United Rentals Halves First-Quarter Loss on Record Utilization

 

Greenwich, Conn. (April 19, 2011) — United Rentals, Inc. (NYSE: URI) today announced total first-quarter 2011 revenue was $523 million and rental revenue was $434 million, compared with $478 million and $380 million, respectively, for the same period last year.

On a GAAP basis, the company reported a first quarter 2011 net loss of $20 million, or $0.34 per diluted share, compared with a net loss of $40 million, or $0.67 per diluted share, for the same period in 2010. Adjusted EPS for the quarter, which excludes the impact of special items, was a loss of $0.32 per diluted share, compared with a loss of $0.57 per diluted share the prior year. The effective tax rate for the quarter was 25.9%.

First Quarter 2011 Highlights

  • Rental revenue increased 14.2%, reflecting year-over-year increases of 4.2% in rental rates and 12.8% 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 62.4%, an increase of 6.2 percentage points from the same period last year, and a first quarter record for the company. The company has reaffirmed its outlook for an increase in time utilization for the full year of approximately 1 percentage point.
  • The company generated $32 million of proceeds from used equipment sales at a gross margin of 43.8%, compared with $35 million of proceeds at a gross margin of 31.4% for the same period last year.
  • Adjusted EBITDA was $145 million, an increase of $30 million compared with the same period last year. Adjusted EBITDA margin was 27.7%, an increase of 3.6 percentage points compared with the same period last year.

CEO Comments

Michael Kneeland, chief executive officer of United Rentals, said, "We have started the year with a very solid performance that includes rate improvement in all operating regions and record first quarter time utilization, as well as stronger gross margins on every major revenue stream. Once again we outpaced our end markets with significant rental revenue growth at a very early stage in the recovery. As demand for our services increases, we are focused on attaining the optimal balance of rate and utilization to drive returns."

Free Cash Flow and Fleet Size

For the first quarter 2011, free cash flow was $70 million, after total rental and non-rental capital expenditures of $120 million. By comparison, free cash flow for the first quarter 2010 was $99 million after total rental and non-rental capital expenditures of $54 million. Free cash flow for the first quarter 2010 included the receipt of a $55 million federal tax refund. The company has reaffirmed its outlook for full year 2011 free cash flow generation in the range of $10 million to $50 million.

The size of the rental fleet was $3.85 billion of original equipment cost at March 31, 2011, compared with $3.79 billion at December 31, 2010. The age of the rental fleet was 48.2 months on a unit-weighted basis at March 31, 2011, compared with 47.7 months at December 31, 2010.

Return on Invested Capital (ROIC)

Return on invested capital was 4.3% for the 12 months ended March 31, 2011, an increase of 2.3 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.

Conference Call

United Rentals will hold a conference call tomorrow, Wednesday, April 20, 2011, at 11:00 a.m. Eastern Time. The conference call will be available live by audio webcast at unitedrentals.com, where it will be archived, and by calling 866-261-2650.

 

Loading