17.10.2013

United up over 10%

United Rentals has published its third quarter results, with nine month revenues up over 10 percent, and a steep jump in profits. The company also announced a $500 million share buy back programme.

Total revenues for the nine month period were $3.79 billion almost 11 percent higher than last year’s results for United and RSC (RSC became part of United at the end of April), pre-tax profits for the same period jumped over five-fold to $379 million.

Looking at the third quarter, revenues improved eight percent to $1.3 billion, while pre-tax profits more than doubled to $218 million. Physical utilisation improved to 70.8 percent, pushing the year to date utilisation to 67.7 – close to its target for the year of 68 percent.

So far this year the company has spent $1.57 billion of capital expenditure, and generated $356 million from sales of used equipment. It also says that it has achieved $64 million of cost synergies as it continues to merge RSC in to the business. It is therefore holding its full year target at $230 to $250 million.

Chief executive Michael Kneeland said: "This was a strong quarter for us, capped by a record 49 percent adjusted EBITDA margin. We leveraged increasing demand for our services to put more equipment on rent at higher utilisation, and with sequential monthly rate improvements throughout the quarter. This is the environment we anticipated when we set our full year financial targets, and we expect non-residential construction will continue to trend upward in 2014. As we plan for the coming year, our operations are in a strong position to drive margin expansion through further rate improvement and business process efficiencies."

"The $500 million share repurchase program we announced today reflects our confidence in achieving our multi-year free cash flow generation goals, while pursuing a balanced and disciplined capital allocation strategy that includes organic growth and acquisitions.”

Vertikal Comment

This is a solid performance from United which looks to have pulled off the challenge of merging two large companies relatively quickly and achieved more than the sum of its parts. The timing for the deal looks increasingly ideal, adding to the results of its impressive merger management skills.

United looks to be on target for a great year, with an even better one in 2014.