CHICAGO — National Equipment Services reported lower sales and a slight loss for the three-month and nine-month periods ended Sept. 30. Third quarter rental revenue was $121.7 million, down 4.7 percent from last year's $127.6 million. And total revenue dropped 2.3 percent from $167.5 million to $163.6 million, year over year.
Net earnings loss for the quarter was $388,000, compared to a $5.7 million net earnings profit in last year's third quarter.
For the first nine months of 2001, NES' total revenue rose 1.5 percent from $460.5 million for the same period last year, with rental revenue rising .9 percent from $345 million to $348 million. However in terms of net earnings, the company dropped from a $9.8 million profit for the first nine months of 2000, to a net loss of $8.3 million this year.
CEO Kevin Rodgers saw some silver linings. “We continued to make progress on our primary goal for 2001, of using our strong free cash flow to reduce debt by [more than] $100 million,” Rodgers said. “We already exceeded this goal for the 12 months ended in September. The combination of lower debt plus a reduced cost base should allow us to improve performance next year, even if demand for rental services stays at the current level.”
Although EBITDA for the quarter was down 22 percent, it still was $49.2 million. The company used its cash flow to reduce debt by $37.6 million during the quarter, and $110 million over the past 12 months.
Rodgers said softness in the Gulf Coast and Midwest regions, where the company is heavily concentrated, had the largest negative impact on NES' business. “In the Midwest, we are facing a manufacturing sector that has experienced 12 consecutive months of contraction,” Rodgers said. “Unfortunately, this situation has been the cause of about 70 percent of the budget shortfalls we experienced this year.”
On the positive side, Rodgers said the company has seen strength in the Northeast, and in its traffic safety and trench shoring divisions. “In addition, our remanufacturing centers remained at breakeven during the quarter, partly as a result of third-party work — refurbishing machines taken in on trade by various manufacturers.”
Rodgers remains upbeat about the company's potential for 2002 despite the likelihood of continuing economic softness. “By using our remanufacturing facilities to keep equipment in excellent condition, we did more than simply limit capital spending this year,” he said. “Should we experience a deeper recession, we could still keep capital investment at levels similar to 2001 for the next three years while still offering a sound equipment rental portfolio.”
In personnel news, the company promotes Steve Shaughnessy to executive vice president and COO. Shaughnessy will transfer from Boston to the company's headquarters in Evanston, Ill., and will be responsible for the company's five operating regions, with the regional vice presidents reporting to him.
“Steve has grown up in the industry in the best sense,” said CEO Kevin Rodgers. “As a fourth-generation member of a family-owned equipment rental company, he learned the business from the ground up. The time he spent on rigging crews in his early days laid the foundation for him later to lead the largest aerial specialist company in New England. Steve brings a wealth of best practices to his position as COO.”
Shaughnessy has served as president of Shaughnessy Crane Services since 1998 when it was acquired by NES. He was promoted to regional vice president of NES' east region in 1999.
Tony Groat will assume the responsibilities of acting NES east region vice president. Groat will also continue his current duties as president of the Albany Ladder division of NES.
NES is No. 6 on the RER 100 and has nearly 200 locations in 35 states.
GOT NEWS TO REPORT?
Call Michael Roth at 800/543-4116, ext. 253 or Brandey Smith at 913/967-7458.
