First-quarter Revenues Up for United

GREENWICH, Conn. — United Rentals reported total first quarter revenues of $644.7 million, an 8.9-percent increase from the first quarter of 2003. Its rental revenue increased from $443.6 to $467.3 year over year, a 5.3-percent jump. However, the company still experienced an adjusted net loss for the first quarter of $5.9 million, or 8 cents per share, an improvement from the net loss of $8.7 million in the first quarter of last year, or 11 cents per share.

United also incurred $95.2 million in charges net of tax, relating to the debt refinancing completed in the first quarter of 2004 and a $5.5 million charge net of tax for the vesting of restricted shares granted to executives in 2001. After taking the charges into account, the company reported GAAP results for the first quarter as follows: operating income of $32.9 million, a net loss of $106.6 million and a loss of $1.38 per share.

Still the company had many positives to report. Dollar utilization was 49.6 percent, an increase of 3 percentage points from the first quarter of 2003. First quarter revenues for the general rentals segment — United will now report results in two segments, general rentals and traffic control — were $599 million, an 11.2-percent jump year over year. Rental rates for the first quarter increased 6.5 percent, with same-store rental revenues climbing 8.5 percent year over year. And segment operating income for the first quarter was $53.7 million, up from $48.7 million in Q103.

“Adjusted results for the seasonally slow first quarter improved from last year and were better than our expectations,” said CEO Wayland Hicks. “The improvement was driven by the 6.5-percent increase in rental rates as well as a 34-percent increase in contractor supply sales in our general rentals segment. The positive impact of these factors offset higher general rentals operating costs and declining revenues and profits in our traffic control segment. We also benefited from lower interest expense due to lower interest rates.”

Hicks added that first-quarter data suggests that private non-residential construction, United's primary end market, appears to have leveled off. “We're beginning to sense more optimism from our customers that their business has bottomed out and is beginning to turn,” Hicks added. “Beyond 2004, a sustained rebound in private non-residential construction has the potential to drive revenues significantly higher. As that happens, our substantial operating leverage should allow us to grow earnings much faster than revenues.”

First quarter revenues for the traffic control segment were $45 million, a decline of 14.5 percent compared with $53 million for the first quarter of 2003. Same-store rental revenues in the first quarter declined 11.7 percent from the first quarter of 2003. The segment operating loss for the first quarter was $13.8 million compared with $8.4 million for the first quarter of 2003. However, United officials were optimistic that as TEA-21 highway construction is eventually resolved, which Hicks added, may not occur until after the fall election, prospects for the traffic control division appear much brighter.

United president and chief financial officer John Milne added that United's maintenance costs will decrease significantly for the year's remaining three quarters. “We incur more maintenance costs in the first quarter as we prep older fleet in anticipation of equipment sales in the rest of the year,” Milne said. “Our sales of rental fleet increased to $55 million in the first quarter in line with our plans for about $250 million for the year.”

Milne added that United's capital expenditure for rental equipment for the first quarter was $153 million, a $51 million increase from the first quarter of last year, with total Q1 capex reaching $172 million, a $61 million jump year over year.

Greenwich, Conn.-based United Rentals is No. 1 on the RER 100.

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