United Rentals closing 185 branches as RSC integration proceeds
By Murray Pollok18 July 2012
United Rentals has closed 61 branches and is in the process of closing another 124 as it integrates with RSC Equipment Rentals.
The two companies had combined branch numbers of around 900 - many located in the same cities - and United's CEO Michael Kneeland had earlier said that he would not be surprised if more than 10% of the network was closed.
United said the integration of RSC was on track, with RSC's operations integrated into United's rental software system and sales forces for national and strategic accounts now consolidated. United said it was ahead of schedule on making costs savings, with US$17 million of costs synergies realised in the quarter.
United is targeting $230 million annual costs savings when the integration is complete.
The integration update was given as United announced its results for the second quarter of the year - its first including RSC. Revenues for the three months were $993 million and the company made an operating loss of $52 million, with losses resulting from $80 million of costs related to the integration.
Michael Kneeland, chief executive officer of United Rentals, said the integration was "very much on track", and added that the company's "strong" second quarter results were driven by several factors; "Our end markets are more robust than a year ago, and we see a growing customer appreciation for the economic value of renting equipment. In addition, we capitalized on our enhanced market position following the acquisition of RSC, particularly in the industrial sector."
Mr Kneeland said the macroeconomic environment remained difficult to predict; "Nevertheless, we like what we're hearing from our customers. The higher rates and volume we achieved in the second quarter reflect continued demand for our equipment. Our customers remain confident in their outlook, and we feel comfortable with our financial targets for 2012."
The second quarter results also show that United booked a $10 million gain on its sale of Wynne Systems, its former rental software subsidiary.