01—Abstract
Summary
Summary of the 10-K filed February 1, 2011. Cited figures are marked; the original filing is the authoritative source.
United Rentals, Inc. (URI) reported its 2010 annual results, indicating a challenging year that nevertheless showed signs of recovery in the latter half.
Total revenues decreased slightly year-over-year, primarily due to significant drops in used equipment sales and contractor supplies. However, equipment rental revenue saw a modest increase, driven by higher equipment utilization, which the company attributed to a broader economic improvement. The company continued its strategic focus on optimizing its fleet, strengthening customer service, and controlling costs, including headcount reductions and branch network optimization.
Financially, URI demonstrated progress in managing its debt structure, successfully issuing new notes and using proceeds to retire existing debt, thereby improving its debt maturity profile. Despite a net loss for the year, the company generated positive free cash flow, underscoring its operational efficiency.
The outlook for 2011 was cautiously optimistic, with expectations of continued modest growth in key end markets, particularly U.S. non-residential construction. Investors should note the company's high leverage and the ongoing sensitivity of its business to economic cycles.
02—Key points
Key Highlights
- Total revenues for 2010 were $2.24 billion, a slight decrease from $2.36 billion in 2009, primarily driven by lower sales of used equipment and contractor supplies.
- Equipment rental revenue remained relatively flat at $1.83 billion, with a 4.3% increase in the volume of equipment on rent offset by a 2.1% decrease in rental rates.
- The company generated $227 million in free cash flow in 2010, a decrease from $367 million in 2009, reflecting increased capital expenditures for fleet replenishment.
- United Rentals reduced its headcount by approximately 700 employees and closed 49 branches in 2010 as part of ongoing cost-saving and optimization efforts.
- The company successfully issued $750 million in Senior Subordinated Notes and used proceeds to retire existing debt, improving its debt maturity profile.
- National Account customer revenue increased to 31% of total equipment rental revenue in 2010, up from 27% in 2009, indicating a successful push towards larger, more stable client relationships.
- The company reported a net loss of $26 million ($0.44 per share) for 2010, an improvement from a net loss of $62 million ($1.02 per share) in 2009.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2010, United Rentals, Inc. lost $0.01.
- Revenue$2.24B100.0%
- Cost of revenue−$1.58B70.6%
- Gross profit$658.0M29.4%
- Operating costs−$461.0M20.6%
- Operating income$197.0M8.8%
- Interest, other & tax−$223.0M10.0%
- Net income−$26.0M1.2%
Where FY2010 revenue went
$2.24B- Cost of revenue: $1.58B, 71% of revenue
- SG&A: $367.0M, 16% of revenue
- Operating income: $197.0M, 8.8% of revenue
- Other operating costs: $94.0M, 4.2% of revenue
Kept 8.8% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 1, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $2.24B$2.36B | −5.1% |
| Cost of Revenue | $1.58B$1.75B | −9.7% |
| Gross Profit | $658.00M$610.00M | +7.9% |
| SG&A Expenses | $367.00M$408.00M | −10.0% |
| Operating Income | $197.00M$114.00M | +72.8% |
| Net Income | -$26.00M-$62.00M | +58.1% |
| EPS (Basic) | $-0.44$-1.02 | +56.9% |
| EPS (Diluted) | $-0.44$-1.02 | +56.9% |
| Shares Outstanding (Basic) | 60.45M60.10M | +0.6% |
| Shares Outstanding (Diluted) | 60.45M60.10M | +0.6% |
05—Questions
Frequently Asked Questions
What was United Rentals' financial performance in 2010?
In 2010, United Rentals reported total revenues of $2.24 billion, a decrease from $2.36 billion in 2009. The company experienced a net loss of $26 million, an improvement from the $62 million net loss in 2009. Despite the net loss, free cash flow generation was positive at $227 million, and key strategies focused on cost control and shifting revenue towards national accounts were implemented.
How did the economic recovery impact United Rentals' business?
The company noted signs of recovery in its end markets starting in the first quarter of 2010, leading to a 12% year-over-year increase in equipment on rent in the second half of the year. This recovery was primarily attributed to cyclical improvements in the operating environment. United Rentals expects this modest recovery trend to continue into 2011, with an estimated mid-single digit percentage increase in U.S. non-residential construction activity.
What are United Rentals' key strategic priorities?
United Rentals' strategy focuses on generating free cash flow and achieving disciplined growth in revenues and earnings at higher margins. Key elements include a consistent focus on equipment rental, optimization of the rental fleet and branch network, responsible rate management, and driving operational efficiencies through cost reductions. The company is also prioritizing increasing revenue from National Accounts and expanding its presence in industrial markets.
How has the company managed its debt?
United Rentals has actively managed its debt by issuing new notes and using proceeds to repurchase or retire existing debt securities. In 2010, the company issued $750 million in Senior Subordinated Notes, contributing to an improvement in its debt maturity profile. As of December 31, 2010, total debt was $2.81 billion, a decrease from $2.95 billion at the end of 2009.
06—Continue