United Rentals is tracking better than the $40 million of cost synergies the company projected for its acquisition of NES Rentals, CEO Michael Kneeland told an investor conference call this week. Kneeland said with revenue synergies, the company is confident it will achieve the $35 million target by year three. Regarding its recent acquisition of Cummins generator assets, Kneeland said that with the acquisition less than two months old, it is already paying dividend, with the assets and the team it brought onboard already being fully integrated into United’s Power & HVAC business.

On the Neff acquisition, Kneeland said the acquired branches are all running on United’s operating system.

“That’s going to jumpstart our collaboration on sales and fleet,” Kneeland noted. “The rest of the integration is right on schedule. We’re merging back office sales, the operating teams, and adding telematics to the fleet. And we’re analyzing the combined operations to identify efficiencies, as well as cross-sell opportunities with our combined customer base.”

Kneeland said the acquisition of Neff gives United a larger platform for growth going into 2018 just as NES did in the spring. “Both acquisitions are timed to capitalize on the continued strength of the cycle,” Kneeland said. “In fact, the operating environment in the third quarter was among the best I’ve seen in a while. Our core general rental business, which excludes specialty, jumped 4.7 percent year over year pro forma.”

Kneeland said the company’s business in Canada is up 9 percent in local currency. In the U.S., the coasts remained strong and the Gulf and Southeast are starting to rebuild after the hurricanes.   

“And our regions are broadly positive in their projections,” he said. “In addition, there’s a lot of evidence pointing to sustained project activity, particularly in commercial construction. Our customer survey indicated that optimism has increased sequentially in the third quarter.”

Kneeland added that in the construction sector, United Rentals’ revenues from both non-residential and infrastructure increased by double digits year over year and said that would have been likely even without the NES contribution.

Specialty operations continue to shine for United. “Our Trench, Power & Pump segment delivered a major increase in rental revenue in the quarter of 33 percent, primarily through organic growth,” Kneeland said. “Trench was up 16 percent, Power was up 44 percent and Pump was up 46 percent. I’m most impressed by what the teams did with that margin. Rental gross margin for that segment as a whole increased 280 basis points to an outstanding 54.8 percent. And we’re on track to meet our target for 16 specialty cold starts by year end, and in 2018 you’ll see us continue to grow that segment as a cornerstone of our strategic plan."

Kneeland noted that the recent round of major hurricanes hit its employees and customers, with many losing homes and businesses. “Our people are to be commended for how quickly they responded across our network,” he noted.

He said the company estimated that the storm-related business accounted for about $6 million of incremental revenue in September.”

Kneeland said United Rentals staff donated significantly to the company’s United Compassion Fund to help other employees, including Neff Rental employees even before the acquisition of Neff was finalized.