United Rentals Posts Flat But Consistent Results for Fourth Quarter and Full Year 2016

United Rentals posted total revenue of $1.523 billion in the fourth quarter of 2016, the same number as the fourth quarter of 2015. Rental revenue rose slightly from $1.278 billion in the fourth quarter of 2016 to $1.298 in the recently concluded quarter ended Dec. 31, 2016, a 1.6-percent increase.

For the full year 2016, total revenue was $5.762 billion, compared to $5.817 billion in 2015, a decline of less than 1 percent. Rental revenue was essentially flat, $4.941 billion compared to $4.949 billion in 2015.

Adjusted earnings per share for the full year were $8.65 per diluted share, compared with $8.02 per diluted share in 2015. Adjusted EBITDA was $2.759 billion and adjusted EBITDA margin was 47.9 percent for 2016, compared to adjusted EBITDA of $2.832 billion and 48.7 percent margins in 2015.

For the fourth quarter of 2016, time utilization increased 110 basis points year over year to 69.3. Full year 2016 time utilization jumped 67.9 percent.

For the fourth quarter and full year 2016, United Rentals’ Trench, Power and Pump specialty segment hiked 10 percent in rental revenue year over year, primarily on a same store basis.

Used equipment brought in $135 million in the fourth quarter of 2016 at an adjusted gross margin of 46.5 percent. For the full year United Rentals generated $496 million from used equipment sales, compared to $538 million in 2015.

“We were very pleased with our fourth quarter results, which benefited from broad-based demand,” said CEO Michael Kneeland. “While rental rates remained a year-on-year headwind, our sequential rate performance was somewhat better than expected, and OEC volumes were robust through the end of the quarter. These factors helped us exceed the upper band of guidance on total revenue, adjusted EBITDA and free cash flow.”

The bigger news of the day was United Rentals’ acquisition of NES Rentals for $965 million in cash. Kneeland said he expected the acquisition would close early in the second quarter, saying the company would then immediately embark on its integration plan.

“The transaction should be accretive to earnings, revenue, EBITDA and free cash flow this year,” Kneeland said. “Once the acquisition is complete, we will issue new 2017 guidance to reflect the combined operations. In addition to M&A investment, we expect our performance to be driven by broad-based market opportunities and growing demand. Our confidence in this cycle is supported by internal data, customer sentiment, and the strength of key leading indicators. Longer term, we expect our 2017 strategic investments in increased capital spending, sales and marketing, digital and Project XL to extend our market position and enhance future profitability.”

Based in Stamford, Conn., United Rentals is No. 1 on the RER 100.

For more on United Rentals’ acquisition of NES Rentals, go to: http://rermag.com/headline-news/united-rentals-acquire-aerial-specialist-rental-company-nes-rentals