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Rental rates rose 21 percent for United Rentals in the third quarter Photo by United Rentals
Rental rates rose 2.1 percent for United Rentals in the third quarter.

United Rentals’ Rental Revenue Jumps 21.2 Percent in Third Quarter

United Rentals posted $2.116 billion in revenue in the third quarter compared with $1.766 billion for the third quarter last year, a 19.8-percent boost. United scored $1.861 billion in rental revenue compared to $1.536 billion in the third quarter of 2017, a 21.2-percent climb. On a GAAP basis, United reported third quarter net income of $333 million, or $4.01 per diluted share, compared with $199 million, or $2.33 per diluted share for the same period a year ago, a jump of more than double.

The third quarter 2018 includes a net income benefit associated with the Tax Cuts and Jobs Act enacted in December 2017. The Tax Act reduced United Rentals’ corporate statutory tax rate reduced from 35 percent to 21 percent, contributing an estimated $0.73 to earnings per diluted share for Q318.

Owned equipment rental revenue increased 20.3 percent, reflecting increases of 17.8 percent in the volume of equipment on rent, and a 2.1-percent hike in rental rates in the quarter. Pro forma rental revenue increased 10.9 percent year over year, with a growth of 7.4 percent on the volume of equipment on rent, and also a 2.1-percent rental rate increase.

Time utilization decreased 100 basis points year over year to 70.9 percent, primarily reflecting the impact of the Neff and BakerCorp acquisitions. On a pro forma basis, time utilization decreased only 10 basis points year over year to 70.7 percent.

The company’s specialty segment, Trench, Power and Fluid Solutions, increased its rental revenue by 39.5 percent year over year, including a 12.7-percent increase on a same-store basis. Rental gross margin decreased by 250 basis points to 52.3 percent. The decrease in rental gross margin was primarily the impact of the BakerCorp acquisition, and an increase in lower-margin fuel revenues mostly within the Power and HVAC area.

United Rentals completed the acquisitions of NES Rentals in April 2017, Neff Corp. in October 2017 and BakerCorp in July 2018. The acquisitions are included in United’s results subsequent to the acquisition dates, and are included in pro forma results for all periods.

Late in the quarter on Sept. 10, United Rentals entered into a definitive agreement to acquire BlueLine Rental for about $2.1 billion in cash. The deal is expected to close in the fourth quarter.

“We are pleased with the strength of our third quarter results, including the acceleration in volume growth and improved margins,” said Michael Kneeland, CEO of United Rentals. “Our rates were again positive for each month in a competitive market, while time utilization remained robust. We continue to make good progress integrating Baker into our specialty operations; and look forward to beginning that process with BlueLine this quarter.

“Our updated guidance reflects the combination of strong market demand and the contributions from our completed acquisitions, which, together with internal and external indicators, point to a solid fourth quarter and healthy momentum into 2019. Our strategy remains highly focused on driving profitable growth across our core businesses, integrating our recent acquisitions and leveraging our cash flows to maximize shareholder value.”

For the first nine months of 2018, rental revenue was $4.951 billion, compared to $4.069 billion for the same period in 2017, a 21.7-percent leap. Total revenue for the nine-months was $5.741 billion, compared to $4.719 billion a year ago, a 21.6-percent increase. Pro forma rental revenue increased 11 percent year over year.

United Rentals raised its revenue outlook from a range of $7.64 billion to $7.84 billion to a range of $7.77 billion to $7.87 billion.

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


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