GREENWICH, Conn. - United Rentals last month announced that its year-over-year same-store revenue increased at a double-digit growth rate for the 12th consecutive quarter and that rental rates improved for the third consecutive quarter.
United officials said same-store revenue was up 15.2 percent in the third quarter ended Sept. 30, with same-store rental revenue rising 16.3 percent. Overall, revenue jumped 28.5 percent to $859 million for the quarter, United said, with $610 million, or 71 percent, in rental revenue. Rental revenue rose 30.2 percent from the same period last year. United's operating margin improved to 22.6 percent, a 140-basis-point increase year over year, and net income grew 34.1 percent to $75.4 million.
United had $2.2 billion in total revenue for the nine months ended Sept. 30, about $1.5 billion in rentals, numbers comparable to the full-year totals in 1999.
United's equipment utilization rate was 68.7 percent, a 370-basis-point gain that CEO Brad Jacobs attributed to the company's "ongoing commitment to share equipment between branches." Company officials credited the rental rate improvement - 2.3 percent year over year and 2.6 percent compared with the second quarter - to a companywide concentration on raising rates. Jacobs said the average length of rental transactions - 4.6 days - enabled United to keep rates higher than companies with longer average contracts.
The company also pointed to growth in national account revenue, with $73 million in third-quarter revenue bringing its year-to-date total to $160 million, close to its goal of $175 million for the year. "We now have 1,100 national account customers, including 583 added since the beginning of the year," Jacobs said.
United continued its concentration on growth in the traffic safety rental sector by acquiring six more traffic specialty companies in the third quarter, United Rentals officials told RER.
United's third quarter traffic safety acquisitions were F&R Safety Products, Richland, N.J.; Charles Joseph Traffic Services, Rockford, Ill.; Warning Lites of Texas, Corpus Christi, Texas; Welch Sign & Safety, Pilot Mountain, N.C.; Russ Enterprises, San Jose, Calif.; and Flasher-Handling, Depew, N.Y. United has now acquired 39 traffic safety companies, making it the largest player in that growing segment.
In the third quarter, United also purchased two general rental companies - Joy Wagner Rental Equipment, Marietta, Ohio, and West-Co Rentals and Sales, Grand Junction, Colo. - and as well as high-reach specialist Horizon High Reach, Fresno, Calif. The nine third-quarter acquisitions total $110 million in revenue, with Horizon accounting for $90 million.
Since the beginning of this year, United Rentals has completed 49 acquisitions with combined annual revenue of about $360 million. Chief acquisitions officer John Milne said transactions will be relatively minimal in the fourth quarter and that the company now has a letter-of-intent backlog of about $20 million.
Although chief operations officer Wayland Hicks said impact from the Transportation Equity Act for the 21st Century (TEA-21) federal highway legislation has fallen below expectations because some states have yet to follow through in qualifying for federal matching funds or in providing their own funds, the sector has, nonetheless, been strong for United. Hicks said margins have been good in the traffic safety business and contributions from the sector have boosted United's utilization rates.
United remains the industry's largest rental company with more than 700 branches in 47 states, seven Canadian provinces and Mexico.
According to a recent survey, 85 percent of U.S. contractors report that they expect construction activity to increase or stay the same in 2001.
- Source: CIT Equipment Financing
MIAMI - Neff Rental reported net income of $1.1 million, or 5 cents a share, for the third quarter ended Sept. 30. The company had net income of $300,000, or 2 cents a share, for the third quarter in 1999.
On a same-store basis, third-quarter rental revenue jumped 10.4 percent from last year.
Third-quarter revenue overall decreased 29.7 percent to $73 million from $103.8 million a year ago, although that's misleading because Neff sold its equity in subsidiaries S.A. Argentina and Neff Machinery during the fourth quarter of 1999.
On a pro forma basis, assuming the sales took place Jan. 1, 1999, revenue increased 15.3 percent. Pro forma revenue for the third quarter of 1999 was $63.3 million.
"It was in line with our expectations, but we're still looking to keep control of our expenses," chief financial officer Mark Irion said. "We're encouraged with the growth, but a lot of that was done during the peak (rental) season. We still have a lot of work to be done in the off-season."
For the nine months ended Sept. 30, the company reported a net loss of $5.2 million, or 25 cents a share, compared with net income of $5.3 million, or 24 cents a share, for the same period a year ago. Revenue decreased 34.9 percent to $194.2 million from $298.5 million.
Neff, which has 84 locations in 17 states, is No. 7 on the RER 100.
