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 pre-tax charges from the fourth quarter related to the company's recently announced potential merger. Excluding these charges, 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)
             
 
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)
       
 
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)
       
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)
   
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)
               
Three Months Ended Twelve Months Ended
December 31, 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 %
 
 
Three Months Ended Twelve Months Ended
December 31, 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)
 
Three Months Ended Twelve Months Ended
December 31, 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.

RSC Holdings Inc.
Investor/Analyst Contacts:
Scott Huckins, 480-281-6956
VP ? Treasurer
Scott.Huckins@RSCRental.com
or
Media Contact:
Chenoa Taitt, 212-223-0682