United Rentals last week announced record earnings per share from continuing operations for both the fourth quarter and full year 2007. For the fourth quarter, earnings per share of $0.84 was an 18.3 percent year-over-year increase compared with $0.71 for the same period in 2006. For the full year, EPS was $2.76, a 21-percent jump compared with $2.28 for the full year 2006.
The EPS results do not include the $100 million break-up fee from private equity fund Cerberus, which had to pay the fee for reneging on its agreement to acquire the Greenwich, Conn.-based national rental company. However, including the fee, net income for the fourth quarter rose to $153 million or $1.35 per share, nearly tripling its Q406 net income total of $53 million, or 49 cents per share. Including the one-time benefit, fourth quarter and full-year EPS was $1.36 per share and $3.26 per share, respectively, both company records.
EBITDA increased 9.3 percent to a record $318 million for the fourth quarter, and increased 8 percent to a record $1.17 billion for the full year. EBITDA margin improved 3.2 percentage points to 34.2 percent for the fourth quarter and 31.4 percent for the full year.
Rental revenue increased 4.1 percent for the fourth quarter and 4 percent for the full year. Rental revenue was $683 million for the fourth quarter, up from $656 million for the same period in 2006. Total revenue was $930 million, a 1-percent drop from $939 million in Q406.
Rental revenue for the full year was an industry record $2.63 billion, compared with $2.53 billion for 2006. Total revenues increased from $3.64 billion in 2006 to $3.73 billion in 2007.
Same-store rental revenue increased 3.7 percent for the fourth quarter and 3.1 percent for the full year. Time utilization increased 2.3 percentage points for the fourth quarter and 2.5 percentage points for the full year, offsetting rental rate declines of 2.1 percent for the fourth quarter and 1.1 percent for the full year.
United Rentals re-affirmed its full-year 2008 outlook for EPS of $2.80 to $3 based on anticipated rental revenue growth of 3 percent to $2.71 billion and total revenue of $3.53 billion. Rental revenue expectations reflect the following assumptions: an improvement in time utilization, virtually no growth capital and modest growth in non-residential construction activity. The company expects to generate $1.17 billion to $1.21 billion of EBITDA in 2008, a full-year EBITDA margin improvement to about 33.7 percent of revenues. United expects to generate $325 million to $375 million of free cash flow after planned total capital expenditures of about $715 million.
“The record EPS and EBITDA we generated in 2007 were the direct result of a new strategic plan that is intensely focused on profitable growth,” said CEO Michael Kneeland. “In mid-year, we put our operations under a microscope and returned our sales and service focus to our core equipment rental business, where we have numerous competitive advantages. This helped drive significant increased in time utilization and organic rental revenue growth. We took action to improve our cost structure with a 9-percent headcount reduction, branch network optimization, and approximately $22 million in cumulative savings through better sourcing.”
The company also said its board of directors has retained the executive recruitment firm of Heidrick & Struggles to conduct a search for a permanent CEO. The board confirmed that Kneeland, who is serving on an interim basis, is a candidate for the position and commended Kneeland on his leadership of the company since taking over for retiring Wayland Hicks in June 2007.
United Rentals is No. 1 on the RER 100.