EX-99.1 2 kl05037_ex99-1.htm EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Press Release

                                                                                Exhibit 99.1

 
 
 
United Rentals Announces First Quarter 2006 Results and Raises 2006 Outlook

GREENWICH, Conn. - May 9, 2006 - United Rentals, Inc. (NYSE: URI) today announced first quarter 2006 diluted earnings per share of $0.19, an increase of 73% compared with $0.11 for the first quarter 2005. Net income increased 67% to $20 million for the first quarter 2006 from $12 million for the first quarter 2005. Total revenues of $846 million for the first quarter increased 15.6% from the first quarter 2005. Free cash flow for the first quarter was $47 million after total capital expenditures of $264 million.

The company raised its full year 2006 outlook for diluted earnings per share to $2.17 to $2.27 from the previous range of $2.13 to $2.23. The company also expects to generate $4.0 billion in total revenues in 2006, and approximately $175 million of free cash flow after total capital expenditures of approximately $900 million.

First Quarter 2006 Financial Highlights

For the first quarter 2006 compared with last year’s first quarter:

·  
Total revenues increased 15.6% to $846 million.
 
·  
Same-store rental revenues increased 13.5%.
 
·  
Rental rates increased 6.5%.
 
·  
Contractor supplies sales increased 37.5% to $88 million.
 
·  
Dollar utilization was 58.6%, an increase of 5.0 percentage points.
 
·  
Return on invested capital improved 2.2 percentage points to 12.8%.
 
Purchases of rental equipment were $243 million for the first quarter 2006 compared with $152 million for the same period last year. The size of the rental fleet, as measured by the original equipment cost, was $4.0 billion and the age of the rental fleet was 40 months at March 31, 2006, compared with $3.9 billion and 40 months at year-end 2005, and $3.7 billion and 40 months at March 31, 2005.

Cash flow from operations was $226 million for the first quarter 2006 compared with $125 million for the same period last year. The increase in cash flow from operations was largely the result of working capital items. After total rental and non-rental capital expenditures of $264 million compared with $165 million in the first quarter 2005, free cash flow for the first quarter 2006 was $47 million compared with free cash flow of $44 million for the same period last year.

The company's total cash balance was $331 million at March 31, 2006, an increase of $15 million from December 31, 2005.

CEO Comments

Wayland Hicks, chief executive officer, said, “Improved rental rates and higher time utilization on a larger rental fleet, together with excellent contractor supplies growth, helped us continue our strong performance this quarter. We achieved record first quarter dollar utilization of 58.6%.
 
Rentals ·Sales ·Service ·Supplies
 
 
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“Same-store rental revenues were up 13.5%, reflecting growth across all three segments of our business. Our total revenue growth of 15.6% outpaced growth in our primary end market, private non-residential construction, where spending increased 10.6% in the first quarter according to Department of Commerce data.

“We are continuing to make significant strategic investments to take advantage of the growth opportunities in our market. We remain focused on driving revenue growth, improving our margins and increasing our return on capital.

Hicks also said, “For the full year 2006, as a result of our continuing strong performance, we are raising our outlook for diluted earnings per share to a range of $2.17 to $2.27 on total revenues of $4.0 billion.”

Return on Invested Capital (ROIC)

Return on invested capital was 12.8% for the twelve months ended March 31, 2006, an improvement of 2.2 percentage points from 2005. The company’s ROIC metric uses operating income for the trailing twelve months divided by the averages of shareholders’ equity, debt and deferred taxes, net of average cash. The company initiated reporting of ROIC with its results for 2005 to provide information on the company’s efficiency and effectiveness in deploying its capital and generating shareholder value.

Segment Performance

The company’s financial reporting segments are general rentals; trench safety, pump and power; and traffic control.

General Rentals
 
The general rentals segment includes rental of construction, aerial, industrial and homeowner equipment as well as related services and activities.

First quarter 2006 revenues for general rentals were $750 million, an increase of 14.7% compared with $654 million for the first quarter 2005. Rental rates for the quarter increased 6.6% and same-store rental revenues increased 13.4% from the same period last year.

Operating income for general rentals was $82 million for the first quarter, an increase of 15.5% compared with $71 million for the same period last year.

