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United Rentals Announces First Quarter 2014 Results

United Rentals, Inc. (NYSE:URI) today announced financial results for the first quarter 2014. Total revenue was $1.178 billion and rental revenue was $1.005 billion, compared with $1.100 billion and $916 million, respectively, for the same period last year. On a GAAP basis, the company reported first quarter net income of $60 million, or $0.56 per diluted share, compared with $21 million, or $0.19 per diluted share, for the same period last year.

Adjusted EPS 1 for the quarter was $0.90 per diluted share, compared with $0.58 per diluted share for the same period last year. Adjusted EBITDA 2 was $519 million and adjusted EBITDA margin was 44.1%, a first quarter company record.

First Quarter 2014 Highlights

  • Rental revenue (which includes owned equipment rental revenue, re-rent revenue and ancillary items) increased 9.7% year-over-year. Within rental revenue, owned equipment rental revenue increased 9.1%, reflecting year-over-year increases of 7.6% in the volume of equipment on rent and 4.3% in rental rates. The company has reaffirmed its outlook for a full-year increase in rental rates of approximately 4%, and full year total revenue in a range of $5.45 billion to $5.65 billion.
  • Adjusted EBITDA was $519 million and adjusted EBITDA margin was a first quarter record 44.1%, an increase of $68 million and 310 basis points, respectively, from the same period last year. The company has reaffirmed its outlook for full year adjusted EBITDA in a range of $2.55 billion to $2.65 billion, and it currently expects to be near the top of that range.
  • Time utilization increased 40 basis points year-over-year to 64.6%. The company has reaffirmed its outlook for full year time utilization of approximately 68.5%.
  • The company generated $110 million of proceeds from used equipment sales at an adjusted gross margin of 49.1%, compared with $123 million and 43.9% for the same period last year. 3
  • Flow-through, which represents the year-over-year change in adjusted EBITDA divided by the year-over-year change in total revenue, was 87.2% for the quarter.

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1.     Adjusted EPS is a non-GAAP measure that excludes the impact of the following special items: (i) merger related costs; (ii) restructuring charge; (iii) asset impairment charge; (iv) impact on interest expense related to fair value adjustment of acquired RSC indebtedness; (v) impact on depreciation related to acquired RSC fleet and property and equipment; (vi) impact of the fair value mark-up of acquired RSC fleet; (vii) RSC merger related intangible asset amortization and (viii) loss on repurchase/redemption of debt securities and retirement of subordinated convertible debentures. See table below for amounts.
2. Adjusted EBITDA is a non-GAAP measure that excludes the impact of the following special items: (i) merger related costs; (ii) restructuring charge; (iii) impact of the fair-value mark up of acquired RSC fleet; and (iv) stock compensation expense, net. See table below for amounts.
3. Adjusted used equipment gross margins exclude the impact of the fair value mark-up of acquired RSC fleet that was sold.
 

CEO Comments

Michael Kneeland, chief executive officer of United Rentals, said, "We're off to a strong start in 2014, with notable year-over-year growth in rates, time utilization and volume. Our adjusted EBITDA margin improved to over 44%, a first quarter record. Despite the headwind of a harsh winter, we strategically managed our business to capitalize on pockets of opportunity. We now see solid demand in almost every market, giving us further confidence in our full year outlook."

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