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8-K - FORM 8-K - RSC Holdings Inc. | c15747e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
RSC Reports 1Q11 Results
SCOTTSDALE, Ariz., April 20, 2011 RSC Holdings Inc. (NYSE: RRR), one of the largest equipment
rental providers in North America, today announced financial results for the quarter ended March
31, 2011. Total revenue was $327 million and rental revenue was $272 million, compared with $261
million and $222 million, respectively, for the same period last year. The companys first quarter
net loss was $50 million, or $0.49 per diluted share, compared with a net loss of $38 million, or
$0.37 per diluted share, for the first quarter 2010. The net loss in the current quarter includes
$49 million of pre-tax charges associated with the companys refinancing activities in the quarter.
Adjusted EBITDA was $99 million for the quarter, compared with $66 million for the same period last
year. Adjusted EBITDA margin was 30.2% for the first quarter, compared with 25.3% in 2010. The
change in profitability and margins primarily reflects increased volume and improved pricing.
First Quarter 2011 Highlights
| Generated a 50% increase in
year-over-year Adjusted EBITDA at a margin of 30.2%. |
| Grew total revenue 25% over the first quarter 2010, including a 22% increase in rental
revenue. |
| Increased rental volume 20% year-over-year, the fourth consecutive quarter of volume
growth. |
| Improved rental rates over the first quarter of last year by 2.0%. |
| Increased average fleet utilization for the quarter to 64%, improving from 55% in the
first quarter 2010. |
| Invested $158 million in gross rental capital expenditures in response to growing
demand. |
| Sold $90 million of
fleet at original equipment cost with margins of 27%, up from 9% in
the year ago quarter. |
| Generated 62% of revenue from industrial customers. |
| Refinanced $1.7 billion of debt at lower rates with longer maturities. |
| Maintained strong availability of $641 million under the ABL revolver as of March 31,
2011. |
CEO Comments
Erik Olsson, President and Chief Executive Officer, stated: We produced another quarter of
exceptional volume growth of 20% and generated positive year-over-year pricing of 2.0%, including a
3.8% year-over-year improvement in March. These results drove a 50% year-over-year increase in
EBITDA and demonstrate the continued and increasing acceptance of our leading value proposition by
both industrial and non-residential construction customers. Our strategy of making consistent
investments in our footprint, people, technology and sales
organization throughout the downturn has positioned us to
outpace the growth of our end markets as we enter the expansion phase of the business cycle.
Outlook for 2Q11
Business activity in the companys primary end-market, industrial and non-construction, improved on a
year-over-year basis in the first quarter, while the non-residential
construction end market, which makes up 35% of RSC revenues, declined
at a moderating pace. These trends are anticipated to continue and RSC
expects double-digit volume growth in the second quarter. In addition, the company expects utilization
levels to be considerably higher than those seen in the prior year quarter and in the first quarter
of 2011 with favorable year-over-year rental rates.
Mr. Olsson concluded: We see continued strengthening in the industrial markets and
are
benefiting from increasing customer focus on the total cost of rental and not strictly pricing.
Customers are embracing the value of our total rental solution
approach including our Total Control® system. In addition, improved
results were widespread with all regions delivering double digit revenue growth. As a result, we
expect continued favorable year-over-year comparisons in the second quarter and remain optimistic
that these positive trends will continue throughout the year.
Conference Call
RSC Holdings will hold a conference call tomorrow at 8:00 a.m. Eastern Time. Investors may access
the call by visiting the investor relations portion of the RSC website at
www.RSCrental.com/Investor. To listen to the live conference call from the U.S. and Canada dial
(866) 393-7634; from international locations dial (706) 679-0678. A replay of the conference call
will be available through May 5, 2011. To access the replay dial: U.S. and Canada: (800) 642-1687;
international (706) 645-9291. Pass code: 57728843. A replay of the webcast will also be available
at www.RSCrental.com/Investor.
