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8-K - FORM 8-K - RSC Holdings Inc. | d287719d8k.htm |
Exhibit 99.1
RSC Reports 4Q11 Results
SCOTTSDALE, Ariz., January 26, 2012 RSC Holdings Inc. (NYSE: RRR), one of the largest equipment rental providers in North America, today announced financial results for the quarter ended December 31, 2011. Total revenue was $421 million and rental revenue was $364 million, compared with $339 million and $287 million, respectively, for the same period last year. The companys fourth quarter net income was $5 million, or $0.04 per diluted share, compared with a net loss of $7 million, or $0.07 per diluted share, for the fourth quarter 2010. The net income in the current quarter includes $11 million of pre-tax charges associated with the companys announcement on December 16 of a potential merger. Excluding these charges, net income for the fourth quarter would have been $15 million, or $0.14 per diluted share.
Adjusted EBITDA was $164 million for the quarter, compared with $116 million for the same period last year. Adjusted EBITDA margin was 38.9% for the fourth quarter, compared with 34.4% in 2010. The increase in profitability and margins primarily reflects continued volume growth, pricing growth and the companys ability to leverage and control its operating costs.
Fourth Quarter 2011 Highlights
| Grew rental revenue 27% over the fourth quarter 2010. |
| Increased rental volume 20.7% year-over-year, the sixth consecutive quarter of double-digit volume growth. |
| Improved rental rates 6.5% over the fourth quarter of last year and 4.5% over the third quarter of 2011. |
| Generated a 41% increase in year-over-year Adjusted EBITDA. |
| Increased average fleet utilization to 71%, up 310 bps from the fourth quarter 2010. |
| Invested $73 million in gross rental capital expenditures in response to growing demand. |
| Sold $85 million of existing fleet at original cost with record margins of 41%. |
| Strong availability of $628 million under the ABL revolver as of December 31, 2011. |
FY 2011 Results
Total revenue for 2011 was $1,522 million, compared with $1,234 million in 2010. The companys full year net loss was $30 million, compared with a net loss of $74 million a year ago. The 2011 net loss includes $49 million of pre-tax charges from first quarter refinancing activities and $11 million of charges from the fourth quarter related to the companys recently announced potential merger. Excluding these charges, pre-tax net income for 2011 would have been $10 million, or $0.10 per diluted share. Adjusted EBITDA for 2011 was $561 million, versus $393 million in 2010. The changes in profitability were driven by increased volume, pricing growth, and effective cost management.
FY 2011 Highlights
| Grew rental revenue 24% over 2010. |
| Increased rental volume 18.9% over 2010. |
| Improved rental rates 4.9% over 2010. |
| Generated Adjusted EBITDA of $561 million, a $167 million or 43% increase over 2010. |
| Increased average fleet utilization to 69%, up 510 bps from 2010. |
| Invested $616 million in gross rental capital expenditures in response to growing demand. |
CEO Comments
Erik Olsson, President and Chief Executive Officer, commented: The fourth quarter was another very strong quarter. Our business strategy and industry-leading execution produced an impressive 21% volume growth, while at the same time generating positive year-over-year pricing of 6.5%, driven by positive sequential pricing over the third quarter of 4.5%. This growth, in combination with strong cost management, resulted in a 41% year-over-year increase in Adjusted EBITDA. Furthermore, improved results were widespread with all regions delivering double-digit revenue growth and significant increases in utilization and profitability. I am very pleased with this strong finish to a great 2011, which supports our view of a strong 2012.
Conference Call
RSC Holdings will hold a conference call today at 5:15 p.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 February 8, 2012. To access the replay dial: U.S. and Canada: (855) 859-2056; international (404) 537-3406. Pass code: 43509493. A replay of the webcast will also be available at www.RSCrental.com/Investor.
The company will take questions on fourth quarter and 2011 results, but does not intend to take questions on the announced merger.
