Trench Safety and Power & HVAC Pace United Rentals in Q3
United Rentals posted total revenue of $1.55 billion in the third quarter, compared with $1.544 for last year’s third quarter, while rental revenue increased 0.8 percent from $1.315 billion to $1.326 billion. On a GAAP basis, the company reported third quarter net income of $215 million or $2.25 per diluted share, compared with $192 million or $1.84 per diluted share for the year-ago period.
United Rentals’ Trench Safety and Power & HVAC businesses’ rental revenue increased by a combined 17.9 percent year over year, primarily on a same-store basis.
Return on invested capital was 8.9 percent for the 12 months ended Sept. 30, a increase of 0.5 percentage points from the previous 12-month span. Time utilization decreased 150 basis points year over year to 70 percent. Excluding the branches with the most exposure to upstream oil and gas, time utilization decreased 60 basis points.
“The third quarter unfolded much as we had anticipated,” said Michael Kneeland CEO of United Rentals. “We delivered a robust performance in our Trench Safety and Power & HVAC businesses, aided by cross-selling. As expected, we saw rate and time pressure on our general rental business from the continued impact of upstream oil and gas activity and a weak Canadian dollar. We ran our operations with great cost discipline in this environment, generating solid financial results and strong free cash flow. Our EBITDA margin, at over 50 percent, was the highest of any quarter in our company’s history.”
United Rentals, meanwhile, has reaffirmed its full-year outlook for 2015, Kneeland said. “We’re now in the midst of planning for 2016, which we believe will be another solid year of industry growth. This is supported by customer optimism and industry forecasts for 2016 and several years beyond. All of these factors, as well as the timing of current headwinds, will shape how we manage capex, rates and utilization in the coming year.”
For the first nine months of 2015, total revenue was $4.294 billion, compared with $4.121 billion for the first nine months of 2014, a 4.2-percent hike. Rental revenue reached $3.671 billion, compared to $3.499 billion a year ago, a 4.9-percent leap.
However, the company’s Trench Safety and Power & HVAC businesses’ rental revenue jumped a combined 23.7 percent year over year, primarily on a same-store basis.
Adjusted EBITDA was $2.088 billion, and adjusted EBITDA margin 48.6 percent, an increase of $145 million and 150 basis points compared to the same period last year.
United Rentals reaffirmed its full-year outlook as total revenue in the $5.8 billion to $5.9 billion range, adjusted EBITDA of $2.80 billion to $2.85 billion, a 0.5-percent rental rate increase, approximately, and time utilization of about 67.5 percent.
On Sept. 30, the size of the rental fleet was $8.95 billion of original equipment cost, and the age of the rental fleet was 41.9 months.
United Rentals, based in Stamford, Conn., now has 900 rental locations in 49 states and 10 Canadian provinces, and is No. 1 on the RER 100.
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.