United Rentals Announces Preliminary Fourth Quarter and Full Year 2005 Earnings and Full Year 2006 Outlook.GREENWICH Greenwich, borough, Greater London, England Greenwich (grĭn`īj, grĕn`–), outer borough (1991 pop. 200,800) of Greater London, SE England, on the Thames River. Manufactures include telephone equipment and underwater cable. , Conn. -- United Rentals Founded in 1997 by eight entrepreneurs, United Rentals, Inc. is the largest equipment rental company in the world, with more than 700 rental locations throughout the United States, Canada, and Mexico. , Inc. (NYSE NYSE See: New York Stock Exchange :URI Uri, in the Bible Uri (y  `rī), in the Bible.1 Father of Bezaleel (1.) 2 Father of Geber (2.) 3 Porter. ) today announced that it expects diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.48 for the fourth quarter of 2005 and $1.81 for the full year 2005. Free cash flow for the year was $133 million after total capital expenditures of $839 million. The company also announced its full year 2006 outlook for diluted earnings per share of $2.13 to $2.23. The company expects to generate $4.0 billion in total revenues in 2006, and approximately $175 million of free cash flow after total capital expenditures of approximately $900 million. Preliminary Fourth Quarter and Full Year 2005 Financial Highlights --Total revenues increased 17.1% for the fourth quarter and 15.2% for the full year 2005 to a record $3.56 billion. --Same-store rental revenues increased 13.0% for the fourth quarter and 11.8% for the full year. --Rental rates increased 5.2% for the fourth quarter and 6.0% for the full year. --Contractor supplies sales increased 41.7% for the fourth quarter and 44.2% for the full year to $324 million. --Dollar utilization for the full year was a record 64.9%, an increase of 5.1 percentage points from 2004. Fourth Quarter and Full Year 2005 Selected Business/Preliminary Financial Data As previously announced, the company has delayed reporting final results for 2004 and for 2005 interim periods. The company will delay filing its 2005 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. beyond the March 16, 2006, due date but is working diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d to accomplish the filing by the end of the 15-day extension period. The 2005 earnings, financial highlights, other selected business and financial data and 2006 outlook provided in this press release are preliminary and subject to change based on completion of the 2004 and 2005 audits or the outcome of the previously announced SEC inquiry. This data should not be viewed as a substitute for full financial statements. Total revenues for the fourth quarter of 2005 were $962 million, an increase of 17.1% compared with $821 million for the same period last year. Dollar utilization for the fourth quarter of 2005 was 69.0%, an increase of 7.7 percentage points from the fourth quarter of 2004. The size of the rental fleet, as measured by the original equipment cost, was $3.9 billion and the age of the rental fleet was 40 months at December December: see month. 31, 2005, compared with $3.7 billion and 40 months at year-end 2004. Total revenues for the full year 2005 were $3.56 billion, an increase of 15.2% compared with $3.09 billion for the full year 2004. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was $662 million for the full year 2005 compared with $743 million for the full year 2004. Cash flow from operations during 2005 was lower than during 2004 primarily due to the impact of cash used for working capital in 2005. Purchases of rental equipment were $757 million in 2005 compared with $592 million in 2004. After total rental and non-rental capital expenditures of $839 million, free cash flow for 2005 was $133 million compared with free cash flow of $392 million for 2004. The decline in free cash flow was primarily due to the $165 million increase in rental fleet investment and the impact of cash used for working capital in 2005. The total cash balance was $316 million at December 31, 2005, an increase of $14 million from December 31, 2004. In August 2005, the company agreed to maintain a cash balance of $75 million in an investment account for a traffic control subsidiary to conduct business with the state of Florida. This cash is included in the total cash balance at year-end 2005. Financial Reporting Segments As a result of changes in the company's organizational structure  This article has no lead section.To comply with Wikipedia's lead section guidelines, one should be written. as well as the increased financial contribution of the trench trench: see ocean. safety, pump and power business during 2005, the company's financial reporting segments now include trench safety, pump and power; general rentals; and traffic control. General Rentals Segment The general rentals segment includes rental of construction, aerial aerial: see antenna, in electronics. , industrial and homeowner equipment as well as related services and activities. Fourth quarter 2005 revenues for general rentals were $843 million, an increase of 16.8% compared with $721 million for the fourth quarter of 2004. Rental rates for the fourth quarter increased 5.1% and same-store rental revenues increased 10.3% from the same period last