01—Abstract
Summary
Summary of the 10-Q filed October 16, 2019. Cited figures are marked; the original filing is the authoritative source.
United Rentals, Inc. (URI) reported solid financial results for the nine months ended September 30, 2019, demonstrating strong revenue growth driven by its equipment rental segment.
Total revenues increased by 20.1% year-over-year to $6.895 billiona, with equipment rentals accounting for 86% of this figure. This growth was significantly influenced by strategic acquisitions, notably BakerCorp and BlueLine, which expanded the company's fleet and market reach. The company also maintained a focus on operational efficiency and profitability through initiatives like 'Lean' management techniques and Project XL.
Net income for the nine-month period rose to $836 millionb from $786 million in the prior year, with diluted earnings per share increasing to $10.66 from $9.34. The company generated substantial operating cash flow, allowing for continued investment in fleet, debt reduction, and share repurchases. Despite increased operating costs related to repair and maintenance, United Rentals maintained healthy EBITDA and Adjusted EBITDA margins, indicating a strong operational performance.
02—Key points
Key Highlights
- Total revenues increased by 20.1% to $6.895 billion for the nine months ended September 30, 2019, compared to the same period in 2018.
- Equipment rentals, the largest revenue driver, grew by 19.2% to $5.902 billion, bolstered by acquisitions and fleet expansion.
- Net income rose to $836 million for the nine months ended September 30, 2019, up from $786 million in the prior year.
- Diluted earnings per share increased to $10.66 from $9.34 year-over-year.
- The company generated $2.582 billion in net cash provided by operating activities for the nine months ended September 30, 2019.
- Acquisitions of BakerCorp and BlueLine significantly contributed to fleet size and revenue growth.
- The company ended the period with $60 million in cash and cash equivalents and available liquidity of $2.161 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2019, United Rentals, Inc. kept $0.16.
- Revenue$2.49B100.0%
- Cost of revenue−$1.46B58.5%
- Gross profit$1.03B41.5%
- Operating costs−$377.0M15.2%
- Operating income$656.0M26.4%
- Interest, other & tax−$265.0M10.7%
- Net income$391.0M15.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2019filed October 16, 2019Financial Statements
Q3 FY2019 against Q3 FY2018
| Line item | Q3 FY2019Q3 FY2018 | Change |
|---|---|---|
| Revenue | $2.49B$2.12B | +17.6% |
| Cost of Revenue | $1.46B$1.18B | +23.5% |
| Gross Profit | $1.03B$938.00M | +10.1% |
| SG&A Expenses | $273.00M$265.00M | +3.0% |
| Operating Income | $656.00M$578.00M | +13.5% |
| Net Income | $391.00M$333.00M | +17.4% |
| EPS (Basic) | $5.10$4.05 | +25.9% |
| EPS (Diluted) | $5.08$4.01 | +26.7% |
| Shares Outstanding (Basic) | 76.70M82.34M | −6.9% |
| Shares Outstanding (Diluted) | 76.86M83.17M | −7.6% |
05—Questions
Frequently Asked Questions
What were the main drivers of United Rentals' revenue growth in this period?
The primary drivers of revenue growth were the equipment rental segment, which saw a 19.2% increase due to a 21.5% rise in average Original Equipment Cost (OEC) largely from the BakerCorp and BlueLine acquisitions. Sales of rental equipment also saw a significant increase of 22.8% due to higher volumes, influenced by the larger fleet size post-acquisition and a strong used equipment market.
How did the recent acquisitions impact the company's financial performance?
The acquisitions of BakerCorp and BlueLine were instrumental in expanding United Rentals' fleet size, geographic reach, and customer base. These acquisitions contributed significantly to the increase in equipment rentals revenue and sales of rental equipment. However, they also led to increased depreciation costs and operating expenses, which partially offset the positive revenue impact on gross margins.
What is the company's liquidity position and outlook?
As of September 30, 2019, United Rentals had $60 million in cash and cash equivalents and $2.161 billion in available liquidity. The company generated substantial cash from operations and expects existing sources of cash to be sufficient for its operations over the next 12 months, which include funding operating activities, capital expenditures, debt service, and share repurchases.
What is the company's strategy for profitability and growth?
United Rentals continues to focus on improving profitability and return on invested capital. Key strategies include delivering superior customer service, optimizing customer and fleet mix, implementing 'Lean' management techniques for efficiency, continuing Project XL for profitable growth and cost savings, expanding its trench, power, and fluid solutions offerings, and pursuing strategic acquisitions.
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