20.05.2015

Steady progress at Neff

US rental company Neff has reported an eight percent rise in first quarter revenues, on weaker utilisation.

The company achieved total revenues of $84.1 million in the first quarter, 8.2 percent up on the same period last year. This was based on a 3.8 percent improvement in rental rates offset by a fall in physical utilisation from 68.3 percent last year to 63.7 percent this year. Although this was on a larger overall fleet. Pre-tax profits for the period improved 52 percent to $12.3 million.

The company has adjusted the top end of its full year revenue forecasts and is now expecting to achieve between $390 to $400 million, compared to its original projections of $390 to $410 million. It is maintaining its rental rate predictions of a 4.5 percent increase for the year, but downgrading utilisation expectations to 66 percent from 68 percent previously.

Chief executive Graham Hood said: “We are pleased to announce record first quarter results for rental revenue and EBITDA. Despite challenging winter weather conditions and the headwinds from Oil and Gas, we grew our rental revenues by 7.3 percent and Adjusted EBITDA by 12.2 percent compared to the first quarter of 2014. Overall conditions in our construction markets remain solid and we are not seeing any impact related to oil prices outside of locations that have significant oil and gas exposure. We remain highly focused on managing our fleet and executing our strategy as we move into our seasonally strong period.

Vertikal Comment

A decent set of numbers from Neff, which demonstrate how physical utilisation is not everything. Compared to some other rental companies Neff, while not setting the world on fire is doing OK. Expect steady progress this year, with a decent improvement in profitability on relatively stable revenues.