GREENWICH, Conn. — United Rentals reported total revenue of $805.1 million in the third quarter of 2003, up from $783.1 million for the same period last year, with rental revenue rising from $615.5 million to $625.7 million year over year. Gross profit rose from $245.7 million to $258.6 million year over year, while same-store rental revenue jumped 4.7 percent and rental rates increased 3.4 percent over last year's third quarter.
Net income dropped in the third quarter from $40.8 million in 3Q03 to $31.9 million this year, with earnings per diluted share dropping from 43 cents in last year's third quarter to 34 cents this year. The decrease in net income is because of a non-cash charge of $11.7 million attributable to the vesting of restricted shares granted to senior executives in 2001. The vesting was triggered this quarter by the increase in the company's stock price. Excluding the charge, net income for the quarter would have been $42 million, with earnings per diluted share of 44 cents.
Chairman and CEO Brad Jacobs was particularly bullish about the increase in rental rates. “This quarter's increase in rental rates was achieved despite continued softness in our end markets,” Jacobs said. “We expect that the emerging economic recovery should lead to improved business conditions, but the timing of a significant rebound in non-residential construction remains difficult to forecast.”
For the first nine months of 2003, United pulled even with last year with a total of $2.13 billion.
The company also announced that it priced an offering of $125 million aggregate principal amount of 1 7/8 percent convertible senior subordinated notes due 2023. The company has granted the initial purchasers of the notes a 30-day option to purchase up to an additional $18.75 million aggregate principal amount of notes.
The notes will be convertible, under certain circumstances, into the company's common stock at an initial conversion rate of 38.952 shares per $1,000 principal amount of notes. This is equivalent to a conversion price of approximately $25.67 per share.
The company plans to use the net proceeds of the convertible notes offering to buy out existing equipment leases and/or for general corporate purposes.
United also said that it expects to proceed with an additional offering of $525 million. The notes will bear interest at 7.75 percent and be due in 2013.
The company expects to use about $424 million of the offering net proceeds to redeem $205 million face amount of outstanding 8.8 percent senior subordinated notes due 2008. The balance will be used to buy out existing equipment leases and/or for general corporate purposes. Completion of this offering is conditioned on the company obtaining an amendment to its senior credit facility allowing the planned redemption of outstanding notes.
United Rentals is No. 1 on the RER 100.