First Quarter Rental Revenue Leaps 25.1 Percent for United Rentals
Rental industry leader United Rentals posted $1.459 billion in rental revenue in the first quarter of 2018 compared to $1.166 billion in the first quarter of 2018, a 25.1-percent surge. Total revenue was $1.734 billion compared with $1.356 a year ago, a 27.9-percent hike.
On a GAAP basis, the company reported first quarter net income of $183 million compared with $109 million in the year-ago quarter.
The Tax Cuts and Jobs Act that reduced the U.S. federal corporate statutory tax rate from 35 percent to 21 percent contributed an estimated $0.37 per diluted share for the first quarter.
Pro forma rental revenue increased 9.9 percent, reflecting growth of .68 percent in the volume of equipment on rent and a 2.7-increase in rental rates.
Time utilization decreased 80 basis points year over year to 65.2 percent, mainly reflecting the impact of the NES and Neff acquisitions. On a pro forma basis, time utilization dropped 20 basis points year over year.
United’s Trench, Power and Pump specialty segment’s rental revenue increased by 36.5 percent year over year in the first quarter, primarily on a same-store basis. The segment’s rental gross margin improved by 170 basis points to 46.1 percent.
“We reported a good start to the year, with both rates and volumes benefiting from broad-based demand,” said Michael Kneeland, CEO of United Rentals. “Our Specialty segment continued to outperform, aided by strong market growth and cross-selling opportunities, and trends remained positive in Canada. We’re also pleased with the progress the team has made integrating Neff, where we remain on-track to deliver our 2018 synergies goals. Combined, we are well positioned for the seasonal upturn in customer activity.
“Our confidence extends to both our immediate operating environment and the durability of the cycle. Virtually all indicators point to market growth, which supports our reaffirming our outlook for the year.”
Kneeland added that United Rentals’ board of directors has authorized a new $1.25 billion share repurchase program to begin when the current program is complete. “We remain focused on maximizing our value given the strength of our cash flows and capital structure,” Kneeland added.
United reaffirnmed its full year outlook: total revenue of $7.3 billion to $7.6 billion; adjusted EBITDA between $3.6 billion and $3.75 billion; and net rental capital expenditures after gross purchases of $1.2 billion to $1.35 billion, after gross purchases of $1.8 billion to $1.95 billion.
The size of the rental fleet was $11.39 billion of OEC on March 31, 2018 compared with $11.51 billion on March 31, 2017. The age of the rental fleet was 47.5 months compared to 47 months on Dec. 31.
ROIC was 9.4 percent for the 12 months ended March 31, 2018, compared 8.4 percent for the 12 months ended March 31, 2017.
