01—Abstract
Summary
Summary of the 10-K filed January 24, 2018. Cited figures are marked; the original filing is the authoritative source.
United Rentals, Inc. (URI) demonstrated robust growth in 2017, with total revenues reaching $6.64 billiona, a significant increase of 15.3% year-over-year.
This growth was largely driven by strategic acquisitions, notably NES Rentals and Neff Corporation, which expanded the company's fleet and geographic reach. The company reported strong equipment rental revenue, up 15.7%b, and a record high in time utilization at 69.5%. Management highlighted a continued focus on operational efficiencies, customer service, and strategic growth initiatives for 2018, anticipating continued solid demand across its end markets.
Financially, United Rentals managed its capital structure effectively, redeeming several senior notes and issuing new ones to improve financial flexibility. The company also benefited significantly from the Tax Cuts and Jobs Act enacted in late 2017, which provided a substantial net income boost.
Despite a notable increase in total debt to $9.44 billionc, the company maintained compliance with its debt covenants. Investors should note the ongoing strategy of pursuing strategic acquisitions as a key growth driver, balanced by a commitment to improving profitability and return on invested capital.
02—Key points
Key Highlights
- Total revenues increased by 15.3% to $6.64 billion in 2017, primarily due to the acquisitions of NES Rentals and Neff Corporation.
- Equipment rental revenue grew by 15.7%, with a significant 18.2% increase in the volume of equipment on rent.
- Time utilization reached a record high of 69.5% in 2017.
- The company benefited from the Tax Cuts and Jobs Act, resulting in a significant increase in net income ($1.35 billion) and a reduced effective tax rate.
- Total debt increased to $9.44 billion, reflecting financing for acquisitions, but the company remained compliant with its debt covenants.
- United Rentals plans to continue its strategy of growth through strategic acquisitions and operational efficiencies.
- The company is actively managing its fleet, with original equipment cost (OEC) reaching $11.5 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, United Rentals, Inc. kept $0.20.
- Revenue$6.64B100.0%
- Cost of revenue−$3.87B58.3%
- Gross profit$2.77B41.7%
- Operating costs−$1.26B19.0%
- Operating income$1.51B22.7%
- Interest, other & tax−$161.0M2.4%
- Net income$1.35B20.3%
Where FY2017 revenue went
$6.64B- Cost of revenue: $3.87B, 58% of revenue
- Net income: $1.35B, 20% of revenue
- SG&A: $903.0M, 14% of revenue
- Other operating costs: $359.0M, 5.4% of revenue
- Interest, other & tax: $161.0M, 2.4% of revenue
Kept 20% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed January 24, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $6.64B$5.76B | +15.3% |
| Cost of Revenue | $3.87B$3.36B | +15.3% |
| Gross Profit | $2.77B$2.40B | +15.2% |
| SG&A Expenses | $903.00M$719.00M | +25.6% |
| Operating Income | $1.51B$1.42B | +6.5% |
| Net Income | $1.35B$566.00M | +137.8% |
| EPS (Basic) | $15.91$6.49 | +145.1% |
| EPS (Diluted) | $15.73$6.45 | +143.9% |
| Shares Outstanding (Basic) | 84.60M87.22M | −3.0% |
| Shares Outstanding (Diluted) | 85.56M87.78M | −2.5% |
05—Questions
Frequently Asked Questions
What were the main drivers of United Rentals' revenue growth in 2017?
The primary drivers of United Rentals' revenue growth in 2017 were the successful acquisitions of NES Rentals and Neff Corporation, which significantly expanded the company's fleet and market presence. This was complemented by a strong increase in the volume of equipment on rent and improved time utilization rates across its operations.
How did the Tax Cuts and Jobs Act impact United Rentals' financial results?
The Tax Cuts and Jobs Act, enacted in late 2017, provided a substantial benefit to United Rentals, primarily through the revaluation of its net deferred tax liability at the new lower federal tax rate. This resulted in an estimated $689 million increase in net income, or $8.05 per diluted share, for the year. The company expects to benefit from the lower U.S. federal tax rate in future periods.
What is the company's strategy for growth and profitability moving forward?
United Rentals' strategy focuses on improving profitability and return on invested capital. Key elements include maintaining superior customer service, optimizing its customer and fleet mix, implementing 'Lean' management techniques for operational efficiencies, executing Project XL for revenue and cost improvements, expanding its specialty rental offerings, and continuing to pursue strategic acquisitions to grow its core equipment rental business.
How is United Rentals managing its debt and capital structure?
The company actively manages its capital structure by redeeming existing debt and issuing new debt to improve financial flexibility and liquidity. In 2017, it completed several debt issuances and note redemptions, and amended/extended its credit facilities. While total debt stands at $9.44 billion, the company reported compliance with its debt covenants and has significant available liquidity.
06—Continue