RSC Holdings posted solid increases for the fourth quarter and full year 2007 in a conference call held last week. For the fourth quarter, rental revenues increased 10.8 percent to $399 million, compared with $360.1 million in the previous year’s fourth quarter, with rental revenues accounting for 87.1 percent of the company’s total volume. Same-store rental revenues jumped 8.1 percent for the period.
Sales of used equipment for the fourth quarter were $39.3 million, down from $43.8 million in the previous year’s fourth quarter, reflective of RSC’s young and well-maintained fleet. Sales of merchandise were $19.8 million, down from $21.8 million in Q406, consistent with the company’s strategy of focusing on higher-margin items more complementary to its core equipment rental operations.
Total revenues for the fourth quarter were $458.1 million, a 7.6-percent increase from $425.6 million in the same period in 2006.
“We achieved another quarter of double-digit rental revenue growth and positive year-over-year rate increases by focusing on creating value for our customers and differentiating our services,” said RSC CEO Erik Olsson. “Our strategic growth plan and focus on excellent execution continues to drive both market share gains and margin expansion.”
RSC expanded its footprint in the fourth quarter by opening four new locations, bringing its total number to 473. RSC continued its same-store sales strategy by adding 11 net new salespeople in the period, bringing the full year additions to 99.
Fourth-quarter operating income jumped 20.4 percent to $120.3 million, compared with $99.9 million for the same period in 2006. Free cash flow for the fourth quarter was a negative $19.9 million compared to a negative $101.1 million for the previous year’s period, primarily as a result of large payments made on fleet purchased earlier in the year.
For the full year 2007, rental revenues increased 12.7 percent year over year to $1,543.2 million, up from $1,368.7 million in 2006. Same-store rental revenues increased 11.1 percent for the year. Sales of used equipment were $145.4 million, down from $191.7 million in 2006, and sales of merchandise dropped from $92.5 million to $80.6 million. Total revenues were $1,769.2 million, a 7-percent year-over-year jump from $1,652.9 million in 2006.
Operating income for 2007 increased 8.2 percent to $454.9 million, or 25.7 percent of total revenues, compared to $420.5 million or 25.4 percent of total revenues in 2006. Adjusted EBITDA increased 13.5 percent to $823.6 million, compared with $725.6 million in 2006, with adjusted EBITDA margin increasing to 46.6 percent from 43.9 percent in 2006.
“In 2007, we increased our rental revenues by 12.7 percent, while achieving a positive free cash flow of $60.8 million, a $166.9 million positive swing from 2006,” added Olsson. “In addition, we reached milestones in shop efficiency and on-time delivery and were able to achieve record fleet utilization of 72.8 percent for the year.”
Olsson said the company reached a new low of non-available fleet of 8.2 percent in the fourth quarter, below its previous benchmark of 9 percent. He added the company was 98 percent current on manufacturers’ recommended preventive maintenance at the end of 2007.
Olsson added that 95 percent of RSC’s revenue came from non-residential and industrial construction.
Based in Scottsdale, Ariz., RSC Equipment Rentals is No. 3 on the RER 100.
