United Posts Record Q4 and Full-Year Time Utilization Rates; Rental Revenue Rises in Q4

United Rentals posted a 10.4-percent rental revenue increase in the fourth quarter of 2010, bringing in $497 million compared with $450 million for the same period in 2009. Along with the rental revenue boost, rental rates for the quarter increased 1.2 percent compared with the year-ago quarter, while same-store rental revenues jumped 14.3 percent year over year. Total revenue for the fourth quarter increased 7.2 percent from $557 in the fourth quarter of 2009 to $597 in the recently concluded quarter.

Time utilization for the fourth quarter was 69.3 percent, a 7.5-percentage point improvement compared to the same period in 2009. The utilization number was a company record for the fourth quarter. Time utilization for the full year was 65.6 percent, a 4.9-percentage point hike compared to 2009 and a full-year record for the company.

For the full year, total revenue was $2.2 billion, a 9.1-percent drop compared with 2009, while rental revenue was flat at $1.8 billion.

Free cash flow was $227 million for the full year 2010, compared with $367 million for 2009. Full-year net rental capex – defined as purchases of rental equipment minus the proceeds from sales of rental equipment – were $202 million, compared with $31 million in 2009, a 650-percent increase.

“We once again outperformed our markets, with double-digit increases in rental revenue and volume, and record time utilization for the quarter,” said Michael Kneeland, United Rentals CEO. “Underlying these numbers is a systemic focus on profitability that has helped us limit costs and turn the corner on rates. Our year-over-year rate performance was positive for the first time in 15 quarters, driven by an increase in demand and our internal pricing initiatives. This is a very strong close to the year, and gives us excellent momentum going into 2011.”

For 2011, the company is targeting a 5-percent year-over-year hike in rental rates; an increase in time utilization of about 1 percentage point year over year; free cash flow in the range of $10 million to $50 million; net rental capex of $425 million to $475 million, with gross rental purchases of about $625 million.

“This year is about profitable growth for United Rentals,” added Kneeland. “We are continuing to strengthen our metrics, our margins and the levers that drive them, particularly our customer service structure. Our strategy has been to stay in front of key customer segments through the worst of times, earning their confidence for exactly this point in the cycle. As a result, we expect to outpace what we see as a modest recovery in our end markets.”

For the fourth quarter of 2010, on a GAAP basis, United reported a loss from continuing operations of $17 million compared with a loss of $24 million for the same period in 2009. On an adjusted basis, earnings per share in the fourth quarter were 16 cents per diluted share, compared with a loss of 21 cents per diluted share in the year-ago period. Adjusted EBITDA and adjusted EBITDA margins were $691 million and 30.9 percent respectively for 2010, compared with $628 million and 26.6 percent in 2009.

The size of the rental fleet, as measured by original equipment cost, was $3.79 billion at the end of the year, compared with $3.76 billion at the end of 2009. The age of the rental fleet was 47.7 months on the last day of 2010, compared with 42.4 months at the end of 2009.

Based in Greenwich, Conn., United Rentals is No. 1 on the RER 100.

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