United Rentals, Inc. announced financial results this week for the fourth quarter and full year 2017.
Fourth Quarter 2017
For the fourth quarter of 2017, total revenue was $1.922 billion and rental revenue was $1.646 billion, compared with $1.523 billion and $1.298 billion, respectively, for the same period the prior year.
On a GAAP basis, the company reported fourth quarter net income of $897 million compared with $153 million for the same period the prior year. The fourth quarter of 2017 includes a net income benefit estimated at $689 million associated with the enactment of the Tax Cuts and Jobs Act of 2017 discussed below.
Fourth Quarter Highlights
- Rental revenue increased 26.8% year-over-year. Within rental revenue, owned equipment rental revenue increased 26.5%, reflecting increases of 28.7% in the volume of equipment on rent and 1.1% in rental rates.
- The company’s Trench, Power and Pump specialty segment's rental revenue increased by 38.7% year-over-year, primarily on a same store basis.
The company generated $172 million of proceeds from used equipment sales at a GAAP gross margin of 39.0% and an adjusted gross margin of 57.6%, compared with $135 million of proceeds at a GAAP gross margin of 43.0% and an adjusted gross margin of primarily reflects the impact of selling NES and Neff equipment.
Full Year 2017
For the full year 2017, total revenue was $6.641 billion and rental revenue was $5.715 billion, compared with $5.762 billion and $4.941 billion, respectively, for 2016. Full year net income was $1.346 billion compared with $566 million for 2016. 2017 includes a net income benefit estimated at $689 million associated with the enactment of the Tax Cuts and Jobs Act of 2017.
Full Year Highlights
- Rental revenue increased 15.7% year-over-year. Within rental revenue, owned equipment rental revenue increased 15.3%, reflecting an increase of 18.2% in the volume of equipment on rent, partially offset by a 0.2% decrease in rental rates.
- The company’s Trench, Power and Pump specialty segment's rental revenue increased by 27.5% year-over-year, primarily on a same store basis.
- Pro forma rental revenue increased 7.6% year-over-year, reflecting growth of 7.1% in the volume of equipment on rent and a 0.4% increase in rental rates.
Michael Kneeland, chief executive officer of United Rentals, said, "We capped a year of record results with a strong fourth quarter finish on the back of broad-based demand. Pro forma volume increased nearly 9% year-over-year in the quarter, and rental rates were up 2%. For the full year, we exceeded the upper-band of guidance on total revenue, adjusted EBITDA and free cash flow, and increased our ROIC by 50 basis points year-over-year to its highest level since 2015."
Kneeland continued, "Our 2018 guidance reflects the confidence we feel in our operating environment based on what we hear from customers and see in key leading indicators. Our optimism is further supported by the tailwinds we expect from leveraging our 2017 acquisitions and our ongoing investments in people and technology, as well as the recent U.S. tax reform. Our strategy remains focused on balancing growth and returns to maximize our long-term value."
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