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8-K - FORM 8-K - RSC Holdings Inc.d287719d8k.htm

Exhibit 99.1

RSC Reports 4Q11 Results

SCOTTSDALE, Ariz., January 26, 2012 — RSC Holdings Inc. (NYSE: RRR), one of the largest equipment rental providers in North America, today announced financial results for the quarter ended December 31, 2011. Total revenue was $421 million and rental revenue was $364 million, compared with $339 million and $287 million, respectively, for the same period last year. The company’s fourth quarter net income was $5 million, or $0.04 per diluted share, compared with a net loss of $7 million, or $0.07 per diluted share, for the fourth quarter 2010. The net income in the current quarter includes $11 million of pre-tax charges associated with the company’s announcement on December 16 of a potential merger. Excluding these charges, net income for the fourth quarter would have been $15 million, or $0.14 per diluted share.

Adjusted EBITDA was $164 million for the quarter, compared with $116 million for the same period last year. Adjusted EBITDA margin was 38.9% for the fourth quarter, compared with 34.4% in 2010. The increase in profitability and margins primarily reflects continued volume growth, pricing growth and the company’s ability to leverage and control its operating costs.

Fourth Quarter 2011 Highlights

 

   

Grew rental revenue 27% over the fourth quarter 2010.

 

   

Increased rental volume 20.7% year-over-year, the sixth consecutive quarter of double-digit volume growth.

 

   

Improved rental rates 6.5% over the fourth quarter of last year and 4.5% over the third quarter of 2011.

 

   

Generated a 41% increase in year-over-year Adjusted EBITDA.

 

   

Increased average fleet utilization to 71%, up 310 bps from the fourth quarter 2010.

 

   

Invested $73 million in gross rental capital expenditures in response to growing demand.

 

   

Sold $85 million of existing fleet at original cost with record margins of 41%.

 

   

Strong availability of $628 million under the ABL revolver as of December 31, 2011.

FY 2011 Results

Total revenue for 2011 was $1,522 million, compared with $1,234 million in 2010. The company’s full year net loss was $30 million, compared with a net loss of $74 million a year ago. The 2011 net loss includes $49 million of pre-tax charges from first quarter refinancing activities and $11 million of charges from the fourth quarter related to the company’s recently announced potential merger. Excluding these charges, pre-tax net income for 2011 would have been $10 million, or $0.10 per diluted share. Adjusted EBITDA for 2011 was $561 million, versus $393 million in 2010. The changes in profitability were driven by increased volume, pricing growth, and effective cost management.

FY 2011 Highlights

 

   

Grew rental revenue 24% over 2010.

 

   

Increased rental volume 18.9% over 2010.

 

   

Improved rental rates 4.9% over 2010.

 

   

Generated Adjusted EBITDA of $561 million, a $167 million or 43% increase over 2010.

 

   

Increased average fleet utilization to 69%, up 510 bps from 2010.

 

   

Invested $616 million in gross rental capital expenditures in response to growing demand.


CEO Comments

Erik Olsson, President and Chief Executive Officer, commented: “The fourth quarter was another very strong quarter. Our business strategy and industry-leading execution produced an impressive 21% volume growth, while at the same time generating positive year-over-year pricing of 6.5%, driven by positive sequential pricing over the third quarter of 4.5%. This growth, in combination with strong cost management, resulted in a 41% year-over-year increase in Adjusted EBITDA. Furthermore, improved results were widespread with all regions delivering double-digit revenue growth and significant increases in utilization and profitability. I am very pleased with this strong finish to a great 2011, which supports our view of a strong 2012.”

Conference Call

RSC Holdings will hold a conference call today at 5:15 p.m. Eastern Time. Investors may access the call by visiting the investor relations portion of the RSC website at www.RSCrental.com/Investor. To listen to the live conference call from the U.S. and Canada dial (866) 393-7634; from international locations dial (706) 679-0678. A replay of the conference call will be available through February 8, 2012. To access the replay dial: U.S. and Canada: (855) 859-2056; international (404) 537-3406. Pass code: 43509493. A replay of the webcast will also be available at www.RSCrental.com/Investor.

The company will take questions on fourth quarter and 2011 results, but does not intend to take questions on the announced merger.

