RSC Equipment Rental (RRR) posted a 7.8-percent total revenue decline in the second quarter of 2010, with $301 million in total revenue compared with $326.6 million for the same period in 2009. Rental revenues dropped 4 percent from $270.5 million in Q209 to $259.7 million for the recently completed quarter ended June 30.
Net loss nearly doubled to $22.1 million compared with $11.5 million in last year’s second quarter. Adjusted EBITDA was $92 million for the quarter, compared with $108 million for the same period last year. Adjusted EBITDA margin was 30.6 percent for the second quarter, compared with 33.1 percent in 2009.
The change in profitability and margins primarily reflects excess rental industry fleet capacity and the resulting negative impact on pricing, partially offset by increased volume and the savings realized from the company’s cost-cutting initiative.
Fleet on rent increased 12 percent during the quarter. The company invested $102 million of gross rental capital expenditures in response to growing demand for select categories, while generating free cash flow of $29 million. RSC decreased debt by $19 million during the quarter and had $646 million of borrowing availability under its ABL revolver as of June 30.
The company increased its average fleet utilization for the quarter to 63.5 percent, compared with 54.8 percent in the first quarter.
“We are seeing 2010 play out the way we expected, with the positive momentum from the first quarter continuing and strengthening throughout the second quarter,” said Erik Olsson, president and CEO. “The market was mixed in the first half of the year but steadily improving. We correctly identified early signs of improving customer demand and responded with increased sales activities, and by investing in our rental fleet and rental staff. This resulted in year-to-date fleet-on-rent growth of 35 percent. Our leading position in serving the industrial end market enabled us to meet or exceed our second-quarter revenue, adjusted EBITDA and free cash flow expectations.”
RSC said it expect utilization and fleet-on-rent to build in the third quarter resulting in positive year-over-year volume growth in the third quarter. It expects third-quarter rental revenues in the $285 million to $300 million range, with total revenues ranging from $325 million to $340 million and adjusted EBITDA in the $115 million to $125 million range.
Based in Scottsdale, Ariz., RSC Equipment Rental is No. 2 on the RER 100.
