United Rentals, Inc announced financial results for the first quarter 2017 and an optimistic revised forcast for the rest of the year.
UR's results for the first quarter 2017 total revenue was $1.356 billion and rental revenue was $1.166 billion for the first quarter, compared with $1.310 billion and $1.117 billion, respectively, for the same period last year.
First Quarter 2017 Highlights
• Rental revenue (which includes owned equipment rental revenue, re-rent revenue and ancillary items) increased 4.4 percent year-over-year. Within rental revenue, owned equipment rental revenue increased 3.8 percent year-over-year, reflecting an increase of 7.0 percent in the volume of equipment on rent partially offset by a 1.4 percent decrease in rental rates.
• Time utilization increased 190 basis points year-over-year to 66.0 percent, a first quarter record for the company.
• The company’s trench, power and pump specialty segment's rental revenue increased by almost 17 percent year-over-year, primarily on a same store basis, while the segment’s rental gross margin improved by 240 basis points to 44.4 percent.
• The company generated $106 million of proceeds from used equipment sales at a GAAP gross margin of 43.4 percent and an adjusted gross margin of 50.9 percent, compared with $115 million at a GAAP gross margin of 40.9 percent and an adjusted gross margin of 48.7 percent for the same period last year.2
• The company generated $623 million of net cash provided by operating activities and $490 million of free cash flow3, compared with $604 million and $627 million, respectively, for the same period last year. Net rental capital expenditures were $113 million, compared with net proceeds of $15 million for the same period last year.
Michael Kneeland, chief executive officer of United Rentals, said, "We were pleased with our momentum in the first quarter, particularly our 7 percent growth in volume and record time utilization driven by strength in our core construction markets. It was also encouraging to see positive trends in our upstream oil and gas business after the headwinds faced over the last several years. While our rental rates remained under some pressure, they continue to support our reaffirmed standalone 2017 guidance for total revenue, adjusted EBITDA and capital spending, and our increased guidance for free cash flow."
Kneeland continued, "As we enter the critical part of the construction season, we’re very encouraged by the continued strength of key leading indicators, the tone of conversations with our customers and the industry’s disciplined response in adding fleet. Our focus remains on implementation of Project XL and other initiatives that should enhance our long-term value. With the integration of NES now underway, our updated guidance reflects the combined operations across the remainder of 2017, as well as our sustained confidence in the cycle."
United Rentals updated its full-year guidance following the finalized acquisition of NES on April 3, 2017.
The company now estimates a 5 percent increase in total 2017 revenue, totaling close to $6.25 billion. Earlier estimates were $5.95 billion max.
United Rentals has raised its expectation for net cash provided by operating activities to $2.05 billion compared to its previous expectation in the range of $1.675 billion to $1.875 billion. It expected free cash flow in the range of $800 million to $900 million.