United Rentals Inc. announced financial results for the third quarter 2016, reporting flat rental revenue year-over-year but showing a 10% jump in revenue generated by the company's Trench Safety and Power & HVAC specialty business.
"Our third-quarter results played out largely as expected, as volumes benefited from continued growth on the East and West Coasts of the U.S. and the start of numerous large projects," said Michael Kneeland, chief executive officer. "We were also pleased by solid contributions from our specialty businesses and cross-selling initiatives, which helped offset ongoing headwinds in oil and gas markets and Canada."
He continued, "Based on what we saw through the third quarter, and what we hear from our customers, we remain optimistic about the cycle. We now expect our 2016 rental rates and adjusted EBITDA to track toward the upper end of prior guidance and free cash flow to exceed our prior expectations. This takes into account our plan to invest up to an additional $50 million in fleet to service specific large contract wins. Looking forward, we remain positive about our operating environment and remind investors of the substantial flexibility we have in managing our business for whatever market conditions materialize."
According to the quarterly report, total revenue was $1.508 billion and rental revenue was $1.322 billion for the third quarter, compared with $1.550 billion and $1.326 billion, respectively, for the same period last year. On a GAAP basis, the company reported third quarter net income of $187 million, or $2.16 per diluted share, compared with $215 million, or $2.25 per diluted share, for the same period last year.
Adjusted EPS1 for the quarter was $2.58 per diluted share, compared with $2.57 per diluted share for the same period last year. Adjusted EBITDA1 was $747 million and adjusted EBITDA margin was 49.5%, reflecting decreases of $33 million and 80 basis points, respectively, from the same period last year.
Third Quarter 2016 Highlights
• Rental revenue (which includes owned equipment rental revenue, re-rent revenue and ancillary items) decreased 0.3% year-over-year. Within rental revenue, owned equipment rental revenue decreased 0.8% year-over-year, reflecting a 1.7% drop in rental rates partially offset by an increase of 2.2% in the volume of equipment on rent.
• Time utilization increased 30 basis points year-over-year to 70.3%.
• Rental revenue generated by the company’s Trench Safety and Power & HVAC specialty businesses, combined, increased by 10% year-over-year, primarily on a same store basis.
• The company’s Pump specialty unit's rental revenue increased by 5% year-over-year driven by strong gains in non oil and gas markets and branch expansion.
• The company generated $112 million of proceeds from used equipment sales at a GAAP gross margin of 39.3% and an adjusted gross margin of 46.4%, compared with $141 million at a GAAP gross margin of 39.7% and an adjusted gross margin of 44.0% for the same period last year.2
