A month has passed by because the final earnings report for United Leases (URI). Shares have added about 1.9% in that timeframe, underperforming the S&P 500.
Will the latest optimistic pattern proceed main as much as its subsequent earnings launch, or is United Leases due for a pullback? Earlier than we dive into how traders and analysts have reacted as of late, let’s take a fast have a look at the latest earnings report as a way to get a greater deal with on the essential catalysts.
United Leases Q3 Earnings & Revenues Miss Estimates
United Leases launched tepid third-quarter 2024 outcomes. The corporate’s earnings per share (EPS) and revenues fell in need of the Zacks Consensus Estimate. Nonetheless, each metrics registered enchancment on a year-over-year foundation.
The corporate has tightened the outlook ranges for income, adjusted EBITDA, rental capital expenditures, and web money from working actions whereas reaffirming the mid-points of its 2024 forecast.
United Leases’ Quarterly Highlights
Adjusted EPS of $11.80 missed the Zacks Consensus Estimate of $12.49 by 5.5%. The reported determine, nevertheless, elevated 0.6% from the prior-year adjusted determine of $11.73 per share.
Whole revenues had been $3.992 billion within the quarter, marginally lacking the consensus mark of $3.994 billion. On a year-over-year foundation, the highest line grew 6% 12 months over 12 months.
Gear Leases revenues elevated 7.4% from the year-ago quarter to $3.46 billion. Fleet productiveness inched up 3.5% 12 months over 12 months, and the identical elevated 1.9%, excluding the influence of the Yak acquisition. Common unique gear at value elevated 3.8% 12 months over 12 months.
Used gear gross sales (or gross sales of rental gear) dropped 12.3% from a 12 months in the past to $321 million. The Used gear gross sales produced an adjusted gross margin of 49.5%, which contracted 570 foundation factors (bps). The lower within the year-over-year adjusted gross margin primarily resulted from the continued normalization of the used gear market, which incorporates pricing changes.
URI’s Phase Dialogue
Basic Leases: This section registered 0.9% year-over-year progress in rental revenues to a third-quarter file of $2.327 billion. Rental gross margin contracted 20 bps 12 months over 12 months at 37.6%.
Specialty: Segmental rental revenues improved 23.9% 12 months over 12 months to a third-quarter file of $1.136 billion. Excluding the influence of the Yak acquisition, rental revenues grew 14.8% 12 months over 12 months. Rental gross margin, nevertheless, contracted 210 bps 12 months over 12 months to 50%, reflecting larger elevated depreciation expense.
Margins
The corporate’s complete gear leases’ gross margin contracted 30 bps 12 months over 12 months to 41.6%. Adjusted EBITDA for the reported interval grew 2.9% 12 months over 12 months to $1.9 billion. Nevertheless, the adjusted EBITDA margin contracted 140 bps to 47.7%. The decline within the adjusted EBITDA margin primarily stemmed from a lower within the adjusted gross margin associated to gross sales of used gear.
Steadiness Sheet
United Leases had money and money equivalents of $479 million as of Sept. 30, 2024, up from $363 million at 2023-end. Whole liquidity was $2.87 billion on the third-quarter finish. Lengthy-term debt on the third quarter of 2024-end was $11.9 billion, up from $10.05 billion at 2023-end. On Sept. 30, 2024, the online leverage ratio was 1.8x in contrast with 1.6x on Dec. 31, 2023. Return on invested capital was 13.2% for the trailing 12 months ended on Sept. 30, 2024.
Throughout the first 9 months of 2024, money from working actions improved 6.3% 12 months over 12 months to $3.5 billion. Free money stream grew 4.7% 12 months over 12 months to $1.21 billion for a similar interval.
2024 Steering Narrowed
Whole revenues are actually anticipated to be within the vary of $15.1-$15.3 billion in contrast with 15.05-$15.35 billion anticipated earlier. The brand new expectation displays an enchancment from the $14.332 billion reported in 2023. Adjusted EBITDA is now projected to be between $7.115 billion and $7.215 billion in contrast with $7.09 billion and $7.24 billion projected earlier. The steerage displays a rise from $6.857 billion reported in 2023.
Internet rental capital expenditure is now projected to be within the vary of $2.05-$2.25 billion (in contrast with $2-$2.3 billion anticipated earlier) after gross purchases of $3.55 billion in contrast with $1.934 billion after gross purchases of $3.508 billion in 2023.
Internet money offered by working actions is now anticipated to be within the vary of $4.4-$4.8 billion (in contrast with $4.3-$4.9 billion of earlier expectations). Free money stream (excluding the influence of merger and restructuring-related funds) remains to be anticipated to be within the vary of $2.05-$2.25 billion (in contrast with $2.314 billion reported in 2023).
How Have Estimates Been Shifting Since Then?
It seems, estimates revision have trended downward throughout the previous month.
VGM Scores
At the moment, United Leases has a mean Progress Rating of C, although it’s lagging loads on the Momentum Rating entrance with an F. Nevertheless, the inventory was allotted a grade of C on the worth aspect, placing it within the center 20% for this funding technique.
Total, the inventory has an combination VGM Rating of C. When you aren’t centered on one technique, this rating is the one you need to be concerned with.
Outlook
Estimates have been broadly trending downward for the inventory, and the magnitude of those revisions signifies a downward shift. Notably, United Leases has a Zacks Rank #3 (Maintain). We count on an in-line return from the inventory within the subsequent few months.
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United Rentals, Inc. (URI) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
