The Southeast had the most robust performance in United Rentals’ general rental business in the fourth quarter, CEO Michael Kneeland told an investor conference call this week. Kneeland said the company drove rental revenue growth in all but one of United’s regions in the quarter, with about half of its regions showing double-digit growth.
“[The Southeast] was up nearly 21 percent year over year,” Kneeland said. “Georgia was particularly strong. We serviced large capital improvement projects and plant shutdowns as well as retail. A number of these projects are ongoing in 2014 and we see good demand from oil and gas, industrial manufacturing and the food and beverage sector. Plant maintenance and retrofits continue to be a strong trend.”
Kneeland added that United Rentals also recently ran bids for corporate offices and data centers. “It’s an encouraging mix and the real traction in commercial construction is still ahead of us,” he noted.
Kneeland was particularly bullish about the company’s specialty business. “In the fourth quarter, trench safety revenues were up more than 19 percent year over year,” he said. “The Power/HVAC revenues were up more than 15 percent and that growth would have been even higher without the comparison of Hurricane Sandy in 2012. Our third specialty business is called Tools and Industrial Solutions and we see an enhanced opportunity to cross-sell these services based on an increasing number of tool hubs in our footprint.”
Adding that United opened 18 specialty locations in 2013, 12 of them in the fourth quarter, he said those branches are off to a good start in 2014 and the company plans to continue to grow this portion of the business, organically and through select acquisitions if the right opportunities arise.
“This year you can expect us to open another 13 cold starts dedicated to Power and HVAC, trench safety and tools,” Kneeland said. “We’ve increased our capital allocation for specialty by 44 percent compared to last year. There are sound, strategic reasons for our focus on specialty rentals. First, they’re an attractive high-margin business that serves a range of growth markets. Second, we expect that a greater diversification of revenue streams in end markets will help us achieve our goal for return on invested capital and lessen the impact of cycles. And third, we can cross-sell these services to our general rental customers using our existing sales structure.”
For United Rentals’ fourth quarter and full-year 2013 results, click on: http://rermag.com/headline-news/united-rentals-q413-revenue-jumps-94-percent-full-year-revenue-climbs-62-percent.