United Rentals Earnings Call NUGGETS: Hues of Rental Revenue, The Interplay of Rate and Time

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On Wednesday, United Rentals Inc (NYSE:URI) reported its second quarter earnings and discussed the following topics in its earnings conference call. Here’s what the C-suite shared.

Hues of Rental Revenue

Henry Kirn – UBS Securities: On a pro forma basis, the rental revenue was up 15% in the second quarter, now I know you don’t give full year revenue guidance, but could you give some color on the level of growth that you might expect for the second half of the year given the comps that you face?

William B. Plummer – EVP and CFO: I think the fair thing to say would be that we would expect the level of growth in, let’s say the third quarter, to be down a touch from where it was in the second quarter. So, on a pro forma basis, we were 15%. I would expect that we would come down just a shape from that, just given the strength of the third quarter last year, and obviously the interplay of rate and time utilization in the quarter will determine exactly where we ended up. But it’s hard to keep repeating against the comps that we know are coming in the third and fourth quarter, and so I’d say down a touch.

The Interplay of Rate and Time

Peter Chang – Credit Suisse: I guess to build on Henry’s question, and again with the caveat that you don’t give explicit financial guidance, but with the interplay of the growth in your rate guidance compared to the decrease of the utilization, I mean would you say, if you did give explicit financial guidance that this would be a flat raise or lower? I mean it looks like flat to me. But the reason why I asked because I think there’s some confusion that utilization is more important than the increase in rental rates which actually drive higher EBITDA, and I just wanted to get your comment on that?

William B. Plummer – EVP and CFO: Sure, Peter. So, maybe I’ll try and others can chime in. Maybe I can simplify it. As we think about the full year today compared to the way we thought about the full year back in May when we gave you that outlook. The interplay between rate and time, results in a view of profitability that’s really not significantly different today than it was back in mid-May. So, even though, rates have done a little better, time has done a little worse. When we look at that and blend it with the underlying cost performance that we expect – the synergies that we expect and so on. The profitability looks – the picture looks very much the same today as it did back in mid-May.

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