Equipment rental company United Rentals (NYSE: URI) second quarter 2019 earnings results exceeded estimates. The company reported adjusted EPS of $4.74 on revenue of $2.29 billion. On average, analysts had estimated United Rentals to earn $4.46 per share on revenue of $2.27 billion.
Shares of United Rentals were down about 6% in the extended hours of trading as the company trimmed down the upper end of 2019 revenue outlook.
Total revenue for the recently ended quarter increased 21% to $2.29 billion and rental revenue increased 20% to $1.96 billion. GAAP earnings increased to $3.44 per share from $3.20 in the prior year quarter.
“Our updates to guidance reflect a slightly slower than expected pace for the BlueLine integration, as well as historically bad weather in several key regions this past quarter. As a result, we’ve trimmed the upper ends on total revenue and adjusted EBITDA by approximately 1%, and capex by $150 million, while raising our free cash flow expectation,” said Matthew Flannery, United Rentals’ new CEO, who succeeded Michael Kneeland on May 8, 2019.
United Rentals trimmed down the upper end of revenue and adjusted EBITDA outlook for 2019. The company now sees total revenue to be in the range of $9.15 billion to $9.45 billion versus the prior outlook of $9.15 billion to $9.55 billion. Adjusted EBITDA is now touted to be in the range of $4.35 billion to $4.5 billion compared to the previous estimate of $4.35 billion to $4.55 billion.
United Rentals’ fleet productivity for the quarter ended June 30, 2019, dropped 3.1% year-over-year, primarily due to the impact of the BakerCorp and BlueLine acquisitions.
In early June, United Rentals’ Board of Directors approved an enhanced capital allocation strategy. The Stamford, Connecticut-based company lowered its targeted leverage range to 2.0x-3.0x, from 2.5x-3.5x. The company expects to end the year with a net leverage ratio of approximately 2.5x versus a reported net leverage ratio of 2.9x as of March 31, 2019.
United Rentals stock has given a positive return of 28% since the beginning of this year. However, the stock had dropped 14% over the past 12 months period.