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United Rentals, Inc CEO Discusses Q2 2012 Results - Earnings Conference Call

Stocks in this article: URI

We felt it was prudent to adjust our outlook for time utilization while we assess the markets for our new combined footprint. We now expect full year time utilization to be at 68% on a Pro Forma basis and this is the same as last year, which is a record for United Rentals.

The other Pro Forma targets we issued last night are an increase in rental rates of approximately 6.5% year-over-year, up 0.5 points over our previous outlook and net rental cap expenditures of about $1.1 billion after gross purchases of between $1.5 billion and $1.6 billion and negative free cash flow in the range of $90 million to $140 million and that excludes the impact of the merger-related costs.

All of these numbers are based on the assumption that full-year results for 2011 and 2012 reflect a combination of operations of United Rentals and RSC.

Now there are a number of reasons our confidence in this outlook, especially when it comes to rates. One is rental penetration. If we look at how we performed over the last few years, you can see the impact of the change in market behavior.

Our end markets are still evolving toward rental. That's one reason why we've been able to outpace the construction recovery quarter after quarter. The other advantage is we have an expanded value proposition. Our footprint is going to end up around 850 branches with a fleet size of more than 7 billion in regional equipment costs.

In addition, we now offer new site services like tool management and new customer facing technologies and we have a much stronger industrial presence. As a result, we've been able to engage our larger customers in discussions about serving more of their needs.

I'm particularly proud of how quickly we were able to align jour sales organization once the transaction was complete. Transition of our national accounts an strategic accounts has been nearly seamless.

Our rental revenue from national accounts grew by more than 20% in the quarter year-over-year and that's on a Pro Forma basis. Now this should give you an idea of how well we managed the combination.

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