Having posted an 88-percent rental revenue increase in specialty rentals in the third quarter, United Rentals CEO Michael Kneeland told an investors’ conference call this week that the company intends to continue to grow its four specialty segments of trench safety, power and HVAC, pumps and tool solutions. Kneeland said United posted a 98-percent jump in gross profit in the specialty segments, thus improving the company’s margins as it expanded these operations through acquisitions, cold starts and organic growth.
Kneeland said with the integration of the National Pump acquisition now accomplished, United has begun cross-selling these assets to a broader base. “These are high-touch, high-value services that build loyalty and engage our customers in using other types of fleet,” he said.
Kneeland said it was not just acquisitions that grew the specialty segments, with organic growth accounting for 27 percent. He said that in addition to the eight specialty cold starts the company announced in August, it opened three more in September and plans an additional eight to 10 branches in the fourth quarter, all in the specialty area.
The United Rentals CEO was also bullish on the growth in national accounts business. “Our national account revenue kept pace with the company performance in the quarter at 16-percent growth,” he said. “It’s our strongest growth rate for national accounts this year. Now that large projects are picking up, these relationships are becoming increasingly important to our base. And right now they account for about 40 percent of our rental revenue. And while national accounts have the small constraint on rates because of negotiated pricing, they support our strategy for the long haul, which is to drive returns over time and to mitigate volatility throughout the cycle.”
Kneeland noted that every one of United Rentals’ regions delivered year-over-year rental revenue growth in the third quarter, with half of its regions showing double-digit growth.
“One of the standouts was our industrial region, which was up 22 percent, due in large part to manufacturing and certain energy verticals that we’re seeing strong demand from plant expansions and modernizations, particularly in the chemical sector,” he said. “And while there is a healthy variety of projects across our footprint, our regions are reporting certain types of projects more frequently, they include renewable [segments] such as wind and solar farms, hospitals, sports arenas, pharmaceutical and chemical plants and urban office construction.”
Kneeland also mentioned the current volatility in the stock market, saying that it’s primarily related to global issues that don’t relate significantly to the rental industry in North America. “There will always be bumps in the road as we move to recovery,” he said. “But there are far more ups than downs and secular penetration is adding an extra layer of demand. And we’ve shown that we can navigate the business successfully through much greater macro uncertainty than this.”
For more complete coverage of United Rentals’ third quarter performance, visit: http://rermag.com/headline-news/united-rentals-reports-robust-third-quarter