SCOTTSDALE, Ariz. — Rental Service Corp.'s operating profit grew 81 percent in 2004, according to parent company Atlas Copco's report on its fourth quarter and full-year 2004 summary.
Atlas Copco reported strong fourth-quarter results with double-digit growth in all geographic regions.
“We have improved our market presence; both product sales and the aftermarket business have developed very favorably,” said Atlas Copco president and CEO Gunnar Brock. “Rental Service had yet another quarter with a striking performance; it had the highest fleet utilization ever and continued rate increases.”
Based on current conversion of Swedish kronor into U.S. dollars, RSC grossed about $362 million in the fourth quarter, a 1 percent year-over-year improvement, with about $275.1 million coming from rental revenue. Affected by a negative currency translation effect of 10 percent, company officials said rental revenue increased in U.S. dollars by 14 percent year over year, with an 8-percent increase in rental rates and same-store rental revenue increasing 17 percent. The total number of rental centers dropped from 483 at the end of 2003 to 467 at the end of 2004. Sales of used equipment, representing 15 percent of total revenue, increased 33 percent in U.S. dollars.
Fourth quarter operating profit increased 87 percent year over year, from $33.3 million in Q303 to $62.4 million in Q404.
Return on total capital employed for the year was 10 percent, compared to 5 percent in 2003, while the return on operating capital, excluding goodwill, increased by 19 percent. Fleet utilization averaged 70 percent, RSC's highest ever for a fourth quarter, up from 64 percent in Q303.
Total RSC revenue was about $1.48 billion, essentially flat year over year, but operating profit grew 81 percent, from $118.8 million to $215.5 million. Average fleet age at the end of 2004 was 3.3 years, compared to 3.7 years at the end of 2003.
In other RSC news, the company announced that effective March 1, 2005, Erik Olsson took over as chief operating officer. Olsson has served as chief financial officer for RSC since joining the company in January 2001. In his new position as COO, Olsson will oversee the effort to fulfill the equipment rental needs of the more than 200,000 RSC customers in North America.
“Erik brings a proven track record of driving change and achieving results,” said Tom Zorn, CEO of RSC. “He has been an integral part of the team that has restored the profitability of Rental Service and he has an extensive international experience, including many senior financial positions in Sweden, Brazil and the United States.”
Scottsdale, Ariz.-based RSC is No. 2 on the RER 100. Parent company Atlas Copco is based in Stockholm, Sweden.