Equipment rental operator United Rentals (URI) reported a 91% jump in earnings for the second quarter driven by higher rental revenue. The company, which rents earthmovers, forklifts, and other heavy equipment, is utilizing on the strong construction spending data that reached a record level in May, helped by increases in residential and public investment. Revenue and profit exceeded the Street’s expectations.
With revenue jumping 18% to about $1.89 billion, the Stamford, Connecticut-based company saw its earnings for the June quarter soar 91% higher to $270 million or $3.20 per share. The results included a benefit associated with new tax reform. Adjusted earnings per share climbed 62% to $3.85. A climb in the volume of equipment on rent and higher rental rates helped the total revenue spurt.
The company’s rental revenue improved 19.3%, helped by an increase in owned equipment rental revenue. Time utilization fell 20 basis points to 69.2% due to the impact of NES and Neff acquisitions. Trench, Power and Pump specialty segment’s rental revenue increased by 33.5%, primarily on a same-store basis.
Looking ahead into fiscal 2018, United Rentals raised its outlook. The company lifted its total revenue outlook to a range of $7.5-$7.7 billion from the previous estimate of $7.3-$7.6 billion, and its adjusted EBITDA estimate to $3.675-$3.775 billion from the prior outlook of $3.60-$3.75 billion.
For the full year 2018, net cash provided by operating activities guidance was revised upward to a range of $2.675-$2.825 billion from the previous outlook of $2.625-$2.825 billion. Meanwhile, the company maintained its free cash flow forecast of $1.3-$1.4 billion for fiscal 2018.
On July 2, United Rentals has entered into a pact to buy BakerCorp International, a provider of rental solutions for fluid storage, transfer, and treatment, for about $715 million in cash. The deal is predicted to close early in the third quarter and will contribute about $140 million of revenue and $40 million of adjusted EBITDA to the full year 2018 results. This will add about $50 million to 2018 capital spending plan.
Shares of United Rentals ended Wednesday’s regular trading session up 1.77% at $154.91 on the NYSE. The stock had been trading between $106.52 and $190.74 for the past 52 weeks.
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