01—Abstract
Summary
Summary of the 10-Q filed April 17, 2019. Cited figures are marked; the original filing is the authoritative source.
United Rentals, Inc. (URI) reported solid financial results for the first quarter of 2019, demonstrating robust revenue growth driven by strong equipment rental performance and strategic acquisitions.
Total revenues increased by 22.1% year-over-year to $2.117 billiona, with equipment rentals alone growing by 23.0% to $1.795 billion. This growth was significantly bolstered by the integration of recent acquisitions, BakerCorp and BlueLine, contributing to a 23.7% increase in average fleet original equipment cost (OEC). The company's profitability, measured by EBITDA, saw a substantial increase of 18.5% to $870 million.
While net income slightly decreased year-over-year to $175 millionb from $183 million, this was influenced by specific acquisition-related costs, including intangible asset amortization and fair value mark-ups on acquired fleet. Diluted EPS remained strong at $2.19. United Rentals maintained a healthy liquidity position, with cash and cash equivalents of $52 million and significant availability under its credit facilities, indicating strong financial health and capacity for continued growth and strategic initiatives.
02—Key points
Key Highlights
- Total revenues surged 22.1% to $2.117 billion, driven primarily by a 23.0% increase in equipment rentals.
- Significant growth was fueled by the successful integration of BakerCorp and BlueLine acquisitions, increasing average fleet OEC by 23.7%.
- EBITDA rose 18.5% to $870 million, reflecting strong operational performance and integration of acquired businesses.
- Despite a slight decrease in net income to $175 million, diluted EPS remained robust at $2.19.
- The company maintained a strong liquidity position with $52 million in cash and significant credit facility availability.
- Strategic focus remains on customer and fleet optimization, operational efficiencies via 'Lean' management, and expansion of specialized solutions.
- Adopted new lease accounting standard (ASC 842) effective January 1, 2019, impacting balance sheet recognition of right-of-use assets and lease liabilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2019, United Rentals, Inc. kept $0.08.
- Revenue$2.12B100.0%
- Cost of revenue−$1.36B64.1%
- Gross profit$761.0M35.9%
- Operating costs−$393.0M18.6%
- Operating income$368.0M17.4%
- Interest, other & tax−$193.0M9.1%
- Net income$175.0M8.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2019filed April 17, 2019Financial Statements
Q1 FY2019 against Q1 FY2018
| Line item | Q1 FY2019Q1 FY2018 | Change |
|---|---|---|
| Revenue | $2.12B$1.73B | +22.1% |
| Cost of Revenue | $1.36B$1.09B | +24.6% |
| Gross Profit | $761.00M$646.00M | +17.8% |
| SG&A Expenses | $280.00M$232.00M | +20.7% |
| Operating Income | $368.00M$340.00M | +8.2% |
| Net Income | $175.00M$183.00M | −4.4% |
| EPS (Basic) | $2.21$2.18 | +1.4% |
| EPS (Diluted) | $2.19$2.15 | +1.9% |
| Shares Outstanding (Basic) | 79.40M84.26M | −5.8% |
| Shares Outstanding (Diluted) | 80.05M85.24M | −6.1% |
05—Questions
Frequently Asked Questions
What were the primary drivers of the significant revenue increase in Q1 2019?
The primary drivers of the 22.1% year-over-year revenue increase to $2.117 billion were strong performance in equipment rentals, which grew 23.0%, and the successful integration of the BakerCorp and BlueLine acquisitions. These acquisitions significantly expanded the company's fleet size (average OEC increased by 23.7%) and geographic reach, contributing substantially to rental revenue.
How did the recent acquisitions impact profitability?
The BakerCorp and BlueLine acquisitions positively impacted operational performance, as evidenced by an 18.5% increase in EBITDA to $870 million. However, reported net income decreased slightly due to acquisition-related costs, including amortization of acquired intangible assets and fair value adjustments on acquired fleet, which are typical in the integration phase of major acquisitions.
What is the company's liquidity and debt situation?
United Rentals maintained a solid liquidity position with $52 million in cash and cash equivalents as of March 31, 2019. The company also has significant borrowing capacity available under its ABL facility ($2.176 billion) and accounts receivable securitization facility. Total debt stood at $11.606 billion, with long-term debt at $10.676 billion. The company was in compliance with all loan covenants.
What is the significance of adopting the new lease accounting standard (ASC 842)?
The adoption of ASC 842 on January 1, 2019, has a material impact on the balance sheet by requiring the recognition of operating lease right-of-use assets and lease liabilities. While it did not materially impact the income statement or cash flow statement, it provides greater transparency on the company's leasing arrangements. This is a standard accounting change for many companies and is in line with industry best practices.
06—Continue