RSC Reports First Quarter 2008 Results.* Rental revenues up 7.0% * Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become $182.7 million or 43.3% of total revenues * Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $0.22 * Increasing Free Cash Flow Outlook for Year SCOTTSDALE, Ariz. -- RSC RSC Royal Society of Chemistry (UK) RSC Royal Shakespeare Company RSC Responsabilidad Social Corporativa (Spanish: corporate social responsibility) RSC Royal Society of Canada Holdings Inc. (NYSE NYSE See: New York Stock Exchange :RRR See Required Rate of Return. ), one of the largest equipment rental providers in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , today announced first quarter 2008 rental revenues of $372.3 million, up 7.0% from $348.0 million in last year's first quarter and representing 88% of total revenues. Same store rental revenue growth was 4.6% for the quarter and rental rates were 0.4% lower on a year-over-year basis. Sales of used equipment were $31.4 million, down from $37.8 million in the 2007 first quarter, as the company deliberately slowed this sales activity to reduce capital expenditures in the current market environment and take advantage of its young fleet, which averaged 28 months at the end of the quarter. Utilization of fleet was 68.6% in the quarter compared to 70.3% in the year ago period as the company held its fleet for the seasonal upturn. Sales of merchandise were $18.4 million compared to $20.6 million in the prior year. Total revenues were $422.1 million, up 3.9% from the $406.3 million reported for the comparable year-ago period. "We are pleased with our solid rental revenue growth in what is the toughest quarter of the year," said Erik Olsson, President and Chief Executive Officer. "The non-residential market continued to grow in the first quarter and we continue to increase our share of this market. We are particularly strong in the industrial segment, which is the fastest growing part of our business and now constitutes more than 35% of our revenues. Our strong performance is a direct result of our commitment to providing customers reliable access to one of the youngest and most diverse fleets in the industry, superior customer service and our extensive national footprint." In the first quarter, RSC continued its warm start expansion program by opening five new locations, bringing the total number of RSC locations to 478. First quarter operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. decreased 6.3% to $91.4 million, or 21.6% of total revenues, from $97.5 million, or 24.0% of total revenues in the same period last year which reflects increased fleet depreciation, rising fuel costs, sales force expansion and the additional costs of being a public entity. The company expects the margin impact from these costs to lessen less·en v. less·ened, less·en·ing, less·ens v.tr. 1. To make less; reduce. 2. Archaic To make little of; belittle. v.intr. To become less; decrease. as the year progresses and utilization increases seasonally. Adjusted EBITDA increased 1.8% to $182.7 million in the first quarter compared to $179.4 million in the prior year, and adjusted EBITDA margin decreased to 43.3% compared to 44.1% in the same quarter 2007. "As growth in the non-residential market slows, we are adhering to our strategy of reducing capital expenditures in order to maximize cash flow and profit margins," said Mr. Olsson. "We are executing effectively and our flexible business model enables us to quickly respond to changing market conditions to take advantage of opportunities or to pare back when necessary to achieve optimal profitability and efficiency." Interest expense was $55.4 million in the first quarter, a decrease of $8.8 million over the comparable period last year due to lower debt and lower interest rates. Net income was $22.3 million, or $0.22 per diluted share. In the 2007 first quarter, net income was $20.2 million, or $0.22 per diluted share. Net capital expenditures for the first quarter were $52.3 million down 21.2% from the prior year. Free cash flow was negative $41.8 million for the quarter compared to negative $10.2 million in the comparable prior-year period. In the quarter the company made large scheduled payments on fleet purchased the prior year, reducing accounts payable by $114 million. Excluding the decrease in accounts payable, free cash flow would have been over $70 million positive. "Our free cash flow outlook for the year is strong," said Mr. Olsson. "We expect free cash flow to be in the range of $305 million to $355 million for the year before an expected reduction of approximately $175 million in accounts payable." Return on operating capital Noun 1. operating capital - capital available for the operations of a firm (e.g. manufacturing or transportation) as distinct from financial transactions and long-term improvements capital, working capital - assets available for use in the production of further assets employed for the last twelve months ended first quarter 2008 was 23% which significantly exceeded the company's weighted average cost of capital Weighted average cost of capital (WACC) Expected return on a portfolio of all a firm's securities. Used as a hurdle rate for capital investment. Often the weighted average of the cost of equity and the cost of debt The weights are determined by the relative proportions of equity . The return measures operating performance and capital efficiency, and value is created when the return exceeds the weighted average cost of capital. Outlook for 2008 "For 2008, independent research firms are projecting that RSC's major end markets will increase at a low single-digit rate. This is consistent with our assumptions, and therefore our income statement guidance remains unchanged. We expect rental revenues to grow 4 to 7 percent in 2008, total revenues to range from $1.80 to $1.85 billion, diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of from $1.44 to $1.56, adjusted EBITDA from $835 to $860 million and net capital expenditures from $200 to $250 million. With the introduction of the federal Economic Stimulus Act of 2008 which includes bonus depreciation for 2008 we are increasing our free cash flow projections A Cash Flow Projection is an attempt to forecast the cash flows that will be generated by an asset, often a company, over a specified time frame. Methodology Projections