United Rentals' Q1 Earnings & Revenues Beat Estimates, Stock Up

Core Viewpoint - United Rentals, Inc. (URI) reported strong first-quarter 2025 results, with earnings and revenues exceeding expectations, although the bottom line showed a year-over-year decline [1][4]. Financial Performance - Adjusted EPS was $8.86, slightly above the Zacks Consensus Estimate of $8.84, but down 3.2% from $9.15 in the prior year [4]. - Total revenues reached $3.719 billion, surpassing the consensus mark of $3.563 billion by 4.4%, and grew 6.7% year-over-year [4]. - Adjusted EBITDA increased by 5.3% year-over-year to $1.7 billion, with a margin contraction of 60 basis points to 44.9% [10]. Revenue Breakdown - Equipment Rentals revenues rose 7.4% year-over-year to a record $3.145 billion, with fleet productivity increasing by 3.1% [5]. - General Rentals segment saw a 1.4% growth in rental revenues to $2.099 billion, while Specialty segment revenues improved by 21.8% to $1.046 billion [7][8]. Margin Analysis - Total equipment rentals' gross margin contracted 180 basis points year-over-year to 35.9% [9]. - The adjusted gross margin for used equipment sales decreased to 47.2%, down 610 basis points due to market normalization [6]. Strategic Initiatives - The company maintains a focus on disciplined capital deployment and operational efficiency, supported by a solid balance sheet and a new $1.5 billion share repurchase authorization [3]. - Cash from operating activities improved by 38.5% year-over-year to $1.425 billion, with free cash flow growing 24.5% to $1.082 billion [14]. Guidance and Outlook - Full-year revenue guidance has been raised to a range of $15.6-$16.1 billion, up from the previous $15.1-$15.3 billion [15]. - Adjusted EBITDA is now projected between $7.2 billion and $7.45 billion, reflecting an increase from prior estimates [15]. Balance Sheet Strength - As of March 31, 2025, cash and cash equivalents stood at $542 million, with total liquidity of $3.345 billion [13]. - Long-term debt decreased to $11.5 billion from $12.23 billion at the end of 2024, with a net leverage ratio of 1.7x [13].