GREENWICH, Conn. — United Rentals posted third quarter total revenue of $1.219 billion and rental revenue of $1.051 billion, with net income of $73 million. Rental revenue increased 8.9 percent for the quarter on a pro-forma basis, with an increase of 7.9 percent in volume of equipment on rent and a 7.5-percent year-over-year rental rate improvement.
Time utilization decreased 200 basis points to 69.8 percent from the same period a year ago. Adjusted EBITDA was $570 million and adjusted EBITDA margin was 46.8 percent for the quarter, an increase of $124 million and 700 basis points from the same period a year ago. Realized cost synergies of the United Rentals-RSC merger were $45 million in the third quarter and $62 million year-to-date, towards a fully developed goal of at least $230 million on a run-rate basis. The company raised its expected cost synergies to a range of $230 million to $250 million, compared to its previous estimate of at least $230 million.
“We delivered a strong performance in the quarter, propelled by the effective execution of our strategy and widespread demand for our rental equipment,” said United Rentals CEO Michael Kneeland. “All but one of our regions reported year-over-year rate increases, and we now expect a rate gain of approximately 7 percent for the full year. Third quarter time utilization, while below last year’s record level, contributed to a very healthy year-to-date performance of 67 percent. Our exceptionally strong flow-through and adjusted EBITDA margin make it clear that we’re effectively managing rates, utilization and costs.”
Kneeland offered a bullish analysis of the company’s integration with RSC. “The RSC integration is going very well, and we’re raising our total cost synergies target to a range of $230 to $250 million,” he said. “We’ve realigned our sales territories and consolidated 187 branches to date, all while continuing to generate double-digit revenue growth from our target accounts. These larger customers are at the heart of our strategy for profitable growth. They believe, as do we, that while there is some macro uncertainty, there are also good reasons to be optimistic about the coming year.”
Meanwhile, United Rentals updated its full-year pro-forma outlook. The company is expecting total revenue of about $4.6 billion, compared with 2011 total revenue – of United and RSC as separate companies – of $4.13 billion, an 11.4-percent revenue jump. Adjusted EBITDA in the range of $1.95 billion to $2 billion, compared with 2011 adjusted EBITDA of $1.49 billion. Rental rates are expected to improve 7 percent year over year, updated from United’s previous estimate of 6.5 percent.
Time utilization is expected at 67.5 percent, compared to the previous estimate of 68 percent.
United predicted net capital expenditures of between $1.075 billion and $1.125 for the full year after gross purchases of between $1.5 billion and $1.6 billion.
Since the close of the RSC acquisition April 30, the company has consolidated 187 branches while integrating RSC locations onto a common information technology platform. United has also implemented price optimization software in all legacy RSC branches and brought together the majority of national and strategic accounts, while realigning sales territories. The company also increased its 2012 realized cost synergy target to $100 million and re-affirmed its revenue synergy target of $70 million on a fully developed basis.
For the first nine months of 2012 United Rentals posted total revenue of $2.868 billion, and rental revenue of $2.419 billion. On a pro-forma basis – assuming the combination of United Rentals results and RSC results for the nine months ended Sept. 30 -- total revenue was $3.415 billion and rental revenue $2.884, compared with $2.967 billion and $2.509 billion for the first nine months of 2011, respective increases of 15.1 percent and 14.9 percent. Volume of equipment on rent jumped 13 person and rental rates hiked 7.3 percent year over year.
Greenwich, Conn.-based United Rentals now has 848 rental locations in 48 states and 10 Canadian provinces, and is No. 1 on the RER 100.