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.
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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.