Investor Presentation Information
Information concerning our business and financial results that we expect to use at upcoming
investor presentations will be made available on our website following the conference call and will
be maintained on our website for at least the period of its use at such meetings or until updated
by more current information.
About RSC Holdings Inc.
RSC Holdings Inc. (NYSE: RRR) based in Scottsdale, Arizona, is the holding company for the
operating entity RSC Equipment Rental, Inc. (RSC), which is a premier provider of rental
equipment in North America, servicing the industrial, maintenance and non-residential construction
markets with $2.4 billion of equipment at original cost. RSC offers superior equipment
availability, reliability and 24x7 service to customers through an integrated network of 446 branch
locations across 41 states in the United States and three provinces in Western Canada. Customer
solutions to improve efficiency and reduce cost include the proprietary Total Control® rental
management software, Mobile Tool Rooms and on-site rental locations. With over 4,300 employees
committed to safety and sustainability, RSC delivers the best value and industry leading customer
service. All information is as of March 31, 2011. Additional information about RSC is available at
www.RSCrental.com.
Forward Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements are based on managements current expectations and are subject to uncertainty and
changes in factual circumstances. The forward-looking statements herein include statements
regarding the companys future financial position, end-market outlook, business strategy, budgets,
projected costs and plans and objectives of management for future operations.
In addition, forward-looking statements generally can be identified by the use of forward-looking
terminology such as may, plan, seek, will, should, expect, intend, estimate,
anticipate, believe or continue or the negative thereof or variations thereon or similar
terminology. Actual results and developments may therefore differ materially from those described
in this release.
The company cautions therefore that you should not rely unduly on these forward-looking statements.
You should understand the risks and uncertainties discussed in Risk Factors and elsewhere in the
companys Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the United
States Securities and Exchange Commission could affect the companys future results and could cause
those results or other outcomes to differ materially from those expressed or implied in the
companys forward-looking statements.
These forward-looking statements are not guarantees of future performance and speak only as of the
date hereof, and, except as required by law, we disclaim any obligation to update these
forward-looking statements to reflect future events or circumstances.
Non-GAAP Financial Information
In addition to disclosing financial results that are determined in accordance with U.S. generally
accepted accounting principles (GAAP), the company also discloses in this press release certain
non-GAAP financial information including adjusted EBITDA and free cash flow. These financial
measures are not recognized measures under GAAP and they are not intended to be and should not be
considered in isolation or as a substitute for, or superior to, the financial information prepared
and presented in accordance with GAAP. For more information on these non-GAAP financial measures,
please see the tables captioned Adjusted EBITDA GAAP Reconciliations and Free Cash Flow GAAP
Reconciliation included at the end of this release. Additionally, explanations of these Non-GAAP
measures are provided in Annex A attached to this release.
RSC HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended | ||||||||||||
March 31, | Change | |||||||||||
2011 | 2010 | % | ||||||||||
Revenues: |
||||||||||||
