United Rentals this week posted first-quarter results, with total revenue of $478 million and rental revenue of $380 million, down from $594 million and $448 million for the same period in 2009. Total revenue decrease was 19.5 percent while rental revenue dropped 15.2 percent. On a GAAP EPS basis, United reported a first-quarter 2010 net loss of $40 million, or $0.67 per diluted share, compared with a net loss of $19 million of $0.32 per diluted share for 2009’s first quarter.
Free cash flow was $99 million, compared with $129 million for the same period a year ago. The company has raised its outlook for full-year free cash flow generation to a range of $200 million to $225 million, from its previous estimate of $175 million to $200 million.
SG&A expense decreased by $22 million compared with last year. The company has raised its outlook for full-year SG&A expense reduction to a range of $40 million to $50 million, from its previous estimate of $25 million to $35 million. The company sold $77 million of fleet on an original equipment cost basis during the quarter and generated a used equipment gross margin of 31.4 percent, compared with $184 million of fleet sold at a gross margin of 11.9 percent for the same period last year.
Time utilization increased 0.1 percentage points to 56.2 percent, reflecting an increase in demand for earthmoving equipment and a 6-percent year-over-year reduction in total fleet based on original equipment cost, among other factors. Rental rates declined 6.5 percent compared with last year’s first quarter, and dollar utilization, which reflects the impact of rental rates and time utilization, dropped 3.5 percentage points to 39.4 percent.
Despite the revenue decreases, United Rentals CEO Michael Kneeland was bullish about the company’s prospects for the year. “Twelve months ago, we were in the midst of an economic free fall in our end markets,” he said. “Today we see signs of a more positive outlook for our industry, with the foremost indicator being used equipment prices. We fought back against the economic and seasonal challenges of the first quarter by holding firm on time utilization and mitigating the decline in rates. Our top line, while temporarily impacted by demand, reflects our shift toward a more optimal revenue mix. We are serving our most profitable customers more effectively and at lower cost. We now expect to outperform our initial estimates for SG&A savings and free cash flow this year.
“As conditions improve over time, the results of our strategic initiatives around customer segmentation and service, as well as our strong liquidity position and industry-leading scale, will be defining advantages. We are well prepared to benefit from the recovery with ample capital to invest in growth and with our arms firmly around value creation.”
The age of the rental fleet was 44.1 months on a unit-weighed basis March 31, compared with 42.4 months at the end of 2009.
In other United Rentals news, the company announced that CEO Kneeland and chief financial officer William Plummer will present its new investor presentation via webcast at 12:30 p.m. Thursday April 29, at http://www.wsw.com/webcast/uri. It will also be accessible at www.ur.com, where it will be archived.
Based in Greenwich, Conn., United Rentals is No. 1 on the RER 100.
