17.11.2007

Ahern up 28%

Ahern rentals the largest independently owned rental company in North America has reported its third quarter and nine month results with revenues up by over 28 percent driven both by organic growth and the addition of nine new branches.

Total revenues for the nine months were $245 million while rental revenues grew by a more modest 24 percent to $212 million with same store revenues growing by 19 percent and the balance coming from nine new stores opened during the period.

Aerial lifts represent almost 80 percent or the machine rental revenues with the balance being general equipment including telescopic handlers.

Rates over the period grew by three percent while physical utilisation dropped from 76 percent to 72 percent. (Utilisation for aerial lifts dropped form 73% to 70%) thanks to a significant fleet expansion.

Gross margins grew by 17 percent to 83.5 million but fell as a percentage of revenues from 37 percent to 34 percent.

Operating income for the period grew by six percent to 43.6 million or 17 percent of revenues, compared to 21 percent for the first nine months of 2006. The change being due to a steep rise in Sales and admin costs attributed to the branch network expansion.

Net income dropped by 29 percent to $13.3 million or 5.6 percent of revenues, this due to higher interest costs.

Capital expenditure on the rental fleet was $162 million, up from $139 million at the same time last year. This helped the replacement value of the fleet grow by $156 million to $650 million.

Vertikal Comment

Ahern is expanding the business at a time when some US rental companies are absorbed in changes of ownership or feeling nervous about the construction market.

With non residential orders remaining at record levels and surprisingly more market penetration growth left Don Ahern is probably right to roll the dice and expand while others are dithering.

The key of course is the location of the new outlets and the quality of the people that he is recruiting to run them. Assuming that these have been wisely selected the pay off will be fairly rapid.