By RTT News, October 16, 2013, 09:45:00 PM EDT
(RTTNews.com) - Equipment rental company United Rentals, Inc. ( URI ) reported Wednesday a profit for the third quarter that doubled from last year, reflecting revenue growth amid increases in rental rates and rental volumes. Adjusted earnings per share for the quarter topped analysts' expectations by three cents, while quarterly revenues missed their estimates.
The company's board of directors also approved a share repurchase program authorizing up to $500 million in share repurchases, to be completed within 18 months.
"This was a strong quarter for us, capped by a record 49% adjusted EBITDA margin. We leveraged increasing demand for our services to put more equipment on rent at higher utilization, and with sequential monthly rate improvements throughout the quarter," CEO Michael Kneeland said in a statement.
The Greenwich, Connecticut-based company reported net income of $143 million or $1.35 per share for the third quarter, higher than $73 million or $0.70 per share in the prior-year quarter.
Results for the latest quarter primarily include RSC merger related intangible asset amortization of $0.23 per share, while the prior year included $0.25 per share of the same and merger related restructuring charges of $0.23 per share.
Excluding items, adjusted earnings for the quarter was $1.63 per share, compared to $1.35 per share in the year-ago quarter.
On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $1.60 per share for the quarter. Analysts estimate typically exclude special items.
Total revenues for the quarter increased to $1.31 billion from $1.22 billion in the same quarter last year, but missed ten Wall Street analysts' consensus estimate of $1.32 billion by a whisker.
Equipment rental revenues grew 8.3 percent from last year to $1.14 billion, with owned equipment rental revenue increasing 8.0 percent, reflecting year-over-year increases of 8.2 percent in volume of equipment on rent and 3.2 percent in rental rates. Time utilization also grew 100 basis points year-over-year to 70.8 percent.
The company also said it has realized cost synergies of $64 million in the third quarter from the integration of RSC, and reaffirmed its goal of $230 million to $250 million of annual cost synergies in 2014.
Looking ahead to fiscal 2013, the company reaffirmed its outlook for rental rates growth of at least 4 percent, and adjusted EBITDA in a range of $2.25 billion to $2.35 billion. The company also continues to expect time utilization of about 68.0 percent, and free cash flow in the range of $400 million to $500 million.
"This is the environment we anticipated when we set our full year financial targets, and we expect that nonresidential construction will continue to trend upward in 2014. As we plan for the coming year, our operations are in a strong position to drive margin expansion through further rate improvement and business process efficiencies," Kneeland added.
URI closed Wednesday's regular trading session at $59.79, up $2.41 or 4.20% on a volume of 6.23 million shares.
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