RSC Equipment Rental posted a 24-percent year-over-year rental volume increase in the third quarter, with $361 million compared with $292 million for last year’s third quarter. Total volume for the quarter was $407 million compared with $334 million a year ago, a 19-percent hike. Third-quarter net income was $16 million, or 15 cents per diluted share compared with a net loss of $6 million, or 6 cents per diluted share in the year-ago quarter.
Adjusted EBITDA was $163 million for the quarter, compared with $119 million for the third quarter of 2010, a 38-percent jump, with EBITDA margin rising from 35.6 percent to 40.1 percent. The company said its increase in profitability and margins was the result of volume growth, pricing growth and the company’s ability to leverage and control its operating costs.
RSC increased rental rates 1 percent sequentially from the second quarter and 4.6 percent compared with the third quarter a year ago. Fleet utilization increased to 73 percent. The company invested $176 million in gross rental capital expenditures in response to increased demand.
“The third quarter was another very strong quarter and we have once again significantly outpaced the growth of our end markets,” said RSC CEO Erik Olsson. “We see the current economic environment with low GDP growth playing perfectly into the value proposition of renting and to RSC in particular. As a result, we produced an impressive 19-percent volume growth, while at the same time generating positive year-over-year pricing of 4.6 percent. This growth, in combination of strong cost management, resulted in a 38-percent increase in adjusted EBITDA. Furthermore, improved results were widespread with all regions delivering double-digit revenue growth and significant increases in utilization.”
The company expects business momentum to remain in the fourth quarter, expecting year-over-year rental revenue growth to top 20 percent. The company believes that economic improvement, along with the reduced availability of credit are contributing to a growing outsourcing trend favoring rental penetration. RSC expects rental rates to be similar to the third quarter and for utilization to again top 70 percent.
“We expect favorable year-over-year comparisons in the fourth quarter and a strong finish to 2011,” added Olsson. “We see continued growing demand from our end market and are benefiting from the consistent execution of our business model with market share gains as well as increased outsourcing of equipment needs. As a result, we believe an economic environment with low- to medium-rate GDP growth will be favorable to renting equipment and provide significant growth opportunities in the coming year.”
Based in Scottsdale, Ariz., RSC Equipment Rental is No. 2 on the RER 100.