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 $2.7 billion of equipment at original cost. RSC offers superior equipment availability, reliability and 24x7 service to customers through an integrated network of 440 branch locations across 43 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 4,700 employees committed to safety and sustainability, RSC delivers the best value and industry leading customer service. All information is as of December 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, view, see, will, should, expect, 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)
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
December 31, | Change | December 31, | Change | |||||||||||||||||||||
2011 | 2010 | % | 2011 | 2010 | % | |||||||||||||||||||
Revenues: |
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Equipment rental revenue |
$ | 364,482 | $ | 286,648 | 27.2 | % | $ | 1,312,507 | $ | 1,060,266 | 23.8 | % | ||||||||||||
Sale of merchandise |
14,890 | 11,725 | 27.0 | 55,241 | 49,313 | 12.0 | ||||||||||||||||||
Sale of used rental equipment |
41,422 | 40,530 | 2.2 | 154,466 | 124,845 | 23.7 | ||||||||||||||||||
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Total revenues |
420,794 | 338,903 | 24.2 | 1,522,214 | 1,234,424 | 23.3 | ||||||||||||||||||
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Cost of revenues: |
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Cost of equipment rentals, excluding depreciation |
173,118 | 144,822 | 19.5 | 651,651 | 563,513 | 15.6 | ||||||||||||||||||
Depreciation of rental equipment |
78,747 | 69,689 | 13.0 | 300,377 | 272,610 | 10.2 | ||||||||||||||||||
Cost of merchandise sales |
9,990 | 8,435 | 18.4 | 36,817 | 35,701 | 3.1 | ||||||||||||||||||
Cost of used rental equipment sales |
24,517 | 31,348 | (21.8 | ) | 101,141 | 104,491 | (3.2 | ) | ||||||||||||||||
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Total cost of revenues |
286,372 | 254,294 | 12.6 | 1,089,986 | 976,315 | 11.6 | ||||||||||||||||||
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Gross profit |
134,422 | 84,609 | 58.9 | 432,228 | 258,109 | 67.5 | ||||||||||||||||||
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Operating expenses: |
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Selling, general and administrative |
52,425 | 39,567 | 32.5 | 183,145 | 146,791 | 24.8 | ||||||||||||||||||
Depreciation and amortization of non-rental equipment and intangibles |
10,892 | 10,234 | 6.4 | 42,427 | 40,213 | 5.5 | ||||||||||||||||||
Merger costs |
10,954 | | n/a | 10,954 | | n/a | ||||||||||||||||||
Other operating gains, net |
(1,292 | ) | (1,975 | ) | (34.6 | ) | (4,000 | ) | (5,592 | ) | (28.5 | ) | ||||||||||||
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Total operating expenses, net |
72,979 | 47,826 | 52.6 | 232,526 | 181,412 | 28.2 | ||||||||||||||||||
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Operating income |
61,443 | 36,783 | 67.0 | 199,702 | 76,697 | 160.4 | ||||||||||||||||||
Interest expense, net |
48,212 | 47,999 | 0.4 | 224,518 | 194,471 | 15.5 | ||||||||||||||||||
Loss on extinguishment of debt |
| | n/a | 15,342 | | n/a | ||||||||||||||||||
Other expense (income), net |
322 | (175 | ) | (284.0 | ) | 260 | (539 | ) | (148.2 | ) | ||||||||||||||
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Income (loss) before (provision) benefit for income taxes |
12,909 | (11,041 | ) | (216.9 | ) | (40,418 | ) | (117,235 | ) | (65.5 | ) | |||||||||||||
(Provision) benefit for income taxes |
(8,281 | ) | 3,890 | (312.9 | ) | 10,514 | 43,719 | (76.0 | ) | |||||||||||||||
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Net income (loss) |
$ | 4,628 | $ | (7,151 | ) | (164.7 | ) | $ | (29,904 | ) | $ | (73,516 | ) | (59.3 | ) | |||||||||
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Weighted average shares outstanding used in computing net income (loss) per common share: |
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Basic |
104,023 | 103,605 | 103,911 | 103,527 | ||||||||||||||||||||
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Diluted |
105,342 | 103,605 | 103,911 | 103,527 | ||||||||||||||||||||
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Net income (loss) per common share: |
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Basic |
$ | 0.04 | $ | (0.07 | ) | $ | (0.29 | ) | $ | (0.71 | ) | |||||||||||||
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Diluted |
$ | 0.04 | $ | (0.07 | ) | $ | (0.29 | ) | $ | (0.71 | ) | |||||||||||||
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Other operational data (a): |
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Fleet utilization |
70.8 | % | 67.7 | % | 68.8 | % | 63.7 | % | ||||||||||||||||
Average fleet age at period end (months) |
42 | 44 | 42 | 44 | ||||||||||||||||||||
