United Rentals Jumps 8.3 Percent in Total, Rental Revenue in Third Quarter

United Rentals posted total revenue of $1.31 billion for the third quarter, compared with $1.21 billion for the same period, an 8.3-percent increase, while rental revenue also jumped 8.3 percent, improving from $1.051 billion last year to $1.138 billion this year.

On a GAAP basis, the company reported third quarter net income of $143 million, or $1.35 per diluted share, nearly doubling last year’s $73 million, or 70 cents per diluted share.

Adjusted EBITDA was $642 million and adjusted EBITDA margin was a company record 49 percent for the quarter.

United Rentals’ board of directors also approved a share repurchase program authorizing up to $500 million in share repurchases. The company’s current intention is to complete the repurchases within 18 months.

The company increased its volume of equipment on rent by 8.2 percent and improved rental rates by 3.2 percent, it said. Time utilization increased 100 basis points year over year to 70.8 percent, and has reaffirmed its outlook for full year time utilization of approximately 68 percent.

United generated $102 million of proceeds from used equipment sales at an adjusted gross margin of 48 percent, compared with $101 million of proceeds at an adjusted gross margin of 40.3 percent for the same period last year.

The company realized cost synergies of $64 million in the quarter from the integration of RSC and reaffirmed its goal of $230 million to $250 million of annual cost synergies in 2014.

“This was a strong quarter for us, capped by a record 49-percent adjusted EBITDA margin,” said United Rentals CEO Michael Kneeland. “We leveraged increasing demand for our services to put more equipment on rent at higher utilization, and with sequential monthly rate improvements throughout the quarter. This is the environment we anticipated when we set our full year financial targets, and we expect that nonresidential construction will continue to trend upward in 2014. As we plan for the coming year, our operations are in a strong position to drive margin expansion through further rate improvement and business process efficiencies.”

Addressing the share re-purchase program, Kneeland added that it “reflects our confidence in achieving our multi-year free cash flow generation goals, while pursuing a balanced and disciplined capital allocation strategy that includes organic growth and acquisitions.”

For the nine-month period, on a pro-forma basis, which assumes the combination of United Rentals results and RSC results for the entire period, total revenue was $3.617 billion compared with $3.415 billion, a 5.9-percent hike. Rental revenue, meanwhile, increased 6.2 percent for the nine-month period, going from $2.884 billion to $3.063 billion.

The size of the rental fleet was $7.96 billion of original equipment cost on Sept. 30, 2013, compared with $7.23 billion Dec. 31, 2012. The age of the rental fleet was 44 months on Sept. 30, compared with 47.2 months at the end of 2012.

Based in Stamford, Conn., United Rentals is No. 1 on the RER 100.


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