25.01.2018

United soars

United Rental has published its full year results, achieving record revenues and profits.

Looking at the year as a whole, revenues increased more than 15 percent to $6.64 billion, partly due to the incorporation of NES and NEFF in April and October respectively, and partly due to strong organic growth in rental volumes plus a slight improvement in rates. Pre-tax profits for the year were almost 16 percent higher at $1.05 billion.

Moving on to the fourth quarter revenues were leapt more than 26 percent to $1.92 billion, led by a 27 percent jump in rental revenues, driven by an 11.5 percent improvement in the volume of equipment on rent, plus a two percent increase in rental rates compared to the same quarter last year. The company also benefited from the sale of $172 million of older NES and NEFF equipment. Pre-tax profits for the quarter soared 39 percent to $336 million.

Capital expenditure for the year was $1.7 billion, compared to $1.25 billion in 2016. The average age of the fleet at the end of the year was 47 months, with a total replacement value of $11.5 billion. Utilisation hit 70 percent.

The company anticipates total revenues for 2018 will be in the range of $7.3 to 7.6 billion, while capital expenditure on new equipment will be in the region of $1.8 to 1.95 billion.

Chief executive Michael Kneeland said: "We capped a year of record results with a strong fourth quarter finish on the back of broad-based demand. Pro forma volume increased nearly nine percent year over year in the quarter, and rental rates were up two percent. For the full year, we exceeded the upper band guidance on total revenue, adjusted EBITDA and free cash flow, and increased our ROIC by 50 basis points to its highest level since 2015."

"Our 2018 guidance reflects the confidence we feel in our operating environment based on what we hear from customers and see in key leading indicators. Our optimism is further supported by the tailwinds we expect from leveraging our 2017 acquisitions and our ongoing investments in people and technology, as well as the recent U.S. tax reform. Our strategy remains focused on balancing growth and returns to maximize our long-term value."

Vertikal Comment

It is hard to argue with the numbers, this is an exceptional result for such a large company working in what is still a relatively fragmented market. United has become exceptionally adept at incorporating large acquisitions. Achieving such strong fourth quarter revenue and profit growth is very promising for the current year, when NEFF and NES will add a significant increase in addition to the ongoing organic growth. If the company looks to be well on target to hit the $8 billion revenue mark in 2019, if not before.

All in all a very positive start to the annual reporting season.