Specialty Businesses Shine During a Flat First Quarter for United Rentals
United Rentals posted total revenue of $1.310 billion and rental revenue of $1.117 billion for the first quarter, compared with $1.315 billion and $1.125 billion for the same period a year ago, results that were relatively flat. On a GAAP basis, the company reported first quarter net income of $92 million compared with $115 million in the year-ago quarter.
Adjusted EBITDA was $1.40 per diluted share for the quarter, compared with $1.34 per diluted share in the year-ago frame.
However, the specialty businesses were strong for United. Combined rental revenue from United Rentals’ Trench Safety and Power & HVAC businesses increased by 12 percent year over year on a same-store basis. Time utilization decreased 10 basis points to 64.1 percent, although in the month of March, time utilization jumped 100 basis points.
“During the first quarter, we saw broad-based, improving demand in many of our core markets, which was most apparent in accelerating volume,” said Michael Kneeland, United Rentals CEO. “On the other hand, we continue to face significant headwinds from oil and gas and from our Canadian business, pressuring rental rates. We are encouraged, however, by industry data that shows that fleet supply-demand dynamics are moving towards equilibrium in the U.S.
“Based on what we see and hear in the marketplace, we continue to expect our business to improve both seasonally and cyclically, with our updated guidance reflecting the net impact of weaker rental rates due primarily to what we believe are temporary factors. Our business is larger, more diverse and more operationally effective than it has ever been, and we have the tools to maintain our industry leadership and financial strength, including significant flexibility to manage both our costs and capital plans in any environment. We remain confident in our ability to generate at least $900 million of free cash flow and then to redeploy this capital in an optimal manner.”
The company has slightly altered its guidance for 2016. In its prior outlook, United Rentals said it expected total revenue in the range of $5.65 billion to $5.95 billion for the year. It has since lowered its expectations slightly to $5.6 billion to $5.8 billion. Previously it said it expected EBITDA of $2.7 billion to $2.9 billion, now it has lowered that expectation to a range of $2.65 billion to $2.75 billion. And where previously it had expected rental rates for the year to decline in the range of 1 percent to 2 percent, now the company expects rental rates to drop somewhere between 3 to 4 percent for the year.
United Rentals, based in Stamford, Conn., is No. 1 on the RER 100.