Investor Presentation Information

Information concerning our business and financial results that we expect to use at upcoming investor presentations will be made available on our website following the conference call and will be maintained on our website for at least the period of its use at such meetings or until updated by more current information.

About RSC Holdings Inc.

RSC Holdings Inc. (NYSE: RRR), based in Scottsdale, Arizona, is the holding company for the operating entity RSC Equipment Rental, Inc. (“RSC”), which is a premier provider of rental equipment in North America, servicing the industrial, maintenance and non-residential construction markets with $2.7 billion of equipment at original cost. RSC offers superior equipment availability, reliability and 24x7 service to customers through an integrated network of 440 branch locations across 43 states in the United States and three provinces in Western Canada. Customer solutions to improve efficiency and reduce cost include the proprietary Total Control® rental management software, Mobile Tool Rooms™ and on-site rental locations. With over 4,700 employees committed to safety and sustainability, RSC delivers the best value and industry leading customer service. All information is as of December 31, 2011. Additional information about RSC is available at www.RSCrental.com.


Forward Looking Statements

This press release contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on management’s current expectations and are subject to uncertainty and changes in factual circumstances. The forward-looking statements herein include statements regarding the company’s future financial position, end-market outlook, business strategy, budgets, projected costs and plans and objectives of management for future operations.

In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “plan”, “view”, “see”, “will”, “should”, “expect”, “anticipate”, “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Actual results and developments may therefore differ materially from those described in this release.

The company cautions therefore that you should not rely unduly on these forward-looking statements. You should understand the risks and uncertainties discussed in “Risk Factors” and elsewhere in the company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the United States Securities and Exchange Commission could affect the company’s future results and could cause those results or other outcomes to differ materially from those expressed or implied in the company’s forward-looking statements.

These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, we disclaim any obligation to update these forward-looking statements to reflect future events or circumstances.

Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), the company also discloses in this press release certain non-GAAP financial information including adjusted EBITDA and free cash flow. These financial measures are not recognized measures under GAAP and they are not intended to be and should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Adjusted EBITDA GAAP Reconciliations” and “Free Cash Flow GAAP Reconciliation” included at the end of this release. Additionally, explanations of these Non-GAAP measures are provided in Annex A attached to this release.


RSC HOLDINGS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

September 30, September 30, September 30, September 30, September 30, September 30,
       Three Months Ended           Twelve Months Ended        
       December 31,     Change     December 31,     Change  
       2011     2010     %     2011     2010     %  

Revenues:

              

Equipment rental revenue

     $ 364,482      $ 286,648        27.2   $ 1,312,507      $ 1,060,266        23.8

Sale of merchandise

       14,890        11,725        27.0        55,241        49,313        12.0   

Sale of used rental equipment

       41,422        40,530        2.2        154,466        124,845        23.7   
    

 

 

   

 

 

     

 

 

   

 

 

   

Total revenues

       420,794        338,903        24.2        1,522,214        1,234,424        23.3   
    

 

 

   

 

 

     

 

 

   

 

 

   

Cost of revenues:

              

Cost of equipment rentals, excluding depreciation

       173,118        144,822        19.5        651,651        563,513        15.6   

Depreciation of rental equipment

       78,747        69,689        13.0        300,377        272,610        10.2   

Cost of merchandise sales

       9,990        8,435        18.4        36,817        35,701        3.1   

Cost of used rental equipment sales

       24,517        31,348        (21.8     101,141        104,491        (3.2
    

 

 

   

 

 

     

 

 

   

 

 

   

Total cost of revenues

       286,372        254,294        12.6        1,089,986        976,315        11.6   
    

 

 

   

 

 

     

 

 

   

 

 

   

Gross profit

       134,422        84,609        58.9        432,228        258,109        67.5   
    

 

 

   

 

 

     

 

 

   

 

 

   

Operating expenses:

              

Selling, general and administrative

       52,425        39,567        32.5        183,145        146,791        24.8   

Depreciation and amortization of non-rental equipment and intangibles

       10,892        10,234        6.4        42,427        40,213        5.5   

Merger costs

       10,954        —          n/a        10,954        —          n/a   

Other operating gains, net

       (1,292     (1,975     (34.6     (4,000     (5,592     (28.5
    

 

 

   

 

 

     

 

 

   

 

 

   

