United Rentals hopeful on non-residential construction

United Rental said it expected non-residential construction to continue to improve through 2014 as it reported strong results for the third quarter of 2013.

Total revenues rose by 8.3% to US$1138 million for the three months to the end of September, with gross profits up 10% to $497 million. General rentals revenues were up by 6.9%, but the best performing sector was its specialist businesses in trench safety, power and HVAC, where sales were up 25% to $100 million.

The increased revenues reflect an 8.2% in the volume of equipment on rent, year on year, and a 3.2% increase in rental rates. United said it expected rates to rise by at least 4% over the full year.

Michael Kneeland, chief executive officer of United Rentals, said, “This was a strong quarter for us, capped by a record 49% adjusted EBITDA margin. We leveraged increasing demand for our services to put more equipment on rent at higher utilisation, 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 non-residential construction will continue to trend upward in 2014.”

The company has also announced a $500 million share repurchase programme, which Mr Kneeland said reflected “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.”

United will invest around $1.6 billion gross in its fleet this year, and $1.1 billion net of used fleet sales.