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United Rentals (URI) Beats Q1 Earnings & Revenue Estimates
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United Rentals’ (URI - Free Report) first-quarter 2018 earnings and revenues surpassed the Zacks Consensus Estimate and increased from the prior-year quarter, owing to changes in tax laws and higher rental revenues.
Adjusted earnings of $2.87 per share beat the Zacks Consensus Estimate of $2.38 and surged 76% from the prior-year quarter.
Revenues
Total revenues of $1.73 billion surpassed the Zacks Consensus Estimate of $1.66 billion by 4.2%. Revenues rose 27.9% year over year.
Rental revenues were also up 25.1% from the year-ago quarter to $1.46 billion. Volume of equipment on rent increased 26.1%, while rental rates inched up 1.9%.
Margins
Total equipment rentals gross margin contracted 70 basis points (bps) year over year to 37.4%.
Adjusted EBITDA improved 32% year over year to $780 million. Adjusted EBITDA margin increased 140 bps to 45% in the quarter.
Segment Discussion
General Rentals: Segment rental revenues increased 22.9% year over year to $1.2 billion. Segment equipment rentals’ gross profit rose 18.3% to $426 million. However, gross margin declined 130 bps year over year.
Trench, Power and Pump: Segmental rental revenues increased 36.5% year over year to $258 million, primarily on a same-store basis. Equipment rentals gross profit rose 41.7% to $119 million, while gross margin improved 170 bps on a year-over-year basis.
Time Utilization & Fleet Size
Time utilization declined 80 bps to 65.2% from the year-ago quarter’s level, thanks to the impact of the NES and Neff acquisitions.
The size of the rental fleet was $11.4 billion of original equipment cost (OEC) as of Mar 31, compared with $11.5 billion as of Dec 31, 2017. The age of the rental fleet was 47.5 months on an OEC-weighted basis as of Mar 31, 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 quarter under review, the company generated $642 million of net cash from operating activities compared with $622 million in the prior-year quarter.
Free cash flow was $516 million for the first three months of 2018, compared with $490 million in the year-ago period.
Share Repurchase Program
United Rentals authorized a new $1.25-billion share repurchase program which will begin when the current program is complete. As of March 31, the company had completed $832 million of repurchases under the current program, which it intends to complete by mid-2018.
Reiterated 2018 Guidance
Total revenues are expected in the range of $7.3-$7.6 billion, reflecting an increase from $6.64 billion reported in 2017.
Adjusted EBITDA is projected between $3.60 billion and $3.75 billion, higher than the prior-year adjusted EBITDA of $3.16 billion.
Net rental capital expenditures after gross purchases are projected in the range of $1.2-$1.35 billion.
Net cash provided by operating activities is expected in the range of $2.625-$2.825 billion, higher than $2.230 billion reported in 2017.
Free cash flow is expected in the range of $1.3-$1.4 billion, higher than $983 million reported in 2017.
United Rentals, Inc. Price, Consensus and EPS Surprise
Owens Corning (OC - Free Report) is slated to report quarterly results on Apr 25. The Zacks Consensus Estimate for earnings is pegged at 96 cents, indicating a rise of 12.9% year over year.
Louisiana-Pacific (LPX - Free Report) is scheduled to release quarterly results on May 7. The Zacks Consensus Estimate for earnings is pegged at 67 cents, showing an increase of 103% year over year.
Installed Building Products (IBP - Free Report) is expected to report quarterly results on May 5. The Zacks Consensus Estimate for earnings is pegged at 46 cents, indicating a rise of 31.4% year over year.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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United Rentals (URI) Beats Q1 Earnings & Revenue Estimates
United Rentals’ (URI - Free Report) first-quarter 2018 earnings and revenues surpassed the Zacks Consensus Estimate and increased from the prior-year quarter, owing to changes in tax laws and higher rental revenues.
Adjusted earnings of $2.87 per share beat the Zacks Consensus Estimate of $2.38 and surged 76% from the prior-year quarter.
Revenues
Total revenues of $1.73 billion surpassed the Zacks Consensus Estimate of $1.66 billion by 4.2%. Revenues rose 27.9% year over year.
Rental revenues were also up 25.1% from the year-ago quarter to $1.46 billion. Volume of equipment on rent increased 26.1%, while rental rates inched up 1.9%.
Margins
Total equipment rentals gross margin contracted 70 basis points (bps) year over year to 37.4%.
Adjusted EBITDA improved 32% year over year to $780 million. Adjusted EBITDA margin increased 140 bps to 45% in the quarter.
Segment Discussion
General Rentals: Segment rental revenues increased 22.9% year over year to $1.2 billion. Segment equipment rentals’ gross profit rose 18.3% to $426 million. However, gross margin declined 130 bps year over year.
Trench, Power and Pump: Segmental rental revenues increased 36.5% year over year to $258 million, primarily on a same-store basis. Equipment rentals gross profit rose 41.7% to $119 million, while gross margin improved 170 bps on a year-over-year basis.
Time Utilization & Fleet Size
Time utilization declined 80 bps to 65.2% from the year-ago quarter’s level, thanks to the impact of the NES and Neff acquisitions.
The size of the rental fleet was $11.4 billion of original equipment cost (OEC) as of Mar 31, compared with $11.5 billion as of Dec 31, 2017. The age of the rental fleet was 47.5 months on an OEC-weighted basis as of Mar 31, 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 quarter under review, the company generated $642 million of net cash from operating activities compared with $622 million in the prior-year quarter.
Free cash flow was $516 million for the first three months of 2018, compared with $490 million in the year-ago period.
Share Repurchase Program
United Rentals authorized a new $1.25-billion share repurchase program which will begin when the current program is complete. As of March 31, the company had completed $832 million of repurchases under the current program, which it intends to complete by mid-2018.
Reiterated 2018 Guidance
Total revenues are expected in the range of $7.3-$7.6 billion, reflecting an increase from $6.64 billion reported in 2017.
Adjusted EBITDA is projected between $3.60 billion and $3.75 billion, higher than the prior-year adjusted EBITDA of $3.16 billion.
Net rental capital expenditures after gross purchases are projected in the range of $1.2-$1.35 billion.
Net cash provided by operating activities is expected in the range of $2.625-$2.825 billion, higher than $2.230 billion reported in 2017.
Free cash flow is expected in the range of $1.3-$1.4 billion, higher than $983 million reported in 2017.
United Rentals, Inc. Price, Consensus and EPS Surprise
United Rentals, Inc. Price, Consensus and EPS Surprise | United Rentals, Inc. Quote
Zacks Rank
United Rentals carries a Zacks Rank #2 (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 Apr 25. The Zacks Consensus Estimate for earnings is pegged at 96 cents, indicating a rise of 12.9% year over year.
Louisiana-Pacific (LPX - Free Report) is scheduled to release quarterly results on May 7. The Zacks Consensus Estimate for earnings is pegged at 67 cents, showing an increase of 103% year over year.
Installed Building Products (IBP - Free Report) is expected to report quarterly results on May 5. The Zacks Consensus Estimate for earnings is pegged at 46 cents, indicating a rise of 31.4% year over year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>