RSC Holdings last week announced results for the third quarter ended Sept. 30. For the third quarter, total revenues were $462.0 million, up 8 percent from the $427.6 million reported for last year's third quarter.
Rental revenues, which accounted for 89 percent of total revenues, grew 12.3 percent to $411.6 million from $366.4 million in the comparable year-ago period. Same-store rental revenues increased 10.2 percent for the period. Sales of used equipment totaled $30.5 million, down from $38.6 million in the 2006 third quarter, reflective of the company's young and well-maintained fleet and the high rental demand from the non-residential construction and industrial markets. Sales of merchandise were $19.9 million compared to $22.6 million in the prior-year quarter, consistent with the company's strategy to focus on higher-margin items that are more complementary to its core equipment rental operations.
In the third quarter, RSC expanded its footprint by opening five new locations, bringing its total number of locations to 469. The company added 33 net new sales people in the period.
Third-quarter operating income increased 10.9 percent to $136.1 million compared to $122.8 million in the same quarter of 2006, and operating margin expanded to 29.5 percent from 28.7 percent in the prior year. Adjusted EBITDA increased 13.5 percent to
$225.4 million in the third quarter compared to $198.6 million in the prior year, and adjusted EBITDA margin increased to 48.8 percent compared to 46.5 percent in the same quarter 2006.
“We achieved significant gains in operating income in the third quarter, resulting from strong volume growth, effective cost control and efficient fleet management with an impressive fleet utilization rate of 74.6 percent, up from 73.1 percent in the prior year,” said Erik Olsson, president and CEO of RSC. “At the end of the period, RSC’s fleet age was 25 months, which we believe is the youngest in the industry, and which provides the company with important operating flexibility.”
Net income in the third quarter was $47.5 million, or $0.45 per diluted share. In the 2006 third quarter, net income was $59.6 million, which equated to $0.18 per diluted share ($0.60 per diluted share on a pro forma share basis).
Net rental capital expenditures were $155.7 million for the period, bringing the value of RSC's rental fleet at original cost to $2.7 billion at the end of the third quarter.
In the third quarter, the company reduced total debt by $44.1 million to $2.7 billion, bringing the year-to-date debt reduction to $304.1 million including $230.7 million in IPO proceeds. Free cash flow for the third quarter was $58.3 million compared to $0.7 million for the previous year.
Scottsdale, Ariz.-based RSC Equipment Rentals is no. 3 on the RER 100.
