Rental Service Corp. posted a 31.5-percent decline in rental revenue in 2009, dropping from $1.567 billion for the full-year 2008 to $1.073 billion. Total revenues for 2009 were $1.283 billion compared with $1.765 billion for 2008, a 27.3-percent decline.
Net income dropped from $122.5 million in 2008 to a $59.4 million loss in 2009.
For the fourth quarter, rental revenue was $243.5 million, a 34.4-percent decline compared with $371.5 million for the fourth quarter of 2008. Total revenues for the fourth quarter declined from $427.2 million in 2008 to $290.1 million for 2009’s fourth quarter, a 32.1-percent plunge.
RSC continued to manage its footprint by closing 24 locations, but opening 17 new branches in more attractive areas.
Full-year operating income was $80 million, 6.2 percent of total revenues, compared with $398 million, or 22.5 percent of total revenue in 2008. Free cash flow was $395 million, an increase of $173 million compared with 2008. Total debt was reduced by $397 during the year, as the company applied its free cash flow to debt reduction.
Fourth-quarter fleet utilization averaged 56.3 percent compared with 67.8 percent for the same period in 2008.
“Strong and consistent execution on all aspects of our business enabled us to exceed our fourth-quarter revenue, EBIDTA, cost reductions and free cash flow expectations despite an economy that continued to be challenging,” said president and CEO Erik Olsson. “Full-year cost reductions reached $174 million, which exceeded our stated goal of $150 million and contributed to an impressive full-year free cash flow of $395 million. While we continue to calibrate our business to the realities of the market, we maintained our focus on our long-term priorities. Industrial/non-construction revenues increased to 58 percent of our overall business, and we continued to bolster our position in this market with unique industrial service offerings. We maintained very strong customer satisfaction ratings and provided our customers with enhanced services and support. Our ability in this environment to keep rate declines to slightly less than 8 percent for the year underscores that we have meaningfully differentiated ourselves with our customers.”
Olsson said the company believes it is at or near the “trough” in the economic cycle. “While the first half of 2010 will be challenging and a recovery in the construction segment will most likely lag an industrial recovery, economic trends, including the uptick in industrial production and growth in GDP indicate that the markets served by the majority of our businesses are improving,” he said. “We expect to see gradual improvement in our business during the course of the year, given the normal two- to three-quarter lag between increasing economic activity and equipment demand.”
RSC officials said the company plans to increase capital expenditures in 2010 for new fleet to meet demand in targeted segments. The company will also use capital to replace fleet. The estimated free cash flow range for 2010 is expected to be in the $70 million to $100 million range. The company expects the first quarter of 2010 to continue to be soft, and with industry-wide fleet levels continuing to exceed demand, rental rates will likely remain under pressure. The company expects total revenues in the $240 million to $255 million range and rental revenues between $205 million and $220 million.
“We expect 2010 to be a year of transition, with demand bottoming out, followed by a modest recovery in the second half,” added Olsson. “Given this outlook, we expect a challenging year, but with positive year-over-year comparisons starting in the second half. We believe our end market diversification strategy and operational execution have positioned us to emerge stronger. We have rigorously evaluated and improved our cost position and focused our efforts on further improving our customer service and key account management.”
RSC is No. 2 on the RER 100.