Equipment rental revenue |
$ | 271,775 | $ | 222,213 | 22.3 | % | ||||||
Sale of merchandise |
12,652 | 11,421 | 10.8 | |||||||||
Sale of used rental equipment |
42,493 | 27,106 | 56.8 | |||||||||
Total revenues |
326,920 | 260,740 | 25.4 | |||||||||
Cost of revenues: |
||||||||||||
Cost of equipment rentals,
excluding depreciation |
148,976 | 129,292 | 15.2 | |||||||||
Depreciation of rental equipment |
70,889 | 66,645 | 6.4 | |||||||||
Cost of merchandise sales |
8,442 | 8,074 | 4.6 | |||||||||
Cost of used rental equipment sales |
30,970 | 24,637 | 25.7 | |||||||||
Total cost of revenues |
259,277 | 228,648 | 13.4 | |||||||||
Gross profit |
67,643 | 32,092 | 110.8 | |||||||||
Operating expenses: |
||||||||||||
Selling, general and administrative |
41,718 | 35,712 | 16.8 | |||||||||
Depreciation and amortization of
non-rental equipment and intangibles |
10,225 | 10,057 | 1.7 | |||||||||
Other operating gains, net |
(719 | ) | (2,312 | ) | n/a | |||||||
Total operating expenses, net |
51,224 | 43,457 | 17.9 | |||||||||
Operating income (loss) |
16,419 | (11,365 | ) | n/a | ||||||||
Interest expense, net |
81,959 | 49,793 | 64.6 | |||||||||
Loss on extinguishment of debt |
15,342 | | n/a | |||||||||
Other income, net |
(337 | ) | (199 | ) | n/a | |||||||
Loss before benefit
for income taxes |
(80,545 | ) | (60,959 | ) | n/a | |||||||
Benefit for income taxes |
30,113 | 23,131 | n/a | |||||||||
Net loss |
$ | (50,432 | ) | $ | (37,828 | ) | n/a | |||||
Weighted average shares outstanding used in computing
net loss per common share: |
||||||||||||
Basic and diluted |
103,787 | 103,477 | ||||||||||
Net loss per common share: |
||||||||||||
Basic and diluted |
$ | (0.49 | ) | $ | (0.37 | ) | ||||||
Other operational data (a): |
||||||||||||
Fleet utilization |
63.6 | % | 54.8 | % | ||||||||
Average fleet age at period end (months) |
43 | 42 | ||||||||||
Same store rental revenue growth / (decline) |
26.3 | % | (22.6 | )% | ||||||||
Employees |
4,385 | 4,134 | ||||||||||
Original equipment fleet cost at period
end (in millions) |
$ | 2,408 | $ | 2,301 |
(a) | Refer to attached Statistical Measures for descriptions. |
RSC HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 32,153 | $ | 3,510 | ||||
Accounts receivable, net |
237,163 | 228,532 | ||||||
Inventory |
14,994 | 14,171 | ||||||
Deferred tax assets, net |
10,494 | 17,912 | ||||||
Prepaid expense and other current assets |
12,349 | 13,798 | ||||||
Total current assets |
307,153 | 277,923 | ||||||
Rental equipment, net |
1,394,632 | 1,336,424 | ||||||
Property and equipment, net |
108,904 | 110,779 | ||||||
Goodwill and other intangibles, net |
939,112 | 939,302 | ||||||
Deferred financing costs |
58,309 | 44,205 | ||||||
Other long-term assets |
9,336 | 9,342 | ||||||
Total assets |
$ | 2,817,446 | $ | 2,717,975 | ||||
Liabilities and Stockholders Deficit |
||||||||
Accounts payable |
$ | 246,660 | $ | 193,819 | ||||
Accrued expenses and other current liabilities |
106,528 | 119,608 | ||||||
Current portion of long-term debt |
25,603 | 25,294 | ||||||
Total current liabilities |
378,791 | 338,721 | ||||||
Long-term debt |
2,166,773 | 2,043,887 | ||||||
Deferred tax liabilities, net |
305,084 | 330,862 | ||||||
Other long-term liabilities |
29,037 | 41,782 | ||||||
Total liabilities |
2,879,685 | 2,755,252 | ||||||
Total stockholders deficit |
(62,239 | ) | (37,277 | ) | ||||
Total liabilities and stockholders deficit |
$ | 2,817,446 | $ | 2,717,975 | ||||
RSC HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (50,432 | ) | $ | (37,828 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
81,114 | 76,702 | ||||||
Amortization of deferred financing costs |
2,730 | 3,173 | ||||||
Amortization of original issue discount |
299 | 268 | ||||||
Share-based compensation expense |
1,274 | 663 | ||||||
Gain on sales of rental and non-rental property and
equipment, net of non-cash write-offs |
