RSC Holdings, Scottsdale, Ariz., announced revenue of $301 million and rental revenue of $260 million, compared with $327 million and $271 million, respectively, for the same period last year. The company reported a second quarter net loss of $22 million, or $0.21 per diluted share, compared with a net loss of $11 million, or $0.11 per diluted share, for the second quarter 2009.

The company said the change in profitability and margins primarily reflects excess rental industry fleet capacity and the resulting negative impact on pricing, partially offset by increased volume and the savings realized from the company's cost-cutting initiatives.

In the second quarter, RSC:

• Achieved growth in fleet on rent, increasing 12 percent during the quarter and 35 percent year to date.
• Grew rental volume 4.4 percent year-over-year, following six successive quarters of decline.
• Invested $102 million of gross rental capital expenditures in response to growing demand for select categories.
• Sold $64 million of fleet at original equipment cost with margins of 15 percent up from 9 percent in the first quarter.
• Generated free cash flow of $29 million.
• Decreased debt by $19 million during the quarter and had $646 million of borrowing availability under the ABL revolver as of June 30, 2010.
• Increased average fleet utilization for the quarter to 63.5 percent, improving from 54.8 percent in the first quarter.
• Improved rental rates sequentially over the first quarter, while rental rates were below the second quarter last year by 8.4 percent.

Erik Olsson, president and CEO, said, “We are seeing 2010 play out in the way we expected, with the positive momentum from the first quarter continuing and strengthening throughout the second quarter. The market was mixed in the first half of the year but steadily improving. We correctly identified early signs of improving customer demand and responded with increased sales activities, and by investing in our rental fleet and rental staff. This resulted in year-to-date fleet on rent growth of 35 percent. Our leading position in serving the industrial end market enabled us to meet or exceed our second quarter revenue, adjusted EBITDA, and free cash flow expectations. In addition, our strong operating model and focus on service allow us to continue to exceed customer expectations, as demonstrated by world class customer loyalty scores.”

The company said that business activity in the company’s primary end-market, industrial, improved on a year-over-year basis in the second quarter and anticipates this trend will continue in the second half of the year. The nonresidential construction market continued to decline slightly in the second quarter and, while the decline is slowing, the company expects growth will remain slightly negative in the third quarter of 2010. The company said industry-wide fleet levels continue to exceed demand and as a result rental rates will remain under pressure.

The company expects utilization and fleet on rent to continue to build in the third quarter, resulting in positive year-over-year volume growth and rental revenues for the third quarter are expected to be favorable on a year-over-year basis. However, while pricing continues to improve, the company expects that it will remain challenging in the third quarter.