United Rentals Announces Second Quarter and First Half 2008 Results

Business Wire, July 30, 2008

Updates Full Year Outlook to Reflect Completion of Share Repurchases;

Calls $125 Million of New 14% HoldCo Notes

GREENWICH, Conn. -- United Rentals, Inc. (NYSE: URI) today announced second quarter 2008 income from continuing operations of $37 million, compared with $67 million for the second quarter 2007; and first half 2008 income from continuing operations of $75 million, compared with $99 million for the first half 2007. The decreases primarily reflect lower gross profit in a softening equipment rental environment as well as the previously disclosed $14 million after-tax provision relating to the SEC inquiry, partially offset by the company's successful cost-cutting initiatives, including reductions in SG&A expense of $21 million and $39 million for the second quarter and first half 2008, respectively.

On a GAAP basis, the company reported a second quarter 2008 continuing operations loss per share of $2.33, compared with continuing operations earnings per share of $0.60 for the second quarter 2007; and a first half 2008 continuing operations loss per share of $1.89, compared with continuing operations earnings per share of $0.90 for the first half 2007. Second quarter and first half 2008 losses per share reflect the impact of a $239 million preferred stock redemption charge that reduces income available to common stockholders for EPS purposes, but does not affect net income. As previously disclosed, this one-time redemption charge relates to the company's June 2008 repurchase of all of its outstanding Series C and D preferred stock. The company's second quarter and first half 2008 loss per share amounts also reflect an $8 million after-tax charge principally related to the establishment of a foreign tax credit valuation allowance as a result of the additional leverage from the share repurchase, as well as the SEC provision.

EBITDA was $252 million and $476 million for the second quarter and first half 2008, respectively, compared with EBITDA of $295 million and $508 million, respectively, for the same periods last year. Excluding the impact of the SEC provision, the company's pro-forma EBITDA margin improved 1.3 percentage points to 32.0% for the second quarter 2008, and improved 2.4 percentage points to 30.6% for the first half 2008, reflecting the beneficial impact of the company's ongoing initiatives to reduce operating costs.

For the second quarter 2008, rental revenue was $621 million and total revenue was $831 million, compared with $659 million and $962 million, respectively, for the second quarter 2007. For the first half 2008, rental revenue was $1,192 million and total revenue was $1,603 million, compared with $1,226 million and $1,800 million, respectively, for the first half 2007. The reduction in rental revenue in the second quarter 2008 reflects declines of 1.4 percent in rental rates and 0.8 percentage points in time utilization. Total revenue performance also reflects a planned reduction in sales of contractor supplies, consistent with the company's strategy to focus on its core rental business.

The company also reported pro-forma continuing operations earnings per share for the second quarter and first half 2008, reflecting the reduced share count from the preferred stock repurchase. Pro-forma EPS, which excludes the impact of the preferred stock redemption charge, the $8 million after-tax charge, and the SEC provision, was:

* $0.62 for the second quarter 2008.

* $1.03 for the first half 2008.

Full Year 2008 Outlook

Based on a reduced, anticipated full year weighted-average share count of 85 million shares, the company recalculated its full year 2008 outlook for pro-forma earnings per share to a range of $3.15 to $3.25. The outlook continues to anticipate total revenue of $3.3 billion to $3.4 billion and pro-forma EBITDA of $1.15 billion to $1.17 billion. The company also expects $350 million to $400 million of free cash flow after total capital expenditures of approximately $715 million.

Excluding the impact of the preferred stock repurchase, the common share repurchases discussed below and the provision related to the SEC matter, the company's outlook range would have been unchanged from its previous guidance range of $2.65 to $2.75.

Share Repurchases

On June 10, 2008, the company announced that it had repurchased all of its outstanding Series C preferred stock and Series D preferred stock, which, on a converted basis, was the equivalent of 17 million common shares. In addition, on June 17, 2008, the company commenced a "modified Dutch auction" tender offer to repurchase up to 27.16 million of its common shares at a price not greater than $25.00 nor less than $22.00 per share. On July 23, 2008, the company announced the final results of the tender, and accepted for purchase the full allotment of 27.16 million shares at a price of $22.00 per share. As a result, the company's outstanding shares of common stock were reduced to approximately 59.3 million.

On June 9, 2008, and in anticipation of the share repurchases, the company entered into a new $1.25 billion asset-based revolving credit facility and repaid the approximately $462 million outstanding under the company's former revolving credit facility and term loan. It also issued $425 million in new 14% HoldCo notes due 2014 to the holders of the preferred stock as partial payment for the repurchase. These notes are callable at par at any time.