United Rentals Hits Q3 Revenue High, Faces Margin Pressure
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United Rentals Inc. set a quarterly revenue record in the third quarter on surging demand in its specialty rentals segment, but the company faced pressure on bottom-line results amid tighter margins, normalized equipment sales and rising operating costs.
The company on Oct. 23 reported that Q3 revenue rose 6.1% to $3.99 billion compared with $3.76 billion a year ago, as revenue from the specialty rentals segment, which serves industrial and infrastructure clients, grew 23.9% to $1.13 billion. Those segment results were boosted by the March acquisition of matting company Yak Access. Excluding the acquisition, the segment saw 14.8% year-over-year growth, highlighting gains in specialized services. General rentals grew 0.9% to $2.32 billion, with construction and industrial projects showing steady but limited growth, United said.
Net income inched up less than 1%, to $708 million from $703 million a year ago, as challenges emerged. In particular, profitability took a hit amid rising selling, general and administrative expenses and tighter gross margins on used equipment sales, which fell 12.3% to $321 million. Gross margins on used equipment contracted to 45.2% as the market normalized after several years of elevated demand and pricing, United said.
“We were pleased with our record third-quarter results, which were in line with our expectations and reflected continued growth across both our construction and industrial end-markets,” said CEO Matthew Flannery.
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For the full year, United Rentals narrowed its guidance range while maintaining the midpoint. The company now expects total revenue between $15.1 billion and $15.3 billion. The company returned nearly $500 million to shareholders in Q3 through stock repurchases and dividends, with liquidity of $2.86 billion as of Sept. 30.
Flannery noted the company’s outlook on broader project trends, citing “secular tailwinds” expected to support large infrastructure projects. “This is how we will continue to drive compelling long-term value for our shareholders,” he said.
In the final quarter of the year, the company said a key focus remains managing specialty segment growth against cost pressures in used equipment sales and SG&A expenses.
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