19.07.2018

Strong first half for United

US based United Rentals has reported a strong second quarter and first half with profits rising more than 50 percent.

Starting with the results for the first six months to the end of June, revenues increased by 22.5 percent to $3.63 billion, thanks largely to the acquisitions of NEFF in April 2017 and NES in October last year. Pre-tax profit was 51 percent higher at $591 million. The company says that utilisation slipped 67.2 percent due to the two big acquisitions, while volume of equipment on rent increased 20.6 percent, and rates were 2.5 percent higher. Revenue increases were posted for aspects of the business- from rentals to new and used sales.

Moving onto the second quarter revenues were 18.5 percent higher at $1.89 billion, while pre-tax profits jumped 56.5 percent to 359 million. Utilisation was 69.2 percent, with volume of equipment on rent up seven percent, with rates improving 2.8 percent.

The company has slightly increased its gross capital expenditure plans to $1.9 to $2 billion with plans to sell around $750 million of used equipment from the fleet.

Chief executive Michael Kneeland said: "We were very pleased with the momentum of our business in the second quarter, as strong gains in volume and rates helped drive better than 11 percent growth in pro forma rental revenue. Importantly, demand remained robust across our construction and industrial verticals in both the U.S. and Canada. The Neff integration is largely complete, and we look forward to getting the process started with Baker this quarter.

“Everything we see internally and externally points to a durable cycle and continued industry discipline in managing fleet growth. Given this backdrop, we’ve raised our 2018 guidance for total revenue, adjusted EBITDA and capex. We remain focused on executing a balanced strategy of growth and returns to maximize long term value."

Vertikal Comment

This is a first class, positive set of numbers from United with growth coming from both the acquisitions and organic growth. The company will be more than happy with the way that the higher revenues have fallen through to the bottom line, and the company is on plan to be the first rental company to achieve annual revenues of more than $7 billion.

The company and its shareholders have also benefited from the lower rates of corporation tax that have now come into force. It is interesting to note that in spite of more than 50 percent increase in pre-tax profits the company will actually pay less tax than in first half of last year.

This is the first set of first half numbers – hopefully it is an indication of further positive new to come from other companies in our sector.