Employees |
4,721 | 4,427 | 4,721 | 4,427 | ||||||||||||||||||||
Original equipment fleet cost at period end (in millions) |
$ | 2,666 | $ | 2,345 | $ | 2,666 $ | 2,345 |
(a) | Refer to attached Statistical Measures for descriptions. |
RSC HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31, | December 31, | |||||||
2011 | 2010 | |||||||
Assets |
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Cash and cash equivalents |
$ | 4,833 | $ | 3,510 | ||||
Accounts receivable, net |
267,879 | 228,532 | ||||||
Inventory |
15,909 | 14,171 | ||||||
Deferred tax assets, net |
122,862 | 17,912 | ||||||
Prepaid expense and other current assets |
14,422 | 13,798 | ||||||
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Total current assets |
425,905 | 277,923 | ||||||
Rental equipment, net |
1,573,193 | 1,336,424 | ||||||
Property and equipment, net |
123,114 | 110,779 | ||||||
Goodwill and other intangibles, net |
957,129 | 939,302 | ||||||
Deferred financing costs |
52,484 | 44,205 | ||||||
Other long-term assets |
9,148 | 9,342 | ||||||
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Total assets |
$ | 3,140,973 | $ | 2,717,975 | ||||
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Liabilities and Stockholders Deficit |
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Accounts payable |
$ | 258,811 | $ | 193,819 | ||||
Accrued expenses and other current liabilities |
140,725 | 119,608 | ||||||
Current portion of long-term debt |
27,417 | 25,294 | ||||||
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Total current liabilities |
426,953 | 338,721 | ||||||
Long-term debt |
2,294,865 | 2,043,887 | ||||||
Deferred tax liabilities, net |
429,074 | 330,862 | ||||||
Other long-term liabilities |
28,500 | 41,782 | ||||||
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Total liabilities |
3,179,392 | 2,755,252 | ||||||
Total stockholders deficit |
(38,419 | ) | (37,277 | ) | ||||
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Total liabilities and stockholders deficit |
$ | 3,140,973 | $ | 2,717,975 | ||||
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RSC HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Twelve Months Ended | ||||||||
December 31, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
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Net loss |
$ | (29,904 | ) | $ | (73,516 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
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Depreciation and amortization |
342,804 | 312,823 | ||||||
Amortization of deferred financing costs |
10,018 | 12,782 | ||||||
Amortization of original issue discount |
1,246 | 1,117 | ||||||
Share-based compensation expense |
7,051 | 3,753 | ||||||
Gain on sales of rental and non-rental property and equipment, net of non-cash write-offs |
(55,458 | ) | (19,376 | ) | ||||
Deferred income taxes |
(19,099 | ) | (2,697 | ) | ||||
Loss on extinguishment of debt |
15,342 | | ||||||
Gain on settlement of insurance property claims |
| (3,426 | ) | |||||
Interest expense, net on ineffective hedge |
(104 | ) | 42 | |||||
Changes in operating assets and liabilities |
51,904 | 93,358 | ||||||
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Net cash provided by operating activities |
323,800 | 324,860 | ||||||
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Cash flows from investing activities: |
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Cash paid for acquisition |
(49,098 | ) | | |||||
Purchases of rental equipment |
(616,159 | ) | (327,107 | ) | ||||
Purchases of property and equipment |
(11,837 | ) | (5,766 | ) | ||||
Proceeds from sales of rental equipment |
154,466 | 124,845 | ||||||
Proceeds from sales of property and equipment |
7,073 | 2,951 | ||||||
Insurance proceeds from rental equipment and property claims |
| 4,368 | ||||||
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Net cash used in investing activities |
(515,555 | ) | (200,709 | ) | ||||
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Cash flows from financing activities: |
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Net proceeds (payments) on debt |
202,196 | (127,194 | ) | |||||
Financing costs |
(28,101 | ) | (1,756 | ) | ||||
Proceeds from stock option exercises |
5,109 | 948 | ||||||
Other |
14,670 | 1,921 | ||||||
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Net cash provided by (used in) financing activities |
193,874 | (126,081 | ) | |||||
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Effect of foreign exchange rates on cash |
(796 | ) | 905 | |||||
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Net increase (decrease) in cash and cash equivalents |
1,323 | (1,025 | ) | |||||
Cash and cash equivalents at beginning of period |
3,510 | 4,535 | ||||||
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Cash and cash equivalents at end of period |
