United Rentals boosted rental volume to $571 million in the first quarter of 2008, compared with $567 million for the same period last year. However, total volume declined from $838 million in Q106 to $772 million in this year’s first quarter. The increase in rental revenue and decrease in total revenue are consistent with the company’s previously announced plan to refocus on its core business of equipment rental, de-emphasizing the supply business and the divested traffic safety business.
Diluted earnings per share jumped 13.3 percent to $0.34 per share, from $0.30 per share in last year’s first quarter. Income from continuing operations jumped 18.8 percent for the first quarter to $38 million, compared with $32 million for the year-ago quarter. The company attributed the increase to a renewed focus on its core rental business and ongoing initiatives to reduce operating costs.
EBITDA improved $11 million to $224 million and EBITDA margin improved 3.6 percentage points to 29 percent. Operating income margin improved 1.4 percentage points to 13.2 percent if revenue.
Time utilization, on a larger fleet, increased 0.7 percentage points, offsetting a rental rate decline of 0.6 percent. Free cash flow for the first quarter jumped to $143 million after total rental and non-rental capital expenditures of $151 million. Based on current utilization trends and considering recent industry forecasts for spending in its primary end markets, United Rentals revised its full-year 2008 outlook for earnings per share to a range of $2.65 to $2.85.
“Our increased emphasis on equipment rental and cost containment is directly responsible for the record first-quarter earnings and EBITDA that we reported today,” said CEO Michael Kneeland. “We are committed to pursuing profitable rental volume, with the result that our employees were successful in increasing both rental revenue and time utilization for the quarter despite the challenges faced in some of our end markets. We expect that the disciplined execution of our strategy will continue to benefit our 2008 results.
“Nevertheless we concur with many construction industry experts and the experience of our own customers who see a slowdown in construction starts. This will constrain the demand for equipment as the year progresses. In light of the current operating environment, we have made a modest revision to our outlook. The board continues to review alternatives for enhancing shareholder value, taking account of the environment, our cash flow, capital structure and covenants.”
Greenwich, Conn.-based United Rentals is No. 1 on the new RER 100.