19.10.2012

United to top $4.6 billion for 2012

United Rentals has issued its third quarter results and expects the business, which acquired RSC earlier this year, to achieve total revenues of $4.6 to $4.7 billion for the full year 2012.

For the nine months to the end of September the company had revenues of $2.87 billion. The combined business achieved pre-tax profits of $49 million less than half last year’s level of $108 million.

Looking at the third quarter, revenues were $1.22 billion 8.7 percent higher than the same period last year. Pre-tax profits were $94 million compared to $96 million last year – although this compares with United’s 2011 only, while if the two separate operations are counted the fall is more pronounced – from $122 million. However this is after this year’s numbers include $48 million of restricting and merger costs.

The company has spent $1.1 billion on new rental equipment so far this year and sold $258 million of used equipment from the fleet. The average age of the aerial lift fleet which makes up 39 percent of the company’s revenues is 55.2 months, while its telehandler fleet which makes up 17.4 percent is 47.5 months.

Utilisation is currently running at 74.8 percent for aerial lifts and 80.3 percent for telehandlers. Overall rates have improved seven percent.

The company has also provided an update on its consolidation process with RSC, so far 187 branches have been merged, RSC locations have moved on to the United IT system and harmonised the majority of national and strategic accounts, while realigning sales territories. 2012 synergy cost savings have been increased to $100 million

Chief executive Michael Kneeland said: "We delivered a strong performance in the quarter, propelled by the effective execution of our strategy and widespread demand for our rental equipment. All but one of our regions reported year-over-year rate increases, and we now expect a rate gain of approximately seven percent for the full year. Third quarter time utilisation, while below last year's record level, contributed to a very healthy year-to-date performance of 67 percent. Our exceptionally strong flow-through and adjusted EBITDA margin make it clear that we're effectively managing rates, utilization and costs."

"The RSC integration is going very well, and we're raising our total cost synergies target to a range of $230 to $250 million. We've realigned our sales territories and consolidated 187 branches to date, all while continuing to generate double-digit revenue growth from our target accounts. These larger customers are at the heart of our strategy for profitable growth. They believe, as do we, that while there is some macro uncertainty, there are also good reasons to be optimistic about the coming year."

Vertikal Comment

Trying to compare the precise performance of the merged United /RSC business with last year is something of a challenge, however it does look as though it is progressing far better than might have been expected.

This is a mammoth task but overall the company appears to be carrying it out at a faster and more efficient pace than often happens in these cases. The other even more important factor is that timing looks to be excellent in terms of the state of rental market and the economic cycle which bodes well for the success of this merger.