year. Revenues for the full year 2005 for general rentals were $3.11 billion, an increase of 14.9% compared with $2.71 billion for the full year 2004. Rental rates for the full year 2005 increased 5.6% and same-store rental revenues increased 9.8% from 2004. General rentals segment revenues represented 87% of total revenues for the full year 2005. Trench Safety, Pump and Power Segment The trench safety, pump and power segment includes rental of steel trench shields Trench shields are steel or aluminum structures used for protecting utility workers while performing their duties within a trench. They are customarily constructed with sidewalls of varying thicknesses held apart by steel or aluminum spreaders. and shoring, pumps, temporary power and climate control equipment, as well as related services and activities. Fourth quarter 2005 revenues for trench safety, pump and power were $50 million, an increase of 42.8% compared with $35 million for the fourth quarter of 2004. Rental rates for the fourth quarter increased 6.8% and same-store rental revenues for the fourth quarter increased 44.3% 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% compared with $130 million for the full year 2004. Rental rates for the full year 2005 increased 6.9% and same-store rental revenues increased 37.0% from 2004. Trench safety, pump and power segment revenues represented 5% of total revenues for the full year 2005. Traffic Control Segment The traffic control segment includes rental of equipment used in traffic management as well as related services and activities. Fourth quarter 2005 revenues for traffic control were $69 million, an increase of 6.8% 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% compared with $255 million for the full year 2004. Traffic control segment revenues represented 8% of total revenues for the full year 2005. CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Comments Wayland Hicks Hicks , Edward 1780-1849. American painter of primitive works, notably The Peaceable Kingdom, of which nearly 100 versions exist. , chief executive officer, said, "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. Dollar utilization of 64.9% in 2005 was the highest we have ever achieved. "All three segments of our business demonstrated strong revenue growth in 2005. Our total revenue growth of 15% outpaced our primary end market, private non-residential construction, which improved 5% in 2005 according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Department of Commerce data. This construction spending Construction Spending An economic indicator that measures the amount of spending towards new construction. Released monthly by the U.S. Department of Commerce's Census Bureau, it looks at residential and non-residential construction in the private sector, and state and federal at is still well below peak historical levels." Hicks continued, "To capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. 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. We opened 37 new branches in 2005, and expect to open another 30 to 35 new branches in 2006." Hicks added, "We are making progress toward finalizing our financial results for 2004 and 2005 and filing our financial statements. In January, the special committee of the board of directors presented its report on matters relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the SEC inquiry. This report represents a significant step forward for our company. We are now implementing the actions directed by the board to address the issues identified by the committee. We are finalizing restatements for certain sale-leaseback transactions and also for other matters unrelated to the special committee's review, all previously announced. We are working diligently to file our financial statements by March 31, 2006." Preliminary Return on Invested Capital (ROIC ROIC Return On Invested Capital ROIC Return On Investment Capital ROIC Readout Integrated Circuit ROIC Resident Officer In Charge ROIC Regional Office Implementation Committee ) For the full year 2005, the company is initiating reporting of return on invested capital (ROIC) to provide information on the company's efficiency and effectiveness in deploying its capital and increasing shareholder value. The company's metric uses annual operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. divided by the annual averages of shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. , debt and deferred taxes, net of average cash. On this basis, the 2005 preliminary ROIC was 12.0%, an improvement of 2.4 percentage points from 2004. Preliminary 2005 Quarterly Earnings Per Share During the fourth quarter and in conjunction with the finalization Writing the table of contents (TOC) on a recordable CD or DVD disc. The finalization process ensures that the disc can be played back on most CD and DVD players. See disc-at-once. of our 2004 and 2005 results, the company made several adjustments that affected its previously reported preliminary diluted earnings per share. As a result, the revised preliminary revised quarterly diluted earnings per share for the first three quarters of 2005 are as follows:
Previously Reported Revised
------------------- -------
First quarter $0.15 $ 0.12
Second quarter 0.53 0.49
