United Rentals Announces Q1 2011 Results
Promotes Matt Flannery to Executive Vice President, Operations and Sales.
United Rentals, Inc. (NYSE: URI) has 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.
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.
Matt Flannery Promoted to Executive Vice President, Operations and Sales
United Rentals, Inc today also announced a management realignment that included the promotion of Matt Flannery to executive vice president, operations and sales. In his new role, Flannery will continue to have overall responsibility for leading our general rental and aerial operations.
"I am delighted to promote Matt in recognition of his strong business acumen and leadership skills, said Michael Kneeland, chief executive officer. "He has played a key role in our ongoing transformation through Operation United, and in his new role will work with me in looking to the future to identify growth opportunities."
Flannery was appointed senior vice president, operations in April 2008. Flannery joined the company in 1998, starting as branch manager and then serving in a variety of operating positions with increasing responsibility.
Asplund and Moshouris also promoted
United also announced that Dale Asplund has been promoted to senior vice president, business services. In continuing to build upon his success in integrating the supply chain, fleet management and shared services, Asplund's portfolio will now also include information technology.
In addition, Irene Moshouris has been promoted to senior vice president, treasurer, where she will continue to oversee treasury, tax and credit but will now also oversee real estate.
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.
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