Free cash flow takeaway
A quick read on the company's cash generation and what it means for investors.
United Rentals reported modest free cash flow in the first quarter of 2023, as capital expenditure absorbed the majority of operating cash flow. Free cash flow margin weakened compared to both the prior quarter and the same quarter last year, despite revenue growth.
- Revenue remained stable sequentially and increased year-over-year. Operating cash flow decreased from the preceding quarter but was slightly higher than a year ago. Capital expenditure also fell from the prior quarter but rose significantly compared to the year-ago period. The resulting free cash flow declined both sequentially and year-over-year, leading to a lower free cash flow margin.
- Compared to the prior quarter, free cash flow and margin were lower, driven by a decline in operating cash flow despite lower capital expenditure. Versus the same quarter one year earlier, free cash flow and margin declined sharply as capital expenditure increased at a faster pace than operating cash flow.
FCF snapshot
Quarterly and TTM cash-flow metrics with the minimum valuation context.
TTM free cash flow
$463.0M
Trailing twelve-month free cash flow.
Quarter free cash flow
$69.0M
Free cash flow in the selected fiscal quarter.
Operating cash flow
$939.0M
Cash generated by operations before capital spending.
CapEx
$870.0M
Capital spending and related asset purchases.
FCF margin
2.1%
The share of revenue converted into free cash flow.
Cash flow trend
A short quarterly history shows whether FCF is scaling with revenue or only spiking for one period.
| Period | Revenue | Operating CF | CapEx | FCF | FCF margin |
|---|---|---|---|---|---|
| 2022-06-30 | -$1.4B | $1.2B | $940.0M | $214.0M | -15.1% |
| 2022-09-30 | $578.0M | $1.1B | $1.2B | -$19.0M | -3.3% |
| 2022-12-31 | $3.3B | $1.3B | $1.1B | $199.0M | 6.0% |
| 2023-03-31 | $3.3B | $939.0M | $870.0M | $69.0M | 2.1% |
Cash conversion quality
Checks that separate high-quality free cash flow from accounting noise or working-capital timing.
| FCF / net income | 15.3% | Shows whether accounting earnings convert into cash. |
| CapEx / revenue | 26.5% | Lower capital intensity usually supports FCF margin. |
| Net cash | n/a | Cash and equivalents minus total debt. |
Recent events shaping cash flow
Near-term business events that help explain the free cash flow result.
Capital Expenditure Intensity
Capital expenditure in the current quarter absorbed a large portion of operating cash flow, resulting in a thin free cash flow margin. The increase in capital spending year-over-year was the strongest observable driver of the decline in free cash flow.
Higher capital expenditure constrained free cash flow conversion in the quarter.
What the cash flow says
How to interpret the company's free cash flow beyond the headline number.
Revenue remained stable sequentially and increased year-over-year. Operating cash flow decreased from the preceding quarter but was slightly higher than a year ago. Capital expenditure also fell from the prior quarter but rose significantly compared to the year-ago period. The resulting free cash flow declined both sequentially and year-over-year, leading to a lower free cash flow margin.
Compared to the prior quarter, free cash flow and margin were lower, driven by a decline in operating cash flow despite lower capital expenditure. Versus the same quarter one year earlier, free cash flow and margin declined sharply as capital expenditure increased at a faster pace than operating cash flow.
The level of capital expenditure relative to operating cash flow will be a key factor in future free cash flow generation.