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United Rentals Announces Third Quarter 2013 Results

United Rentals, Inc. (NYSE:URI) today announced financial results for the third quarter 2013. Total revenue was $1.311 billion and rental revenue was $1.138 billion, compared with $1.219 billion and $1.051 billion, respectively, for the same period last year. On a GAAP basis, the company reported third quarter net income of $143 million, or $1.35 per diluted share, compared with $73 million, or $0.70 per diluted share, for the same period last year.

Adjusted EPS 1 for the quarter was $1.63 per diluted share, compared with $1.35 per diluted share for the same period last year. Adjusted EBITDA 2 was $642 million and adjusted EBITDA margin was a company record 49.0% for the quarter.

Share Repurchase Authorization

The company’s board of directors has approved a share repurchase program authorizing up to $500 million in share repurchases. The company’s current intention is to complete the repurchases within 18 months.

Third Quarter 2013 Highlights 3
  • Rental revenue (which includes owned equipment rental revenue, re-rent revenue and ancillary items) increased 8.3% year-over-year. Within rental revenue, owned equipment rental revenue increased 8.0%, reflecting year-over-year increases of 8.2% in the volume of equipment on rent and 3.2% in rental rates. The company has reaffirmed its outlook for a full-year increase in rental rates of at least 4%.
  • Adjusted EBITDA was $642 million and adjusted EBITDA margin was a company record 49.0%, an increase of $72 million and 220 basis points, respectively, from the same period last year. The company has reaffirmed its outlook for full year adjusted EBITDA in a range of $2.25 billion to $2.35 billion.
  • Time utilization increased 100 basis points year-over-year to 70.8%. The company has reaffirmed its outlook for full year time utilization of approximately 68.0%.
  • The company generated $102 million of proceeds from used equipment sales at an adjusted gross margin of 48.0%, compared with $101 million of proceeds at an adjusted gross margin of 40.3% for the same period last year. 4
  • The company realized cost synergies of $64 million in the quarter from the integration of RSC, and reaffirmed its goal of $230 million to $250 million of annual cost synergies in 2014.
  • Flow-through, which represents the year-over-year change in adjusted EBITDA divided by the year-over-year change in total revenue, was 78.3%.

CEO Comments

Michael Kneeland, chief executive officer of United Rentals, said, "This was a strong quarter for us, capped by a record 49% adjusted EBITDA margin. We leveraged increasing demand for our services to put more equipment on rent at higher utilization, and with sequential monthly rate improvements throughout the quarter. This is the environment we anticipated when we set our full year financial targets, and we expect that nonresidential construction will continue to trend upward in 2014. As we plan for the coming year, our operations are in a strong position to drive margin expansion through further rate improvement and business process efficiencies."

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