01.05.2018

27% jump for United

US based United Rentals has reported a 27.5 percent rise in first quarter revenues with a substantial improvement in profitability.

Total revenues for the quarter were $1.73 billion up more than 27 percent on the same period last year, thanks largely to the addition of NES acquired in April and Neff towards the end of the year. Pre-tax profits jumped 44 percent to $232 million.

The company spent $280 million ion new rental equipment, up from $219 million last year. Sales of used equipment increased to $181 million. Average utilisation for the quarter was 65.2 percent down from 66.2 percent in the same period last year, however aerial lift utilisation – 33 percent of the total fleet – was 68.8 percent. The average age of the fleet at the end of March was 47.5 months or 53.4 months for the aerial work platform fleet. Rental rates improved by an average of 1.8 percent, rising month by month to 2.2 percent in March.

Chief executive Michael Kneeland said: "We reported a good start to the year, with both rates and volumes benefiting from broad-based demand. Our Specialty segment continued to outperform, aided by strong market growth and cross selling opportunities, and trends remained positive in Canada. We’re also pleased with the progress the team has made integrating Neff, where we remain on track to deliver our 2018 synergies goals. Combined, we are well positioned for the seasonal upturn in customer activity."

"Our confidence extends to both our immediate operating environment and the durability of the cycle. Virtually all indicators point to market growth, which supports our reaffirming our outlook for the year. We are also pleased to announce that our board of directors has authorised a new $1.25 billion share repurchase programme to commence when the current program is complete. We remain focused on maximizing our value given the strength of our cash flows and capital structure."

Vertikal Comment

A strong start to the year from United, although with so many changes during the latter part of 2017, it is challenging to get a clear picture of the how the base business performed. However, the company has an excellent track record at incorporating and digesting big acquisitions and looks set to achieve revenues this year of around $7.5 billion and will spend around $1.8 billion on new equipment.

There is no question about it United is a true power house, and has managed to extract excellent profits from its acquisitions, the only thing is that it seems to rely a little too much on them for growth. But with the market now really positive and last year’s acquisitions to incorporate, perhaps it would benefit from a year or two of consolidation and organic growth?

Having said that an excellent result which should put a smile on sharholders faces.