Neff Rental Corp lowers outlook

12 November 2015

Despite reporting year-on-year growth in its nine-month results, US-based Neff Rental Corp has downgraded its full-year forecast.

Revenues for the nine months to the end of September were up 3.7% compared to the same period in 2014 to US$278 million (€259 million), of which rental revenues increased 3.8% to US$250 million (€233 million).

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 2.6% compared to the same nine months last year to reach US$137 million (€128 million). Neff said rental rate growth was 1.8% for the current year, while time utilisation stood at 66.7% compared to 70.5% for the nine-month period in 2014.

CEO Graham Hood said, “We achieved record rental revenues in the third quarter of 2015 which increased by 3.2% year over year, despite the ongoing headwinds from Oil and Gas activities.

“[Third quarter] Adjusted EBITDA increased by 1.3% year over year and we delivered excellent Adjusted EBITDA margin of 51.1% for the quarter. Outside of our branches directly affected by oil and gas, our rental revenues were up 10.5% and our EBITDA increased by 11.1%, reflecting the ongoing strength in the construction markets we serve.”

Nevertheless, the company downgraded its outlook for the full-year. Total revenues are now forecast to be in the range of US$375 million (€350 million) to US$385 million (€359 million), compared to the previous guidance of US$385 million (€359 million) to US$395 million (€369 million).

And the new forecast for adjusted EBITDA is in the range of US$185 million (€173 million) to US$190 million (€177 million), compared to the previous guidance range of US$190 million (€177 million) to US$195 million (€182 million).

Year-on-year rental rate increases were expected to be approximately 1% to 2%, compared to the previous guidance of 3%. The company’s time utilisation forecast is unchanged from its prior guidance of 66%, as is the net capital expenditure forecast of a range of US$130 million (€121 million) to US$135 million (€126 million).