19.07.2013

United on the up

United Rentals has posted its first half numbers which, while still not a direct comparison with last year when RSC only contributed two months revenues – do indicate that the RSC business has been well digested and that the combined business is in good shape.

Total revenues for the first six months were $2.3 billion – 40 percent higher than last year, but when RSC’s first four months are factored in the increase is probably closer to 7.5 percent. Some of this came from higher sales of used equipment, as the business rationalises its fleet, but rental revenues also show solid growth.

Last year’s pre-tax loss of $45 million – caused largely by merger costs – has been turned into a $161 million profit for this year.

Looking at the second quarter, revenues were up over 21 percent to $1.2 billion – if all of RSC’s revenues are included, the increase is likely to have been in the region of 10 percent. Last year’s loss of $52 million was converted to a profit this year of $83 million.

During the first half rental rates improved by 4.8 percent, while physical utilisation edged up half a percent to 66.1 percent.

The size of the fleet was $7.70 billion compared with $7.23 billion at the start of the year, with an average age of 44.5 months compared to 47.2 months at the end of December. The company says that it expects capital expenditure on its rental fleet to be around $1.05 billion for the year.

Chief executive Michael Kneeland said: "Our strong second quarter performance reflects our commitment to a strategy of profitable and disciplined growth. We invested over $730 million in fleet purchases in the second quarter to fill customer orders, especially key accounts, and prepare for peak season demand. We feel comfortable about achieving our full year outlook on rate, total revenue, EBITDA and free cash flow, while continuing to reduce our leverage.”

Vertikal Comment

The merger of these two large companies appears to have gone very well, and it does now look as though 3+2 might make 6. It is still early days but the timing has been favourable which is half the battle in such a deal and the results indicate that the company has not only managed to hold on to most of the two companies revenues. But that it is now also claiming its fair share of the improving market.

From here on out the quarterly comparisons will be a great deal more straightforward, but at this stage the business looks to be well set for further expansion.