$13.5m loss at Ahern as revenues fall
By Patrick Hill20 May 2009
Las Vegas-based Ahern Rentals made a US$13.5 million net loss in the first quarter of 2009. Revenues of $63.2 million were down 19% on the previous year, with same-branch revenues falling 23%.
The company experienced continued pressure on rates - 13% down on the same quarter in 2008 - and time utilisation on its high reach equipment fell to 56% from 67%. High reach equipment, which includes aerial platforms and telehandlers, accounts for two-thirds of Ahern's rental business.
Unlike other big US rental companies who are closing depots and reducing costs, Ahern opened 10 depots since the first quarter of 2008 and increased its SGA (selling, general and administrative) costs by 7% in the first quarter.
This expansion strategy is to diversify the business away from the Las Vegas area where Ahern is strongest. The company said; "we do not believe that the strong operating results we have historically experienced in Las Vegas will continue at the same or similar levels in 2009 or beyond.
Because of this and also due to the economic slowdown in general, we have been and plan to continue diversifying our business by opening branch locations in new markets."
The revenue decline was partially offset by approximately $10 million in revenues from the 10 branches Ahern has opened since April 2008. Since the first quarter, Ahern has also opened three additional branches - in Raleigh, North Carolina; Atlanta, Georgia; and Lubbock, Texas.
EBITDA in the most recent quarter was $21.2 million, giving a 30% earnings margin, compared to $37.2 million, a 40% margin, in the quarter of 2008. Rental revenues were 89% of total company revenues during the quarter.
The company made $9 million of capital expenditures during the quarter and expects total 2009 capital expenditures to be less than $50 million. It spent approximately $150 million in 2008.
Same branch costs fell 12% during the period, compared to the period in 2008, because of 18% lower payroll costs resulting from staff reductions and a 30% decrease in vehicle expenses related to lower fuel costs.
Ahern Rentals has56 locations across the Southwestern US and in Georgia North Carolina, and New Jersey.