General rentals segment revenues represented 89% of total revenues for the first quarter 2006.

Trench Safety, Pump and Power

The trench safety, pump and power segment includes rental of steel trench shields and shoring, pumps, temporary power and climate control equipment, as well as related services and activities.

First quarter 2006 revenues for trench safety, pump and power were $49 million, an increase of 44.1% compared with $34 million for the first quarter 2005. The acquisition of Sandvick Equipment and Supply Company in December 2005 contributed $6 million to first quarter 2006 revenue growth. Rental rates for the quarter increased 3.7% and same-store rental revenues increased 19.0% from the same period last year.
 
 
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Operating income for trench safety, pump and power was $13 million for the first quarter, an increase of $7 million compared with $6 million for the same period last year.

Trench safety, pump and power segment revenues represented 6% of total revenues for the first quarter 2006.

Traffic Control

The traffic control segment includes rental of equipment used for traffic management as well as related services and activities.

First quarter 2006 revenues for traffic control were $47 million, an increase of 6.8% compared with $44 million for the first quarter 2005. Same-store rental revenues for the first quarter increased 12.0% from the same period last year.

The operating loss for traffic control was $7 million for the first quarter, an improvement of $4 million compared with an operating loss of $11 million for the same period last year.

Traffic control segment revenues represented 5% of total revenues for the first quarter 2006.

Update on the SEC Inquiry

The previously announced SEC inquiry of the company is ongoing and the company is continuing to cooperate fully with the SEC. As previously stated, this inquiry appears to relate to a broad range of the company's accounting practices and is not confined to a specific period.

Conference Call

United Rentals will hold a conference call tomorrow, Wednesday, May 10th, at 11 a.m. Eastern Time. The conference will be available live by audio webcast at unitedrentals.com, where it will be archived.

About United Rentals

United Rentals, Inc. is the largest equipment rental company in the world, with an integrated network of more than 750 rental locations in 48 states, 10 Canadian provinces and Mexico. The company’s 13,500 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers for rent over 20,000 classes of rental equipment with a total original cost of $4.0 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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Certain statements contained in this press release are forward-looking in nature. These statements can be identified by the use of forward-looking terminology such as "believes," "expects," "plans," "intends," "projects," "forecasts," "may," "will," "should," "on track" or "anticipates" or the negative thereof or comparable terminology, or by discussions of strategy or outlook. The company's business and operations are subject to a variety of risks and uncertainties and, consequently, actual results may differ materially from those projected by any forward-looking statements. Factors that could cause actual results to differ from those projected include, but are not limited to, the following: (1) unfavorable economic and industry conditions can reduce demand and prices for the company's products and services, (2) governmental funding for highway and other construction projects may not reach expected levels, (3) the company may not have access to capital that it may require, (4) any companies that United Rentals acquires could have undiscovered liabilities and may be difficult to integrate, (5) rates may increase less than anticipated or costs may increase more than anticipated, (6) the SEC inquiry is ongoing and there can be no assurance that the outcome of the SEC inquiry will not require additional changes in the company’s accounting policies and practices, restatements of financial statements, revisions of results or guidance, and/or otherwise be adverse to the company, and (7) the company may incur additional significant expenses in connection with the SEC inquiry of the company, the related internal review or the class action lawsuits and derivative actions that were filed in light of the SEC inquiry. Certain of these risks and uncertainties, as well as others, are discussed in greater detail in the company's filings with the SEC. The company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made.


###

Contact:
Chuck Wessendorf
VP, Investor Relations and
Corporate Communications
United Rentals, Inc.
(203) 618-7318
cwessendorf@ur.com

 
 

 
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UNITED RENTALS, INC
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
  
(In millions, except per share data)
  
               
   
Three Months Ended
      
   
March 31,
      
   
2006
  
2005
  
% Growth
  
               
Revenues:
              
Equipment rentals
  
$
591
  
$
514
    
15.0
%
Sales of rental equipment
    
78
   
80
   
(2.5
%)
New equipment sales
    
52
   
41
   
26.8
%
Contractor supplies sales
    
88
   
64
   
37.5
%
Service and other revenues
    
37
   
33
   
12.1
%
                 
Total revenues
    
846
   
732
   
15.6
%
                     
Cost of revenues:
                
