UNITED RENTALS 
By United Rentals, Inc. (NYSE: URI) today announced first quarter 2007 continuing operations diluted earnings per share of $0.30, an increase of 30% compared with $0.23 for the first quarter 2006. Income from continuing operations for the first quarter 2007 increased 28% to $32 million from $25 million for the first quarter 2006. Total continuing operations revenue of $841 million for the first quarter increased 5.3% compared with the same period last year.
On February 15, 2007, the company completed the previously-announced sale of its traffic control business, which is reflected as a discontinued operation.
Net income for the first quarter 2007 was $30 million, or $0.28 per diluted share, including the discontinued operation after-tax loss of $2 million, or $0.02 per diluted share. Net income for the first quarter 2006 was $20 million, or $0.19 per diluted share, including the discontinued operation after-tax loss of $5 million, or $0.04 per diluted share. Free cash usage for the first quarter 2007 was $85 million after total rental and non-rental capital expenditures of $296 million, compared with free cash generation of $44 million after total rental and non-rental capital expenditures of $260 million for the same period last year. The year-over-year change in free cash flow was largely the result of working capital usage in 2007 compared with generation in 2006, and an increase in rental and non-rental capital expenditures. Free cash flow is a non-GAAP measure.
The size of the rental fleet, as measured by the original equipment cost, was $4.0 billion and the age of the rental fleet was 38 months at March 31, 2007, compared with $3.9 billion and 39 months at year-end 2006, and $3.9 billion and 40 months at March 31, 2006.
First Quarter 2007 Financial Highlights from Continuing Operations
For the first quarter 2007 compared with last year's first quarter:
- Return on invested capital at March 31, 2007, improved 1.0 percentage points to 14.4%.
- EBITDA, a non-GAAP measure, improved $13 million to $213 million.
- Rental rates increased 1.7%.
- Same-store rental revenue increased 2.3%.
- Dollar utilization increased 0.1 percentage points to 56.0%.
- SG&A expense ratio improved 0.7 percentage points to 17.6% of revenue.
- Contractor supplies sales increased 13.3% to $94 million.
Wayland Hicks, chief executive officer for United Rentals, said, ?Our business continued to perform well in the first quarter, with a 30% improvement in earnings per share, solid revenue growth and free cash flow in line with our full year forecast. Earnings per share were a first quarter record for our company.?
Hicks added, ?As we improve earnings from operations, we are also actively continuing the process we announced last month to explore a broad range of strategic alternatives to maximize shareholder value.?
Full Year 2007 Outlook
The company affirmed its full year 2007 outlook for diluted earnings per share of $2.65 to $2.75. The company also expects to generate $1.2 billion of EBITDA on $3.85 billion in total revenue, and $150 to $200 million of free cash flow after total capital expenditures of $960 to $980 million.
Michael Kneeland, chief operating officer for United Rentals, said, "We are focused on expanding our margins and accelerating EBITDA growth by driving down the SG&A expense ratio and reducing non-equipment purchase costs through consolidation of our vendor base. At the same time, we are seeking to optimize return on invested capital through more intense management of our fleet mix, rates and expenses."
Exploration of Strategic Alternatives, CEO Retirement
On April 10, 2007, the company announced that its board of directors had authorized commencement of a process to explore a broad range of strategic alternatives to maximize shareholder value, including a possible sale of the company. The company cautions that there can be no assurance that the exploration of alternatives will result in a transaction. The company does not expect to disclose further developments regarding the process unless and until its board of directors has completed its evaluation or approved a specific transaction.
The company also announced that Wayland Hicks will retire as chief executive officer effective at the annual shareholders' meeting on June 4, 2007, and will continue to serve on the board as vice chairman. He will be succeeded by Michael Kneeland as interim chief executive officer.
Return on Invested Capital (ROIC)
Return on invested capital was 14.4% for the twelve months ended March 31, 2007, an improvement of 1.0 percentage points from the same period last year. The company's ROIC metric uses operating income for the trailing twelve months divided by the averages of shareholders' equity, debt and deferred taxes, net of average cash. The company reports ROIC to provide information on the company's efficiency and effectiveness in deploying its capital and improving shareholder value.
Additional Information on First Quarter 2007 Results and Status of SEC Inquiry
For additional information concerning the company's first quarter 2007 results, including segment performance for its general rentals and trench safety, pump and power businesses, as well as the status of the previously announced SEC inquiry of the company and related matters, please see the company's first quarter 2007 Form 10-Q filed today with the SEC, which is available at unitedrentals.com. The company's historical downloadable financial model is also available at its website.