(12,041 | ) | (2,608 | ) | ||||
Deferred income taxes |
(31,180 | ) | (23,666 | ) | ||||
Gain on settlement of insurance property claims |
| (1,736 | ) | |||||
Loss on extinguishment of debt |
15,342 | | ||||||
Interest expense, net on ineffective hedge |
(104 | ) | 85 | |||||
Changes in operating assets and liabilities |
52,182 | 50,428 | ||||||
Net cash provided by operating activities |
59,184 | 65,481 | ||||||
Cash flows from investing activities: |
||||||||
Purchases of rental equipment |
(157,921 | ) | (44,906 | ) | ||||
Purchases of property and equipment |
(2,444 | ) | (331 | ) | ||||
Proceeds from sales of rental equipment |
42,493 | 27,106 | ||||||
Proceeds from sales of property and equipment |
1,594 | 1,296 | ||||||
Insurance proceeds from rental equipment and property claims |
| 1,736 | ||||||
Net cash used in investing activities |
(116,278 | ) | (15,099 | ) | ||||
Cash flows from financing activities: |
||||||||
Net proceeds (payments) on debt |
110,932 | (47,020 | ) | |||||
Financing costs |
(26,826 | ) | (624 | ) | ||||
Proceeds from stock option exercises |
1,330 | 15 | ||||||
Other |
(440 | ) | | |||||
Net cash provided by (used in) financing activities |
84,996 | (47,629 | ) | |||||
Effect of foreign exchange rates on cash |
741 | 574 | ||||||
Net increase in cash and cash equivalents |
28,643 | 3,327 | ||||||
Cash and cash equivalents at beginning of period |
3,510 | 4,535 | ||||||
Cash and cash equivalents at end of period |
$ | 32,153 | $ | 7,862 | ||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid for interest |
$ | 70,305 | $ | 36,831 | ||||
Cash received for taxes, net |
66 | 406 |
RSC HOLDINGS INC. AND SUBSIDIARIES
Rental Revenue Growth Bridge
(in thousands)
Rental Revenue Growth Bridge
(in thousands)
Rental Revenues | ||||
Three Months Ended | ||||
March 31, | ||||
2010 |
$ | 222,213 | ||
Changes: |
||||
Volume |
19.8 | % | ||
Price |
2.0 | % | ||
Currency |
0.5 | % | ||
2011 |
$ | 271,775 | ||
Annex A
EBITDA and Adjusted EBITDA. EBITDA, a supplemental non-GAAP financial measure, is defined as
consolidated net income (loss) before net interest expense, income taxes and depreciation and
amortization. Adjusted EBITDA as presented herein is a non-GAAP financial measure and is defined as
consolidated net income (loss) before net interest expense, income taxes, and depreciation and
amortization and before certain other items, including loss on extinguishment of debt, share-based
compensation, and other (income) expense, net. All companies do not calculate EBITDA and Adjusted
EBITDA in the same manner, and RSC Holdings presentation may not be comparable to those presented
by other companies.
The company presents EBITDA and Adjusted EBITDA in this release because it believes these
calculations are useful to investors in evaluating our financial performance and as a liquidity
measure. However, EBITDA and Adjusted EBITDA are not recognized measurements under GAAP, and when
analyzing the companys performance, investors should use EBITDA and Adjusted EBITDA in addition
to, and not as an alternative to, net income (loss) or net cash provided by operating activities as
defined under GAAP.
Free cash flow. The company defines free cash flow as net cash provided by operating activities
and net capital inflows (expenditures). All companies do not calculate free cash flow in the same
manner, and RSC Holdings presentation may not be comparable to those presented by other companies.
We believe free cash flow provides useful additional information concerning cash flow available to
meet future debt service obligations and working capital needs. However, free cash flow is a
non-GAAP measure and should be used in addition to, and not as an alternative to, data presented in
accordance with GAAP.
The accompanying tables reconcile the GAAP financial measures that are most directly comparable to
these non-GAAP financial measures.
