CHICAGO — NES Rentals last month announced improved financial results for 2005, with increased rental revenue, operating income, and gross margins. The improved results are likely to enhance the Chicago-based company's position as the company reviews strategic alternatives announced in January, including a possible sale of the company, merger, acquisition or other major transaction.
Rental revenues for 2005 totaled $447 million, an increase of $14 million compared with 2004, with rental volume accounting for 77 percent of the company's total revenue in 2005, up from 74 percent in 2004. Rental rate improvement and strong market conditions drove same-store revenues up 9 percent in 2005. Total NES revenue was $582 million in 2005, a slight year-over-year drop from $589 million in 2004.
Gross margins, excluding depreciation expense, increased from 43 percent in 2004 to 48 percent in 2005, a result of higher rental rates and reduced costs. Selling, general and administrative expenses decreased 4 percent or $6 million, to 22 percent of total revenues, down from 23 percent in 2004.
Operating income in 2005 was $33 million, up $64 million from the 2004 operating loss of $31 million. The company's net loss dropped from $69 million in 2004 to $7 million in 2005. The implementation of company-wide service and maintenance programs to improve equipment reliability also contributed to the improvement.
NES Rentals spent $100 million on new rental equipment and allocated $40 million to debt reduction payments in 2005. Chairman and CEO Andrew Studdert said the company will spend more than $100 million on new equipment purchases in 2006.
NES Rentals is No. 7 on the RER 100.