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United Rentals issues preliminary year-end financial numbers for 2005
04/01/2006
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United Rentals has reported preliminary fourth quarter and year-end numbers that included earnings which were more than earlier company projections. Finalized numbers cannot be issued until the company files restated results for 2004 and interim periods.
Total revenues increased 17.1 percent for the fourth quarter and 15.2 percent for the full year 2005 to $3.56 billion. Same-store rental revenues increased 13 percent for the fourth quarter and 11.8 percent for the full year.
Rental rates were up 5.2 percent for the quarter and 6 percent for the year. Dollar utilization for the full year was a record 64.9 percent, up from 59.8 percent for 2004.
“Our strong performance in 2005 reflects continuing success in improving rental rates, expanding our rental fleet, increasing time utilization and driving contractor supplies revenue growth,” said Wayland Hicks, United Rentals’ CEO.
The company began reporting numbers for the trench safety, pump and power segment. That segment, which made up 5 percent of United’s revenues in 2005, has a higher margin than other segments.
Fourth quarter 2005 revenues for trench safety, pump and power were $50 million, an increase of 42.8 percent compared with $35 million for the fourth quarter of 2004. Rental rates for the fourth quarter increased 6.8 percent and same-store rental revenues for the fourth quarter increased 44.3 percent from the same period last year.
Revenues for the full year 2005 for trench safety, pump and power were $180 million, an increase of 38.5 percent compared with $130 million for the full year 2004. In this segment, rental rates for the full year 2005 increased 6.9 percent and same-store rental revenues increased 37 percent from 2004.
The traffic segment lost $20 million in 2005. The company had projected this segment to lose $30 million but said improved pricing and cost-cutting measures accounted for the better-than-expected result. Fourth quarter 2005 revenues for traffic control were $69 million, an increase of 6.8 percent compared with $65 million for the fourth quarter of 2004.
Revenues for the full year 2005 for traffic control were $270 million, an increase of 5.7 percent compared with $255 million for the full year 2004.
Traffic control segment revenues represented 8 percent of total revenues for the full year 2005. The company expects the traffic control segment to hit the “break even” point in 2006.
“All three segments of our business demonstrated strong revenue growth in 2005,” said Hicks. “Our total revenue growth of 15 percent outpaced our primary end market, private non-residential construction, which improved 5 percent in 2005 according to Department of Commerce data. This construction spending is still well below peak historical levels.”
Also, the company began reporting return on invested capital (ROIC), which company officials say is a good measurement of their business and the industry. The company’s metric uses annual operating income divided by the annual averages of shareholders’ equity, debt and deferred taxes and net of average cash. On this basis, the 2005 preliminary ROIC was 12 percent, an improvement from 9.6 percent in 2004.
In 2006, the company hopes to improve rates by another 4 percent while continuing to improve utilization. The company also expects to continue growing and investing in its fleet.
“To capitalize on future growth opportunities, we are continuing to make significant, strategic investments in the business. We plan to invest approximately $845 million in our rental equipment fleet this year,” Hicks said. “We opened 37 new branches in 2005, and expect to open another 30 to 35 new branches in 2006.”
When asked about whether United would consider acquiring one of the large competitors that have recently been put on the market, Hicks responded that the company’s plan remains to pursue the $15-20 million acquisitions that fill in geographical or market area holes, but that the company has “not ruled out larger acquisitions.”
Hicks reported the company is making progress toward finalizing its financial results for 2004 and 2005 and, as of press time, believed the company was “on track” to file by the SEC’s March 31 deadline.
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