Back to top

Image: Bigstock

United Rentals (URI) Beats Q2 Earnings & Revenue Estimates

Read MoreHide Full Article

United Rentals’ (URI - Free Report) second-quarter 2018 earnings and revenues surpassed the Zacks Consensus Estimate and improved year over year. The upside can be attributed to strong gains in volume and rates along with robust demand across its construction and industrial verticals in United States as well as Canada.

Adjusted earnings of $3.85 per share beat the Zacks Consensus Estimate of $3.50 and surged 62.4% from the prior-year quarter’s tally.

Revenues

Total revenues of $1.89 billion surpassed the Zacks Consensus Estimate of $1.80 billion by 4.9%. Revenues rose 18.9% year over year.

Rental revenues were also up 19.3% from the year-ago quarter to $1.6 billion. Volume of equipment on rent increased 15.9% and rental rates rose 2.8%.

Margins

Total equipment rentals gross margin expanded 10 basis points (bps) year over year to 42.2%.

Adjusted EBITDA increased $160 million to $907 million. Adjusted EBITDA margin rallied 120 bps to 48% in the quarter.

Segment Discussion

General Rentals: Segment equipment rentals revenues increased 16.5% year over year to $1.3 billion. Segment equipment rentals’ gross profit rose 16.8% to $543 million. Also, gross margin expanded 10 bps year over year.

Trench, Power and Pump: Segmental equipment rentals revenues increased 33.5% year over year to $299 million. Equipment rentals gross profit rose 30.6% to $145 million, while gross margin declined 110 bps on a year-over-year basis.

United Rentals, Inc. Price, Consensus and EPS Surprise

 

Time Utilization & Fleet Size

Time utilization declined 20 bps to 69.2% from the year-ago quarter’s level, thanks to the adverse impact of Neff acquisitions.

The size of the rental fleet was $11.98 billion of original equipment cost (OEC) as of Jun 30, 2018 compared with $11.5 billion as of Dec 31, 2017. The age of the rental fleet was 46 months on an OEC-weighted basis as of Jun 30 compared with 47 months as of Dec 31, 2017.

Balance Sheet

United Rentals’ cash and cash equivalents totaled $278 million as of Mar 31 compared with $352 million as of Dec 31, 2017.

In the first six months of 2018, the company generated $1.6 billion of net cash from operating activities compared with $1.3 billion in the prior-year quarter.

Free cash flow was $703 million for the first six months of 2018 compared with $614 million in the year-ago period.

Share Repurchase Program

In the qurter under review, United Rentals completed its $1-billion program to repurchase shares of its common stock. The commenced initiated a new $1.25-billion share repurchase program in July 2018, which the company intends to complete by the end of 2019.

Reiterated  Guidance

Total revenues are expected in the range of $7.5-$7.7 billion, up from the prior projection of $7.3-$7.6 billion. This reflects an increase from $6.64 billion in 2017.

Adjusted EBITDA is projected between $3.675 billion and $3.775 billion, higher than the previous guidance of $3.6 billion-$3.75 billion.

Net rental capital expenditures after gross purchases are projected in the range of $1.9-$2 billion compared with $1.8-$1.95 billion expected earlier.

Net cash provided by operating activities is estimated in the range of $2.675-$2.825 billion, higher than the previous expectation of $2.625 billion-$2.825 billion.

Free cash flow is still expected in the range of $1.3-$1.4 billion, higher than $983 million in 2017.

Zacks Rank

United Rentals carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Peer Releases

Owens Corning (OC - Free Report) is slated to report quarterly results on Jul 25. The Zacks Consensus Estimate for earnings is pegged at $1.44, indicating a rise of 20% year over year.

Louisiana-Pacific (LPX - Free Report) is scheduled to release quarterly results on Aug 7. The Zacks Consensus Estimate for earnings is pegged at 97 cents, showing an increase of 67.2% year over year.

Installed Building Products (IBP - Free Report) is expected to report quarterly results on Aug 3. The Zacks Consensus Estimate for earnings is pegged at 83 cents, indicating a rise of 40.7% year over year.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Published in