CHICAGO — NES Rental Holdings announced a third-quarter increase of 4 percent in total revenue. The company's revenue increased from $153 million in last year's third quarter to $159 million this year. Rental revenue for the quarter increased 5 percent to $139 million from $132 million during the third quarter of 2003.

Company officials said a steady improvement in private, non-residential construction activity in the company's markets helped drive improved revenues. And rental rates on the company's largest classes of fleet increased 9 percent year-over-year. Physical utilization of that fleet — which was strategically reduced by 5 percent during the past nine months — increased 2 percent over the third quarter of 2003.

NES' traffic safety revenues, which account for about 20 percent of total revenue, increased to $37 million in the third quarter, a year-over-year jump from the $30 million the company took in in 3Q03. Company officials attributed the increase to improving operations and a number of late-starting construction projects that continued into the third quarter. Traffic safety revenues for the first nine months of 2004 were $84 million, up 9 percent year-over-year.

Cash flow from operations for the nine-month period increased to $47 million from $21 million during the same period in 2003, reflecting the benefits of the company's restructuring, new credit facility and stronger operating results.

Rental fleet purchases for the company were $89 million for the first nine months of 2004, compared to $26 million for the same period last year.

“We're making continual progress and I'm pleased with the steps we took during this quarter,” said CEO Andrew Studdert, who joined the company in June. “We continued to improve efficiencies in fleet use. We stepped up our strategic acquisition of new equipment while divesting ourselves of fleet that no longer meets our customers' rental needs. The restructuring we completed earlier in the year, coupled with the new credit facility, began to have a positive impact on cash flow.”

In August, NES completed its refinancing by entering into a new $300 million, five-year credit facility that provides NES with a $200 million term loan and $100 million revolving credit line, as well as a $275 million, six-year second-lien term loan. As a result, year-to-date interest expense declined from $51 million last year for the same period, to $29 million.

In other NES news, the company recently opened its first traffic safety branch in Missouri. The branch, in St. Louis, also houses an NES general rentals branch, which relocated from Maryland Heights, Mo.

The establishment of the traffic safety division in a shared facility offers NES the opportunity to grow that segment of the business in the St. Louis area, which also includes Madison, Monroe and St. Clair counties in Illinois. NES' traffic control segment offers sign installation, pavement marking services, and traffic control and protection services on highways and other major roads.

Chicago-based NES is No. 5 on the RER 100.