United Rentals Sets New Q2 Utilization Record; Rental Revenues Up 16.4%

Greenwich, CT - United Rentals Inc. has announced financial results for the second quarter 2011. Total revenue was $629 million and rental revenue was $524 million, compared with $557 million and $450 million, respectively, for the same period last year.

On a GAAP basis, the company reported second quarter 2011 income from continuing operations of $28 million, or $0.38 per diluted share, compared with $12 million, or $0.18 per diluted share, for the same period last year. Adjusted EPS for the quarter, which excludes the impact of special items, was $0.40 per diluted share, compared with $0.25 per diluted share the prior year.

Second Quarter 2011 Highlights

  • Rental revenue increased 16.4%, reflecting year-over-year increases of 6.1% in rental rates and 13.8% in the volume of equipment on rent. The company has reaffirmed its outlook for an increase in rental rates of at least 5% for the full year.
  • Time utilization was 69.0%, an increase of 3.6 percentage points from the same period last year, and a new second quarter record for the company. The company has raised its outlook for a full-year increase in time utilization to approximately 2.5 percentage points year-over-year.
  • The company generated $41 million of proceeds from used equipment sales at a gross margin of 31.7%, compared with $37 million of proceeds at a gross margin of 24.3% for the same period last year.
  • Adjusted EBITDA was $221 million, an increase of $42 million compared with the same period last year. Adjusted EBITDA margin was 35.1%, an increase of 3.0 percentage points compared with the same period last year.

Michael Kneeland, chief executive officer of United Rentals, said, "Our strong numbers in the quarter defied a flat construction environment, and elevated our performance well above the same period last year. It was our fifth consecutive quarter of record time utilization, with a gain of more than six points of rate on a larger fleet. As we capitalize on the increasing demand for our equipment, we are also scrutinizing our cost structure for sound ways to enhance our operating leverage."

Kneeland continued, "Looking to the balance of the year, we expect our performance to remain robust as we move closer to our near term goal of a billion dollars of EBITDA and stronger margins. Although the recovery itself can be difficult to predict, our results are being propelled by a strategic plan that does not rely on our operating environment. We are continuing to shape our customer mix, fleet mix and operations in ways that create demand for our equipment now and in the long term."

Six Months 2011 Results

For the first half 2011, the company reported total revenue of $1,152 million and rental revenue of $958 million, compared with $1,035 million and $830 million, respectively, for the same period last year.

On a GAAP basis, the company reported income from continuing operations of $8 million, or $0.10 per diluted share, for the first half 2011, compared with a loss of $28 million, or $0.46 per diluted share, for the same period last year. Adjusted EPS was $0.14 per diluted share, compared with a loss of $0.28 per diluted share last year. Adjusted EBITDA margin was 31.8% for the first half 2011, an increase of 3.4 percentage points compared with the same period last year.

Free Cash Flow and Fleet Size

For the first half 2011, free cash (usage) flow was $(48) million, after total rental and non-rental capital expenditures of $425 million. By comparison, free cash flow for the first half 2010 was $107 million after total rental and non-rental capital expenditures of $186 million. Free cash flow for the first half 2010 included the receipt of a $55 million federal tax refund.

The company has updated its outlook for full year free cash flow to a range of $5 million to $10 million, including net rental capital expenditures of $450 million to $500 million. Gross rental purchases are now estimated to be approximately $650 million.

The size of the rental fleet was $4.18 billion of original equipment cost at June 30, 2011, compared with $3.79 billion at December 31, 2010. The age of the rental fleet was 46.5 months on a unit-weighted basis at June 30, 2011, compared with 47.7 months at December 31, 2010.

Return on Invested Capital (ROIC)

Return on invested capital was 4.6% for the 12 months ended June 30, 2011, an increase of 2.0 percentage points from the same period last year. The company's ROIC metric uses after-tax operating income for the trailing 12 months divided by the averages of stockholders' equity (deficit), debt and deferred taxes, net of average cash. To mitigate the volatility related to fluctuations in the company's tax rate from period to period, the federal statutory tax rate of 35% is used to calculate after-tax operating income.

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