Total operating expenses, net

       72,979        47,826        52.6        232,526        181,412        28.2   
    

 

 

   

 

 

     

 

 

   

 

 

   

Operating income

       61,443        36,783        67.0        199,702        76,697        160.4   

Interest expense, net

       48,212        47,999        0.4        224,518        194,471        15.5   

Loss on extinguishment of debt

       —          —          n/a        15,342        —          n/a   

Other expense (income), net

       322        (175     (284.0     260        (539     (148.2
    

 

 

   

 

 

     

 

 

   

 

 

   

Income (loss) before (provision) benefit for income taxes

       12,909        (11,041     (216.9     (40,418     (117,235     (65.5

(Provision) benefit for income taxes

       (8,281     3,890        (312.9     10,514        43,719        (76.0
    

 

 

   

 

 

     

 

 

   

 

 

   

Net income (loss)

     $ 4,628      $ (7,151     (164.7   $ (29,904   $ (73,516     (59.3
    

 

 

   

 

 

     

 

 

   

 

 

   

Weighted average shares outstanding used in computing net income (loss) per common share:

              

Basic

       104,023        103,605          103,911        103,527     
    

 

 

   

 

 

     

 

 

   

 

 

   

Diluted

       105,342        103,605          103,911        103,527     
    

 

 

   

 

 

     

 

 

   

 

 

   

Net income (loss) per common share:

              

Basic

     $ 0.04      $ (0.07     $ (0.29   $ (0.71  
    

 

 

   

 

 

     

 

 

   

 

 

   

Diluted

     $ 0.04      $ (0.07     $ (0.29   $ (0.71  
    

 

 

   

 

 

     

 

 

   

 

 

   

Other operational data (a):

              

Fleet utilization

       70.8     67.7       68.8     63.7  

Average fleet age at period end (months)

       42        44          42        44     

Employees

       4,721        4,427          4,721        4,427     

Original equipment fleet cost at period end (in millions)

     $ 2,666      $ 2,345        $ 2,666 $        2,345     

 

(a)

Refer to attached Statistical Measures for descriptions.


RSC HOLDINGS INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

September 30, September 30,
       December 31,      December 31,  
       2011      2010  

Assets

       

Cash and cash equivalents

     $ 4,833       $ 3,510   

Accounts receivable, net

       267,879         228,532   

Inventory

       15,909         14,171   

Deferred tax assets, net

       122,862         17,912   

Prepaid expense and other current assets

       14,422         13,798   
    

 

 

    

 

 

 

Total current assets

       425,905         277,923   

Rental equipment, net

       1,573,193         1,336,424   

Property and equipment, net

       123,114         110,779   

Goodwill and other intangibles, net

       957,129         939,302   

Deferred financing costs

       52,484         44,205   

Other long-term assets

       9,148         9,342   
    

 

 

    

 

 

 

Total assets

     $ 3,140,973       $ 2,717,975   
    

 

 

    

 

 

 

Liabilities and Stockholders’ Deficit

       

Accounts payable

     $ 258,811       $ 193,819   

Accrued expenses and other current liabilities

       140,725         119,608   

Current portion of long-term debt

       27,417         25,294   
    

 

 

    

 

 

 

Total current liabilities

       426,953         338,721   

Long-term debt

       2,294,865         2,043,887   

Deferred tax liabilities, net

       429,074         330,862   

Other long-term liabilities

       28,500         41,782   
    

 

 

    

 

 

 

Total liabilities

       3,179,392         2,755,252   

Total stockholders’ deficit

       (38,419      (37,277
    

 

 

    

 

 

 

Total liabilities and stockholders’ deficit

     $ 3,140,973       $ 2,717,975   
    

 

 

    

 

 

 


RSC HOLDINGS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

September 30, September 30,
       Twelve Months Ended  
       December 31,  
       2011      2010  

Cash flows from operating activities:

       

Net loss

     $ (29,904    $ (73,516

Adjustments to reconcile net loss to net cash provided by operating activities:

       

Depreciation and amortization

       342,804         312,823   

Amortization of deferred financing costs

       10,018         12,782   

Amortization of original issue discount

       1,246         1,117   

Share-based compensation expense

       7,051         3,753   

Gain on sales of rental and non-rental property and equipment, net of non-cash write-offs

