Total revenue dropped 32 percent for United Rentals in the third quarter while rental revenue plunged 43 percent compared with the same period in 2008. Total revenue was $592 million compared with $873 million in the year-ago quarter, while rental revenue declined from $684 million in last year’s third quarter to $478 million in this year’s quarter.
On a GAAP basis, the company reported third-quarter 2009 net income of $0, compared with $74 million for the third quarter of 2008.
There were, however, some positive developments. Free cash flow was $123 million, compared with $20 million for the same period last year. The company expects to generate about $350 million of free cash flow for full-year 2009, an increase from its previous estimate of $325 million. Total debt decreased by $73 million during the quarter. United repurchased and retired $162 million aggregate principal amount of outstanding indebtedness.
SG&A expense decreased by $33 million compared with the same period in 2008. The company expects to reduce full-year SG&A expenses by $95 million to $100 million. Also, United sold $100 million of fleet on an original equipment cost basis with an average of 76 months.
Time utilization dropped 3.8 percentage points to 64.2 percent and rental rates declined 11.8 percent compared with last year’s third quarter. Dollar utilization dropped 12.2 percentage points to 48.7 percent.
“We are making progress on key areas of the business that are within our control, despite the further deterioration of activity in most of our end markets,” said CEO Michael Kneeland. “Our continued focus on costs was instrumental in reducing SG&A expense and cost of rentals, and we now expect free cash flow to come in higher than previously projected for the full year. Rental rates, while down year over year, showed a sequential improvement from the second quarter.”
In regard to a potential recovery, Kneeland said expectations for the timing of the cycle remain unchanged. “We are planning for a modest recovery late in 2010, with demand building gradually throughout 2011 as lending resumes for non-residential construction projects. The strategic and financial actions that we have taken over the past year will allow us to manage the business for profitable growth when the cycle turns in our favor.”
For the first nine months of 2009, the company reported total revenue of $1.8 billion and rental revenue of $1.38 billion, compared with $2.48 billion and $1.89 billion, respectively for the same period of 2008. Operating income was $90 million for the first nine months of 2009, compared with $418 million for the same period a year ago.
The size of the rental fleet, as measured by original equipment cost, was $3.8 billion and the age of the rental fleet 41 months on Sept. 10, compared with $4.1 billion and 39 months at the end of 2008.
Based in Greenwich, Conn., United Rentals is the largest equipment rental company in the world, with an integrated network of 580 rental locations in 48 states, 10 Canadian provinces and Mexico. It is No. 1 on the RER 100.