United Rentals last week announced a year-over-year increase in third quarter revenues, grossing $984 million, compared to $850 million for the same period last year.
Total revenues for the first nine months of 2005 were $2.61 billion, an increase of 15.1 percent compared with $2.27 billion for the first nine months of 2004. Cash flow from operations was $427 million during the first nine months of 2005 compared with $531 million during the 2004 period. Cash flow from operations during the first nine months of 2005 was lower than during the first nine months of 2004 primarily due to the impact of cash used for working capital in 2005.
Third quarter 2005 revenues for general rentals were $901 million, an increase of 16.8 percent compared with $772 million for the third quarter of 2004. Rental rates for the third quarter increased 5 percent and same-store rental revenues increased 12.9 percent from the third quarter of 2004.
Revenues for the first nine months of 2005 for general rentals were $2.41 billion, an increase of 16 percent compared with $2.08 billion for the first nine months of 2004. Rental rates for the first nine months increased 6.3 percent and same-store rental revenues increased 11.8 percent from the first nine months of 2004.
Third quarter 2005 revenues for traffic control were $83 million, an increase of 6.2 percent compared with $78 million for the third quarter of 2004. Same-store rental revenues for the third quarter increased 13.9 percent from the third quarter of 2004.
Revenues for the first nine months of 2005 for traffic control were $200 million, an increase of 5.3 percent compared with $190 million for the first nine months of 2004. Same-store rental revenues for the first nine months increased 9.4 percent from the first nine months of 2004.
United said it expects diluted earnings per share of 76 cents for the third quarter of 2005. The company also expects to generate approximately $100 million of free cash flow after total capital expenditures of $800 million to $850 million.
The size of the rental fleet, as measured by the original equipment cost, was $3.96 billion and the age of the rental fleet was 39 months at Sept. 30, 2005, compared with $3.70 billion and 40 months at year-end 2004. Purchases of rental equipment were $677 million in the first nine months of 2005 compared with $465 million in the first nine months of 2004.
"Our strong performance this quarter reflects continuing success in improving rental rates, expanding our rental fleet, increasing time utilization and driving contractor supplies revenue growth,” said Wayland Hicks, CEO. Dollar utilization of 72.7 percent in the third quarter was the highest we have ever achieved.
"To capitalize on future growth opportunities, we're opening new branches in attractive markets. We expect to open 35 new branches in 2005, of which 30 are already operating. These new branches increase our presence in existing markets and expand our product offerings and footprint into new markets.
"In addition, we are growing our sales of contractor supplies at a rapid pace. These sales were up 46 percent compared with last year's third quarter, and we now have completed our plan to open nine regional distribution centers throughout the United States and Canada to support future growth. These significant investments should allow us to capitalize on the continuing improvement in private non-residential construction spending.
"For the full year 2005, as a result of our favorable operating performance, we are raising our outlook for total revenues to $3.5 billion and for diluted earnings per share to a range of $1.68 to $1.75, while achieving free cash flow of approximately $100 million."
Hicks added that United is making progress toward finalizing its financial results for 2004. “We have been working diligently on concluding the restatements for the self-insurance reserves and the income tax provisions and are continuing to provide information to the special committee of the board reviewing matters relating to the SEC inquiry,” Hicks said. We have also begun the work to restate our results for sale-leaseback transactions in 2000, 2001 and 2002, with aggregate reported gross profit of $34.2 million. Based on a preliminary assessment by the special committee, the accounting for most of those transactions was incorrect and appears to have been improper. When we receive the special committee's final conclusions on this matter, we will take appropriate action with respect to anyone responsible for improper conduct."
The company previously announced that it expects to restate its financial statements for the years 2000 through 2003 and the first nine months of 2004 to correct the expense associated with the self-insurance reserve. This expense was too high in 2004 and 2003 and too low in 2002 and prior years. The company has concluded that the reserve level at year-end 2004 is appropriate.
The company also previously announced that it expects to restate its financial statements for years prior to 2004 to correct the provision for income taxes. The company's analysis of the impact of the restatement on aggregate income tax expense for periods prior to 2004 and for particular periods is not yet complete. The company believes this restatement will not impact results of operations for 2004.
Greenwich, Conn.-based United Rentals is No. 1 on the RER 100.
