United Rentals announced last week that it has raised its planned net rental capex to $160 million to $180 million, a 60-percent increase from its previously projected range.
“We spent $125 million of gross rental CapEx in the [second] quarter,” chief financial officer William Plummer told United’s second-quarter conference call. “And we’re buying categories with that spend that we expect to perform well in the near term. For instance, we’re buying forklifts, we’re buying light towers, compressors, excavators, really a host of general rental and earthmoving products and skewing away from aerial products in the spend. We are spending a little bit on aerial but doing so in specific categories like big booms, which are still in good demand.”
Plummer added the company is buying categories that fit with the demand United Rentals is seeing from its customer groups, and will continue buying equipment into the second half of 2010.
“We are confident that as we do put that new CapEx into our fleet, that we’ll be able to put that fleet on rent right away,” added Plummer. “We’re going to target the spend on specific categories. We’re going to support specific accounts, and we’re going to really focus on driving returns out of the investment.”
Second-quarter total revenue dropped 9.4 percent for United Rentals, posting $557 million compared with $615 million for the same period in 2009. Rental revenue was essentially flat, dropping from $454 million in the second quarter of 2009 to $450 million this year.
However, because of reduced expenses, profits were significantly improved. On a GAAP earnings per share basis, United Rentals reported second-quarter 2010 net income of $12 million, or 18 cents per diluted share, compared with a net loss of $17 million, and a 28-cents-per-diluted-share plunge for the same period last year.
Net income for the second quarter was $12 million, compared with a $21 million loss in 2009’s second quarter. Adjusted EBITDA margin was 32.1 percent for the quarter, a 31.5-percent improvement compared with 24.4 percent in the year-ago period.Based in Greenwich, Conn., United Rentals is No. 1 on the RER 100.