Back to top

Image: Bigstock

United Rentals (URI) Q2 Earnings & Revenues Top, Down Y/Y

Read MoreHide Full Article

United Rentals, Inc.’s (URI - Free Report) shares declined 0.9% in the after-hours trading session on Jul 29, after the company reported second-quarter 2020 results. Although earnings and revenues topped the respective Zacks Consensus Estimate, the metrics declined on a year-over-year basis, thanks to the COVID-19 pandemic.

Inside the Headlines

Adjusted earnings of $3.68 per share topped the consensus estimate of $1.93 by 90.7%. However, the reported figure decreased 22.4% from the prior-year figure. Total revenues of $1.94 billion surpassed the consensus mark of $1.81 billion by 7% but declined 15.3% year over year.

Rental revenues (including revenues from owned equipment rental, re-rent and ancillary) fell 16.2% from the year-ago quarter, mainly due to the pandemic’s impact.

Quarterly fleet productivity was also down 13.6% year over year due to lower rental volumes.

Used equipment sales generated $176 million of proceeds compared with $197 million a year ago. Adjusted gross margin of 46% contracted 320 basis points (bps) due to changes in the mix of equipment sold and pricing.

United Rentals, Inc. Price, Consensus and EPS Surprise

United Rentals, Inc. Price, Consensus and EPS Surprise

United Rentals, Inc. price-consensus-eps-surprise-chart | United Rentals, Inc. Quote

Segment Discussion

General Rentals: Segment equipment rentals’ revenues fell 17.8% year over year to $1.26 billion. Rental gross margin contracted 540 bps year over year to 33.4%, owing to increased depreciation expenses, as well as the COVID-19 pandemic’s impact on revenues.

Trench, Power and Pump/Specialty: Segmental rental revenues decreased 10.6% year over year to $387 million due to an 11.7% organic sales decline. Rental gross margin contracted 80 bps on a year-over-year basis to 46.8% due to higher operating costs and increased depreciation expenses.


The company’s total equipment rentals gross margin dropped 390 bps year over year to 36.5%. Adjusted EBITDA also dropped 16.2% from the prior-year quarter to $899 million. Adjusted EBITDA margin contracted 50 bps to 46.4%.

Balance Sheet

United Rentals had cash and cash equivalents of $127 million as of Jun 30, 2020 compared with $52 million at 2019-end. Total liquidity was $3.82 billion at quarter-end.

Net leverage ratio was 2.5 as of Jun 30, 2020 compared with 2.6 at 2019-end. Notably, it has reduced total net debt by $1.1 billion year to date. The company has no long-term debt maturities until 2025. It has repurchased $257 million of shares under the current $500-million repurchase program so far in 2020.

2020 Guidance Reissued

Total revenues are expected in the range of $8.05-$8.45 billion, indicating a decrease from $9.35 billion in 2019.

Adjusted EBITDA is projected between $3.6 billion and $3.8 billion, suggesting a decline from $4.36 billion in 2019.

Net rental capital expenditures after gross purchases are projected in the range of $50-$150 million, implying a decline from $1.3 billion in 2019.

Net cash provided by operating activities is expected in the range of $2.25-$2.55 billion, pointing to a decline from $3.02 billion reported in 2019.

Free cash flow (excluding the impact of merger and restructuring-related payments) is expected in the range of $2-$2.2 billion, which suggests an increase from $1.59 billion reported in 2019.

Matthew Flannery, chief executive officer of United Rentals, said, “We saw a steady recovery in volume beginning in mid-April, which gave us goodmomentum into the start of our busy season. While visibility is still limited, near-term indicators suggestthat the second half of 2020 may track to seasonal patterns in the majority of our markets.”

Zacks Rank & Other Key Picks

United Rentals currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other top-ranked stocks in the Zacks Building Products – Miscellaneous industry include Masco Corporation (MAS - Free Report) , Patrick Industries Inc. (PATK - Free Report) and TopBuild Corp. (BLD - Free Report) , each sporting a Zacks Rank #1.

Masco’s three-five year expected EPS growth rate is projected at 10.2%.

Patrick’s earnings topped the consensus mark in three of the last four quarters, with the average surprise being 9.8%.

TopBuild’s earnings topped the consensus mark in all the last four quarters, with the average surprise being 8.7%.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Published in