United Rentals continues its positive march, posting second quarter rental revenues of $1.367 billion, an increase of 13.5 percent year-over-year, and a total revenue increase of 12.38 percent to $1.597 billion.
The company has also revised its full-year guidance, upping its total revenues from the previous $6.05 billion to $6.25 billion to the current outlook of $6.25 billion to $6.40 billion.
Michael Kneeland, chief executive officer of United Rentals, said, “The broad demand we saw early this year continued throughout the second quarter as we entered our busy season. This was reflected in our strong year-over-year performance, with volume up 6.6 percent on a pro forma basis, record second quarter time utilization and an improved rate trend across our business. The NES integration and Project XL are both well underway and on track.
“We remain encouraged by the level of customer activity and the industry’s ongoing absorption of fleet. Given our visibility into the balance of 2017, we’ve increased our full-year guidance for total revenue, adjusted EBITDA, capex and free cash flow. Our focus remains on balancing growth with margins, free cash flow and returns to maximize our long-term value.”
Within rental revenue, owned equipment rental revenue increased 13.5 percent, reflecting an increase of 17.4 percent in the volume of equipment on rent, partially offset by a 1.2 percent decrease in rental rates. The company’s Trench, Power and Pump specialty segment’s rental revenue increased by 18.5 percent year-over-year, primarily on a same store basis, while the segment’s rental gross margin improved by 250 basis points to 49.6 percent.
Pro forma rental revenue, which represents the integration of United Rentals and NES Rentals, increased 6.2 percent year-over-year, reflecting growth of 6.6 percent in the volume of equipment on rent, partially offset by a 0.4 percent decline in rental rates. The company’s time utilization increased 190 basis points year-over-year to 69.4 percent - a second quarter record, with each month in the quarter also establishing a new monthly record. On a pro forma basis, time utilization increased 210 basis points year-over-year.
Adjusted EBITDA was $747 million and adjusted EBITDA margin was 46.8 percent, an increase of $68 million and decrease of 100 basis points year over year for the second quarter.
United generated $133 million of proceeds from used equipment sales at a GAAP gross margin of 39.1 percent and an adjusted gross margin of 52.6 percent, compared with $134 million at a GAAP gross margin of 41.0 percent and an adjusted gross margin of 47.8 percent for the same period last year. The year-over-year decrease in GAAP gross margin and increase in adjusted gross margin primarily reflected the impact of sales of NES equipment.