Third quarter 0.76 0.72
The adjustments to our previously reported preliminary quarterly diluted earnings per share are primarily due to the previously announced restatements for rental revenue recognition and minor sale-leasebacks. In addition, previous estimates for certain accounting accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. have been adjusted to reflect revised preliminary results. Update on the SEC Inquiry The previously announced SEC inquiry of the company is ongoing and the company is continuing to cooperate fully with the investigation. As previously stated, this inquiry appears to relate to a broad range of the company's accounting practices and is not confined con·fine v. con·fined, con·fin·ing, con·fines v.tr. 1. To keep within bounds; restrict: Please confine your remarks to the issues at hand. See Synonyms at limit. to a specific period. Caution on Historical Financial Statements As previously announced, investors are cautioned not to rely on the company's historical financial statements. Conference Call United Rentals will hold a conference call today, Tuesday, March 7th, at 11 a.m. Eastern Time. The conference will be available live by audio webcast at unitedrentals.com, where it will be archived. About United Rentals United Rentals, Inc. is the largest equipment rental company in the world, with an integrated network A network that supports both data and voice and/or different networking protocols. See converged network and new public network. of more than 740 rental locations in 48 states, 10 Canadian provinces Noun 1. Canadian province - Canada is divided into 12 provinces for administrative purposes province, state - the territory occupied by one of the constituent administrative districts of a nation; "his state is in the deep south" and Mexico. The company's 13,400 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers for rent over 20,000 classes of rental equipment with a total original cost of $3.9 billion. United Rentals is a member of the Standard & Poor's MidCap mid·cap adj. 1. Or or relating to corporations whose retained earnings and outstanding shares of common stock have a value between those of small cap companies and large cap corporations. 2. 400 Index and the Russell 2000 Index Russell 2000 Index An index measuring the performance of the 2,000 smallest companies in the Russell 3000 Index, which is made up of 3,000 of the biggest U.S. stocks. The Russell 2000 serves as a benchmark for small-cap stocks in the United States. (R) and is headquartered in Greenwich, Connecticut Greenwich is a town in Fairfield County, Connecticut, United States. As of the 2000 census, the town had a total population of 61,101. It is home to many hedge funds and other financial service companies that have left Manhattan. Of the $1. . Additional information about United Rentals is available at unitedrentals.com. The company's results for 2004 and 2005 full-year and interim periods have not been finalized See finalization. and, consequently, the results and other data for these periods and the company's outlook for 2006 are preliminary and subject to change. Certain statements contained in this press release are forward-looking in nature. These statements can be identified by the use of forward-looking terminology such as "believes," "expects," "plans," "intends," "projects," "forecasts," "may," "will," "should," "on track" or "anticipates" or the negative thereof or comparable terminology, or by discussions of strategy or outlook. The company's business and operations are subject to a variety of risks and uncertainties and, consequently, actual results may differ materially from those projected by any forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Factors that could cause actual results to differ from those projected include, but are not limited to, the following: (1) unfavorable economic and industry conditions can reduce demand and prices for the company's products and services, (2) governmental funding for highway and other construction projects may not reach expected levels, (3) the company may not have access to capital that it may require, (4) any companies that United Rentals acquires could have undiscovered liabilities and may be difficult to integrate, (5) rates may increase less than anticipated or costs may increase more than anticipated, (6) the audit of the company's 2004 results has not yet been completed and, accordingly, previously announced data for 2004 are preliminary and subject to change, (7) the company's results for the interim periods and full year 2005 have not been finalized and audit of the results for the full year 2005 has not been completed and, consequently, these results are preliminary and subject to change, (8) the evaluation and testing of the company's internal controls over financial reporting have not yet been completed and additional material weaknesses may be identified, (9) the company may incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. additional significant expenses in connection with the SEC inquiry of the company, the related internal review or the class action lawsuits class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax and derivative actions A lawsuit brought by a shareholder of a corporation