CHICAGO — Total revenues for NES Rentals dropped 9 percent in 2003, from $621.3 million in 2002 to $567.1 million, according to documents recently filed with the Securities and Exchange Commission. Rental revenues declined from $513.5 to $482.8 million. However, the company's gross profit and operating margins improved in 2003 from 2002 as a result of substantial cost-cutting measures taken throughout the year as a result of restructuring under Chapter 11 bankruptcy protection. The cost-cutting measures included closing and consolidating branch operations, centralizing shared services and administrative functions and rationalizing NES' rental equipment mix.
“The company performed much better than expected through this difficult period of time,” said Michael Milligan, chief financial officer. “The financial statements for 2003 reflect the write-off of goodwill and other debt issuance costs that represent non-cash items. NES Rentals now starts off on solid financial ground with a new $500 million credit facility from a bank group led by our long-term agent, Wachovia Bank. We're fortunate because our current cash position will allow us to increase our fleet's size, and improve fleet mix and quality.”
According to Doug Booth, NES Rentals interim chief operating officer and a partner with Carl Marks Consulting Group, the restructuring firm that has handled the company's reorganization, the new $500 million credit facility will enable NES Rentals to spend about $90 million in capital expenditures in 2004 and aggressively revitalize its fleet of 45,000 pieces of equipment. Fleet revitalization is central to NES' reorganization, and the company plans to reinvest heavily in its fleet over the next several years.
“We also have successfully consolidated more than a dozen separate information systems into a single database and established a Shared Services Center, which will help us more effectively manage our fleet and enhance customer service nationwide,” said Booth.
NES filed for reorganization on June 27, 2003, and successfully emerged from Chapter 11 protection this past February.
NES also announced the appointment of a new board of directors. The seven-member board officially began its duties on April 6.
“Members of this board were selected from some of the finest businessmen in the industry, and we're confident they will help steer NES to a bright future,” said Duff Meyercord, a partner at CMCG and NES' chief restructuring officer. “The members understand and strongly believe in the future of NES and will drive the initiatives needed to fulfill that potential.”
John Neafsey has extensive investment and management experience and is president of JN Associates, an investment consulting firm. He is chairman of Alliance Coal Co. and a director of Constar Inc. He also serves on the board of the West Pharmaceutical Services Co.
Walter Schuetze will serve as NES Rentals' audit committee chair. A certified public accountant, Schuetze was chief accountant to the SEC from January 1992 through his retirement in March 1995. He is audit committee chair on the boards of directors for Computer Associates International and TransMontaigne.
Scott Meadow will serve as the head of NES Rentals' compensation committee. Meadow is a clinical professor of entrepreneurship at the University of Chicago's Graduate School of Business.
Douglas Ball is founder and president of Marlemar, a Chicago-based management consulting company that assists start-up ventures.
R. Barry Uber served as a corporate officer and president of Ingersoll-Rand's $1.2 billion Construction and Mining Group from 1995 to 1998. Most recently, Uber was president and COO of American Commercial Barge Line. Uber is, apparently, the only board member with experience close to the construction equipment and rental industries.
Michael Scott is founder and CEO of ICap Inc., a Great Falls, Va.-based consulting and investment banking firm specializing in the development, construction and systems integration industries, with extensive experience in state contracting.
The seventh board position will be filled temporarily by Michael Watchorn, a managing director of Oaktree Capital Management llc. He is currently a backup portfolio manager in the high-yield bond group based in Los Angeles.
The board's first task will be to appoint a new CEO for NES Rentals. The CEO will become the seventh board member, replacing Watchorn, and will assume the directorship. A group of potential CEO candidates has been slated and the board will oversee the final selection.
Headquartered in Chicago, NES Rentals has 160 locations in 34 states and Canada and is No. 5 on the new RER 100.
