United Rentals Posts Record EBITDA Margin in Third Quarter

Oct. 18, 2013

United Rentals has topped 40-percent EBITDA margin for the sixth consecutive quarter, company officials told an investor conference call this week. CEO Michael Kneeland told investors that only a few years ago the company had the goal of adjusted EBITDA at a 40-percent margin, and that not only did the company top that for the sixth straight quarter, but it posted a company-record 49-percent margin, with adjusted EBITDA of $642 million.

Kneeland was bullish about the still-modest recovery of nonresidential construction spending, saying the company is already benefitting from the modest upswing with the bulk of the recovery expected to come in 2014 and 2015.

“The quarter reflects our ability to generate significant value even from a small improvement in our operating environment,” Kneeland said. “While the upswing is modest compared to what we think we’ll see next year, it has given us enough traction to grow the business. But there’s more than just the construction recovery behind our revenue improvement, and we’re executing our strategy extremely well in this environment.”

Rental rates increased 3.2 percent during the third quarter, and with rates increasing in every category and rates trending up each month sequentially compared to last year, United Rentals expects a full-year rate increase of at least 4 percent.

Kneeland said key account revenue increased by 7 percent in the third quarter and unassigned accounts, which tend to be local customers, had revenue growth of 10.5 percent. “That’s good progress because these smaller accounts were the most challenging to retain during the integration,” Kneeland said.

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.

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

For a more complete look at United Rentals’ third-quarter results, please go to: http://rermag.com/headline-news/united-rentals-jumps-83-percent-total-rental-revenue-third-quarter.