17.07.2014

16% lift for United

US based United Rentals has reported a strong second quarter with revenues up 16 percent causing it to increase its full year projections.

Total revenues for the half year were $2.58 billion 12 percent up on last year, mostly due to higher rental revenues. Pre-tax profits for the period increased 47 percent to $236 million. Capital expenditure for the period was $1.08 billion, while sales of used equipment was $248 million reducing the average age to 42.9 months from 45.2 months at the start of the year.

Looking at the second quarter, revenues improved 16 percent to $1.4 billion, while pre-tax profits grew by a more modest 8.5 percent to $142 million. Equipment out on rent increased 10.3 percent, while rental rates were 4.9 percent higher than last year. Physical utilisation was 68.1 percent.

As a result of the strong first half United has increased the lower end of its full year forecast from between $5.45 to $5.55 billion and expects a 4.5 percent increase in rates compared to its previous projection of four percent.
The company also expects to generate $25 million more free cash than previously expected.

Chief executive Michael Kneeland said: "Our strong performance in the quarter reflects significantly more equipment on rent at better margins than a year ago, resulting in a new high water mark for second quarter EBITDA margin. The rebound in non-residential construction is continuing to drive up demand, particularly in the energy and commercial sectors. Given the vigorous activity we're seeing, and the benefit of secular penetration, we've raised our full year outlook - and we concur with the forecasts that show multiple years of healthy industry growth beyond 2014."

"We are well into the expansion of our speciality segment, most notably the acquisition and integration of National Pump in the second quarter. Our pump customers now have access to our full range of fleet, and we'll expand our cross-selling of pump assets to our broader customer base. In addition, we opened five speciality cold-starts in Trench Safety, Power and HVAC and Tools, and acquired the four-location Blue-Stream Power and HVAC business in May. We're very pleased with the calibre of our speciality acquisitions and the potential they represent for superior return on capital."

Vertikal Comment

Another strong quarter from United which appears to be on something of a roll at the moment, capitalising well on the improving demand for equipment in North America.

It has merged its various acquisitions exceptionally well and looks to be consolidating the business a little, including buying up a chunk of its own shares. It will surely now be taking a look at further possible acquisition targets, possibly even outside of its current market area?