on its behalf to enforce or defend a legal right or claim, which the corporation has failed to do. A derivative action, more popularly known as a Stockholder's Derivative Suit, is derived from the primary right of the that were filed in light of the SEC inquiry, (10) the SEC inquiry is ongoing and there can be no assurance that the outcome of the SEC inquiry or internal review will not require additional changes in the company's accounting policies and practices, restatements of financial statements, revisions of preliminary results or guidance, and/or otherwise be adverse to the company, (11) the company may be unable to deliver financial statements or make SEC filings within the time period required by its lenders or the indentures governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. various securities, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , (12) the company may not be able to file its 2004 10-K by March 31, 2006 (the expiration date Expiration Date The day on which an options or futures contract is no longer valid and, therefore, ceases to exist. Notes: The expiration date for all listed stock options in the U.S. of an extension granted by the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. ), in which case the Exchange will initiate suspension and delisting Delisting When the stock of a company is removed from a stock exchange. Notes: Reasons for delisting include violating regulations and/or failure to meet financial specifications set out by the stock exchange. procedures, (13) the company may not be able to file its 2005 10-K by the end of the 15-day extension period, and (14) the estimated impact of expected restatements is preliminary and may change based upon additional analysis by the company or its auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together . Certain of these risks and uncertainties, as well as others, are discussed in greater detail in the company's filings with the SEC. The company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date any such statement is made.
United Rentals, Inc.
Free Cash Flow GAAP Reconciliation
Full Year 2005
We define "free cash flow" as (i) net cash provided by operating
activities less (ii) purchases of rental equipment and purchases of
other property and equipment plus (iii) proceeds from sales of rental
equipment, proceeds from sales of rental locations and proceeds from
sales-leaseback transactions. Free cash flow is presented to provide
additional information concerning cash flow available to meet future
debt service obligations and working capital requirements. However,
free cash flow is not a measure of financial performance or liquidity
under Generally Accepted Accounting Principles ("GAAP"). Accordingly,
free cash flow should not be considered an alternative to net income
or cash flow from operating activities as indicators of operating
performance or liquidity. Information reconciling forward looking free
cash flow expectations to a GAAP financial measure is unavailable to
the company without unreasonable effort. The table below provides a
reconciliation between preliminary net cash provided by operating
activities and free cash flow.
Full Year Ended
December 31
----------------------
2005 2004
---- ----
(in millions)
Net cash provided by operating activities(1) $661.9 $742.8
Purchases of rental equipment (757.2) (592.4)
Purchases of property and equipment (2) (81.9) (57.5)
Proceeds from sales of rental equipment (1) 307.4 275.1
Proceeds from sales of rental locations 2.7 -
Proceeds from sales-leaseback - 23.5
----------------------
Free Cash Flow $132.9 $391.5
======================
(1) In the third quarter of 2005, the company determined that certain
sales previously classified as "Sales of equipment and contractor
supplies and other revenues" should have been classified as "Sales
of rental equipment." As a result, certain amounts in prior
periods have been adjusted to conform to the 2005 presentation.
The reclassification had no impact on total revenues, total gross
profit or free cash flow. The reclassification reduced 2004 "Net
cash provided by operating activities" by $39.9 million and
increased 2004 "Proceeds from sales of rental equipment" by the
same amount.
(2) The 2004 amount has been adjusted to conform to current period
presentation.
United Rentals, Inc.
Selected Summary Financial Data
Three Months Ended December 31, 2005
Three Months Ended
December 31, 2005
------------------------
(Dollars in millions)
Total revenues $962.2
Net cash provided by operating activities $237.7
Purchases of rental equipment $76.1
Purchases of property and equipment $25.7
Dollar utilization 69.0%
As of
December 31, 2005
------------------------
(in millions)
Total debt $2,930.1
Cash position and borrowing availability(1) $964.7
(1) Includes full availability under the company's $200 million
accounts receivable securitization facility. In the event the
company's long-term senior secured ratings are downgraded below B2
by Moody's Investors Service, Inc. or below B+ by Standard &
Poor's, this facility is subject to termination. The company's
current long-term senior secured ratings are B2 by Moody's
Investors Service, Inc. and BB- by Standard & Poor's.
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