United Rentals raises outlook after strong first half

It reported rental revenues for the first six months of the year of US$2.18 billion (€1.61 billion), up 13.5% year-on-year. Rates were up 4.6% year-on-year in the first half, while fleet utilisation was up 30 basis points to 66.4%.

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) totalled US$1.18 billion (€872 million), up US$182 million (€135 million) compared to the first half of 2013. The EBITDA margin was 45.9%, an increase of 250 basis points.

For the full-year, United Rentals said it now expected to report total revenues of between US$5.55 billion (€4.1 billion) and US$5.65 billion (€4.18 billion), a slight increase on the bottom end of its previous forecast of between US$5.45 billion (€4.3 billion) and US$5.65 billion (€4.18 billion).

Full-year EBITDA is now expected to reach between US$2.65 billion (€1.96 billion) and US$2.7 billion (€2 billion), up from the previous forecast of between US$2.55 billion (€1.88 billion) and US$2.65 billion (€1.96 billion).

The company’s forecast for rental rate increases has also been upgraded from the previous forecast of 4% to the new outlook of around 4.5%.

However, full-year time utilisation expectations remained the same at 68.5%, while the 2014 gross rental capital expenditure forecast was also unchanged at US$1.7 billion (€1.3 billion).

Non-residential rebound

United Rentals CEO Michael Kneeland said, "The rebound in non-residential construction is continuing to drive up demand, particularly in the energy and commercial sectors.

"Given the vigorous activity we're seeing, and the benefit of secular penetration, we've raised our full year outlook – and we concur with the forecasts that show multiple years of healthy industry growth beyond 2014."

Mr Kneeland added that the company was well into the expansion of its specialty segment, most notably the acquisition and integration of National Pump in the second quarter.

“Our pump customers now have access to our full range of fleet, and we'll expand our cross-selling of pump assets to our broader customer base.

"In addition, we opened five specialty cold-starts in Trench Safety, Power and HVAC and Tools, and acquired the four-location Blue-Stream Power and HVAC business in May. We're very pleased with the calibre of our specialty acquisitions and the potential they represent for superior return on capital."