Conference Call
United Rentals will hold a conference call tomorrow, Thursday, May 3rd, at 11 a.m. Eastern Time. The conference will be available live by audio webcast at unitedrentals.com, where it will be archived.
About United Rentals
United Rentals, Inc. is the largest equipment rental company in the world, with an integrated network of over 690 rental locations in 48 states, 10 Canadian provinces and Mexico. The company's 12,200 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers for rent over 20,000 classes of rental equipment with a total original cost of $4.0 billion. United Rentals is a member of the Standard & Poor's MidCap 400 Index and the Russell 2000 Index® and is headquartered in Greenwich, Conn. Additional information about United Rentals is available at unitedrentals.com.
Certain statements in this press release are forward-looking statements within the meaning of the ?safe harbor? provisions of the Private Securities Litigation Reform Act of 1995. These statements can generally be identified by words such as ?believes,? ?expects,? ?plans,? ?intends,? ?projects,? ?forecasts,? ?may,? ?will,? ?should,? ?on track? or ?anticipates,? or the negative thereof or comparable terminology, or by discussions of vision, strategy or outlook. Our businesses and operations are subject to a variety of risks and uncertainties, many of which are beyond our control, and, consequently, actual results may differ materially from those projected by any forward-looking statements. Factors that could cause actual results to differ from those projected include, but are not limited to, the following: (1) weaker or unfavorable economic or industry conditions can reduce demand and prices for our products and services, (2) non-residential construction spending, or governmental funding for infrastructure and other construction projects, may not reach expected levels, (3) we may not always have access to capital at desirable rates for our businesses or growth plans, (4) any companies we acquire could have undiscovered liabilities, may strain our management capabilities or may be difficult to integrate, (5) rates we can charge may be less than anticipated, or costs we incur may be more than anticipated, (6) we have significant leverage, which requires us to use a substantial portion of our cash flow for debt service and can constrain our flexibility in responding to unanticipated or adverse business conditions, (7) our announced exploration of strategic alternatives may have an adverse impact on our business operations, and therefore on our operating results and/or financial outlook, and, if no transaction results, our stock price is likely to be adversely affected, (8) we are subject to an ongoing inquiry by the SEC, and there can be no assurance as to its outcome or any other potential consequences thereof for us, and (9) we may incur additional significant costs and expenses in connection with the SEC inquiry, the class action lawsuits and derivative actions that were filed in light of the SEC inquiry, the U.S. Attorney's office requests for information, or other litigation, regulatory or investigatory matters related to the foregoing or otherwise. For a fuller description of these and other possible uncertainties, please refer to our Annual Report on Form 10-K for the year ended December 31, 2006, as well as to our subsequent filings with the SEC. Our forward-looking statements contained herein speak only as of the date hereof, and we make no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations.
UNITED RENTALS, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) | ||||||||
| (In millions, except per share data) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2007 | 2006 | % Change | ||||||
| Revenues: | ||||||||
| Equipment rentals | $ | 568 | $ | 551 | 3.1% | |||
| Sales of rental equipment | 82 | 77 | 6.5% | |||||
| New equipment sales | 54 | 51 | 5.9% | |||||
| Contractor supplies sales | 94 | 83 | 13.3% | |||||
| Service and other revenues | 43 | 37 | 16.2% | |||||
| Total revenues | 841 | 799 | 5.3% | |||||
| Cost of revenues: | ||||||||
| Cost of equipment rentals, excluding depreciation | 281 | 270 | ||||||
| Depreciation of rental equipment | 102 | 97 | ||||||
| Cost of rental equipment sales | 58 | 54 | ||||||
| Cost of new equipment sales | 44 | 42 | ||||||
| Cost of contractor supplies sales | 78 | 67 | ||||||
