United Rentals Reports Q1 Results

May 2, 2007 • Greenwich, Conn.-based United Rentals, Inc. announced first quarter 2007 continuing operations diluted earnings per share of $0.30, an increase of 30 percent compared with $0.23 for the first quarter 2006. Income from continuing operations for the first quarter 2007 increased 28 percent 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 percent 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 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.

"Our business continued to perform well in the first quarter, with a 30-percent improvement in earnings per share, solid revenue growth and free cash flow in line with our full year forecast,” said Wayland Hicks, CEO for United Rentals. “Earnings per share were a first-quarter record for our company."

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."

In April, 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 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.