Financing charge hits RSC profits buts trends positive

Refinancing charges of US$49 million in the first quarter of 2011 saw RSC Equipment Rental post a net loss of $50 million for the period, compared to a loss of $38 million in the same quarter in 2010.

Despite that loss, the company reported a 25% increase in revenues to $327 million and a 50% increase in EBITDA profits (profits before interest, tax, depreciation and amortisation) to $99 million, driven by 20% higher volumes and improving pricing.

RSC said its industrial and non-construction markets improved year on year while non-residential construction, which represents 35% of RSC revenues, declined at a lower rate. It said these trends were likely to continue in the second quarter, and that utilisation rates were expected to be "considerably higher" than the first quarter.

Erik Olsson, RSC's president and chief executive officer, said; "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...In addition, improved results were widespread with all regions delivering double digit revenue growth.

"As a result, we expect continued favourable year-over-year comparisons in the second quarter and remain optimistic that these positive trends will continue throughout the year."

Dollar utilisation (value of equipment rented divided by total value of the fleet) for the quarter was 64% compared to 55% in the same quarter a year ago, and rental rates were 2% higher than a year ago.

"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", said Mr Olsson, "These results drove a 50% year-over-year increase in EBITDA".