Cost of equipment rentals, excluding depreciation
    
306
   
281
   
8.9
%
Depreciation of rental equipment
    
96
   
94
   
2.1
%
Cost of rental equipment sales
    
54
   
57
   
(5.3
%)
Cost of new equipment sales
    
43
   
34
   
26.5
%
Cost of contractor supplies sales
    
71
   
48
   
47.9
%
Cost of service and other revenue
    
19
   
16
   
18.8
%
                 
Total cost of revenues
    
589
   
530
   
11.1
%
                 
Gross profit
    
257
   
202
   
27.2
%
                     
Selling, general and administrative expenses
    
153
   
122
   
25.4
%
Non-rental depreciation and amortization
    
16
   
14
   
14.3
%
                 
Operating income
    
88
   
66
   
33.3
%
Interest expense, net
    
50
   
43
   
16.3
%
Interest expense-subordinated convertible debentures
    
4
   
4
   
-
  
Other expense, net
    
1
   
-
   
*
  
                   
Income before provision for income taxes
    
33
   
19
   
73.7
%
                     
Provision for income taxes
    
13
   
7
   
85.7
%
                 
Net income
 
$
20
  
$
12
    
66.7
%
                     
                     
Diluted earnings per share
  
$
0.19
  
$
0.11
    
72.7
%
 
*Not meaningful
 
 
 
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UNITED RENTALS, INC
  
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
  
(In millions)
 
               
   
March 31,
  
December 31,
  
   
2006
  
2005
  
2005
  
ASSETS
              
Cash and cash equivalents
  
$
331
  
$
342
  
$
316
  
Accounts receivable, net
   
494
   
443
   
572
 
Inventory
    
211
   
149
   
174
 
Prepaid expenses and other assets
    
143
   
116
   
154
 
Rental equipment, net
    
2,369
   
2,123
   
2,252
 
Property and equipment, net
    
453
   
400
   
445
 
Goodwill
    
1,328
   
1,292
   
1,328
 
Other intangible assets, net
    
32
   
36
   
33
 
                   
Total Assets
  
$
5,361
  
$
4,901
  
$
5,274
  
                   
                   
LIABILITIES AND STOCKHOLDERS' EQUITY
                  
                     
Liabilities
                    
Accounts payable
    
318
   
256
   
211
 
Accrued expenses and other liabilities
    
390
   
302
   
420
 
Debt
    
2,906
   
2,921
   
2,930
 
Subordinated convertible debentures
    
222
   
222
   
222
 
Deferred taxes
    
274
   
158
   
262
 
                     
Total Liabilities
  
$
4,110
  
$
3,859
  
$
4,045
  
                   
Stockholders' equity
                    
Common stock
    
1
   
1
   
1
 
Additional paid-in capital
    
1,333
   
1,350
   
1,345
 
Deferred compensation
    
-
    
(18
)
  
(12
)
Accumulated deficit
    
(135
)
  
(330
)
  
(155
)
Accumulated other comprehensive income
    
52
   
39
   
50
 
                   
Total Stockholders' Equity
  
$
1,251
  
$
1,042
  
$
1,229
  
                     
Total Liabilities and Stockholder's Equity
  
$
5,361
  
$
4,901
  
$
5,274
  
 
 
 
9
 

UNITED RENTALS, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
(In millions)
 
           
   
Three Months Ended
  
   
March 31,
  
   
2006
  
2005
  
Cash Flows From Operating Activities:
          
Net income
 
$
20
  
$
12
  
Adjustments to reconcile net income to net cash
              
provided by operating activities:
              
Depreciation and amortization
   
115
   
110
 
Gain on sales of rental equipment
   
(24
)
  
(23
)
Gain on sales of non-rental equipment
   
(2
)
  
(1
)
Non-cash adjustments to equipment
   
-
   
4
 
Amortization of deferred compensation
   
1
   
1
 
Deferred taxes
   
12
   
6
 
Changes in operating assets and liabilities:
              
Accounts receivable
   
80
   
47
 
Inventory
   
(38
)
  
