United Rentals Reports Results For Fourth Quarter And Full Year
2003 GREENWICH, Conn., Feb. 25 /PRNewswire-FirstCall/ -- United
Rentals, Inc. today reported fourth quarter revenues of $742
million, an increase of 6.9% compared with $694 million forthe
fourth quarter of 2002. Same-store rental revenues increased 6.1%
and rental rates increased 5.6% from the fourth quarter of 2002.
Revenues generated by sharing equipment between branches improved
to 12.1% of rental revenues, compared with 10.9% in the fourth
quarter of 2002. Equipment utilization increased 2.6 percentage
points from the fourth quarter of 2002 to 58.3% in the fourth
quarter 2003. Adjusted net income for the fourth quarter was $15.1
million and adjusted diluted earnings per share was $0.15 compared
with adjusted net income of $8.2 million and adjusted diluted
earnings per share of $0.09 in the fourth quarter of 2002. The
adjusted net income and diluted earnings per share exclude the
charges described below as well as the increase to diluted earnings
per share from the company's repurchases of its preferred
securities. The quarterly results show improvement on a
year-over-year basis largely because the fourth quarter 2002
earnings were reduced by an increase in bad debt expense. For the
full year 2003, the company reported revenues of $2.87 billion, an
increase of 1.6% compared with $2.82 billion for 2002. Same-store
rental revenues for the full year increased 3.7% from the prior
year and rental rates increased 2.1%. Revenues generated by sharing
equipment between branches improved to 11.5% of rental revenues
compared with 11.3% in 2002. Equipment utilization for the full
year 2003 was essentially flat with the prior year at 57.1%
compared with 57.0% in 2002. Adjusted net income for the full year
was $71.8 million and adjusted diluted earnings per share was $0.75
compared with adjusted net income of $107.6 million and adjusted
diluted earnings per share of $1.11 in 2002. The adjusted net
income and diluted earnings per share exclude the charges described
below as well as the increase to diluted earnings per share from
the company's repurchases of its preferred securities. Wayland
Hicks, vice chairman and chief executive officer, said, "Our
intense focus on rental rates began to show real results in 2003.
We saw our first annual rate improvement since 2000, and our 5.6%
rate increase in the fourth quarter was the highest quarterly
increase in the history of our company. Furthermore, we achieved
these gains without adversely affecting utilization. We also
increased same-store rental volume and added 200,000 new customers,
bringing our base to 1.9 million. "Although we outpaced our end
markets, the fourth quarter and full year results were negatively
impacted by higher operating costs as well as continued weakness in
market demand. According to Department of Commerce data, private
non-residential construction declined 6% in 2003 following a
decline of 13% in 2002. In addition, government spending on road
and highway construction remained sluggish." Hicks continued, "Our
2004 plan assumes private non-residential construction will be
relatively flat. However, we expect to substantially improve our
profitability through a combination of lower interest expense due
to our recent refinancings, higher rental rates and contractor
supply sales growth. We anticipate diluted earnings per share,
excluding charges, of $1.00 to $1.10 in 2004. "Beyond 2004, a
sustained rebound in our principal end markets has the potential to
drive earnings significantly higher." The results above for the
fourth quarter and full year 2003 exclude aggregate charges, net of
tax, of $320.2 million and $330.4 million, respectively. These
charges relate to goodwill impairment, buy-out of equipment leases,
debt refinancing, notes receivables write-off, and, in the case of
the full year results, vesting of restricted shares granted to
executives in 2001. The results above for the fourth quarter and
full year 2002 exclude aggregate charges, net of tax, of $217.1
million and $505.4 million, respectively. These charges relate to
goodwill impairment, restructuring costs, debt refinancing, and, in
the case of the full year results, a change in accounting principle
relating togoodwill. The results for the full year 2003 and the
fourth quarter and full year 2002 also exclude the positive impacts
on diluted earnings per share of repurchases by the company of its
6 1/2% convertible quarterly income preferred securities. These
repurchases added $0.01 to diluted earnings per share for the full
year 2003, $0.39 to diluted earnings per share for the fourth
quarter of 2002 and $0.47 for the full year 2002. Taking into
account the excluded items, the company reported GAAP results as
follows: a net loss of $305.1 million and a loss available to
common stockholders per diluted share of $3.96 for the fourth
quarter 2003; a net loss of $258.6 million and a loss available to
common stockholders per diluted share of $3.35 for the full year
2003; a net loss of $209.0 million and a loss available to common
stockholders per diluted share of $2.33 for the fourth quarter
2002; and a net loss of $397.8 million and a loss available to
common stockholders per diluted share of $4.78 for the full year
2002. The projected results above for 2004 exclude first half
refinancing charges, a first quarter charge for the vesting of
restricted shares granted to executives in 2001, and any non-cash
goodwill write-offs and other special charges that may be required.
