FORT LAUDERDALE, Fla. - Nations-Rent reported a 27.8 percent increase in third-quarter rental revenue over 1999's third quarter, with 14 percent of the jump coming from internal growth. Nonetheless, net income dipped considerably, from $11.9 million, or 17 cents per diluted share, in Q3 '99 to $1.3 million, or 2 cents per diluted share, in 2000.
Chairman and CEO James Kirk said the company plans to reduce annual operating expenses by $30 million to adjust imbalances between costs and revenue. He said NationsRent would reduce its expenditures for equipment and cut staff, noting that 70 percent of the cuts have already been made and the rest would take place during the fourth quarter.
Total revenue for the quarter ended Sept. 30 was $184.6 million, a 19.2 percent increase over Q3 '99, with rental revenue accounting for $155.8 million, up from $121.9 million in 1999. The percentage of revenue coming from rental was 84.4, up from 78.7 percent in Q3 '99. NationsRent's rental revenue for the nine-month period ended Sept. 30, 2000, was $407.6 million, up from $293.9 million for the same period a year earlier.
NationsRent officials made it clear that their hopes for growth in 2001 hinge on the company's alliance with Lowe's home-improvement stores. Executive vice president Phil Petrocelli said four of the company's six rental departments in Lowe's stores are already turning a profit.
"The pilots helped us modify and improve the program," Petrocelli said. "We learned we can open and operate with 25 percent less inventory than we had originally planned. All six of the stores would already be profitable had we known this from the beginning." Petrocelli added that NationsRent planned to add four more departments by the end of 2000 and plans to have 60 such locations in 20 markets by the end of 2001. "We believe these stores are an efficient use of capital," he said.
The firm is No. 4 on the RER 100, based on 1999 rental revenue of $415.6 million. It now has 195 locations in 27 states.
MEMPHIS, Tenn. - Nortrax Equipment - South acquired Memphis-based Deere dealer Barton Equipment, which has five locations in western Tennessee, northeastern Arkansas and northern Mississippi.
Nortrax South also named Chuck Paugh president. Paugh, formerly director of sales for Phoenix-based Empire Machinery, will be based in Memphis. Barton serves the construction and forestry segments.
Nortax South is a subsidiary of Nortrax II, a joint venture formed last year by John Deere Construction Equipment and Credit Suisse First Boston Private Equity to consolidate and run Deere dealerships.
