RSC Equipment Rental Appoints Vice President, Announces Q3 Results

SCOTTSDALE, Ariz. – RSC Equipment Rental, one of the nation’s leading providers of rental equipment and services for the construction and industrial sectors, has created the industry’s first executive-level position focused exclusively on innovation and developing services that enhance customers’ productivity and satisfaction.

Phil Hobson was named to the new position of vice president of customer service and process innovation. Over the past year, RSC has launched several initiatives and process improvements designed to provide customers with solutions that meet their equipment rental needs. In close coordination with field management, Hobson will manage the continued implementation of those industry-leading programs, will assess customer needs and feedback through regular focus groups, and will lead the development of new innovations in operating processes and technology.

“We are committed to drive continuous improvement and lead the industry in the way we service customers,” said Erik Olsson, executive vice president and chief operating officer. “Using innovation to build competitive differentiation is an integral part in our strategy to become and remain the best rental company in the industry. This unique role directly supports our brand promise and commitment to ‘provide premier products and innovative services.”

Hobson, who originally joined RSC in 1998, has held a variety of positions within the equipment rental industry. He is a graduate of the University of California – Santa Cruz.

RSC also recently posted impressive financial results for the third quarter of 2005. For the quarter. The company continued to substantially grow rental revenue and achieved the highest operating profit in the company’s history, most notably improving the return on operating capital to record levels. These results were highlighted in the interim quarterly report issued by Atlas Copco, the parent company of RSC.

The report noted organic rental revenue growth of 13 percent and operating profit margin of 25.6 percent for the third quarter. Overall, RSC reported total revenue of $404 million in the third quarter of 2005, compared to $377 million for the same quarter in 2004. Most of that growth came from rate and volume improvements in equipment rentals. Sales of used equipment increased by 13 percent and rental fleet utilization in the quarter improved to 72 percent from 70 percent in the same quarter last year.

Additionally, operating profit for RSC rose to $104 million in the third quarter of 2005, the company’s highest ever, and an increase of 32 percent over the same quarter last year. This improvement marks RSC’s 10th consecutive quarter-over-quarter increase in operating profit. The continued positive development of rental rates, increased rental volumes, and ongoing capital and cost-efficiency improvements all contributed to these strong results. Total operating costs for the third quarter were only slightly higher than the previous year, despite the volume growth and a $2.5 million reserve taken for costs related to hurricanes Katrina and Rita. As a result, EBITDA (earnings before interest, taxes, depreciation and amortization) improved to 43 percent from 37 percent in 2004. 

Likewise, return on operating capital employed increased in the quarter to 24 percent from 16 percent in 2004, significantly outperforming the cost of capital for the company and thereby continuing to generate positive economic value, which is one of RSC’s most important strategic objectives.

“In the third quarter, our team again successfully delivered profitable revenue growth, stayed focused on efforts to improve capital and operating efficiency, and continued to launch innovative customer service improvements,” said Tom Zorn, president and CEO of RSC Equipment Rental. “As these results demonstrate, our unique strategy is now gaining financial momentum which has helped RSC establish industry leadership. Importantly, long-term industry leadership and sustained profitable growth are key components of our strategy and are consistent with the Atlas Copco mission.  Accordingly, we are diligently investing resources in people, innovation, and technology to offer customers more competitive services and industry-leading customer satisfaction.”

The full third quarter report for Atlas Copco is available online at www.atlascopco.com.