can be made with varying levels of detail, but any cash flow projection for a business entails from a range of $100 to $150 million to a range of $130 to $180 million or $305 million to $355 million before reduction in accounts payable," Mr. Olsson said. In connection with the expected generation of free cash flow in 2008, RSC is continuing to evaluate a variety of options including paying down debt, tuck-in acquisitions Tuck-In Acquisition The acquisition of a company made for the sole purpose of merging it into a division of the acquirer. Sometimes referred to as "bolt-on acquisitions." Notes: and the repurchasing of common stock or debt securities. The company's credit agreements limit repurchases of common stock or debt securities to $50 million this year. Conference Call Information 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 Investor relations The process by which the corporation communicates with its investors. portion of the RSC website at www.RSCrental.com/Investor. [TABLE OMITTED] A replay of the webcast will also be available at www.RSCrental.com/Investor. About RSC Holdings Inc. (NYSE: RRR) and RSC Equipment Rental, Inc. Based in Scottsdale, Ariz., RSC Holdings Inc. is the holding company for the operating entity, RSC Equipment Rental, Inc., which is one of the largest equipment rental providers in North America servicing construction and industrial markets with an original equipment fleet cost of $2.7 billion. RSC offers superior levels of equipment availability, reliability and service to customers through an integrated network A network that supports both data and voice and/or different networking protocols. See converged network and new public network. of 478 rental locations across 39 states in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and in four Canadian provinces Noun 1. Canadian province - Canada is divided into 12 provinces for administrative purposes province, state - the territory occupied by one of the constituent administrative districts of a nation; "his state is in the deep south" . With almost 5,500 employees committed to continuous safety and 24x7 customer care, RSC delivers the loyal customer support needed to build the future. Additional information about RSC is available at www.RSCrental.com. Forward Looking Statements This press release contains certain "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " 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", "seek", "will", "expect", "intend", "estimate", "anticipate", "believe" or "continue" or the negative thereof or variations thereon there·on adv. 1. On or upon this, that, or it. 2. Archaic Following that immediately; thereupon. Adv. 1. thereon - on that; "text and commentary thereon" on it, on that or similar terminology. Actual results and developments may therefore differ materially from those described in this release. The company cautions you 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. 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. Non-GAAP Financial Information In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See 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. Neither of these financial measures are 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 Reconciliation" and "Free Cash Flow GAAP Reconciliation" included at the end of this release. Additionally, explanations of these Non-GAAP measures are provided in Annex an·nex tr.v. an·nexed, an·nex·ing, an·nex·es 1. To append or attach, especially to a larger or more significant thing. 2. A attached to this release. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] Annex A EBITDA and Adjusted EBITDA. EBITDA, a supplemental non-GAAP financial measure, is defined as consolidated net income before net interest expense, income taxes and depreciation and amortization. Adjusted EBITDA as presented herein is a non-GAAP financial measure and is generally consolidated net income before net interest expense, income taxes, and depreciation and amortization and before certain other items, including share-based compensation, management fees and recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. expenses. 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 ability to service debt and as tools to evaluate our financial performance. 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 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 less net capital 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. [TABLE OMITTED] [TABLE OMITTED] Statistical Measures Return on Operating Capital Employed is calculated by dividing operating income (excluding transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). and management fees) for the preceding twelve months by the average operating capital employed for the same period. For purposes of this calculation, average operating capital employed is considered to be all assets other than cash, deferred tax assets, hedging derivatives and goodwill, less all liabilities other than debt, hedging derivatives and deferred tax liabilities. Weighted average cost of capital is a calculation of a firm's cost of capital in which each category of capital is proportionately pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. weighted. Utilization is defined as the average dollar value of equipment rented by customers (based on original equipment cost) for the relevant period divided by the aggregate dollar value of all equipment (based on original cost) for all equipment. Same store rental revenue growth is calculated as the year over year change in rental revenue for stores that are open at the end of the period and have been operating under the company's direction for more than 12 months. Employee count is given at the end of the period indicated and the data reflect the actual head count as of each period. Original Equipment Fleet Cost (OEC OEC Outdoor Emergency Care OEC Oxygen Evolving Complex (photosynthesis) OEC Ohio Environmental Council OEC Office of Environmental Coordination (New York, NY) OEC Oregon Employer Council ) is defined as the original dollar value of equipment purchased from the original equipment manufacturer (OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and ). Fleet purchased from non-OEM sources are assigned a comparable OEC dollar value at the time of purchase. |
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