United Rentals optimistic despite macro uncertainties

By Murray Pollok17 October 2012

United Rentals said the integration of RSC Equipment was progressing “very well” as it announced an 8.9% increase in revenues for the third quarter of 2012, on a pro forma basis. United said it was optimistic about the coming year despite uncertainties over the macro economic outlook.

The revenue growth in the quarter was driven by a 7.9% increase in the volume of equipment on rent and a 7.5% rise in rental prices, offset by a small reduction in time utilisation to a still-healthy 69.8%.

Net profits for the quarter were $73 million, with EBITDA of $570 million.

Work on the integration of RSC continues, with 187 branches now closed and a new synergy cost saving cost target of $230-250 million, more than the previously announced $230 million in savings.

All depots are working on the same IT platform; the majority of national and strategic accounts have been integrated; and United’s price optimisation software has been implemented in all former RSC locations.

Michael Kneeland, chief executive officer of United Rentals, said the quarterly performance had been strong propelled by “effective execution of our strategy and widespread demand for our rental equipment. All but one of our regions reported year-over-year rate increases, and we now expect a rate gain of approximately 7% for the full year.”

He said that the RSC integration was going very well; “We've realigned our sales territories and consolidated 187 branches to date, all while continuing to generate double-digit revenue growth from our target accounts. These larger customers are at the heart of our strategy for profitable growth. They believe, as do we, that while there is some macro uncertainty, there are also good reasons to be optimistic about the coming year."

The company is now expecting annual revenues of between $4.6 billion and $4.7 billion, compared to pro forma revenues in 2011 of $4.13 billion. United said it expected gross fleet investment of $1.5-1.6 billion, equivalent to net investment of $1.075 billion to $1.125 billion.

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