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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 company’s 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 company’s 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 company’s 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 management’s current expectations and are subject to uncertainty and changes in factual circumstances. The forward-looking statements herein include statements regarding the company’s 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 company’s 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 company’s future results and could cause those results or other outcomes to differ materially from those expressed or implied in the company’s 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)
                         
    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)
                 
    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)
                 
    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 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 company’s 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)
                 
    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)
                 
    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 company’s 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
Media Contact:
Chenoa Taitt
(212) 223-0682