$ | 4,833 | $ | 3,510 | ||||
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Supplemental disclosure of cash flow information: |
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Cash paid for interest |
$ | 197,803 | $ | 181,272 | ||||
Cash received for taxes, net |
13,130 | 26,539 |
RSC HOLDINGS INC. AND SUBSIDIARIES
Rental Revenue Growth Bridge
(in thousands)
Rental Revenues | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
December 31, | December 31, | |||||||
2010 |
$ | 286,648 | $ | 1,060,266 | ||||
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Changes: |
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Volume |
20.8 | % | 18.6 | % | ||||
Price |
6.5 | % | 4.9 | % | ||||
Currency |
-0.1 | % | 0.3 | % | ||||
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2011 |
$ | 364,482 | $ | 1,312,507 | ||||
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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, merger costs, 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)
Three Months Ended December 31, |
Twelve Months Ended December 31, |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income (loss) |
$ | 4,628 | $ | (7,151 | ) | $ | (29,904 | ) | $ | (73,516 | ) | |||||
Depreciation of rental equipment and depreciation and amortization of non-rental equipment and intangibles |
89,639 | 79,923 | 342,804 | 312,823 | ||||||||||||
Interest expense, net |
48,212 | 47,999 | 224,518 | 194,471 | ||||||||||||
Provision (benefit) for income taxes |
8,281 | (3,890 | ) | (10,514 | ) | (43,719 | ) | |||||||||
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EBITDA |
$ | 150,760 | $ | 116,881 | $ | 526,904 | $ | 390,059 | ||||||||
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Adjustments: |
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Loss on extinguishment of debt |
| | 15,342 | | ||||||||||||
Merger costs |
10,954 | | 10,954 | | ||||||||||||
Share-based compensation |
1,835 | (213 | ) | 7,051 | 3,753 | |||||||||||
Other (income) expense, net |
322 | (175 | ) | 260 | (539 | ) | ||||||||||
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Adjusted EBITDA |
$ | 163,871 | $ | 116,493 | $ | 560,511 | $ | 393,273 | ||||||||
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(Adjusted EBITDA as a percentage of total revenues) |
38.9 | % | 34.4 | % | 36.8 | % | 31.9 | % |
Three Months Ended December 31, |
Twelve Months Ended December 31, |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Net cash provided by operating activities |
$ | (10,366 | ) | $ | 12,411 | $ | 323,800 | $ | 324,860 | |||||||
Gain on sales of rental and non-rental property and equipment, net of non-cash write-offs |
17,681 | 9,741 | 55,458 | 19,376 | ||||||||||||
Gain on settlement of insurance property claims |
| 1,690 | | 3,426 | ||||||||||||
Cash paid for interest |
38,101 | 54,617 | 197,803 | 181,272 | ||||||||||||
Cash paid (received) for taxes, net |
1,263 | (977 | ) | (13,130 | ) | (26,539 | ) | |||||||||
Other (income) expense, net |
322 | (175 | ) | 260 | (539 | ) | ||||||||||
Changes in other operating assets and liabilities |
116,870 | 39,186 | (3,680 | ) | (108,583 | ) | ||||||||||
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Adjusted EBITDA |
$ | 163,871 | $ | 116,493 | $ | 560,511 | $ | 393,273 | ||||||||
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Free Cash Flow GAAP Reconciliation
(in thousands)
Three Months Ended December 31, |
Twelve Months Ended December 31, |
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2011 | 2010 | 2011 | 2010 | |||||||||||||
Net cash provided by operating activities |
$ | (10,366 | ) | $ | 12,411 | $ | 323,800 | $ | 324,860 | |||||||
Purchases of rental equipment |
(72,824 | ) | (61,393 | ) | (616,159 | ) | (327,107 | ) | ||||||||
Purchases of property and equipment |
(3,456 | ) | (136 | ) | (11,837 | ) | (5,766 | ) | ||||||||
Proceeds from sales of rental equipment |
41,422 | 40,530 | 154,466 | 124,845 | ||||||||||||
Proceeds from sales of property and equipment |
2,241 | 766 | 7,073 | 2,951 | ||||||||||||
Insurance proceeds from rental equipment and property claims |
| 2,632 | | 4,368 | ||||||||||||
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Net capital expenditures |
(32,617 | ) | (17,601 | ) | (466,457 | ) | (200,709 | ) | ||||||||
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Free cash flow |
$ | (42,983 | ) | $ | (5,190 | ) | $ | (142,657 | ) | $ | 124,151 | |||||
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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.
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, merger 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.
Contacts
Investor/Analyst Contacts:
Scott Huckins, VP Treasurer
(480) 281-6956 or
Scott.Huckins@RSCRental.com
Media Contact:
Chenoa Taitt
(212) 223-0682