RSC HOLDINGS INC. AND SUBSIDIARIES
Adjusted EBITDA GAAP Reconciliations
(in thousands)
Adjusted EBITDA GAAP Reconciliations
(in thousands)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Net loss |
$ | (50,432 | ) | $ | (37,828 | ) | ||
Depreciation of rental equipment and depreciation and
amortization of non-rental equipment and intangibles |
81,114 | 76,702 | ||||||
Interest expense, net |
81,959 | 49,793 | ||||||
Benefit for income taxes |
(30,113 | ) | (23,131 | ) | ||||
EBITDA |
$ | 82,528 | $ | 65,536 | ||||
Adjustments: |
||||||||
Loss on extinguishment of debt |
15,342 | | ||||||
Share-based compensation |
1,274 | 663 | ||||||
Other income, net |
(337 | ) | (199 | ) | ||||
Adjusted EBITDA |
$ | 98,807 | $ | 66,000 | ||||
(Adjusted EBITDA as a percentage of total revenues) |
30.2 | % | 25.3 | % |
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Net cash provided by operating activities |
$ | 59,184 | $ | 65,481 | ||||
Gain on sales of rental and non-rental property and
equipment, net of non-cash write-offs |
12,041 | 2,608 | ||||||
Gain on settlement of insurance property claims |
| 1,736 | ||||||
Cash paid for interest |
70,305 | 36,831 | ||||||
Cash received for taxes, net |
(66 | ) | (406 | ) | ||||
Other income, net |
(337 | ) | (199 | ) | ||||
Changes in other operating assets and liabilities |
(42,320 | ) | (40,051 | ) | ||||
Adjusted EBITDA |
$ | 98,807 | $ | 66,000 | ||||
Free Cash Flow GAAP Reconciliation
(in thousands)
(in thousands)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Net cash provided by operating activities |
$ | 59,184 | $ | 65,481 | ||||
Purchases of rental equipment |
(157,921 | ) | (44,906 | ) | ||||
Purchases of property and equipment |
(2,444 | ) | (331 | ) | ||||
Proceeds from sales of rental equipment |
42,493 | 27,106 | ||||||
Proceeds from sales of property and equipment |
1,594 | 1,296 | ||||||
Insurance proceeds from rental equipment and property claims |
| 1,736 | ||||||
Net capital expenditures |
(116,278 | ) | (15,099 | ) | ||||
Free cash flow |
$ | (57,094 | ) | $ | 50,382 | |||
Statistical Measures
Fleet utilization is defined as the average aggregate dollar value of equipment rented by customers
(based on original equipment fleet cost) during the relevant period divided by the average
aggregate dollar value of all equipment owned (based on original equipment fleet cost) during the
relevant period.
Average fleet age at period end is the number of months since an equipment unit was first placed in
service, weighted by multiplying individual equipment ages by their respective original costs and
dividing the sum of those individual calculations by the total original cost. Equipment
refurbished by the original equipment manufacturer is considered new.
Same store rental revenue growth/(decline) is calculated as the year-over-year change in rental
revenue for locations that are open at the end of the period reported and have been operating under
the companys direction for more than 12 months.
Employee count is given as of the end of the period indicated and the data reflects the actual head
count as of each period presented.
Original Equipment Fleet Cost (OEC) is defined as the original dollar value of rental equipment
purchased from the original equipment manufacturer (OEM). Fleet purchased from non-OEM sources is
assigned a comparable OEC dollar value at the time of purchase.
Return on operating capital employed (ROCE) is calculated by dividing operating income (excluding
transaction costs, management fees, and amortization of intangibles) for the preceding twelve
months by the average operating capital employed. For purposes of this calculation, average
operating capital employed is considered to be all assets other than cash, deferred tax assets,
hedging derivatives, goodwill and intangibles, less all liabilities other than debt, hedging
derivatives and deferred tax liabilities.
Investor/Analyst Contacts:
Scott Huckins, VP Treasurer
(480) 281-6928 or
Scott.Huckins@RSCRental.com
Scott Huckins, VP Treasurer
(480) 281-6928 or
Scott.Huckins@RSCRental.com
Media Contact:
Chenoa Taitt
(212) 223-0682
Chenoa Taitt
(212) 223-0682