United Rentals Sets Corporate Earnings Record in Second Quarter

United Rentals improved its profitability in the second quarter year-over-year, with record results for second quarter EBITDA margin and adjusted EPS.

United Rentals Inc. announced financial results for the second quarter 2015. Total revenue was $1.429 billion and rental revenue was $1.220 billion, compared with $1.399 billion and $1.179 billion, respectively, for the same period last year. On a GAAP basis, the company reported second quarter net income of $86 million, or $0.88 per diluted share, compared with $94 million, or $0.90 per diluted share, for the same period last year.

Adjusted EPS2 for the quarter was $1.95 per diluted share, compared with $1.65 per diluted share for the same period last year. Adjusted EBITDA3 was $706 million and adjusted EBITDA margin was a second quarter company record at 49.4%, an increase of $43 million and 200 basis points, respectively, from the same period last year.

Second Quarter 2015 Highlights

  • Rental revenue (which includes owned equipment rental revenue, re-rent revenue and ancillary items) increased 3.5% year-over-year.4 Within rental revenue, owned equipment rental revenue increased 3.7%, reflecting year-over-year increases of 2.8% in the volume of equipment on rent and 1.5% in rental rates.
  • Return on invested capital was 8.9% for the 12 months ended June 30, 2015, an increase of 0.8 percentage points from the 12 months ended June 30, 2014.
  • Time utilization decreased 150 basis points year-over-year to 66.6%. Excluding the branches with the most exposure to upstream oil and gas, time utilization decreased 30 basis points year-over-year. 
  • The company generated $124 million of proceeds from used equipment sales at an adjusted gross margin of 50.0%, compared with $138 million and 48.6% for the same period last year.5
  • Flow-through, which represents the year-over-year change in adjusted EBITDA divided by the year-over-year change in total revenue, was 143.3% for the quarter.

Michael Kneeland, chief executive officer of United Rentals, said, "We solidly improved our profitability in the second quarter year-over-year, with record results for second quarter EBITDA margin and adjusted EPS. The adverse impacts from the drop in oil and gas activity as well as industry fleeting were greater than we anticipated and, as a result, we've updated our outlook on our 2015 targets."

Kneeland continued, "Demand for our equipment is clearly there, and our industry is expected to benefit from solid growth in the years ahead as oil drilling stabilizes and rental fleet is absorbed. Industry experts are projecting years of growth ahead, led by the ongoing rebound in non-residential construction. Given this outlook, and our ability to drive profitable growth and returns, we are accelerating our current $750 million share repurchase program and announcing an additional $1 billion repurchase program. These decisions underscore our commitment to return capital and deliver value to our stockholders."

Six Months 2015 Highlights

  • Total revenue was $2.744 billion and rental revenue was $2.345 billion, compared with $2.577 billion and $2.184 billion, respectively, for the same period last year.
  • Rental revenue increased 7.4% year-over-year.6 Within rental revenue, owned equipment rental revenue increased 7.5%, reflecting year-over-year increases of 5.3% in the volume of equipment on rent and 2.2% in rental rates. 7
  • Adjusted EBITDA was $1.308 billion and adjusted EBITDA margin was 47.7%, an increase of $126 million and 180 basis points, respectively, from the same period last year.
  • Time utilization decreased 100 basis points year-over-year to 65.4%. Excluding the branches with the most exposure to upstream oil and gas, time utilization decreased 10 basis points year-over-year.
  • The company generated $240 million of proceeds from used equipment sales at an adjusted gross margin of 50.4%, compared with $248 million and 48.8% for the same period last year.
  • Flow-through, which represents the year-over-year change in adjusted EBITDA divided by the year-over-year change in total revenue, was 75.4%.
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