Stephenson’s Rental Services Income Fund last week announced that revenue for the three months ended Sept. 30, increased 40.8 percent to CD $16.5 million, compared to the third quarter of 2005, primarily due to the contribution of the former A1 Equipment Rental, which was acquired in May.
Equipment rental revenue, which represented about 86 percent of revenue for the quarter, consistent with 2005, was $14.2 million in the third quarter, compared to $10.1 million in 2005.
EBITDA for the third quarter increased 48.5 percent to $5.5 million, from $3.7 million in the same quarter of 2005.
"As expected, the contribution from our recent acquisition of A1 Equipment Rental Ltd., combined with solid organic growth, has resulted in a considerable increase in both revenues and cash flow in the quarter," said William Swisher, president and CEO. "Most importantly, we capitalized on the seasonal nature of our business to significantly reduce our third-quarter payout ratio to 67 percent. Looking ahead, we anticipate a strong finish to the year with an annual payout ratio below 100 percent."
Revenue for the nine months ended Sept. 30, increased 25.6 percent to $39.1 million from the same period in 2005. The increase was primarily the result of the increase in rental revenue generated by the A1 acquisition, the larger rental fleet, and price increases implemented in late 2005 and through 2006. Equipment rental revenue for the nine months ended Sept. 30 was $31.7 million, compared to $25.2 million in the same period a year ago. Equipment rental revenue represented approximately 81.1 percent of revenue for the nine months ended Sept. 30, consistent with 2005. Sales of consumables and new and used equipment also increased in the first nine months of 2006 compared to the prior year period.
EBITDA for the nine months ended Sept. 30, increased 26.6 percent to $9.3 million compared to the same period in 2005 as the higher revenue more than absorbed the increased operating costs resulting from the acquisition of A1 and the increase in selling, general and administrative expenses due to the higher employee costs and public company-related expenses incurred in 2006 compared to 2005.
Stephenson’s acquisition of A-1, its largest independent competitor, has resulted in a market share increase approaching 30 percent of markets served. During the third quarter, two of the A1 branches were consolidated with existing Stephenson’s locations, and a Stephenson’s branch was consolidated with the remaining A1 operation. The rationalization of the combined network should result in further improvement in profitability going forward, the company said.
Mississauga, Ontario-based Stephenson’s Rental Service is No. 48 on the RER 100.
