United ‘considering new markets’
By Joe Malone31 October 2017
United Rentals is preparing to enter into new markets, according to William Plummer, executive vice president and chief financial officer.
Speaking at the International Rental Conference (IRC) in Shanghai, China, on 31 October, Plummer said the company was scouting new markets to enter, citing “it’s not a matter of if, it’s a matter of when”.
Plummer, however, refused to give details on which markets it would enter, but said it was scouting the global markets with the intention of entering into new ones.
United Rentals, the biggest equipment rental company in the world, has 1,019 depots across the US and Canada, and boasts a fleet value of US$11.6 billion (€9.97 billion). Plummer added that the company had a 12% market share in North America.
The company’s executive vice president also stated that he couldn’t forecast more than two years ahead, but said next year and the year after would be ‘big years’ for the company.
United Rentals recently announced third-quarter 2017 rental revenues of US$1.53 billion (€1.32 billion) – an increase of over 16% year-on-year. The company agreed to acquire Neff Corporation in August, in a deal worth €1.11 billion.
Plummer was speaking about managing capital allocation in a rental business, and said it was important to “find the balance between growth and returns”, in order to make a successful business. He added that the most important strategy was to insure a company had the correct amount of leverage, and said that United worked on a leverage of between 2.5 to 3.5 times net debt to EBITDA, depending on the state of the market at any one time.
Plummer urged rental companies to think ahead of the market performance, and not get sucked in to the cyclical nature, which sees companies aggressively invest in their fleets during times of boom, resulting in a price drop and a market crash. He said United tried to work “one step ahead of the market trend”.