United Rentals maintains momentum

By Helen Wright28 January 2016

Full-year 2015 results have revealed year-on-year growth at US-based United Rentals, the world’s largest rental company, but it has issued a cautious outlook for this year.

The company reported 2015 revenues of US$5.82 billion (€5.34 billion) and rental revenues of US$4.95 billion (€4.54 billion), up from US$5.69 billion (€5.22 billion) and US$4.82 billion (€4.42 billion), respectively, for 2014.

Full-year net income increased to US$585 million (€537 million), compared to US$540 million (€496 million) in 2014.

Rental rates increased 0.5% year-on-year, while return on invested capital was 8.8% for full year 2015, which was flat compared to 2014. Full year time utilisation decreased 150 basis points to 67.3%.

Q4 slip

Results slipped in the final three months of 2015. Fourth quarter revenues stood at US$1.52 billion (€1.39 billion), of which rental revenues totalled US$1.28 billion (€1.17 billion), and this compared to US$1.56 billion (€1.43 billion) and US$1.32 billion (€1.21 billion), respectively, for the same period in 2014.

Rental rates decreased 1.8% quarter-on-quarter, while time utilisation decreased 240 basis points compared to 2014 to 68.2% for the fourth quarter of 2015.

CEO Michael Kneeland said 2015 had proved to be challenging in many ways, but had also showcased the resilience and flexibility of the business.

“This was a solid performance in light of the decline in upstream oil and gas and its knock-on effects, particularly in Canada.

“Although we agree with industry forecasters that there is further growth ahead, there is still market uncertainty. For 2016, our stance is to be cautious on capex and proactive about pursuing profitable growth opportunities in areas such as our specialty rental services.

“In the first quarter, we plan to spend less than half of the capex we spent in the first quarter last year, and we’ll adjust our full year spend up or down based on the level of demand we experience. We expect to use our nearly billion dollars of free cash flow this year to buy back shares and pay down debt."

Capital expenditure

United rentals said its total rental and non-rental capital expenditure stood at US$1.64 billion (€1.51 billion) in 2015. It said the size of the rental fleet was US$8.73 billion (€8.01 billion) of original equipment cost (OEC) at December 31, 2015, compared with US$8.44 billion (€7.75 billion) at December 31, 2014.

The age of the rental fleet was 43.1 months on an OEC-weighted basis at December 31, 2015, compared with 43.0 months at December 31, 2014.

For this year, United Rentals said it expected to spend around US$700 million (€642 million) in net rental capital expenditure after gross purchases of US$1.2 billion (€1.1 billion).

The company’s full-year 2016 revenue outlook is between US$5.65 billion (€5.18 billion) and US$5.95 billion (€5.46 billion), while the forecast for adjusted earnings before interest, taxes, depreciation and amortisation is between US$2.7 billion (€2.5 billion) to US$2.9 billion (2.7 billion).

Rental rates are expected to decrease between 1% and 2% year-on-year in 2016, while time utilisation is expected to stay steady at around 68%.

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