United Rentals Announces First Quarter 2011 Results
Greenwich, CT - Apr 18, 2011
United Rentals, Inc. (NYSE: URI) today announced financial results for the first quarter 2011. Total 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.
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.
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.
Free cash flow, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA, and adjusted earnings per share (adjusted EPS) are non-GAAP financial measures as defined under the rules of the SEC. Free cash flow represents net cash provided by operating activities, less purchases of rental and non-rental equipment plus proceeds from sales of rental and non-rental equipment and excess tax benefits from share-based payment arrangements, net. EBITDA represents the sum of net loss, benefit for income taxes, interest expense, net, interest expense-subordinated convertible debentures, depreciation of rental equipment and non-rental depreciation and amortization. Adjusted EBITDA represents EBITDA plus the sum of the restructuring charge and stock compensation expense, net. Adjusted EPS represents EPS plus the sum of the restructuring charge and the losses on the repurchase/retirement of debt securities and subordinated convertible debentures. The company believes that: (i) free cash flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements; (ii) EBITDA and adjusted EBITDA provide useful information about operating performance and period-over-period growth; and (iii) adjusted EPS provides useful information concerning future profitability. However, none of these measures should be considered as alternatives to net income, cash flows from operating activities or earnings per share under GAAP as indicators of operating performance or liquidity. Information reconciling forward-looking free cash flow to a GAAP financial measure is unavailable to the company without unreasonable effort.
About United Rentals
United Rentals, Inc. is the largest equipment rental company in the world, with an integrated network of 530 rental locations in 48 states and 10 Canadian provinces. The company’s approximately 7,300 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers for rent approximately 2,900 classes of equipment with a total original cost of $3.85 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.
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “seek,” “on-track,” “plan,” “project,” “forecast,” “intend” or “anticipate,” or the negative thereof or comparable terminology, or by discussions of vision, strategy or outlook. You are cautioned that our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control, and, consequently, our actual results may differ materially from those projected. Factors that could cause actual results to differ materially from those projected include, but are not limited to, the following: (1) a slowdown in the recovery of North American construction and industrial activities, which decreased during the economic downturn and significantly affected our revenues and profitability, may further reduce demand for equipment and prices that we can charge; (2) a decrease in levels of infrastructure spending, including lower than expected government funding for stimulus-related construction projects; (3) our highly leveraged capital structure, 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; (4) restrictive covenants in our debt agreements, which could limit our financial and operation flexibility; (5) noncompliance with covenants in our debt agreements, which could result in termination of our credit facilities and acceleration of outstanding borrowings; (6) inability to access the capital that our business may require; (7) inability to collect on contracts with customers; (8) incurrence of impairment charges; (9) the potential consequences of litigation and other claims relating to our business, including certain claims that our insurance may not cover; (10) an increase in our loss reserves to address business operations or other claims and any claims that exceed our established levels of reserves; (11) incurrence of additional costs and expenses in connection with litigation, regulatory or investigatory matters; (12) increases in our maintenance and replacement costs as we age our fleet, and decreases in the residual value of our equipment; (13) inability to sell our new or used fleet in the amounts, or at the prices, we expect; (14) challenges associated with past or future acquisitions, such as undiscovered liabilities and integration issues; (15) management turnover and inability to attract and retain key personnel; (16) our rates and time utilization being less than anticipated; (17) our costs being more than anticipated, the inability to realize expected savings and the inability to obtain key equipment and supplies; (18) disruptions in our information technology systems; (19) competition from existing and new competitors; and (20) labor difficulties and labor-based legislation affecting labor relations and operations generally. For a more complete description of these and other possible risks and uncertainties, please refer to our Annual Report on Form 10-K for the year ended December 31, 2010, 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.
Cell: (917) 847-4507