Summary
United Rentals, Inc. reported a decrease in revenues for the second quarter and first half of 2008 compared to the same periods in 2007, largely driven by a softening construction environment and a strategic shift to focus on its core rental business. While equipment rental revenues saw a slight decline, sales of contractor supplies, new equipment, and used rental equipment also decreased as the company repositioned its offerings. The company incurred a significant preferred stock redemption charge of $239 million in the quarter, which, along with a $14 million provision related to an ongoing SEC inquiry, heavily impacted net income and resulted in a net loss available to common stockholders. Despite revenue challenges, the company demonstrated operational efficiencies through reduced Selling, General, and Administrative (SG&A) expenses. Significant corporate actions during the quarter included a Dutch auction tender offer to repurchase approximately 31% of its common stock for $598 million and the repurchase of all outstanding Series C and D preferred stock for approximately $679 million. These actions, coupled with a new $1.25 billion senior secured asset-based revolving credit facility, reshaped the company's capital structure. The company believes its current liquidity sources are sufficient to support operations over the next twelve months.
Key Highlights
- 1Total revenues for the second quarter of 2008 decreased by 13.6% to $831 million, and for the first six months of 2008 decreased by 11.0% to $1,603 million, compared to the prior year periods.
- 2Equipment rental revenues, the company's largest segment, decreased by 5.9% for the quarter and 2.8% for the six-month period.
- 3The company repurchased approximately 27.16 million shares of its common stock for $598 million and all outstanding Series C and D preferred stock for $679 million during the quarter.
- 4A significant preferred stock redemption charge of $239 million was recorded, leading to a net loss available to common stockholders of $202 million for the quarter ($1.89 loss per diluted share for the six-month period).
- 5Selling, General, and Administrative (SG&A) expenses decreased by 14.3% ($21 million) for the quarter and 13.2% ($39 million) for the six-month period, reflecting cost-saving initiatives.
- 6EBITDA decreased by 14.6% to $252 million for the quarter and by 6.3% to $476 million for the six-month period, impacted by lower revenues and a $14 million provision related to an SEC inquiry.
- 7The company entered into a new $1.25 billion senior secured asset-based revolving credit facility and repaid its former credit facilities.