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United Rentals Announces Second Quarter Results; Provides Pro-Forma Outlook

July 18, 2012, 07:15 AM
Filed Under: Corporate Earnings
Related: United Rentals

United Rentals, Inc. announced financial results for the second quarter 2012. Total revenue was $993 million and rental revenue was $845 million, compared with $629 million and $524 million, respectively, for the same period last year.

On a GAAP basis, the company reported a second quarter 2012 loss from continuing operations of $52 million compared with income of $28 million for the same period in 2011. The company’s GAAP results for the second quarter 2012 reflect significant merger and restructuring-related costs associated with its recent acquisition of RSC.

Second Quarter 2012 Highlights:

  • Adjusted EBITDA was $418 million and adjusted EBITDA margin was 42.1% for the second quarter 2012, an increase of $197 million and 700 basis points over last year.
  • Rental revenue increased 61.3%, reflecting year-over-year increases of 63.7% in the volume of equipment on rent and 7.4% in rental rates.
  • Time utilization was 67.1%, a decrease of 20 basis points from the same period last year.
  • The size of the company’s fleet increased by $3.26 billion since year-end 2011, measured on an original equipment cost (OEC) basis, and was 64.2% larger, on average, in the second quarter 2012 compared to the same period last year.
  • The company generated $81 million of proceeds from used equipment sales at a gross margin of 30.9%, compared with $41 million of proceeds at a gross margin of 31.7% for the same period last year.

Michael Kneeland, chief executive officer of United Rentals, said, "Our strong results in the second quarter were driven by several positive factors that should continue to benefit our performance. Our end markets are more robust than a year ago, and we see a growing customer appreciation for the economic value of renting equipment. In addition, we capitalized on our enhanced market position following the acquisition of RSC, particularly in the industrial sector. The integration is very much on track: we have already brought the RSC operations onto our technology platform, aligned our sales force territories, and completed 61 of 185 branch consolidations. Our cost synergies are tracking ahead of target."
Kneeland continued, "The macro environment is still difficult to forecast, and we're keeping a close watch on our end market indicators. Nevertheless, we like what we’re hearing from our customers. The higher rates and volume we achieved in the second quarter reflect continued demand for our equipment. Our customers remain confident in their outlook, and we feel comfortable with our financial targets for 2012. Our model provides us with flexibility to address changes in economic circumstances."

The company provided the following pro-forma outlook for the full year 2012:

  • An increase in rental rates of approximately 6.5% year-over-year;
  • Time utilization of 68.0%, unchanged compared to the prior year;
  • Net rental capital expenditures of between $1.075 billion and $1.125 billion, after gross purchases of between $1.5 billion and $1.6 billion; and
  • Full year free cash usage (excluding the impact of merger related costs) in the range of $90 million to $140 million.

Read the full United Rentals Second Quarter News Release.

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