24.10.2018

Strong quarter for United

US based United Rentals has reported a strong rise in revenues and a steep rise in profits. It has also marginally raised its full year upper revenue estimate to $7.87 billion.

In the nine months to the end of September total revenues were 20.5 percent higher than the same period last year, at $5.74 billion. The results included contributions from the three major acquisitions made last year – Neff, NES and BakerCorp. Organic rental revenue growth was 11 percent, reflecting 7.3 percent more equipment on rent plus a 2.4 percent increase in rental rates. Pre-tax profits for the nine months were just over $1 billion a 48 percent jump on the same period last year.

The average age of the rental fleet at the end of September was 46.6 months compared with 47 months at the end of December. Utilisation was 0.8 percent lower at 68.5 percent, primarily reflecting the impact of the NES, Neff and BakerCorp acquisitions, although utilisation was also lower on a pro-forma basis.

The company is forecasting slightly higher gross capital expenditure for the full year at $2.0 to $2.1 billion. The size of the rental fleet at the end of September was $12.90 billion up from $11.51 billion at the start of the year.

Moving on to the third quarter, total revenues were up 20 percent to $2.12 billion, of which rental was $1.86 billion, a 21 percent increase on the same quarter in 2017 reflecting a 17.8 percent rise in the volume of equipment on rent and 2.1 percent in rental rates. Utilisation was lower at 70.9 percent. Pre-tax profits for the quarter were $460 million an increase of 43 percent on the same quarter in 2017.

Chief executive Michael Kneeland said: "We are pleased with the strength of our third quarter results, including the acceleration in volume growth and improved margins. Our rates were again positive for each month in a competitive market, while time utilisation remained robust. We continue to make good progress integrating Baker into our specialty operations and look forward to beginning that process with BlueLine this quarter."

"Our updated guidance reflects the combination of strong market demand and the contributions from our completed acquisitions, which, together with internal and external indicators, point to a solid fourth quarter and healthy momentum into 2019. Our strategy remains highly focused on driving profitable growth across our core businesses, integrating our recent acquisitions and leveraging our cash flows to maximize shareholder value."

Vertikal Comment

These are truly mind boggling numbers for any company, but especially an equipment rental company. United has done exceptionally well to complete such large multiple acquisitions and yet achieve good growth from the underlying United Rentals operation, not to mention manage a more than 40 percent boost to profits. At this pace the company is on target to pass the $10 billion revenue milestone by 2020, if not before.

The company must surely be getting close to saturation coverage in North America, which could calm the growth levels or make big acquisitions less beneficial and possibly encourage a serious push overseas?

What else is there to say apart from a highly positive result to kick of the reporting season.