RSC Equipment Rental posted $292 million in rental revenue for the third quarter, a 7.4-percent increase compared with $272 million for the same period in 2009. Total revenue for the quarter was $334 million, compared with $316 million for the same period a year ago, a 5.7-percent hike.
RSC reported a third-quarter net loss of $6 million, or 6 cents per diluted share, same as the previous year’s third quarter. Adjusted EBITDA for the quarter was $119 million, compared with $107 million for the year-ago period, a 9.3-percent increase. Adjusted EBITDA margin was 35.6 percent for the third quarter, compared with 34 percent for the same period in 2009.
Fleet on rent increased 10 percent for the quarter and 48 percent year to date. Rental volume grew 11.8 percent year over year, the second consecutive quarter of volume growth. The company invested $119 million of gross rental capital expenditures in response to increasing demand.
The company generated free cash flow of $50 million and decreased debt by $47 million. Average fleet utilization was 68.7 percent, compared with 63.5 percent for the same period a year ago.
Rental rates improved sequentially for the second consecutive quarter, but still were 4.4-percent lower than the same period a year ago.
“The positive momentum from the second quarter strengthened into the third quarter with strong volume growth of 12 percent and solid positive sequential pricing of 2.6 percent,” said CEO Erik Olsson. “Our leading position in serving the industrial end market, continued investments in sales activities, our quality rental fleet and increased staffing positioned us to meet increasing demand and gain market share.”
The company is optimistic that business in the industrial market, which improved on a year-over-year basis in the third quarter, will continue to improve in the fourth quarter, while the non-residential construction market continued to decline in the third quarter.
As a result of seasonality, the company expects utilization and fleet on rent growth to moderate in the fourth quarter, while still resulting in positive year-over-year volume and rental revenue growth. The company expects pricing to remain challenging in the fourth quarter, although it expects continuing improvement.
RSC expects rental revenues in the $270 to $285 million range in the fourth quarter, with total revenues in the $320 to $335 million ballpark; with adjusted EBITDA of $100 to $110 million. The company expects to generate $80 to $100 million of free cash flow for full-year 2010, in line with previous estimates.
“Market demand has steadily improved during the year and we expect favorable year-over-year comparisons in the fourth quarter as we have seen the momentum from the third quarter continue in October,” added Olsson. “We are extremely well positioned with a footprint that has improved relative to our major competitors. Our footprint enables us to respond to improving customer demand with a compelling value proposition, industry-leading customer service, our high-quality fleet and scalable business model.”
Based in Scottsdale, Ariz., RSC Equipment Rental is No. 2 on the RER 100.
