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United Rentals, Inc. URI witnessed a 2.9% rise in its share price during the after-hours trading session yesterday, following the release of the first-quarter 2025 results. The company’s earnings per share (EPS) and revenues surpassed the Zacks Consensus Estimate. On a year-over-year basis, the top line increased, but the bottom line declined.
The company reported record first-quarter revenues and adjusted EBITDA, driven by strong demand across construction and industrial-end markets. This performance, along with sustained customer activity, supported the reaffirmation of full-year guidance as the company enters its peak season.
With a clear focus on its established strategy, the company continues to prioritize disciplined capital deployment and operational efficiency. Backed by a solid balance sheet and a new $1.5 billion share repurchase authorization, the company is positioned to sustain growth, generate strong free cash flow and create long-term value.
Adjusted EPS of $8.86 topped the Zacks Consensus Estimate of $8.84 by 0.2%. The reported figure, however, decreased 3.2% from the prior-year adjusted figure of $9.15 per share. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Total revenues were $3.719 billion in the quarter, surpassing the consensus mark of $3.563 billion by 4.4%. On a year-over-year basis, the top line grew 6.7%.
United Rentals, Inc. price-consensus-eps-surprise-chart | United Rentals, Inc. Quote
Equipment Rentals’ revenues increased 7.4% from the year-ago quarter to $3.145 billion, marking a record high for the first quarter. Fleet productivity inched up 3.1% year over year and the same increased 3.1%, excluding the impact of the Yak acquisition. Average original equipment at cost increased 3.3% year over year.
Used equipment sales (or sales of rental equipment) decreased 1.6% from a year ago to $377 million. This produced an adjusted gross margin of 47.2%, which contracted 610 basis points (bps). The decrease in the year-over-year adjusted gross margin primarily resulted from the ongoing normalization of the used equipment market, which includes pricing adjustments.
General Rentals: This segment registered 1.4% year-over-year growth in rental revenues to a first-quarter record of $2.099 billion. Rental gross margin contracted 60 bps year over year to 32.3%, indicating the impact of inflation and normal cost variability, including higher delivery and certain other costs.
Specialty: Segmental rental revenues improved 21.8% year over year to a first-quarter record of $1.046 billion. Excluding the impact of the Yak acquisition, rental revenues grew 14.8% year over year. Rental gross margin, however, contracted 600 bps year over year to 43.1%, indicating higher depreciation expense related to the Yak acquisition. This was further impacted by a larger portion of 2025 revenues coming from lower-margin ancillary services. Rising inflation and normal cost variability also added pressure. In addition, expenses related to repositioning the fleet to meet strong demand contributed to the overall decrease in gross margin.
The company’s total equipment rentals’ gross margin contracted 180 bps year over year to 35.9%.
Adjusted EBITDA for the reported period grew 5.3% year over year to $1.7 billion. Our estimate for the metric was $1.605 billion. However, the adjusted EBITDA margin contracted 60 bps to 44.9%. This decline in the adjusted EBITDA margin primarily stemmed from a decreased rental and used equipment sales gross margin, along with higher SG&A expenses. However, this was partially offset by the positive impact of the H&E break-up fee.
United Rentals entered into a merger agreement with H&E in January 2025, which was terminated in February. As a result, the company received a $64 million break-up fee. After deducting related transaction costs, a net benefit of $39 million was recorded in the first-quarter results.
United Rentals had cash and cash equivalents of $542 million as of March 31, 2025, up from $429 million at 2024-end. Total liquidity was $3.345 billion at the first-quarter end. Long-term debt at the first quarter of 2025-end was $11.5 billion, down from $12.23 billion at 2024-end.
On March 31, 2025, the net leverage ratio was 1.7x compared with 1.8x on Dec. 31, 2024. Return on invested capital decreased 10 bps year over year to 12.6% for the trailing 12 months ended on March 31, 2025.
During the first quarter of 2025, cash from operating activities improved 38.5% year over year to $1.425 billion. Free cash flow grew 24.5% year over year to $1.082 billion for the said period.
During the quarter, the company returned $368 million to its shareholders, including $250 million through share repurchases and $118 million in dividends.
Total revenues are now expected to be in the range of $15.6-$16.1 billion compared with $15.1-$15.3 billion expected earlier. The new expectation reflects quite an improvement from $15.345 billion reported in 2024.
Adjusted EBITDA is now projected to be between $7.2 billion and $7.45 billion compared with $7.115 billion and $7.215 billion projected earlier. The guidance reflects an increase from $7.160 billion reported in 2024.
Net rental capital expenditure is now anticipated to be in the range of $2.2-$2.5 billion (after gross purchases of $3.65 billion to $3.95 billion) compared with $2.235 billion after gross purchases of $3.756 billion in 2024.
Net cash provided by operating activities is anticipated to be in the range of $4.5-$5.1 billion. Free cash flow (excluding the impact of merger and restructuring-related payments) is expected to be in the range of $2-$2.2 billion.
Currently, United Rentals carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
D.R. Horton, Inc. DHI reported dismal second-quarter fiscal 2025 (ended March 31, 2025) results, with earnings and total revenues missing the Zacks Consensus Estimate and decreasing on a year-over-year basis.
D.R. Horton now expects consolidated revenues to be in the range of $33.3-$34.8 billion, down from the previously expected band of $36-$37.5 billion. This compares with $36.8 billion in fiscal 2024. Homes closed are anticipated to be within 85,000-87,000 units, down from the previously expected range of 90,000-92,000 units. This compares with 89,690 homes closed in fiscal 2024.
KB Home KBH reported lackluster fiscal first-quarter 2025 results. The quarter’s earnings and total revenues missed the Zacks Consensus Estimate and tumbled year over year.
KB Home’s results reflect the softness in the housing market as homebuyers are still navigating through affordability concerns due to high mortgage rates. Besides, the ongoing macroeconomic uncertainties and other regulatory changes in the country are adding to the instability of the housing market. Owing to these market uncertainties and a lower net order level at the end of the quarter, KB Home lowered its fiscal 2025 guidance.
Lennar Corporation LEN reported first-quarter fiscal 2025 results, wherein its earnings and revenues surpassed the Zacks Consensus Estimate. On a year-over-year basis, the top line increased, but the bottom line declined.
Lennar’s performance was impacted by a challenging macroeconomic environment. Although demand remained strong, higher interest rates, inflation and weak consumer confidence made homeownership less accessible. A limited supply of affordable homes added to the difficulties, leading to a decline in the company's average sales price. Moving forward to fiscal 2025, to counter the market uncertainties, Lennar aims to focus on its volume-based strategy to drive sales and implement an asset-light, land-light business model.
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This article originally published on Zacks Investment Research (zacks.com).
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