Revenues Drop But Net Income Rises for United in Q2

July 26, 2002
United Rentals second quarter total revenues dropped 3 percent from $768.0 last year to $744.8 million this year, while rental revenues dropped 5.3 percent

United Rentals second quarter total revenues dropped 3 percent from $768.0 last year to $744.8 million this year, while rental revenues dropped 5.3 percent from $582.4 million to $551.6 million. Second quarter net income increased year over year from $49.4 million to $51.1 million, or $0.52 per diluted share, compared with net income of $49.4 million, or $0.52 per diluted share for the same period last year. Net income in Q2 01 would have been $61.9 million, or $0.64 per diluted share, if goodwill were accounted for under FAS 142 legislation.

Net income for Q2 01 was $13.6 million, or 14 cents per diluted share, after charges for restructuring and debt refinancing.

“Revenues from the Rocky Mountain and Northeast regions, aerial equipment rentals and our national account program improved significantly during the quarter, but these results were more than offset in other areas by the continued decline in non-residential construction spending, especially for industrial facilities, offices and hotels,” said CEO Brad Jacobs. “The year-over-year decline in these categories in May ranged from 14 percent to 42 percent according to the department of commerce.

“Our SG&A in the quarter was down $6.3 million, or 5.6 percent, from last year’s second quarter as we continued to control costs. We reduced our interest expense by $9.8 million on a year-over-year basis as we benefited from lower interest rates and the repayment of approximately $250 million of debt in 2001. Our significant operating leverage – 75 percent of our cost of rentals is fixed or semi-variable – works against us in a downturn, but should benefit us when non-residential construction spending eventually rebounds.”

Same-store rental revenues decreased 5 percent year over year. Equipment utilization was 59.8 percent compared to 63.9 percent in last year’s second quarter, and sharing of equipment between branches accounted for 11.9 percent of rental revenues, compared with 10.7 percent for the same period last year. Rental rates decreased 4.2 percent on a year-over-year basis.