20.04.2017

Positive start for United

US based United Rentals has reported a positive start to the year with higher first quarter revenues and profits.

The results are like for like with last year as the NES acquisition did not complete until after the end of the first quarter.

Total revenues were $1.36 billion, almost four percent up on the same period last year. This due to higher rental revenues – thanks to greater volume of equipment on rent, with utilisation oat 66 percent, partly offset by a 1.4 percent fall in rental rates. The 4.4 percent rise in rental revenues was partly offset by lower sales of both used and new equipment. Pre-tax profits for the quarter jumped 10 percent to $161 million.

As a result of the positive start to the year the company has increased its full year forecasts by around five percent and now expects revenues to be in the region of $6.05 to $6.25 billion.

Chief executive Michael Kneeland said: "We were pleased with our momentum in the first quarter, particularly our seven percent growth in volume and record time utilisation driven by strength in our core construction markets. It was also encouraging to see positive trends in our upstream oil and gas business after the headwinds faced over the last several years. While our rental rates remained under some pressure, they continue to support our reaffirmed standalone 2017 guidance for total revenue, adjusted EBITDA and capital spending, and our increased guidance for free cash flow."

"As we enter the critical part of the construction season, we are very encouraged by the continued strength of key leading indicators, the tone of conversations with our customers and the industry’s disciplined response in adding fleet. Our focus remains on implementation of Project XL and other initiatives that should enhance our long-term value. With the integration of NES now underway, our updated guidance reflects the combined operations across the remainder of 2017, as well as our sustained confidence in the cycle."

Vertikal Comment

After a bumpy year in 2016 it is very encouraging to see the market leader pushing back into positive territory. All things considered this a positive set of numbers, with the only downside being the ongoing softening of rental rates.

United is fairly sophisticated when it comes to rate setting and hopefully will use the higher volumes to start tweaking its rates up a little. All in all a good start to the first quarter results season.