       (55,458      (19,376

Deferred income taxes

       (19,099      (2,697

Loss on extinguishment of debt

       15,342         —     

Gain on settlement of insurance property claims

       —           (3,426

Interest expense, net on ineffective hedge

       (104      42   

Changes in operating assets and liabilities

       51,904         93,358   
    

 

 

    

 

 

 

Net cash provided by operating activities

       323,800         324,860   
    

 

 

    

 

 

 

Cash flows from investing activities:

       

Cash paid for acquisition

       (49,098      —     

Purchases of rental equipment

       (616,159      (327,107

Purchases of property and equipment

       (11,837      (5,766

Proceeds from sales of rental equipment

       154,466         124,845   

Proceeds from sales of property and equipment

       7,073         2,951   

Insurance proceeds from rental equipment and property claims

       —           4,368   
    

 

 

    

 

 

 

Net cash used in investing activities

       (515,555      (200,709
    

 

 

    

 

 

 

Cash flows from financing activities:

       

Net proceeds (payments) on debt

       202,196         (127,194

Financing costs

       (28,101      (1,756

Proceeds from stock option exercises

       5,109         948   

Other

       14,670         1,921   
    

 

 

    

 

 

 

Net cash provided by (used in) financing activities

       193,874         (126,081
    

 

 

    

 

 

 

Effect of foreign exchange rates on cash

       (796      905   
    

 

 

    

 

 

 

Net increase (decrease) in cash and cash equivalents

       1,323         (1,025

Cash and cash equivalents at beginning of period

       3,510         4,535   
    

 

 

    

 

 

 

Cash and cash equivalents at end of period

     $ 4,833       $ 3,510   
    

 

 

    

 

 

 

Supplemental disclosure of cash flow information:

       

Cash paid for interest

     $ 197,803       $ 181,272   

Cash received for taxes, net

       13,130         26,539   


RSC HOLDINGS INC. AND SUBSIDIARIES

Rental Revenue Growth Bridge

(in thousands)

 

September 30, September 30,
       Rental Revenues  
       Three Months Ended     Twelve Months Ended  
       December 31,     December 31,  

2010

     $ 286,648      $ 1,060,266   
    

 

 

   

 

 

 

Changes:

      

Volume

       20.8     18.6

Price

       6.5     4.9

Currency

       -0.1     0.3
    

 

 

   

 

 

 

2011

     $ 364,482      $ 1,312,507   
    

 

 

   

 

 

 


Annex A

EBITDA and Adjusted EBITDA. EBITDA, a supplemental non-GAAP financial measure, is defined as consolidated net income (loss) before net interest expense, income taxes and depreciation and amortization. Adjusted EBITDA as presented herein is a non-GAAP financial measure and is defined as consolidated net income (loss) before net interest expense, income taxes, and depreciation and amortization and before certain other items, including loss on extinguishment of debt, merger costs, share-based compensation, and other (income) expense, net. All companies do not calculate EBITDA and Adjusted EBITDA in the same manner, and RSC Holdings’ presentation may not be comparable to those presented by other companies.

The company presents EBITDA and Adjusted EBITDA in this release because it believes these calculations are useful to investors in evaluating our financial performance and as a liquidity measure. However, EBITDA and Adjusted EBITDA are not recognized measurements under GAAP, and when analyzing the company’s performance, investors should use EBITDA and Adjusted EBITDA in addition to, and not as an alternative to, net income (loss) or net cash provided by operating activities as defined under GAAP.

Free cash flow. The company defines free cash flow as net cash provided by operating activities and net capital inflows (expenditures). All companies do not calculate free cash flow in the same manner, and RSC Holdings’ presentation may not be comparable to those presented by other companies. We believe free cash flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital needs. However, free cash flow is a non-GAAP measure and should be used in addition to, and not as an alternative to, data presented in accordance with GAAP.

The accompanying tables reconcile the GAAP financial measures that are most directly comparable to these non-GAAP financial measures.


