RSC posts Q1 Earnings Report
Grows total revenue 25 percent over Q1 2010.
RSC Holdings Inc. (NYSE: RRR), one of the largest equipment rental providers in North America, today announced financial results for the quarter ended March 31, 2011. Total revenue was $327 million and rental revenue was $272 million, compared with $261 million and $222 million, respectively, for the same period last year. The company’s first quarter net loss was $50 million, or $0.49 per diluted share, compared with a net loss of $38 million, or $0.37 per diluted share, for the first quarter 2010. The net loss in the current quarter includes $49 million of pre-tax charges associated with the company’s refinancing activities in the quarter.
Adjusted EBITDA was $99 million for the quarter, compared with $66 million for the same period last year. Adjusted EBITDA margin was 30.2% for the first quarter, compared with 25.3% in 2010. The change in profitability and margins primarily reflects increased volume and improved pricing.
First Quarter 2011 Highlights
- Generated a 50% increase in year-over-year Adjusted EBITDA at a margin of 30.2%.
- Grew total revenue 25% over the first quarter 2010, including a 22% increase in rental revenue.
- Increased rental volume 20% year-over-year, the fourth consecutive quarter of volume growth.
- Improved rental rates over the first quarter of last year by 2.0%.
- Increased average fleet utilization for the quarter to 64%, improving from 55% in the first quarter 2010.
- Invested $158 million in gross rental capital expenditures in response to growing demand.
- Sold $90 million of fleet at original equipment cost with margins of 27%, up from 9% in the year ago quarter.
- Generated 62% of revenue from industrial customers.
- Refinanced $1.7 billion of debt at lower rates with longer maturities.
- Maintained strong availability of $641 million under the ABL revolver as of March 31, 2011.
CEO Comments
Erik Olsson, President and Chief Executive Officer, stated: “We produced another quarter of exceptional volume growth of 20% and generated positive year-over-year pricing of 2.0%, including a 3.8% year-over-year improvement in March. These results drove a 50% year-over-year increase in EBITDA and demonstrate the continued and increasing acceptance of our leading value proposition by both industrial and non-residential construction customers. Our strategy of making consistent investments in our footprint, people, technology and sales organization throughout the downturn has positioned us to outpace the growth of our end markets as we enter the expansion phase of the business cycle.”
Outlook for Q2
Business activity in the company's primary end market, industrial and non-construction, improved on a year-over-year basis in the first quarter, while the non-residential construction end market, which makes up 35% of RSC revenues, declined at a moderating pace. These trends are anticipated to continue and RSC expects double-digit volume growth in the second quarter. In addition, the company expects utilization levels to be considerably higher than those seen in the prior year quarter and in the first quarter of 2011 with favorable year-over-year rental rates.
Mr. Olsson concluded: “We see continued strengthening in the industrial markets and are benefiting from increasing customer focus on the total cost of rental and not strictly pricing. Customers are embracing the value of our total rental solution approach including our Total Control system. In addition, improved results were widespread with all regions delivering double digit revenue growth. As a result, we expect continued favorable year-over-year comparisons in the second quarter and remain optimistic that these positive trends will continue throughout the year.”
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