23.10.2017

Another good quarter for United

US based United Rentals has reported another good quarter, although profit growth still lags behind revenue growth.

For the nine months to the end of September total revenues were 11.5 percent higher at $4.72 billion, with higher growth rates see in the Trench Power and Pump division. Utilisation was 69.3 percent compared to 67.4 percent at this point last year, while rental rates edged up 0.7 percent. Capital expenditure for the period was $1.01 billion, with sales of used machines from the fleet totalling $378 million. Pre-tax profit for the period was $712 million, seven percent higher than at this point last year.

Moving on the third quarter total revenues increased around 17 percent to $1.76 billion, thanks to higher utilisation rates, which reached new records for each of the three months, averaging 71.9 for the quarter, compared to 70.3 percent last year. This in spite of a substantial increase in the size of the fleet. The increase in rental rates also increased, ending the period 0.9 percent higher than for the same quarter last year. Pre-tax profits were $322 million, more than six percent higher.

Sales of used equipment from the fleet were $139 million, the company has also increased its net rental capital expenditure plan for the year by around $200 to $1.25 to $1.3 billion.

Chief executive Michael Kneeland said: "We are very pleased with the gains we reported for the third quarter. These include significantly higher volume and time utilisation, margin growth, and strong cash flow. Importantly, we delivered positive rental rates both sequentially and year-over-year for every month in the quarter. Our U.S. end markets are driving robust demand for our fleet, and Canada is continuing to rebound. Given these many positive dynamics, and the extended hurricane recoveries, we have raised our 2017 gross capex plan by up to $200 million to best serve the current and anticipated needs of our customers."

"Looking at the balance of 2017, our updated guidance reflects the combination of a fundamentally strong market and the contributions from our acquisitions this year. The integration of Neff is well underway, with all locations on our operating system. We expect fourth quarter market activity to exceed normal seasonality, and based on everything we see, we have confidence in the operating environment for 2018."

Vertikal Comment

Not a bad set of numbers from United although you would expect that the higher rates, larger fleet and improved utilisation to have transferred more of the revenue gain to the bottom line. There is a good deal still going on however in terms of integrating NES and now NEFF. Not to mention fees for rescheduling its debt for better rates and a longer term.

The company has increased its full year revenue forecasts to a range of between $6.52 and $6.625 billion, compared to $5.76 million in 2016, put it on course to exceed $7 billion in 2018. That’s a lot of rental activity.