RSC HOLDINGS INC. AND SUBSIDIARIES

Adjusted EBITDA GAAP Reconciliations

(in thousands)

 

September 30, September 30, September 30, September 30,
       Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
       2011     2010     2011     2010  

Net income (loss)

     $ 4,628      $ (7,151   $ (29,904   $ (73,516

Depreciation of rental equipment and depreciation and amortization of non-rental equipment and intangibles

       89,639        79,923        342,804        312,823   

Interest expense, net

       48,212        47,999        224,518        194,471   

Provision (benefit) for income taxes

       8,281        (3,890     (10,514     (43,719
    

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     $ 150,760      $ 116,881      $ 526,904      $ 390,059   
    

 

 

   

 

 

   

 

 

   

 

 

 

Adjustments:

          

Loss on extinguishment of debt

       —          —          15,342        —     

Merger costs

       10,954        —          10,954        —     

Share-based compensation

       1,835        (213     7,051        3,753   

Other (income) expense, net

       322        (175     260        (539
    

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

     $ 163,871      $ 116,493      $ 560,511      $ 393,273   
    

 

 

   

 

 

   

 

 

   

 

 

 

(Adjusted EBITDA as a percentage of total revenues)

       38.9     34.4     36.8     31.9

 

September 30, September 30, September 30, September 30,
       Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
       2011      2010      2011      2010  

Net cash provided by operating activities

     $ (10,366    $ 12,411       $ 323,800       $ 324,860   

Gain on sales of rental and non-rental property and equipment, net of non-cash write-offs

       17,681         9,741         55,458         19,376   

Gain on settlement of insurance property claims

       —           1,690         —           3,426   

Cash paid for interest

       38,101         54,617         197,803         181,272   

Cash paid (received) for taxes, net

       1,263         (977      (13,130      (26,539

Other (income) expense, net

       322         (175      260         (539

Changes in other operating assets and liabilities

       116,870         39,186         (3,680      (108,583
    

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

     $ 163,871       $ 116,493       $ 560,511       $ 393,273   
    

 

 

    

 

 

    

 

 

    

 

 

 

Free Cash Flow GAAP Reconciliation

(in thousands)

 

September 30, September 30, September 30, September 30,
       Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
       2011      2010      2011      2010  

Net cash provided by operating activities

     $ (10,366    $ 12,411       $ 323,800       $ 324,860   

Purchases of rental equipment

       (72,824      (61,393      (616,159      (327,107

Purchases of property and equipment

       (3,456      (136      (11,837      (5,766

Proceeds from sales of rental equipment

       41,422         40,530         154,466         124,845   

Proceeds from sales of property and equipment

       2,241         766         7,073         2,951   

Insurance proceeds from rental equipment and property claims

       —           2,632         —           4,368   
    

 

 

    

 

 

    

 

 

    

 

 

 

Net capital expenditures

       (32,617      (17,601      (466,457      (200,709
    

 

 

    

 

 

    

 

 

    

 

 

 

Free cash flow

     $ (42,983    $ (5,190    $ (142,657    $ 124,151   
    

 

 

    

 

 

    

 

 

    

 

 

 


Statistical Measures

Fleet utilization is defined as the average aggregate dollar value of equipment rented by customers (based on original equipment fleet cost) during the relevant period, divided by the average aggregate dollar value of all equipment owned (based on original equipment fleet cost) during the relevant period.

Average fleet age at period end is the number of months since an equipment unit was first placed in service, weighted by multiplying individual equipment ages by their respective original costs and dividing the sum of those individual calculations by the total original cost. Equipment refurbished by the original equipment manufacturer is considered new.

Employee count is given as of the end of the period indicated and the data reflects the actual head count as of each period presented.

Original Equipment Fleet Cost (OEC) is defined as the original dollar value of rental equipment purchased from the original equipment manufacturer (OEM). Fleet purchased from non-OEM sources is assigned a comparable OEC dollar value at the time of purchase.

Return on operating capital employed (ROCE) is calculated by dividing operating income (excluding transaction costs, merger fees, and amortization of intangibles) for the preceding twelve months by the average operating capital employed. For purposes of this calculation, average operating capital employed is considered to be all assets other than cash, deferred tax assets, hedging derivatives, goodwill and intangibles, less all liabilities other than debt, hedging derivatives and deferred tax liabilities.

Contacts

Investor/Analyst Contacts:

Scott Huckins, VP – Treasurer

(480) 281-6956 or

Scott.Huckins@RSCRental.com

Media Contact:

Chenoa Taitt

(212) 223-0682