In the face of continuing economic softness and the winding down of construction projects in Las Vegas, Ahern Rentals said last week it plans to continue its national geographic expansion.
“We plan to open as many as 15 more new branches by the end of 2010,” the company said in its Form 10-Q filed with the Securities and Exchange Commission. “We determine the markets to open branch locations through extensive economic and demographic research and also evaluate markets that may already be complementary to our existing branch locations.”The company said opening new branch locations does not require significant capital because most of the fleet to be deployed in a new branch will be moved from existing branches. Ahern has opened 15 new rental branches since the end of the second quarter of 2008.
“This strategy is particularly important as large projects, such as the City Centre project in Las Vegas, approach a point where large amounts of our equipment will be coming off rent due to the project nearing completion,” the company said. “The City Center project in Las Vegas has been winding down construction activities since the second quarter of 2009 and is expected to continue through the end of the first quarter of 2010. We have been successful in redeploying into new branches nearly all of the equipment that has come off rent from the City Center project since the second quarter of 2009.”
The company also plans to deal with softness in the non-residential construction sector by expanding its customer base into infrastructure-related, alternative energy and other end-user markets.
Ahern Rentals posted $72.5 million in total revenue for the third quarter, compared with $101.2 million for the third quarter of 2008, a 28.5-percent decrease. Rental revenues for the quarter plunged 26.9 percent from $89 million in last year’s third quarter to $65 million this year.
For the first nine months of 2009, total revenues were $214.7 million, compared with $293 million for the same period a year ago, a decrease of 26.7 percent. Rental revenue dropped 24.4 percent from $251.4 million for the first nine months last year to $190 million this year.
Same-branch revenues decreased 33 percent or $29.8 million. This decrease in revenues is offset by about $5.9 million of increased revenues from 15 new rental branches opened since the third quarter of 2008. In the third quarter, Ahern Rentals opened branches in Greenville, S.C., and Omaha, Neb., bringing the company’s total to 61.
Average dollar utilization dropped from 44 percent in the third quarter of 2008 to 32 percent in this year’s quarter, caused mostly by a 16-percent decrease in average rental rates and a decrease in average time utilization of high-reach equipment to 56 percent in 2009 from 70 percent in 2008.
Cost of revenues decreased 7 percent year over year. EBITDA for the third quarter was $18.1 million, compared with $41.1 million for the same period a year ago. EBITDA margin decreased from 40.5 percent in Q308 to 24.9 percent in Q309.
Based in Las Vegas, Ahern Rentals is No. 7 on the RER 100.