05.11.2007

American Rental still growing

In spite of the downturn in residential construction, the large American rental companies are still reporting respectable growth in rental revenues.

United up 3.7 percent

The world’s largest rental company United Rentals, has reported nine months revenues of $2.8 billion, an increase of 3.7 percent on the same period last year.

Gross profits grew by 2.9 percent to $969 million while pre tax profits for the period jumped by 19 percent to $338 million thanks to a net reduction in Selling, General & Administration costs and slightly lower interest payments.

Net income for the period included a $5 million after-tax, impact of costs associated with the merger with Cerberus and the amendment of former chairman, Brad Jacob’s service agreement, partially offset by a year-over-year reduction in bad debt expense of $5 million after-tax.

During the first nine months the company spent a total of $785
million on new rental equipment, roughly the same as last year.

RSC revenues rise by 6.8 percent

RSC, the USA’S second largest rental company, previously a division of Atlas Copco, has reported a 6.8 percent rise in overall revenues for the first nine months of 2007 to $1.3 billion, driven by a 13 percent jump in rental revenues.

The company says that it achieved record utilisation of its fleet in the third quarter at just under 75 percent, compared to 73 percent for the same quarter in 2006.

Gross profits increased by 12 percent but pre tax profits slumped by a whopping 43.5 percent. to $195 million due to a massive increase in interest costs, which more than doubled even after allowing for some one off costs, to $195 million from $74 million during the same period last year.

The increase in interest costs is associated with the “recapitalisation” of the business in November 2006, following its purchase by Ripplewood Holdings and Oak Hill Capital Management from Atlas Copco. Earlier this year the company went public in an IPO and has since been paying down debt,

The company spent $516 million on new rental equipment, almost 20 percent less than the company spent during the same period last year. However with an average fleet age of 25 months, RSC has one of the youngest equipment fleets in North America.