For additional information on the items excluded from the
historical results, please see the GAAP reconciliation following
the financial schedules. Conference Call United Rentals will hold a
conference call with Wayland Hicks, vice chairman and chief
executive officer, and John Milne, president and chief financial
officer, today, Wednesday, February 25, at 11:00 a.m. Eastern Time.
Interested parties can participate by dialing 1-913-981-5571
(Passcode 666457). The conference will also be available live by
audio webcast at http://www.unitedrentals.com/, where it will be
archived. About United Rentals United Rentals, Inc. is the largest
equipment rental company in North America, with an integrated
network of more than 730 rental locations in 47 states, seven
Canadian provinces and Mexico. The company's 13,000 employees serve
1.9 million customers, including construction and industrial
companies, utilities, municipalities, homeowners and others. The
company offers for rent over 600 different types of equipment with
a total original cost of $3.5 billion. United Rentals is a member
of the Standard & Poor's MidCap 400 Index and the Russell 2000
Index(R) and is headquartered in Greenwich, Conn. Additional
information about United Rentals is available at
http://www.unitedrentals.com/. 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. The company's business and operations are subject to a
variety of risks and uncertainties and, consequently, actual
results may materially differ from those projected by any
forward-looking statements. 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 and (5) costs may increase more than
anticipated. These risks and uncertainties, as well as others, are
discussed in greater detail in the company's filings with the
Securities and Exchange Commission, including its most recent
Annual Report on Form 10-K and subsequent reports on Form 10-Q. The
company makes no commitment to revise or update any forward-looking
statements in order to reflect events or circumstances after the
date any such statement is made. UNITED RENTALS, INC. CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited) (in millions, except per share
data) Three Months Ended Dec. 31 Year Ended Dec. 31 Revenues 2003
2002 % 2003 2002 % Growth Growth Equipment rentals $557.7 $541.3
3.0% $2,177.5 2,154.7 1.1% Sales of rental equipment 60.3 43.0
40.3% 181.3 176.2 2.9% Sales of equipment and merchandise and other
revenues 124.2 109.9 13.1% 508.5 490.1 3.7% Total revenues 742.2
694.2 6.9% 2,867.2 2,821.0 1.6% Cost of Revenues Cost of equipment
rentals, excluding depreciation 312.2 294.4 6.0% 1,192.6
1,137.64.8% Depreciation of rental equipment 83.7 82.7 1.2% 332.6
325.5 2.2% Cost of rental equipment sales 42.3 29.5 43.3% 122.0
116.8 4.4% Cost of equipment and merchandise sales and other
operating expenses 91.6 79.4 15.4% 372.0 354.7 4.9% Total cost of
revenues 529.8 486.1 9.0% 2,019.3 1,934.7 4.4% Gross profit 212.4
208.1 2.1% 848.0 886.3 (4.3%) Selling, general and administrative
expenses 115.5 123.0 (6.1%) 451.3 438.9 2.8% Restructuring charge
-- 28.3 * -- 28.3 * Non-rental depreciation and amortization 17.8
16.6 7.2% 69.3 59.3 16.9% Goodwill impairment 296.9 247.9 19.7%
296.9 247.9 19.7% Operating income (217.8) (207.7) (4.9%) 30.4
111.9 (72.8%) Interest expense 54.1 54.1 0.1% 223.9 214.2 4.6%
Other (income) expense, net 134.9 2.6 * 133.1 (0.9) * Loss before
provision for income taxes and cumulative effect of change in
accounting principle (406.9) (264.4) (53.9%) (326.5) (101.4)
(222.0%) Provision (benefit) for income taxes (101.7) (55.4) *
(67.9) 8.1 * Loss before cumulative effect of change in accounting
principle (305.1) (209.0) (46.0%) (258.6) (109.5) (136.2%)
Cumulative effect of change in accounting principle, net of taxes
-- -- -- -- 288.3 * Net loss $(305.1) $(209.0) (46.0%) $(258.6)
$(397.8) (35.0%) Loss per share-basic: Loss available to common
stockholders before cumulative effect of change in accounting
principle $(3.96) $(2.33) (70.0%) $(3.35) $(0.98) (241.8%)
Cumulative effect of change in accounting principle, net -- -- --
-- (3.80) * Loss available to common stockholders $(3.96) $(2.33)
