01—Abstract
Summary
Summary of the 10-Q filed April 28, 2021. Cited figures are marked; the original filing is the authoritative source.
United Rentals, Inc. (URI) reported its first quarter 2021 financial results, indicating a sequential improvement in performance compared to the prior year, though total revenues saw a slight decrease.
The company generated total revenues of $2.06 billiona, a 3.2% decrease year-over-year, primarily driven by a 6.5% decline in equipment rentals, reflecting the ongoing impact of the COVID-19 pandemic on rental volumes. However, the company saw a significant 28.4% increase in sales of rental equipment, driven by a strong used equipment market. Net income increased by 17.3% to $203 million, with diluted EPS rising to $2.80 from $2.33 in the prior year period.
This improvement in profitability, despite lower revenues, was aided by a reduction in interest expense and SG&A costs, partially offset by higher income tax expense. URI ended the quarter with a strong liquidity position of $3.745 billionb, comprising cash and cash equivalents, and availability under its credit facilities.
The company also announced a significant strategic move with the proposed acquisition of General Finance Corporation for approximately $996 millionc, which is expected to close in the second quarter of 2021 and expand URI's offerings in mobile storage and modular office space. Management remains focused on disciplined capital expenditures and operational efficiencies, anticipating 2021 rental capital expenditures to be consistent with pre-COVID-19 levels.
02—Key points
Key Highlights
- Total revenues for Q1 2021 were $2.06 billion, a 3.2% decrease year-over-year, primarily due to a 6.5% decline in equipment rentals.
- Net income increased by 17.3% to $203 million, resulting in diluted EPS of $2.80, up from $2.33 in Q1 2020.
- Sales of rental equipment saw a significant increase of 28.4% year-over-year, indicating strength in the used equipment market.
- The company maintained a strong liquidity position with $3.745 billion available as of March 31, 2021.
- United Rentals announced a proposed acquisition of General Finance Corporation for approximately $996 million, expected to close in Q2 2021.
- Interest expense decreased significantly by 27.2% year-over-year due to lower average debt and cost of debt.
- SG&A expenses as a percentage of revenue decreased due to cost-saving measures implemented in response to COVID-19.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2021, United Rentals, Inc. kept $0.10.
- Revenue$2.06B100.0%
- Cost of revenue−$1.34B65.3%
- Gross profit$714.0M34.7%
- Operating costs−$342.0M16.6%
- Operating income$372.0M18.1%
- Interest, other & tax−$169.0M8.2%
- Net income$203.0M9.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2021filed April 28, 2021Financial Statements
Q1 FY2021 against Q1 FY2020
| Line item | Q1 FY2021Q1 FY2020 | Change |
|---|---|---|
| Revenue | $2.06B$2.13B | −3.2% |
| Cost of Revenue | $1.34B$1.40B | −3.9% |
| Gross Profit | $714.00M$727.00M | −1.8% |
| SG&A Expenses | $250.00M$267.00M | −6.4% |
| Operating Income | $372.00M$358.00M | +3.9% |
| Net Income | $203.00M$173.00M | +17.3% |
| EPS (Basic) | $2.81$2.33 | +20.6% |
| EPS (Diluted) | $2.80$2.33 | +20.2% |
| Shares Outstanding (Basic) | 72.34M74.04M | −2.3% |
| Shares Outstanding (Diluted) | 72.67M74.27M | −2.1% |
05—Questions
Frequently Asked Questions
What was the primary driver for the year-over-year decrease in total revenues?
The primary driver for the decrease in total revenues was a 6.5% decline in equipment rentals, which represented 81% of total revenues. This was largely attributed to the ongoing impact of the COVID-19 pandemic on rental volumes, which began to affect operations in March 2020.
How did United Rentals improve its net income despite lower revenues?
United Rentals improved its net income due to several factors including a 27.2% decrease in interest expense (driven by lower average debt and cost of debt), and a reduction in Selling, General, and Administrative (SG&A) expenses as a percentage of revenue. These cost-saving measures, implemented partly in response to COVID-19, helped offset the revenue decline.
What is the significance of the proposed acquisition of General Finance Corporation?
The proposed acquisition of General Finance Corporation for approximately $996 million is a strategic move to expand United Rentals' offerings in the mobile storage and modular office space sectors. This acquisition is expected to close in the second quarter of 2021 and broaden the company's service portfolio, particularly in markets served by General Finance's brands like Pac-Van, Container King, and Royal Wolf.
What is the company's liquidity situation and outlook?
United Rentals reported strong liquidity with $3.745 billion available as of March 31, 2021, comprising cash and cash equivalents and availability under its ABL and accounts receivable securitization facilities. Management believes these sources are sufficient to support operations over the next 12 months and plans to fund operating activities, capital expenditures, debt service, share repurchases, and potential acquisitions from these sources.
06—Continue