30.04.2020

Flat first quarter for United

US rental company United Rentals has posted its first quarter results with revenues roughly the same as this time last year.

Total revenues were $2.12 billion 0.4 percent up on the same quarter in 2019, however rental revenues slipped 0.7 percent to $1.78 billion. Rental revenues, utilisation and rates were in fact running consistently above 2019 levels through until around March 13th or 14th when they declined by around 15 percent before stabilising as April began. Pre-tax profits for the quarter were 2.5 percent higher at $226 million.

Capital expenditure for the quarter was 19 percent lower at $208 million.

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Revenues, rates and utilisation held up until mid March

Chief executive Matthew Flannery said: “I am incredibly proud of the way our team has responded to the Covid-19 crisis, and I want to thank them for their extraordinary efforts during this challenging period. Our highest priority is to ensure the safety of our employees and customers in our workplaces and at job sites. The modifications we’ve made to our operating protocols preserve our ability to serve the needs of thousands of communities, while retaining critical capacity for the return of end-market demand.”

“Our business tracked as we expected through early March, when the outlook for 2020 became far more uncertain due to the pandemic. While we have withdrawn our guidance at this time, we are confident in our ability to leverage the resiliency inherent in our business model. We are in the strongest position in our history to respond to this crisis and to prepare for the recovery to come. This includes the strength of our balance sheet and cash flow, as we remain focused on disciplined capital allocation and cost management. We expect our free cash flow to remain substantially positive in 2020, even in our worst-case scenarios.”

Vertikal Comment

Once again a pretty good result compared to what we are seeing from manufacturers and looking at the current climate it seems that companies like United look set to pull through this crisis in reasonable shape. What will be important though is what happens afterwards. Will the government still be in any shape to invest in the promised infrastructure programme which would of course provide a substantial boost to companies like United.

The second quarter results will be more telling than these, and possibly by then we will have some early indications of what we might expect for the rest of the year.