United Rentals Revenue Remains Flat in Second Quarter, Net Income Up
United Rentals posted $1.421 billion in total revenue in the second quarter compared to $1.429 billion for last year’s second quarter, a decline of less than 1 percent. Rental revenue dropped slightly more than 1 percent, from $1.220 billion in last year’s second quarter to $1.204 billion this year. On a GAAP basis, the company reported second quarter net income of $134 million, or $1.52 per diluted share compared to $86 million or $0.88 per diluted share in last year’s Q2.
The Trench, Power & Pump segment posted a 9.9-percent increase, jumping from $172 million last year to $189 million this year. The Trench Safety and Power & HVAC businesses combined to increase 15 percent year over year, primarily on a same-store basis.
Time utilization increased 90 basis points year over year to 67.5 percent.
For the first six months of 2016, total revenue was $2.731 billion, compared to $2.744 billion last year, a decline of less than a half percent. Equipment rental revenue was also essentially flat with a small decline from $2.345 billion to $2.321 billion, slightly more than 1 percent.
In May and June, month-over-month sequential rates increased 50 basis points and 60 basis points respectively, representing the first increases in sequential rates in 16 months. The company updated its 2016 outlook for rental rates to reflect a smaller expected year-over-year decrease than previously stated.
“During our second quarter, we were pleased with the positive progression of monthly rental rates, which we attribute to the combined impact of our internal initiatives and solid growth in several of our core U.S. markets,” said Michael Kneeland, United Rentals CEO. “While conditions remained challenging in Canada, we see solid customer activity on both the East and West Coasts of the U.S., at the same time that our emphasis on specialty rentals continues to pay dividends.
“Based on what we saw through the mid-year, and what we hear from the field, we continue to expect our business to improve both seasonally and cyclically. Consequently, we can reaffirm our 2016 revenue, EBITDA, capital spending and free cash flow guidance. While we remain mindful of the elevated uncertainty towards the direction of the global economy, we also know that we have considerable flexibility in operating our business to address changing market dynamics.”
United Rentals expects total revenue of $5.6 billion to $5.8 billion for the full year of 2016, and adjusted EBITDA of $2.65 billion to $2.75 billion. It expects net rental capital expenditures of about $650 million to $750 million, after gross purchases of approximately $1.15 billion to $1.25 billion. It expects net cash flow of $900 million to $1 billion. The company altered its prediction of a decrease in rental rates, previously forecasting a decline of 3 to 4 percent, but now expecting a drop of 2 to 3 percent.
The size of United Rentals’ rental fleet was $8.94 billion of original equipment cost on June 30, 2016, compared with $8.73 billion on the last day of 2015. The age of the rental fleet was 43.4 months on an OEC-weighted basis on June 30, compared with 43.1 months on the last day of 2015.
Based in Stamford, Conn., United Rentals is No. 1 on the RER 100.
