Improvements were widespread for United Rentals in the third quarter, with all nine of its regions showing year-over-year third-quarter rental revenue growth, CEO Michael Kneeland told a conference call of industry analysts last week. Kneeland said the strongest improvements came from Northeast Canada, and the weakest coming from the eastern and southwestern United States, although still those areas posted improved revenues.
“In the third quarter, our rental revenues were up year-over-year in 33 of 48 states and all Canadian provinces,” Kneeland said.
The company is also finding its customers are more optimistic. Last month, United Rentals surveyed more than 1,600 of its customers with a wide range of rental spend, excluding the Gulf states, which the company is surveying currently. “Forty-three percent of those surveyed expect business to increase in 2011,” said Kneeland. “Thirty-eight percent indicated a status quo or uncertain and only 19 percent think things will continue to go downhill. The greatest uncertainty appears to be in the West, particularly the Southwest. The greatest optimism comes from customers in our Northeast Canada and Midwest regions. So we’re staying very close to our customers and listening to their input.”
Kneeland noted that growth in the industrial sector and national accounts business is helping United to offset continued non-residential construction softness.
“Industrial business contributed an additional $5 million of revenue in the third quarter versus last year,” he added. “Industrial rentals are just one example of how we’re training our sales people to look beyond the traditional boundaries of the construction industry and pursue any market that fits our strategy for profitable growth.”
Kneeland said national accounts accounted for about 29 percent of rental revenues in the third quarter, an increase year over year and sequentially. “And it’s worth noting that the increasing amount of our industrial business is coming from our national accounts,” says Kneeland. “So as we grow our present in the industrial sector, we’ve been guided by our customer segmentation strategy.”
Executive vice president and chief financial officer William Plummer told the call that United Rentals’ rental capex spend in 2011 will be “significantly” more than in 2010. Plummer said the company has yet to determine that number, but “based on the good momentum that we’ve seen with key relationships from 2010, we’re going to need to spend to support those relationships as well as to continue to position the fleet for where we wanted to be over the long haul.”
United Rentals posted $605 million in total revenue for the third quarter, a 2.2-percent revenue increase compared with $592 million for the same period a year ago. Rental revenue increased 6.1 percent year over year to $507 million, compared with $478 million for the same period a year ago. Operating income improved 28 percent on a year-over-year basis from $67 million in the year-ago quarter to $93 million this year.
Based in Greenwich, Conn., United Rentals is No. 1 on the RER 100.