United Rentals comfortable with capital structure to support business

By Jennifer Lanning Drey

Savannah, Ga., Oct. 20 - United Rentals, Inc. is comfortable with the current position of its capital structure and how it supports the business, William Plummer, United Rentals' chief financial officer, said Wednesday during its third-quarter earnings conference call.

United Rentals had about $860 million of liquidity at Sept. 30, he said.

The company also announced on Wednesday that it expects to issue $500 million principal amount of senior notes due 2020. United Rentals plans to use a portion of the proceeds to redeem its 7¾% senior subordinated notes due 2013.

"This is consistent with our ongoing strategy of making sure the maturity within our debt is well managed and pushed out far enough so that we don't have any undue concerns about refinancing needs in the near term," Plummer said.

The company expects to price and finalize the terms of the deal over the next few days, he said.

Cash flow on track

Plummer also reported Wednesday that United Rental's year-to-date free cash flow of $144 million is "well in line" with the company's previous guidance for full-year free cash flow in the $200 million to $225 million range.

United Rentals generated $37 million of free cash flow in the third quarter.

Regarding 2011, Plummer noted that United Rentals expects its gross and net rental capital expenditures to be significantly more in 2011 than in 2010.

The CFO declined to provide a number for capital expenditures in 2011 but said United Rentals believes it will need to spend to support its key relationships and to continue to position its fleet for the long haul.

That said, United Rentals still expects to deliver positive free cash flow in 2011, he said.

Revenues improve

United Rentals reported third-quarter revenue of $605 million, compared with revenue of $592 million for the same period in 2009. Operating income was $93 million in the third quarter, compared with $67 million for the same period last year.

The company said business conditions have improved in all of its operating regions.

United Rentals attributed the change in profitability to a continued decline in non-residential construction activity.

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