Ahern Rentals posted a 12.3-percent increase in rental revenue in 2008, with $329.5 million in rental revenue compared with $293.4 million for 2007. Total revenue jumped 12.1 percent to $381.6 million, compared with $340.5 million in 2007. Gross profit was essentially flat, $117.4 million in 2008, compared with $118.5 million in 2007.
EBITDA jumped 3.7 percent year over year to $150.1 million in 2008, compared with $144.7 million in 2007.
Same-branch revenues increased 11 percent year over year, or $31 million, with the remaining $5 million increase in revenues coming from seven new stores opened in 2008, five of which were opened in the second half of 2008, including two in November (San Antonio and Austin, Texas). Increased revenues also resulted from an increase in the number of units available for rent as a result of capital expenditures that increased the average original cost of Ahern’s rental fleet to $794 million in 2008, compared to $639 million in 2007, offset by a decrease in dollar utilization to 42 percent in 2008 from 46 percent in 2007.
Average rental rates decreased 4 percent in 2008 and average time utilization of high-reach equipment decreased to 67 percent in 2008 compared to 70 percent in 2007.
CEO Don Ahern told an investor conference Friday that rental and related revenues are down 17 percent for the first two months of 2009 compared with the same period in 2008, while average rental rates have dropped 13 percent for the first two months of 2009. Average time utilization of high-reach equipment has decreased to 56 percent in the first two months of 2009 compared to 66 percent for the same period in 2008.
Ahern Rentals opened three new branches in the first quarter of 2009: Waco and Odessa, Texas, and Charlotte, N.C. The company now has 53 branches.
“We’re opening new locations that are synergistic to some of the locations we’ve currently got in order to drive utilization by opening up a few of these new branches,” Ahern told the investors’ conference. “That will be our primary strategy going forward.” Ahern added the company plans to open more new branches in the second, third and fourth quarters.
The Charlotte branch is Ahern Rentals’ first foray to the East Coast besides a New Jersey facility. Ahern said Charlotte represents a strong opportunity for the company because existing customers already had significant projects going on there. Ahern said the company plans to open about six stores in the Southeast in the not-too-distant future.
“There are a lot of drivers to go there,” Ahern added. “It didn’t make sense earlier, but right now we are operating with utilization down and we have excess fleet. We feel this is one of the better areas for us to increase our footprint and deal with customers that have a national footprint. We have always been stronger in the West. This expansion puts us in a stronger position to service customers who are stronger in the East.”
Ahern Rentals invested $131.1 million in rental equipment in 2008, considerably less than the $216.5 million it spent on equipment in 2007. Ahern said that the company will be decreasing capital expenditures in 2009 to less than half what it spent in 2008, primarily investing in particular models where the company has “shortfalls” and good opportunities to utilize the fleet and “rent a piece of equipment for reasonable periods of time, packaged up with other items,” Ahern said. He added that the complexion of business is changing in a lot of markets, changing from private-sector to government-funded projects.
For 2008, 67 percent of Ahern Rentals’ revenues was from high-reach equipment rental; 19 percent from general equipment rental, and 14 percent from the sale of new and used rental equipment, related merchandise, parts and service.
Based in Las Vegas, Ahern Rentals is No. 8 on the RER 100.
