RSC benefits from strengthening industrial markets

RSC Equipment Rental said its industrial and non-construction markets continued to improve in the second quarter of 2011, while non-residential construction fell slightly.

The company reported second quarter revenues of US$367 million, up 22% on the same period in 2010, and said it was continuing to outperform its end markets. RSC said 61% of its business was with industrial customers.

Net profits were just $67000, but that compared to a $22 million net loss for the second quarter of 2010. Profits before interest, tax, depreciation and amortisation were up 46% to $134 million.

RSC said it expected to match the plus 20% growth of the previous two quarters in the third quarter of this year, despite entering periods with more difficult quarter-on-quarter comparisons. Year-on-year, rental volumes increased 15.2% and rental rates were 6.3% up, while average fleet utilisation was 68% compared to 64% a year ago.

Erik Olsson, RSC's president and chief executive officer, said the business was now benefitting from "the consistent investments in our people, fleet, footprint, technology and sales organisation at all points of the business cycle and this drove a 46% year-over-year increase in adjusted EBITDA in the second quarter."

He said RSC expected continued strengthening of industrial markets, with non-residential construction "bouncing along the bottom."

He added that RSC was seeing increased rental penetration; "More and more customers are realising the benefits of renting equipment and we believe RSC is and will be the leading beneficiary of this trend."

During the second quarter the company spent $209 million gross in rental capital expenditures in response to growing demand.