(70.0%) $(3.35) $(4.78) 29.9% Loss per share-diluted: Loss
available to common stockholders before cumulative effect of change
in accounting principle $(3.96) $(2.33) (70.0%) $(3.35) $(0.98)
(241.8%) Cumulative effect of change in accounting principle, net
-- -- -- -- (3.80) * Loss available to common stockholders $(3.96)
$(2.33) (70.0%) $(3.35) $(4.78) 29.9% Weighted average shares
outstanding: Basic 77.1 76.6 77.0 75.8 Diluted 77.1 76.6 77.0 75.8
* Not meaningful Columns may not add due to rounding UNITED
RENTALS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions)
December 31 December 31 2003 2002 ASSETS Cash and cash equivalents
$79.4 $19.2 Accounts receivable, net 499.4 466.2 Prepaid expenses
and other assets 224.1 223.1 Rental equipment, net 2,071.5 1,845.7
Property and equipment, net 406.6 425.4 Goodwill and other
intangible assets, net 1,441.0 1,711.0 $4,722.0 $4,690.6 LIABIITIES
& STOCKHOLDERS' EQUITY Liabilities: Accounts payable $ 150.8
$207.0 Debt 2,817.1 2,512.8 Company-obligated mandatorily
redeemable convertible preferred securities of a subsidiary trust
221.6 226.6 Deferred taxes 165.0 225.6 Accrued expenses and other
liabilities 226.6 187.1 Total liabilities 3,581.1 3,359.1
Stockholders' equity 1,140.9 1,331.5 $4,722.0 $4,690.6 GAAP
Reconciliation 1. Our results for the three months and full year
ended December 31, 2003 and 2002 reported in the press release have
been adjusted to exclude certain charges. Our results for the three
months ended and full years ended December 31, 2003 and 2002 also
exclude the positive impact of our repurchases of our 6 1/2%
convertible preferred securities. We provide this adjusted data
because we believe that this data may be useful to investors in
analyzing the period-to-period changes in our results that are
attributable to changes in business conditions and that are not due
to the write-off of goodwill. The table below reconciles the as
adjusted results with our results in accordance with generally
accepted accounting principles ("GAAP") for the three months and
full years ended December 31, 2003 and 2002 (in millions except per
share amounts): Three Months Ended Year Ended December 31 December
31 2003 2002 2003 2002 Net Income/(Loss) Net loss (GAAP) $(305.1)
$(209.0) $(258.6) $(397.8) Goodwill impairment 238.9 198.8 238.9
198.8 Buy out of equipment leases 57.7 -- 57.7 -- Refinancing costs
17.1 0.9 17.1 0.9 Write-off of notes receivable 6.6 -- 6.6 --
Vesting of restricted shares granted to executives in 2001 -- --
10.2 -- Restructuring charge -- 17.3 -- 17.3 Cumulative effect of
accounting change -- -- -- 288.3 Income, as adjusted $15.1 $8.2
$71.8 $107.6 Earnings (Loss) Per Diluted Share* Loss available to
common stockholders per diluted share $(3.96) $(2.33) $(3.35)
$(4.78) Goodwill impairment 3.10 2.59 3.10 2.62 Buy out of
equipment leases 0.75 -- 0.75 -- Refinancing costs 0.22 0.01 0.22
0.01 Write-off of notes receivable 0.09 -- 0.09 -- Vesting of
restricted shares granted to executives in 2001 -- -- 0.13 --
Restructuring charge -- 0.23 -- 0.23 Cumulative effect of
accounting change -- -- -- 3.80 Repurchases of convertible
preferred securities -- (0.39) (0.01) (0.47) Earnings per diluted
share, as adjusted $0.15 $0.09 $0.75 $1.11 * Earnings per diluted
share, as adjusted, is calculated on a fully diluted shares basis,
whereas the GAAP net loss per share and the charges per share
amounts are calculated on a basic shares basis. Columns may not add
due to rounding 2. Our EBITDA (adjusted as described below) was
$180.8 million and $136.9 million during the fourth quarter of 2003
and the fourth quarter of 2002, respectively, and $743.1 million
and $745.5 million during the full year 2003 and the full year
2002, respectively. EBITDA is generally defined as net income plus
interest expense, income taxes and depreciation and amortization.
However, our EBITDA for the fourth quarter and full year 2003 has
been adjusted to exclude certain charges incurred in 2003. These
charges relate to the vesting of restricted shares granted to
executives in 2001, goodwill impairment, refinancing costs, the
buy-out of equipment leases and the write-off of notes receivable.
