United Rentals last week announced that total revenues for the second quarter 2006 increased 12 percent to $995 million. In its general rentals segment, which includes rental of construction, aerial, industrial and homeowner equipment as well as related services and activities, second quarter 2006 revenues were $865 million, an increase of 12.2 percent compared with $771 million for the second quarter 2005.
Rental rates for the second quarter increased 5.7 percent and same-store rental revenues increased 8.6 percent from the same period last year. Operating income for general rentals was $142 million for the second quarter, an increase of 15.4 percent compared with $123 million for the same period last year.
First half 2006 revenues for general rentals were $1.62 billion, an increase of 13.3 percent compared with $1.43 billion for the first half of 2005. Operating income for general rentals was $224 million for the first half, an increase of 15.5 percent compared with $194 million for the same period last year. General rentals segment revenues represented 88 percent of total revenues for the first half 2006.
Second quarter 2006 revenues for trench safety, pump and power were $55 million, an increase of 25 percent compared with $44 million for the second quarter 2005. The acquisition of Sandvick Equipment and Supply Co. in December 2005 contributed $5 million to second quarter 2006 revenue growth. Rental rates for the second quarter increased 3.9 percent and same-store rental revenues increased 13.5 percent from the same period last year.
First half 2006 revenues for trench safety, pump and power were $104 million, an increase of 33.3 percent compared with $78 million for the first half 2005. Trench safety, pump and power segment revenues represented 5 percent of total revenues for the first half 2006.
The traffic control segment reported second quarter 2006 revenues of $75 million, an increase of $2 million from the second quarter 2005. Same-store rental revenues for the second quarter increased 6.2 percent from the same period last year.
First half 2006 revenues for traffic control were $122 million, an increase of 4.3 percent compared with $117 million for the first half 2005. Traffic control segment revenues represented 7 percent of total revenues for the first half 2006.
The company also announced second-quarter 2006 diluted earnings per share of 51 cents, after including charges of 5 cents per diluted share to correct previously recorded depreciation expense and provide for a tax contingency. The reported second quarter 2006 diluted earnings per share represents an increase of 6 percent compared with 48 cents for the second quarter 2005.
After recognizing the impact of the 5 cents per diluted share related to the items noted above, the company revised its full-year 2006 outlook for diluted earnings per share to a range of $2.15 to $2.25. The outlook reflects continued strong performance in the company's core business, partially offset by a softer outlook for traffic control. The company expects to generate $4 billion in total revenues in 2006, and approximately $145 million of free cash flow after total capital expenditures of approximately $930 million.
Purchases of rental equipment were $369 million for the second quarter 2006 compared with $332 million for the same period last year. The size of the rental fleet, as measured by the original equipment cost, was $4.2 billion and the age of the rental fleet was 38 months at June 30, 2006, compared with $3.9 billion and 40 months at year-end 2005, and $3.9 billion and 39 months at June 30, 2005.
For the first half 2006, including the second quarter charges of 5 cents per diluted share, the company reported diluted earnings per share of 71 cents, an increase of 18 percent compared with 60 cents for the first half 2005. Net income, including the second-quarter charges of $6 million, increased 23 percent to $76 million for the first half 2006 from $62 million for the first half 2005. Total revenues of $1.84 billion for the first half 2006 increased 13.6 percent from the first half 2005.
“The same combination of improved rental rates and strong time utilization on a larger rental fleet resulted in our continued strong performance in the quarter,” said Wayland Hicks, CEO. “We also continued our excellent contractor supplies growth. We received 70 percent of our planned 2006 additions to the rental fleet by June 30, just in time for the height of the construction season. We also achieved record second-quarter dollar utilization of 65.3 percent.
“We are continuing to make significant strategic investments to take advantage of the growth opportunities in our market. We remain focused on driving revenue growth, improving our margins and increasing our return on capital."
The previously announced Securities and Exchange Commission inquiry of the company is ongoing and the company is continuing to cooperate fully with the SEC. As previously stated, the inquiry appears to relate to a broad range of the company's accounting practices and is not confined to a specific period.
Greenwich, Conn.-based United Rentals is No. 1 on the RER 100.
