United Rentals reports nearly flat year-over-year 3Q results

United RentalsUnited Rentals has reported nearly flat year-over-year results for the third quarter of 2016, with total revenue at $1.508 billion compared to $1.550 billion for the same period last year. Rental revenue was nearly unchanged at $1.322 billion compared to $1.326 billion in 2015.

Breaking down the rental revenue, the company reported owned equipment revenue dropping by 0.8 percent compared to the third quarter last year. This was due to a 1.7 percent drop in rental rates offset by a 2.2 percent increase in volume of equipment on rent.

“Our third quarter results played out largely as expected, as volumes benefited from continued growth on the East and West Coasts of the U.S. and the start of numerous large projects,” says CEO Michael Kneeland. “We were also pleased by solid contributions from our specialty businesses and cross-selling initiatives, which helped offset ongoing headwinds in oil and gas markets and Canada.”

United Rentals saw an increase in time utilization to 70.3 percent and a 10-percent increase in rental revenue from a combination of its Trench Safety and Power & HVAC specialty businesses. Rental revenue for the Pump specialty unit also grew by 5 percent.

Used equipment sales, the company reports, dropped to $112 million in the third quarter, compared to $141 million in the same period last year. However, adjusted gross margins increased to 46.4 percent compared to 44 percent last year.

For the first nine months of the year, United Rental reports $1.630 billion of net cash from operating activities and $846 million of free cash flow, an improvement over the $1.557 billion of net cash and $508 million of free cash flow compared to the same period in 2015. The company reports net rental capital expenditures of $784 million for the first nine months, compared to $1.044 billion last year.

“Based on what we saw through the third quarter, and what we hear from our customers, we remain optimistic about the cycle,” Kneeland says. “We now expect our 2016 rental rates and adjusted EBITDA to track toward the upper end of prior guidance and free cash flow to exceed our prior expectations. This takes into account our plan to invest up to an additional $50 million in fleet to service specific large contract wins. Looking forward, we remain positive about our operating environment and remind investors of the substantial flexibility we have in managing our business for whatever market conditions materialize.”