| Cost of service and other revenue | 19 | 19 | ||||||
| Total cost of revenues | 582 | 549 | 6.0% | |||||
| Gross profit | 259 | 250 | 3.6% | |||||
| Selling, general and administrative expenses | 148 | 146 | 1.4% | |||||
| Non-rental depreciation and amortization | 12 | 10 | 20.0% | |||||
| Operating income | 99 | 94 | 5.3% | |||||
| Interest expense, net | 47 | 49 | ||||||
| Interest expense - subordinated convertible debentures | 2 | 4 | ||||||
| Other expense, net | - | 1 | ||||||
| Income from continuing operations before | ||||||||
| provision for income taxes | 50 | 40 | 25.0% | |||||
| Provision for income taxes | 18 | 15 | ||||||
| Income from continuing operations | 32 | 25 | 28.0% | |||||
| Loss from discontinued operation, net of income taxes | 2 | 5 | ||||||
| Net income | $ | 30 | $ | 20 | 50.0% | |||
| Diluted earnings per share: | ||||||||
| Income from continuing operations | $ | 0.30 | $ | 0.23 | 30.4% | |||
| Loss from discontinued operation | (0.02) | (0.04) | ||||||
| Net income | $ | 0.28 | $ | 0.19 | 47.4% | |||
UNITED RENTALS, INC. | |||||||||||||||||||||||||||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||||||||||||
| 2007 | 2006 | 2006 | |||||||||||||||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 104 | $ | 331 | $ | 119 | |||||||||||||||||||||||||||||||||
| Accounts receivable, net | 500 | 442 | 502 | ||||||||||||||||||||||||||||||||||||
| Inventory | 169 | 190 | 139 | ||||||||||||||||||||||||||||||||||||
| Assets of discontinued operation | - | 143 | 107 | ||||||||||||||||||||||||||||||||||||
| Prepaid expenses and other assets | 70 | 65 | 56 | ||||||||||||||||||||||||||||||||||||
| Deferred taxes | 51 | 185 | 82 | ||||||||||||||||||||||||||||||||||||
| Total current assets | 894 | 1,356 | 1,005 | ||||||||||||||||||||||||||||||||||||
| Rental equipment, net | 2,688 | 2,441 | 2,561 | ||||||||||||||||||||||||||||||||||||
| Property and equipment, net | 381 | 310 | 359 | ||||||||||||||||||||||||||||||||||||
| Goodwill and other intangible assets, net | 1,385 | 1,360 | 1,376 | ||||||||||||||||||||||||||||||||||||
| Other long-term assets | 62 | 79 | 65 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 5,410 | $ | 5,546 | $ | 5,366 | |||||||||||||||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||||||||||||||||||||||
| Current maturities of long-term debt | $ | 61 | $ | 27 | $ | 37 | |||||||||||||||||||||||||||||||||
| Accounts payable | 344 | 306 | 218 | ||||||||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 224 | 259 | 322 | ||||||||||||||||||||||||||||||||||||
| Liabilities related to discontinued operation | - | 24 | 22 | ||||||||||||||||||||||||||||||||||||
| Total current liabilities | 629 | 616 | 599 | ||||||||||||||||||||||||||||||||||||
| Long-term debt | 2,509 | 2,879 | 2,519 | ||||||||||||||||||||||||||||||||||||
| Subordinated convertible debentures | 146 | 222 | 146 | ||||||||||||||||||||||||||||||||||||
| Deferred taxes | 439 | 459 | 463 | ||||||||||||||||||||||||||||||||||||
| Other long-term liabilities | 106 | 119 | 101 | ||||||||||||||||||||||||||||||||||||
| Total liabilities | 3,829 | 4,295 | 3,828 | ||||||||||||||||||||||||||||||||||||
| Stockholders' equity: | |||||||||||||||||||||||||||||||||||||||
| Common stock | 1 | 1 | 1 | ||||||||||||||||||||||||||||||||||||
| Additional paid-in capital | 1,430 | 1,333 | 1,421 | ||||||||||||||||||||||||||||||||||||
| Retained earnings (accumulated deficit) | 99 | (135) | 69 | ||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income | 51 | 52 | 47 | ||||||||||||||||||||||||||||||||||||
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© Business Wire - 2007
United Rentals, Inc. is specialized in equipment rental services intended especially for the construction and manufacturing industries, public services, governmental agencies and private individuals. Net sales break down by activity as follows:
- equipment rentals (86.9%);
- sale of rental equipment (8.3%);
- sale of new equipment (1.3%);
- sale of equipment to businesses (1.1%);
- other (2.4%): in particular, repair services and spare part sales.
Net sales per market are split between general industry (73.7%), electrical energy and security (26.3%).
The United States account for 90.1% of net sales.
Sector
Business Support Services
Calendar
2024-04-24
- Q1 2024 Earnings Release
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