United Rentals Announces Third Quarter 2007 Results

Business Wire, Oct 31, 2007

Diluted EPS from Continuing Operations Rose 23% to $0.97

EBITDA Increased $20 Million to a Quarterly Record of $342 Million

GREENWICH, Conn. -- United Rentals, Inc. (NYSE: URI) today announced third quarter 2007 continuing operations diluted earnings per share of $0.97, an increase of 23% compared with $0.79 for the third quarter 2006. Income from continuing operations for the third quarter 2007 increased 26% to $111 million, compared with $88 million for the third quarter 2006.

Net income for the third quarter 2007 was $112 million, or $0.98 per diluted share, including the discontinued operation after-tax income of $1 million or $0.01 per diluted share. By comparison, net income for the third quarter 2006 was $95 million, or $0.85 per diluted share, including the discontinued operation after-tax income of $7 million or $0.06 per diluted share.

Earnings before interest, taxes, depreciation and amortization ("EBITDA"), a non-GAAP measure, improved $20 million to $342 million, a quarterly record for the company.

Net income for the third quarter 2007 included a non-cash reduction in interest expense of $5 million after-tax, or $0.04 per diluted share, related to the mark-to-market impact of certain interest rate swaps, and a reduction in its income tax provision of $2 million after-tax, or $0.02 per diluted share, related to the reversal of a valuation allowance associated with state net operating loss carryforwards. The favorable impact of these matters was partially offset by charges of $4 million after-tax, or $0.03 per diluted share, related to the aggregate impact of costs associated with the anticipated merger with affiliates of Cerberus Capital Management L.P. ("Cerberus") and the amendment of the company's former chairman's service agreement. Net income for the third quarter 2006 included charges of $4 million after-tax, or $0.03 per diluted share, related to two debt prepayments.

Reflecting increased traction from the company's enhanced cost-cutting efforts, these results were achieved on revenues of $994 million in third quarter 2007, up 1% from $983 million in third quarter 2006. Equipment rentals revenue grew 4% and more than offset declines of 10% and 6%, respectively, within the company's used equipment and contractor supplies businesses. These trends were consistent with the company's renewed focus on its core rental business and its repositioning of contractor supplies.

The size of the rental fleet, as measured by the original equipment cost, was $4.3 billion and the age of the rental fleet was 37 months at September 30, 2007.

Third Quarter 2007 Financial Highlights from Continuing Operations

For the third quarter 2007 compared with last year's third quarter:

* Time utilization, on a larger fleet, improved 4.0 percentage points, more than offsetting a 2.0% decline in rental rates.

* Same-store rental revenue increased 2.8%.

* SG&A expense ratio improved 0.6 percentage points to 15.3% of revenues.

* Return on invested capital at September 30, 2007 improved 0.4 percentage points to 13.9%.

Michael Kneeland, chief executive officer of United Rentals, said, "These strong third quarter results reflect the intense focus and great energy of our employees in pursuing our core rental business as profitably as possible. We realized improvements in several key financial metrics, including earnings per share, EBITDA, time utilization and return on invested capital. At the same time, our ongoing initiatives to reduce costs are clearly succeeding. We look forward to the additional opportunities created by new ownership when the anticipated sale of the company to Cerberus is completed."

First Nine Months Results

For the first nine months 2007, the company reported continuing operations diluted earnings per share of $1.87, an increase of 19% compared with $1.57 for the first nine months 2006. Income from continuing operations increased 22% to $210 million for the first nine months 2007, compared with $172 million for the same period last year.

Net income for the first nine months 2007 was $209 million, or $1.87 per diluted share, including the discontinued operation after-tax loss of $1 million.

EBITDA for the first nine months 2007 increased to $850 million, up 7% from $793 million for the first nine months 2006.

Net income for the first nine months 2007 included charges of $5 million after-tax, or $0.05 per diluted share, related to the aggregate impact of costs associated with the anticipated merger with Cerberus and the amendment of our former chairman's service agreement, partially offset by a year-over-year reduction in bad debt expense of $5 million after-tax, or $0.04 per diluted share. By comparison, net income for the first nine months 2006 was $171 million, or $1.56 per diluted share, including the discontinued operation after-tax loss of $1 million, or $0.01 per diluted share, second quarter 2006 charges of $6 million after-tax, or $0.05 per diluted share, to correct previously recorded depreciation expense and provide for a tax contingency, and the third quarter 2006 charges of $0.03 per diluted share related to two debt prepayments.