Also, our EBITDAfor the fourth quarter and full year 2002 has been
adjusted to exclude charges related to goodwill impairment. EBITDA
is presented to provide additional information concerning our
ability to meet future debt service obligations and capital
expenditure and working capital requirements. However, EBITDA is
not a measure of financial performance or liquidity under GAAP.
Accordingly, EBITDA should not be considered an alternative to net
income or cash flow from operating activities as indicators of our
operating performance or liquidity. The table below provides a
reconciliation between cash flow from operating activities and
EBITDA (adjusted as described above) for the periods indicated:
Three Months Ended Year Ended December 31 December 31 2003 2002
2003 2002 (In millions) Net cash provided by operating activities
$15.8 $160.9 $342.3 $517.9 Gain on sales of rental equipment 18.0
13.5 59.3 59.4 Interest expense 54.1 54.1 223.9 214.2 Benefit
(provision) for income taxes (101.7) (55.4) (67.9) 8.1 Change in
deferred taxes 32.2 48.6 6.3 (5.9) Change in operating assets and
liabilities and other 162.4 (84.8) 179.2 (48.2) EBITDA, as adjusted
$180.8 $136.9 $743.1 $745.5 3. We define "free cash flow" as (i)
net cash provided by operating activities plus proceeds from sales
of rental equipment less (ii) aggregate expenditures for purchase
of rental equipment and other property and equipment. Our free cash
flow was $45.3 million and $167.3 million during the fourth quarter
of 2003 and the fourth quarter of 2002, respectively,and $145.7
million and $163.2 million during the full year 2003 and the full
year 2002, respectively. 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 GAAP. Accordingly, free cash flow should not be
considered an alternative to net income or cash flow from operating
activities as indicators of our operating performance or liquidity.
The table below provides a reconciliation between net cash provided
by operating activities and free cash flow for the periods
indicated: Three Months Ended Year Ended December 31 December 31
2003 2002 2003 2002 (In millions) Netcash provided by operating
activities $15.8 $160.9 $342.3 $517.9 Purchases of rental equipment
(15.3) (30.6) (335.9) (492.3) Purchases of property and equipment
(15.5) (6.0) (42.0) (38.6) Proceeds from sales of rental equipment
60.3 43.0 181.3 176.2 Free cash flow $45.3 $167.3 $145.7 $163.2
Debt Refinancing The following table reflects our actual debt at
December 31, 2003 and such debt as adjusted for our recent $2.1
billion refinancing. As part of this refinancing, we (i) obtained a
new senior secured credit facility which replaced the credit
facility we previously had in place, (ii) issued $1 billion of 6
1/2% Senior notes and $375 million of 7% Senior subordinated notes,
(iii) repaid $639 million of term loans and $53 million of
borrowings that were outstanding under our old credit facility,
(iii) repurchased $845 million principal amount of our 10 3/4%
Senior notes pursuant to a tender offer, (iv) called for redemption
$300 million principal amount of our outstanding 9 1/4% Senior
subordinated notes and (v) called for redemption $250 million
principal amount of our outstanding 9% Senior subordinated notes.
The redemption of the 9 1/4% Senior subordinated notes is expected
to be completed on February 27, 2004, and the redemption of the 9%
Senior subordinated notes is expected to be completed on April 1,
2004. Theadjusted data in the table below reflects completion of
such redemptions. Our new senior secured credit facility includes
(i) a $750 million term loan, (ii) a $650 million revolving credit
facility and (iii) a $150 million institutional letter of credit
facility. The term loan will be obtained in two draws. An initial
draw of $550 million was obtained upon the closing of the credit
facility, and an additional $200 million will be obtained on April
1, 2004. The adjusted data in the table below reflects completion
of both draws. December 31, 2003 Maturity Actual Pro forma (in
millions) Revolving credit facility February 2009 $52.6 $146.4 Term
loan February 2011 639.0 750.0 Receivables securitization September
2006 -- -- 6 1/2% Senior notes February 2012 -- 1,000.0 7% Senior
subordinated notes February 2014 -- 375.0 7 3/4% Senior
subordinated notes November 2013 525.0 525.0 1 7/8% Convertible
senior subordinated notes October 2023 143.8 143.8 9 1/4% Senior
subordinated notes January 2009 300.0 -- 9% Senior subordinated
notes April 2009 250.0 -- 10 3/4% Senior notes April2008 860.9 16.2
Other debt 45.8 43.6 Total debt $2,817.1 $3,000.0 DATASOURCE:
United Rentals, Inc. CONTACT: Chuck Wessendorf, VP,Investor
Relations and Corporate Communications of United Rentals,
+1-203-618-7318, or Web site: http://www.unitedrentals.com/
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