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United doubles profits

United rentals has released its third quarter results, which show a strong pick up in year to date and quarterly profits.

Nine months
Total revenues for the nine months to the end of September were $6.94 billion, an increase of 11 percent compared to this time last year. Most of the improvement came from higher rental revenues which represent more than 85 percent of the total, all sectors improved apart from sales of new equipment which were lower. Pre-tax profit improved almost 60 percent to $1.2 billion.

Third quarter
Moving on the third quarter, revenues improved 18.5 percent to almost $2.6 billion, all but $12 million came from rental revenues which improved more than 22 percent, sales of both new and used equipment both declined. Pre-tax profits were almost double that of the same quarter last year at $409 million.

Capital expenditure on the rental fleet so far this year was $2.31 billion, compared to $785 million at this point in 2020. Total long and short term debt increased by $422 million to $10.1 billion. This was largely due to the use of cash and borrowings to fund the acquisition of General Finance. The company has increased it’s a full year capital expenditure forecasts and now expects to spend between $2.75 to $2.95 billion.

Chief executive Matthew Flannery said: “We were very pleased with our third quarter performance, with rental results coming in ahead of expectations as our team serviced our customers in a safe and efficient manner through the busiest part of our year. Importantly, the momentum we’ve experienced from the broad based recovery of our end-markets supports our raising full year guidance for both total revenue and adjusted EBITDA. Our update also includes an increase to rental capex, reflecting incremental fleet we plan to purchase in the fourth quarter as we look to support growth next year.”

“While early in our planning process, virtually all key indicators point to a sustained recovery. At this same time, the industry has remained disciplined and our strategic partnerships with key suppliers will benefit the company as we invest in fleet to support our customers. Combined, this should position us to deliver strong growth, improved margins and attractive returns in 2022.”

Vertikal Comment

This is certainly an exceptional result from United which looks set to sail past the $10 billion mark in 2022, keeping such a mammoth operation on plan is a quite an achievement in itself, but the company is continuing to invest in systems and telematics etc... which clearly help keep the business on its toes and moving forward, while keeping the customer happy. The onward progress of the mega rental companies in North America looks set to continue. United claims to have around 13 percent share of the US rental market, with Sunbelt being next in line with nine percent. Add to the fact that the overall rental market is still growing, and it looks as though there is still plenty more to go after. On top of this, there are international opportunities, and while United appears to be an all American operation, its overseas sales are steadily increasing with 57 of its 1,335 locations in Europe, Australia and New Zealand.

The company does have a massive debt pile but given that it is currently generating between $3 and $4 billion in cash each year the ratios remain relatively manageable.