United Rentals (URI) up on Q1 earnings and revenue, Lifts View – April 28, 2022

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United Rentals, Inc.it is (URI Free Report) shares gained 4.4% in the April 27 after-hours trading session after better-than-expected first-quarter 2022 results. Improved fleet productivity thanks to widespread rental demand in the construction and industrial verticals, higher total and rental income as well as higher prices helped the company start 2022 on a high note. stronger.

URI also raised its full-year guidance for total revenue, adjusted EBITDA and free cash flow, given customer sentiment and solid project activity.

Commenting on the outlook for 2022, Matthew Flannery, CEO of United Rentals, said: “Based on our visibility over the year, as well as key industry indicators, we remain confident in our ability to capitalize on the current upward cycle and to adapt to all operating conditions. ”

In the headlines

Adjusted earnings of $5.73 per share beat Zacks’ consensus estimate of $5.28 by 8.5%. The reported figure also rose 66.1% from the prior year’s figure of $3.45 per share.

Total revenue of $2.52 billion topped the consensus mark of $2.47 billion by 2.1% and was up 22.7% year over year. This increase reflects solid and widespread momentum in activity in the end markets served.

Rental revenue increased 30.5% from the prior year quarter to $2.18 billion. This was a record first quarter, given a broad recovery in activity in the end markets served by the company as well as a higher rental fleet at original equipment cost (“ OEC”). Fleet productivity increased 13% year over year due to better fleet uptake.

Still, used equipment sales are down 21% from a year ago. Adjusted gross margin of 57.8% increased by 1,510 basis points (bps) due to higher prices, which marked the sixth consecutive quarter of increase.

Sector discussion

General rentals: Segment equipment rental revenue increased 25.1% year-over-year to $1.59 billion. Rental gross margin increased 380 basis points year-on-year to 36.1%, driven by better absorption of fixed costs due to higher revenues.

Specialty (formerly known as Trench, Power and Pump): Segment rental revenue increased 47.7% year-over-year to $582 million. Rental gross margin increased by 240 basis points year-on-year to 44.5%, driven by better absorption of fixed costs.

Margins

The company’s total equipment rental gross margin increased 370 basis points year-over-year to 38.3%.

Adjusted EBITDA also increased 30.5% from the prior year quarter to $1,139 million. Adjusted EBITDA margin increased 270 basis points to 45.1% for the quarter, driven by higher margins from rental revenue and used equipment sales.

Balance sheet

United Rentals had cash and cash equivalents of $101 million as of March 31, 2022, compared to $144 million at the end of 2021. Total liquidity was $3.006 billion at the end of March.

Long-term debt as of March 31, 2022 was $8.53 billion, compared to $8.78 billion at the end of 2021.

Cash flow from operating activities increased 16.9% year over year to $886 million for the quarter. Free cash flow decreased 21.1% year-over-year to $572 million in the first quarter of 2022. The decline was primarily due to higher net rental capital expenditures.

Orientation 2022

Total revenue is expected to be between $11.1 billion and $11.5 billion, compared to the previously forecast $10.65 billion to $11.05 billion. This indicates an increase from the $9.72 billion reported in 2021.

Adjusted EBITDA is expected to be between $5.2 billion and $5.4 billion compared to the previous projection of $4.95 to $5.15 billion. The current projection indicates a jump from the previous year’s figure of $4.41 billion.

Net rental capital expenditure after gross purchases is still projected between $1.85 billion and $2.05 billion, indicating an increase from $2.03 billion in 2021.

Net cash from operating activities is expected to be between $3.7 billion and $4.1 billion (vs. $3.5 billion to $3.9 billion expected previously), suggesting an increase from $3.69 billion dollars in 2021.

Free cash flow (excluding the impact of merger and restructuring-related payments) is expected to be between $1.7 billion and $1.9 billion, versus $1.5 billion to $1.7 billion previously forecast. This suggests an increase from the $1.53 billion reported in 2021.

Zacks Rank

United Rentals currently wears a Zacks Rank #3 (Hold).

You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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