RSC Holdings, the holding company for the operating entity RSC Equipment Rental, last week announced financial results for the quarter ended June 30, reporting total revenue of $367 million, a 21.9 percent increase compared with $301 million for the same period last year. Rental revenue was $316 million, compared with $260 million for the same period last year, a 21.5-percent hike.
The company's second-quarter net profit was $67,000 or $0.00 per diluted share, compared with a net loss of $22 million, or $0.21 per diluted share, for the second quarter 2010. Adjusted EBITDA was $134 million for the quarter, compared with $92 million for the same period last year. Adjusted EBITDA margin was 36.6 percent for the second quarter, compared with 30.6 percent in 2010. The increase in profitability and margins primarily reflects improved pricing, volume growth and the company's ability to leverage and control its cost structure.
In the first half of 2011, the company reported a 23.6-percent improvement in total revenues of $694 million from $562 million in the first half of 2010.
"We have once again significantly outpaced the growth of our end markets and produced another quarter of exceptional volume growth of 15.2 percent, while at the same time generating positive year-over-year pricing of 6.3 percent,” said Erik Olsson, RSC president and CEO. “We continue to realize the benefits of the consistent investments in our people, fleet, footprint, technology and sales organization at all points of the business cycle and this drove a 46-percent year-over-year increase in adjusted EBITDA in the second quarter. Furthermore, improved results were widespread with all regions delivering double-digit revenue growth."
In the quarter, the company increased average fleet utilization to 68 percent, from 64 percent in the second quarter of 2010, and in response to growing demand, it also invested $209 million in gross rental capital expenditures.
Business activity in the company's primary end-market, industrial or non-construction, continued to improve in the second quarter, while the non-residential construction end market, making up only 36 percent of RSC revenues, declined moderately. These trends are anticipated to continue in the third quarter. Business momentum continues to be strong for RSC and the company expects to continue to outpace its underlying end-markets.
Despite entering quarters with more difficult year-over-year comparisons for both volume and rental rates, in the third quarter the company expects to produce year-over-year rental revenue growth only marginally lower than the roughly 22 percent achieved in both the first and second quarters of 2011. Within that year-over-year growth, rental rates are anticipated to be comparable with those achieved in the first half of 2011. The company expects utilization levels to be the highest since the third quarter of 2008.
"We see continued strengthening in the industrial markets and believe that the non-residential markets are bouncing along the bottom,” Olsson said. “We are benefiting from the consistent execution of our business model and associated market share gains, as well as increasing rental penetration. As a result, we expect continued favorable year-over-year comparisons in the third quarter and remain confident that these positive trends should continue throughout the year."
Scottsdale, Ariz.-based RSC Equipment Rental is No. 2 on the RER 100.
