And my second question is on used equipment margins. They were up a real strong 520 basis points year-over-year on an adjusted basis. How much of your used sales went to the retail channel this quarter relative to last year, just trying to kind of parse out [mentally] (ph) how much was from the [shift] (ph) – the more retail [indiscernible] strong performance in used [indiscernible]?

Nick, it's Bill. So operating from memory here, 55% or so was through our retail channel this year, and so that's still a fairly robust level of retail and that certainly helps support the margin. But we've also been focused on the market which is pretty robust. The pricing was pretty solid. And you combine those two things and it really does help drive the margin. So we'll continue to emphasize our retail channels, continue to try and take out as much of the auction sales as we can, continue to tap into the overall strong market pricing. There is a mix component to our margins on a year-over-year basis as well, right, the mix of units that you sell that can move things around. So that was probably part of what played into the significant increase in margin in this quarter as well, but channel mix and overall price environment were probably the bigger drivers.

Our next question comes from the line of Manish Somaiya from Citi.

Congratulations on a strong quarter. Michael, I just want to go back to your opening remarks on the cycle and I guess as we kind of see the cycle play out, how are you thinking about the up-cycle? I mean you said multi-year, but are you thinking like three-year, five-year, maybe if you can just kind of give your thoughts on that?

Look, I have learned that my point of view, I look at the next several years. That's probably after that it gets a little foggy. But all indications are, Manish, that when you look at the Global Insight, when you look at some of the other projections that are out there, 2014, '15 and they go into '16, show nice improvement on a year-over-year basis, with 2015 being one of the strongest. I think it really what is, it's convergence of all the projects coming together in 2015. But again '16 and '17, they still remain very positive but not as great as you would see in 2015. All-in, they are looking at about 8% growth from Global Insight, 8.8% CAGR growth, which I think is very respectable, and those are kind of the things that we look at, but for me, I look at the next two years and I say to myself, what is it that's on our plate and what can we focus on, and do I look at the outlook outer years, absolutely, but as we get closer and closer then you get the metrics to come in and you try to validate whether those numbers are going to be plus or minus in any direction.

And then, maybe a question for Matt, I guess to support this growth, organic growth, Matt, are you finding that the kind of people that you want to have on your team out there? I mean what kind of issues are you having, if any, supporting this growth via hiring the right folks with the right skills?

That's a great question. We're having great success. We have a very active recruiting team out on the field that works with the regions. Sales, management, that type of talent is readily available. We've become as we've grown into the largest in the industry quite a big draw in our space. I would say, if there was anything that I worried about long-term, it would just be, like every trade, it would be the technical expertise, but we do a real good job of home-growing that talent and we've invested a lot of money in the last two years in training because we do see that as a longer-term concern about making sure we have got the skilled labor to keep this equipment running. As far as management and sales, we are very, very well set. We're fortunate, Manish, to have low turnover for about the last five years and that's really played into our favor as well. So, I don't think people will be an issue but we are always focused on it.

Thanks. And then just lastly for Bill, obviously Bill, with performance having improved, with cycle showing good strength, I guess I'm trying to figure out why there is a two-notch differential in the ratings that Moody's has for senior unsecured versus S&P, and are there any discussions that you plan to have to kind of hopefully fix that?

We are trying to figure that one out ourselves. We have an ongoing dialog with both of the major rating agencies and both regular structured calls that we do on a quarterly basis and also ad hoc calls as things change around acquisitions or any other key items in the business. You'd have to ask Moody's how they are thinking about the rating directly. Our view is that we've delivered a capital structure and approach to managing the business that is pretty robust, but I'd point you to the Moody's folks and ask you to come back and tell me what they say.

Okay, thank you so much.

Thank you. Due to time constraints, this does conclude the question-and-answer session of today's program. I'd like to hand the program back to Mr. Michael Kneeland for closing comments.

Thanks operator. I want to thank everybody for joining us today. I just want to remind everybody that we were off to a strong start in 2014. When we look at the demand that we are seeing in almost every one of our markets, the confidence and the field is going upbeat, and you always find the new investor presentation on our Web-site, and as always give us a call here in Stanford if there is something that you want to discuss. And with that, we'll end the call. Thank you very much.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.