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, 2012. Total revenue was $408 million and rental revenue was $346 million, compared with $327 million and $272 million, respectively, for the same period last year. The company’s first quarter net income was $11 million, or $0.10 per diluted share, compared with a net loss of $50 million, or $0.49 per diluted share, for the first quarter 2011.
Adjusted EBITDA was $159 million for the quarter, compared with $99 million for the same period last year. Adjusted EBITDA margin was 39.0% for the first quarter, compared with 30.2% in 2011. The increase in profitability and margins primarily reflects continued volume growth, pricing growth and the company’s ability to leverage and control its operating costs.
First Quarter 2012 Highlights
- Grew rental revenue 27% over the first quarter 2011.
- Increased rental volume 19.2% year-over-year.
- Improved rental rates 8.2% over the first quarter of last year and 0.5% over the fourth quarter of 2011.
- Generated a 61% increase in year-over-year Adjusted EBITDA.
- Increased average fleet utilization to 67%, up 320 bps from the first quarter 2011.
- Invested $145 million in gross rental capital expenditures in response to growing demand.
- Sold $102 million of existing fleet at original cost with record margins of 42%.
- Strong availability of $568 million under the ABL revolver as of March 31, 2012.
Management CommentsRental volumes increased by 19.2% in Q1 2012 over Q1 2011 as the company capitalized on its high quality service model and well maintained fleet. Increased rental penetration, reflecting the customer’s willingness to rent rather than buy equipment, along with modest improvement in the construction and industrial end-markets drove increased demand across all geographies. RSC’s disciplined work force and execution drove an increase in rental rates by 0.5% over the fourth quarter of 2011 and 8.2% over the prior year quarter. Used equipment demand remains very strong, resulting in record margins of 42%. Management believes that used equipment prices are a leading indicator of rental demand. The company purchased $145 million of gross rental capital expenditures in the first quarter of 2012, which was in line with expectations. Free cash flow was a negative $36 million, which is an improvement over management’s original outlook due to increased net income and strong cash inflows from the sale of used rental equipment and non-rental fleet.