United Rentals last week announced first-quarter 2007 continuing operations diluted earnings per share of $0.30, an increase of 30 percent compared with $0.23 for the first quarter 2006. Income from continuing operations for the first quarter 2007 increased 28 percent to $32 million from $25 million for the first quarter 2006. Total continuing operations revenue of $841 million for the first quarter increased 5.3 percent compared with the same period last year.
In February, the company completed the previously announced sale of its traffic control business, which is reflected as discontinued operations.
Net income for the first quarter 2007 was $30 million, or $0.28 per diluted share, including the discontinued operation after-tax loss of $2 million, or $0.02 per diluted share. Net income for the first quarter 2006 was $20 million, or $0.19 per diluted share, including the discontinued operation after-tax loss of $5 million, or $0.04 per diluted share.
The size of the rental fleet, as measured by the original equipment cost, was $4.0 billion and the age of the rental fleet was 38 months at March 31, compared with $3.9 billion and 39 months at year-end 2006, and $3.9 billion and 40 months at March 31, 2006.
Also in the first quarter, return on invested capital at March 31, improved 1.0 percentage point to 14.4 percent. EBITDA, a non-GAAP measure, improved $13 million to $213 million. Rental rates increased 1.7 percent and same-store rental revenue increased 2.3 percent. In addition, dollar utilization increased 0.1 percentage points to 56 percent and contractor supplies sales increased 13.3 percent to $94 million.
“Our business continued to perform well in the first quarter, with a 30-percent improvement in earnings per share, solid revenue growth and free cash flow in line with our full-year forecast,” said CEO Wayland Hicks. “Earnings per share were a first-quarter record for our company.
“As we improve earnings from operations, we are also actively continuing the process we announced last month to explore a broad range of strategic alternatives to maximize shareholder value.”
The company affirmed its full-year 2007 outlook for diluted earnings per share of $2.65 to $2.75. The company also expects to generate $1.2 billion of EBITDA on $3.85 billion in total revenue, and $150 to $200 million of free cash flow after total capital expenditures of $960 to $980 million.
“We are focused on expanding our margins and accelerating EBITDA growth by driving down the SG&A expense ratio and reducing non-equipment purchase costs through consolidation of our vendor base,” said Michael Kneeland, chief operating officer. “At the same time, we are seeking to optimize return on invested capital through more intense management of our fleet mix, rates and expenses.”
On April 10, the company announced that its board of directors had authorized commencement of a process to explore a broad range of strategic alternatives to maximize shareholder value, including a possible sale of the company. The company cautions that there can be no assurance that the exploration of alternatives will result in a transaction. The company does not expect to disclose further developments regarding the process unless and until its board of directors has completed its evaluation or approved a specific transaction.
The company also announced that Wayland Hicks will retire as CEO effective at the annual shareholders' meeting on June 4, and will continue to serve on the board as vice chairman. Michael Kneeland will succeed him as interim CEO.
Return on invested capital was 14.4 percent for the 12 months ended March 31, an improvement of 1.0 percentage point from the same period last year.
Based in Greenwich, Conn., United Rentals is No. 1 on the RER 100 with an integrated network of more than 690 rental locations in 48 states, 10 Canadian provinces and Mexico.
