United Tops $3.5 Billion in ’05 Revenue, Company Reports

Estimated 2005 rental revenue for United Rentals topped $3.2 billion, according to results announced by United last week. Although the company’s 2005 earnings, financial highlights, and other data and outlooks released last week are preliminary, subject to change based on completion of the 2004 and 2005 audits or the outcome of the still-in-process SEC inquiry, the company announced record revenue, with full year 2005 total revenue of $3.56 billion, a 15.2 percent increase from 2004.

Revenue for the full year from the general rental segment was $3.11 billion, a 14 percent year over year jump from $2.71 billion in 2004, with same-store rental revenues increasing 9.8 percent. The trench safety, pump and power segment, which includes rental of steel trench shields and shoring, pumps, temporary power and climate-control equipment did $180 million in revenue, a 38.5 percent year over year increase, up from $130 million in 2004. The traffic control segment had $270 million in revenue, a 5.7 percent increase from 2004.

Fourth quarter total revenues increased 17.1 percent year over year to $962 million. Dollar utilization for the fourth quarter was 69 percent, an increase of 7.7 percentage points from the fourth quarter of 2004, while dollar utilization for the full year was a record 64.9 percent, a 5.1 percentage point jump from 2004.

United said it expects diluted earnings per share of $0.48 for the fourth quarter of 2005 and $1.81 for the full year, with free cash flow for the year of $133 million after total capital expenditures of $839 million.

The company announced its full year 2006 outlook for diluted earnings per share of $2.13 to $2.23, and said it expects to generate $4.0 billion in total revenues in 2006. It expects about $175 million of free cash flow in 2006, after total capital expenditures of about $900 million.

Same store rental revenues increased 13 percent for the fourth quarter and 11.8 percent for the full year, while rental rates increased 5.2 percent for the fourth quarter and 6.0 percent for the full year. Contractor supplies sales increased 41.7 percent for the fourth quarter and 44.2 percent for the full year to $324 million.

Fourth quarter 2005 revenues for general rentals were $843 million, a 16 percent year-over-year increase, up from $721 million in Q405. Rental rates for the fourth quarter increased 5.1 percent, and same-store rental revenues jumped 10.3 percent.

Purchases of rental equipment were $757 million in 2005, compared with $592 million in 2004.

United has delayed reporting final results for 2004 and 2005 and will delay filing its 2005 Form 10-K beyond the March 15 deadline, but hopes to accomplish the filing by the end of the 15-day extension period.

“Our strong performance in 2005 reflects continuing success in improving rental rates, expanding our rental fleet, increasing time utilization and driving contractor supplies revenue growth,” said CEO Wayland Hicks. “Dollar utilization of 64.9 percent in 2005 was the highest we have ever achieved. All three segments of our business demonstrated strong revenue growth in 2005. Our total revenue growth of 15 percent outpaced our primary end market, private non-residential construction, which improved 5 percent in 2005 according to Department of Commerce data.”

Hicks added that United plans to invest about $845 million in its rental equipment fleet in 2006. “We opened 37 new branches in 2005, and expect to open another 30 to 35 new branches in 2006.”

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

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