(31
)
Prepaid expenses and other assets
   
10
   
4
 
Accounts payable
   
106
   
39
 
Accrued expenses and other liabilities
   
(54
)
  
(43
)
               
Net cash provided by operating activities
   
226
   
125
 
               
Cash Flows From Investing Activities:
              
Purchases of rental equipment
   
(243
)
  
(152
)
Purchases of property and equipment
   
(21
)
  
(13
)
Proceeds from sales of rental equipment
   
78
   
80
 
Proceeds from sales of non-rental equipment
   
7
   
4
 
Purchases of other companies
   
(23
)
  
-
 
               
Net cash used in investing activities
   
(202
)
  
(81
)
               
Cash Flows From Financing Activities:
              
Payments of debt
   
(8
)
  
(6
)
Proceeds from the exercise of common stock options
   
-
   
1
 
Net cash used in financing activities
   
(8
)
  
(5
)
Effect of foreign exchange rates
   
(1
)
  
-
 
Net increase in cash and cash equivalents
   
15
   
39
 
Cash and cash equivalents at beginning of period
   
316
   
303
 
               
Cash and cash equivalents at end of period
 
$
331
  
$
342
  

 
 
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UNITED RENTALS, INC.
  
SEGMENT PERFORMANCE
  
(In millions)
  
               
   
Three Months Ended
      
   
March 31,
      
   
2006
  
2005
  
% Growth
  
Total revenues
              
General rentals
  
$
750
  
$
654
    
14.7
%
Trench safety, pump and power
    
49
   
34
   
44.1
%
Traffic control
    
47
   
44
   
6.8
%
Total revenues
    
846
   
732
   
15.6
%
                     
Operating income
                    
General rentals
    
82
   
71
   
15.5
%
Trench safety, pump and power
    
13
   
6
   
116.7
%
Traffic control
    
(7
)
  
(11
)
  
*
  
Total operating income
  
$
88
  
$
66
    
33.3
%
                     
*Not meaningful
                    
 
 

DILUTED EARNINGS PER SHARE CALCULATION
  
(In millions, except per share data)
  
               
   
Three Months Ended
    
   
March 31,
    
   
2006
  
2005
  
% Growth
  
               
Net income
 
$
20
  
$
12
    
66.7
%
Convertible debt interest
    
1
   
1
   
-
  
Income available to common stockholders
  
$
21
  
$
13
    
61.5
%
                     
Weighted average common shares
    
77.3
   
77.9
   
(0.8
%)
Series C and D preferred shares
    
17.0
   
17.0
   
-
  
Convertible shares
    
6.5
   
5.6
   
16.1
%
Stock options, warrants, restricted stock and phantom shares
    
7.1
   
4.2
   
69.0
%
Total weighted average diluted shares
    
107.9
   
104.7
   
3.1
%
                     
Diluted earnings per share
  
$
0.19
  
$
0.11
    
72.7
%
 
 
 
 
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UNITED RENTALS, INC.
FREE CASH FLOW GAAP RECONCILIATION
(In millions)
 

We define "free cash flow" as (i) net cash provided by operating activities less (ii) purchases of rental equipment and purchases of property and equipment plus (iii) proceeds from sales of rental and non-rental equipment. Management believes free cash flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements. However, free cash flow is not a measure of financial performance or liquidity under Generally Accepted Accounting Principles ("GAAP"). Accordingly, free cash flow should not be considered an alternative to net income or cash flow from operating activities as indicators of operating performance or liquidity. Information reconciling forward-looking free cash flow expectations to a GAAP financial measure is unavailable to the company without unreasonable effort. The table below provides a reconciliation between net cash provided by operating activities and free cash flow.
 

   
Three Months Ended
  
   
March 31,
  
   
2006
  
2005
  
           
Net cash provided by operating activities
  
$
226
  
$
125
  
Purchases of rental equipment
    
(243
)
  
(152
)
Purchases of property and equipment
    
(21
)
  
(13
)
Proceeds from sales of rental equipment
    
78
   
80
 
Proceeds from sales of non-rental equipment
    
7
   
4
 
               
Free Cash Flow
  
$
47
  
$
44
  




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