United Rentals Shares Up 2% As Q3 Results Top Estimates

(RTTNews) - Equipment rental company United Rentals, Inc. (URI) reported Wednesday a profit for the third quarter that increased from last year, reflecting revenue growth amid increases in rental rates and rental volumes. Adjusted earnings per share and quarterly revenues topped analysts' expectations.

"The third quarter provided further confirmation that our strategy and the North American construction recovery are both solidly on track. Our end markets are continuing to rally, creating numerous opportunities for well-managed, profitable growth," CEO Michael Kneeland said in a statement.

The Greenwich, Connecticut-based company reported net income of $192 million or $1.84 per share for the third quarter, higher than $143 million or $1.35 per share in the prior-year quarter.

Results for the latest quarter primarily include merger related intangible asset amortization of $0.29 per share, while the prior year included $0.23 per share of the same charge.

Excluding items, adjusted earnings for the quarter was $2.20 per share, compared to $1.63 per share in the year-ago quarter.

On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $2.08 per share for the quarter. Analysts estimate typically exclude special items.

Total revenues for the quarter increased to $1.54 billion from $1.31 billion in the same quarter last year, and topped fourteen Wall Street analysts' consensus estimate of $1.51 billion by a whisker.

Equipment rental revenues grew 15.6 percent from last year to $1.32 billion, with owned equipment rental revenue increasing 15.4 percent, reflecting year-over-year increases of 9.4 percent in volume of equipment on rent and 4.7 percent in rental rates. Time utilization also improved 70 basis points year-over-year to 71.5 percent.

The company also said it generated $140 million of proceeds from used equipment sales at an adjusted gross margin of 47.9 percent, compared with $102 million and 48.0 percent in the year-ago quarter.

Looking ahead to fiscal 2014, United Rentals reaffirmed its revenue guidance in a range of $5.55 billion to $5.65 billion. Street is currently looking for full-year 2014 revenues of $5.62 billion.

The company also reaffirmed its outlook for rental rates growth of about 4.5 percent, and adjusted EBITDA in a range of $2.65 billion to $2.70 billion. The company also continues to expect time utilization of about 68.5 percent.

Meanwhile, the company raised its free cash flow outlook to a range of $475 million to $525 million, excluding the impact of merger and restructuring related costs.

"While we reported very strong results, we believe they reflect just a fraction of what our company can achieve over multiple years in the forecasted upcycle. More immediately, we believe that the current uncertainty in the financial markets relates to global concerns, and not North America," Kneeland added.

The company noted that it will continue to take the actions that drive returns over time, including rigorous fleet management, the expansion of our specialty rental lines, and transformational measures for greater productivity.

URI closed Wednesday's regular trading session at $93.43, up $0.98 or 1.06% on a volume of 3.11 million shares. The stock gained a further $1.57 or 1.68% in after-hours trading.