Despite market concerns regarding the oil and gas slump United Rentals is finding good overall demand and solid profits
Despite market concerns regarding the oil and gas slump, United Rentals is finding good overall demand and solid profits.

Volume Rises Modestly While EBITDA is Q2 Record for United Rentals

United Rentals posted a modest 3.5-percent rental revenue increase for the second quarter, with $1.22 billion for the quarter compared to $1.179 billion for last year’s second quarter. Total revenue was $1.429 billion, compared with $1.399 billion a year ago, a 2.1-percent hike. On a GAAP basis, the company reported second quarter net income of $86 million compared with $94 million for the year-ago frame.

Adjusted EBITDA was $706 million and adjusted EBITDA margin was a second quarter company record at 49.4 percent, an increase of $43 million and 200 basis points respectively, from the same period in 2014.

Return on invested capital was 8.9 percent for the 12-month period 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 percent. Excluding the branches with the most exposure to upstream oil and gas, time utilization decreased 30 basis points.

“We solidly improved our profitability in the second quarter year over year, with record results for second quarter EBITDA margin and adjust earnings per share,” said CEO Michael Kneeland. “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.

“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 share repurchase program. These actions underscore our commitment to return capital and deliver value to our stockholders.”

For the first six months of 2015, total revenue was $2.744 billion, compared to $2.577 billion a year ago, a 6.5-percent leap. Rental revenue jumped from $2.184 billion in 2014 to $2.345 billion, a 7.4-percent increase.

The company lowered its revenue expectations for the year, previously expecting $6 to $6.1 billion and now expecting $5.8 billion to $5.9 billion. United is expecting adjusted EBITDA of $2.8 billion to $2.85 billion, compared to previous expectations of $2.95 billion to $3 billion.

United Rentals second quarter conference call will be Thursday July 23 at 11 a.m. eastern time at 866-835-8906 and will be archived at until the next earnings call. The replay number is 703-925-2533, passcode 1659838.

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

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