SCOTTSDALE, Ariz. — RSC Equipment Rental posted a record gain in its third-quarter 2005 financial results. For the quarter, RSC continued to substantially grow rental revenue, achieved the highest operating profit in the company's history, and improved the return on operating capital to record levels.
Total 3Q05 revenues were $404 million in the third quarter, compared to $377 million in the third quarter of 2004. Most of that growth came from rate and volume improvements in equipment rentals. Sales of used equipment increased by 13 percent and rental fleet utilization in the quarter improved to 72 percent from 70 percent in the same quarter last year.
“In the third quarter, our team again successfully delivered profitable revenue growth, stayed focused on efforts to improve capital and operating efficiency, and continued to launch innovative customer service improvements,” said Tom Zorn, president and CEO of RSC Equipment Rental. “As these results demonstrate, our unique strategy is now gaining financial momentum, which has helped RSC establish industry leadership. Importantly, long-term industry leadership and sustained profitable growth are key components of our strategy and are consistent with the Atlas Copco mission. Accordingly, we are diligently investing resources in people, innovation, and technology to offer customers more competitive services and industry-leading customer satisfaction.”
Operating profit rose to $104 million in the third quarter of 2005, the company's highest ever, and an increase of 32 percent over the same quarter of the previous year. This improvement marks RSC's tenth consecutive quarter-over-quarter increase in operating profit. The continued positive development of rental rates, increased rental volumes, and ongoing capital and cost-efficiency improvements all contributed to these strong results.
Total operating costs for the third quarter were only slightly higher than the previous year, in spite of the volume growth and a $2.5 million reserve taken for costs related to hurricanes Katrina and Rita. As a result, EBITDA improved to 43 percent from 37 percent in 2004.
Likewise, return on operating capital employed increased in the quarter to 24 percent from 16 percent in 2004, significantly outperforming the cost of capital for the company and thereby continuing to generate positive economic value — one of RSC's most important strategic objectives.
Scottsdale, Ariz.-based RSC Equipment Rental is No. 2 on the RER 100.
