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United Rentals last week reported fourth quarter revenues of $742 million, an increase of 6.9 percent from $694 million reported for the same period of 2002. However, because of aggregate charges, net of tax, of $320.2 million for the fourth quarter and $330.4 million for the full year, related to goodwill impairment, buy-outs of equipment leases, debt refinancing and notes receivables write-offs, the company reported a net loss of $305.1 million for Q403 and a net loss of $258.6 million for the full year of 2003.
Excluding the charges, United reported $2.87 billion in revenues for 2003, a 1.6 increase over 2002’s total of $2.82 billion. Rental revenue totaled $2.18 billion for 2003, up 1.1 percent from 2002’s total of $2.15 billion.
In the fourth quarter, United posted a 6.1 percent increase in same-store rental revenues and rental rates increased 5.6 percent from Q402. Revenues generated by sharing equipment between branches improved to 12.1 percent of rental revenues, up 10.9 percent year over year. Equipment utilization increased 2.6 percentage points from the fourth quarter of 2002 to 58.3 percent in Q403.
For the full year, same-store rental revenues increased 3.7 percent from 2002, while rental rates increased 2.1 percent year over year. Revenues generated from sharing equipment between branches improved to 11.5 percent of rental revenues, up from 11.3 percent in 2002.
“Our intense focus on rental rates began to show real results in 2003,” said vice chairman and CEO Wayland Hicks. “We saw our first annual rate improvement since 2000, and our 5.6 percent rate increase in the fourth quarter was the highest quarterly increase in the history of our company… 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 percent in 2003 following a decline of 13 percent in 2002 [and] government spending on road and highway construction remained sluggish.”
Hicks said the company expects a flat year for private non-residential construction. “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 to $1.10 in 2004. Beyond 20004, a sustained rebound in our principal end markets has the potential to drive earnings significantly higher.”
Taking into account the charges the company reported a net loss of $305.1 million and a loss to common stockholders of $3.96 per diluted share for the fourth quarter and a net loss of $258.6 million for the full year, with a loss to common stockholders of $3.35 per diluted share.
Greenwich, Conn.-based United Rentals, No. 1 on the RER 100, closed trading Friday at $17.54.
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