January 2001

Association News

After reviewing eight midwestern advertising agencies, the subcommittee of the A.R.A. Advertising and Marketing Committee has chosen Zimmerman, Laurent and Richardson (ZLR), Des Moines, Iowa, to lead the development of the American Rental Association’s national advertising program for members. 
The subcommittee chose ZLR partly because of the agency’s extensive research into the association, its members and the industry. In preparing a proposal to offer the committee, ZLR interviewed A.R.A. members and associate members nationwide, “the man on the street” in Des Moines, contractors, the editors of consumer and trade publications, as well as members of the A.R.A. staff.

Members of the subcommittee met in Des Moines at the agency’s headquarters in November to plan the transition of responsibility and possible modification of A.R.A.’s 2000-2001 fiscal-year advertising program, which ZLR will put in motion immediately.

ZLR, an independently owned corporation, has been in business since 1987 and has 16 employees. Its client base includes Iowa State University, the Iowa Department of Transportation and the Iowa Department of Public Health. ZLR’s experience includes working with dealer organizations, franchisee organizations and dealer groups. 

State and local rental association leaders from across the continent assembled in Rock Island, Ill., in November to learn about the role of state and local associations, network and build their leadership skills to better serve the members within their rental associations. The theme of the conference, “Facing the Techno-2000 Challenge,” invited participants to think outside the box in serving their constituents. Sessions ranged from a pre-conference seminar on public speaking to putting together major grass-roots legislative efforts at the state level.

One conference attendee said of the public-speaking seminar, “I feel much more confident about getting up in front of my rental association now.” They appreciated the emphasis on technology, as well. “I’m looking forward to improving the communication among our member stores with e-mail and the Web site A.R.A. has provided for us,” said one president. 

Candidates supported by A.R.A.’s Political Action Committee (ARAPAC) scored big in the November elections. 
Those winners were:

Industry News

The Atlas Copco Group has announced that Prime Service, and Rental Service Corp., both acquired by Atlas Copco, will merge into one company with one operating structure and two brands — each targeting a specific market segment. The company estimates it will serve more than 200,000 customers through the more than 570 store locations created by the merger.

The company will be called Rental Service Corp., but will have two distinct brands as of Jan. 1. Prime Industrial Services will serve the industrial customers; RSC will serve construction customers.

“With this new structure, we are in the unique position to provide our customers with the specialized focus they require,” said Thomas Bennett, chairman and chief executive officer of the Rental Service Business Area,. “Whether [they have] industrial or construction rental needs, our customers will work with experts in their field.”

Atlas Copco’s head office is in Stockholm, Sweden, and is an international group of industrial companies. In 1999 the group had revenues of approximately $4.2 billion (U.S.); 97 percent of revenues were generated outside Sweden. 

NationsRent, Fort Lauderdale, Fla., recently reported third quarter operating income of $30 million from rental revenue of $155.8 million, and total revenue of $184.6 million. 

The company reported net income of $1.3 million, compared to $11.9 million in the third quarter of 1999. Operating income in the third quarter of 1999 was $37.7 million from rental revenue of $121.9 million and total revenue of $154.9 million. Earnings per diluted share for the quarter were 2 cents, compared with 17 cents per diluted share in 1999. 

For the nine months ended Sept. 30, the company reported operating income of $90.7 million from rental revenue of $407.6 million and total revenue of $497.3 million. The company also reported net income for the nine-month period of $9.5 million or 13 cents per diluted share, compared with net income of $20.8 million or 34 cents per diluted share for the nine months ended Sept. 30, 1999. Operating income for the nine months ended Sept. 30, 1999, was $80.9 million from rental revenue 

of $293.9 million and total revenue of $387.5 million. 

“Aggressive and necessary action is being taken to reduce annual operating expenses by $30 million to adjust the significant imbalance between costs and revenue resulting from the lower than planned revenue for the second half of this year,” said James L. Kirk, chairman and chief executive officer. “While these actions are about 70 percent implemented, our results for the remainder of 2000 are being negatively affected.

“The industry continues to see strong demand for rental as customers rent more and buy less equipment. Our business experienced a healthy internal growth of 17 percent for the first nine months of this year, but our plan called for growth in excess of 25 percent. For 2001, we plan to slow our growth to focus on optimizing our core business. 

“Our new store growth will concentrate on our strategic alliance with Lowe’s to operate NationsRent rental centers in select Lowe’s locations.”

NationsRent rents construction equipment at nearly 200 locations in 27 states. 

United Rentals, Greenwich, Conn., has released its financial results for the quarter ended Sept. 30. Revenues increased by 28.5 percent to $859 million. On a same-store basis, revenues increased by 15.2 percent year over year. This is the 12th consecutive quarter in which year-over-year same-store revenues have increased at a double-digit growth rate, and the third consecutive quarter in which rental pricing has improved. The company’s equipment utilization rate was 68.7 percent.

The company’s operating margin improved to 22.6 percent. 

Net income grew by 34.1 percent, reaching $75.4 million. Diluted earnings per share were $0.79, a 31.7 percent increase over the $0.60 reported in the third quarter of 1999.

For the nine-month period ended Sept. 30, revenues were $2.17 billion, a 38.6 percent increase over the $1.56 billion reported for the first nine months of 1999. Net income for the nine-month period was $140 million, a 28.4 percent increase over the $109 million reported in last year’s first nine months.

Diluted earnings per share were $1.49, a 26.3 percent increase from the $1.18 reported in the same nine-month period of 1999. 

Financial results for the first nine months of 1999 exclude pre-tax charges of $18.2 million, reflecting expenses incurred by the company related to its terminated tender offer for Rental Service Corp.

The company also completed the acquisitions of nine equipment rental companies with combined annual revenues of about $110 million. The largest of the acquisitions is Horizon High Reach, Fresno, Calif., with annual revenues of about $90 million. Since the beginning of this year, United Rentals has completed 49 acquisitions with combined annual revenues of about $360 million.