Ahern revenues drop 26% as network expansion continues

Continued weakness in the US construction market led Ahern Rentals to report a 26% fall in revenues to US$61.7 million for the three months to 30 June. Ahern made an operating loss of $87.9 million for the quarter.

The company reported that dollar utilisation fell from 70% in the second quarter of 2008 to 55% for the same quarter this year, while rental prices fell by 15%. (Dollar utilization is annual rental revenues divided by original equipment cost.)

Ahern Rentals said it was reacting to the slowdown by cutting back on capital expenditure - spending will be under a third of the $151 million spent in 2008 -by opening branches in new areas, and by expanding into new market areas such as infrastructure and utilities.

The opening of new branches is important as Ahern is relocating existing underused fleet to these new depots. The company plans to open as many as 17 additional depots by the end of 2010 and opened two in the most recent quarter (one in North Carolina and one in Colorado) Ahern now has a network of 58 locations.

For example, Ahern says a lot of its equipment on the massive City Center project in Las Vegas will start to come off rent as the project winds down from September this year onwards. The Las Vegas area still represents around 30% of Ahern's total business.

Ahern Rentals' fleet is dominated by aerial platforms and telehandlers, which together represent around two thirds of all Ahern's rental-related revenues.