United Rentals last week announced record earnings per share from continuing operations for the fourth quarter and full-year 2006. Fourth-quarter earnings per share of 71 cents increased 34 percent compared with 53 cents for the fourth quarter of 2005. Earnings per share for the full year was $2.28, up 18 percent from 2005’s full year EPS of $1.93.
Fourth quarter income from continuing operations of $77 million was a 40-percent jump from $55 million in Q405, while full-year income from continuing operations of $249 million was a 23-percent increase from $202 million in full-year 2005.
Total revenue from continuing operations was $939 million for the fourth quarter 2006, a 5.5-percent hike from Q405, and $3.64 billion for the full year was a 10.7-percent jump from $3.29 billion in 2005. United recently completed its previously announced sale of its traffic control division.
United’s equipment rental revenue totaled $2.53 billion, not including the traffic-control business, up 8.2 percent from $2.34 billion in 2005, not including the discontinued operation.
Net income for the fourth quarter, including an after-tax loss on the sale of the traffic-control business of $24 million, was $53 million, or 49 cents per share, compared with $49 million, or 47 cents per share in the year-ago period. Net income for the full year was $224 million, or $2.06 per share, compared with $187 million, or $1.80 per share, for the full year of 2005, a 19.8 percent jump.
Free cash flow for the fourth quarter was $230 million, after total rental and non-rental capital expenditures of $114 million, up from $211 million for the same period last year. The size of United’s rental fleet, measured by the original equipment cost was $3.9 billion, and the average age was 39 months at year end, compared with $3.8 billion and 40 months at year-end 2005.
Same-store rental revenue increased 0.1 percent for the fourth quarter and 6.2 percent for the full year. Dollar utilization decreased 0.2 percentage points to 63.6 percent for the fourth quarter, and increased 1.9 percentage points to 61.9 percent for the full year.
Rental rates increased 4.2 percent for the fourth quarter and 5.1 percent for the full year. Contractor supplies sales increased 21 percent year over year for the fourth quarter and 28 percent year over year for the full year to $385 million.
The company’s outlook for earnings per share for 2007 is $2.65 to $2.75, and the company expects to generate $3.85 billion in total revenue in 2007, $1.2 billion of EBITDA and $150 million to $200 million of free cash flow after total capital expenditures of $900 to $950 million.
CEO Wayland Hicks was bullish about the company’s record earnings and $249 million free cash flow. “We also improved our return on invested capital by 1.8 percentage points to 14.7 percent and reduced our total debt plus convertible debentures by $450 million,” he added. “Our fourth quarter earnings per share were particularly strong at $0.71, ahead of expectations.”
Hicks added that the recent sale of the company’s traffic-control business “allows us to redeploy capital to our core business. In 2007, we expect to grow our earnings substantially, generate strong free cash flow and continue to improve our ROIC.”
