FORT WAYNE, Ind., Aug. 6, 2020 /PRNewswire/ -- Nesco Holdings,
Inc. (NYSE: NSCO, "Nesco" or the "Company"), a leading provider of
specialty rental equipment to the electric utility, telecom and
rail infrastructure end-markets, today reported financial results
for the second quarter ended June 30, 2020.
Total revenue in the second quarter was $68.5 million, an increase of $5.6 million or 9.0% from the second quarter
2019, which was negatively impacted due to pandemic-related project
delays, but more than offset by the acquisition of Truck
Utilities.
Adjusted EBITDA was $26.2 million,
a decrease of 14.1% from $30.5
million in the second quarter 2019. The decline in Adjusted
EBITDA can be attributed to a combination of lower utilization and
higher selling, general and administrative expenses primarily
related to becoming a public company. The decline was partially
offset by higher equipment sales and the acquisition of Truck
Utilities. Nesco's core rental gross profit, excluding
depreciation, declined 7.4% to $32.7
million.
The Company reported a net loss of $13.2
million, compared to a net loss of $5.4 million for the same period in 2019.
Additional depreciation of $2.8
million, incremental interest expense of $1.1 million and a $0.8
million charge related to the change in fair value of an
interest rate collar contributed to a year-over-year increase in
net loss, partially offset by a $1.5
million increase in income tax benefits due to a recovery of
taxes paid in prior years as part of the CARES Act.
MANAGEMENT COMMENTARY
"Our second quarter results reflect the resiliency and
sustainability of both our critical infrastructure markets and our
business model," said Lee Jacobson,
Chief Executive Officer of Nesco. "Given the unprecedented economic
environment, we are encouraged with our second quarter results and
exceptionally proud of our dedicated team members for their
tireless efforts. We continue to prioritize our team's health and
safety while delivering for our customers during this challenging
period and have streamlined our business operations and reduced
overhead as a result of the temporary slowdown in activity. We are
focused on driving free cash flow to ensure ample liquidity to
navigate through the pandemic."
"We remain disciplined in our working capital management and
curtailed capital expenditures in the latter part of the second
quarter, which helped drive $14.4
million of free cash flow in the second quarter," said
Josh Boone, Chief Financial Officer
of Nesco. "Our flexible business model, combined with the
investments made in 2019 and the first quarter of 2020 to expand
our fleet, position us to capitalize on a typically stronger back
half of the year, which we expect to be bolstered by projects that
were temporarily put on hold due to the pandemic. Additionally, we
have over $80 million of available
liquidity with no near-term debt maturities and expect to generate
free cash flow for the remainder of 2020. We are in a comfortable
financial position that provides flexibility to support continued
growth in the business and reduce leverage. We remain committed to
a long-term leverage target of 3.0x-3.5x."
SECOND QUARTER REVENUE BY SEGMENT
All metrics compared to Second Quarter 2019 unless otherwise
noted
Equipment Rental
and Sales Segment (78.0% of revenue)
|
|
•
|
Revenue decreased
0.5% to $53.4 million, compared to $53.7 million
|
|
•
|
Equipment rental
revenue decreased 4.1% to $43.0 million, compared to $44.9
million
|
|
|
◦
|
Average equipment on
rent decreased 0.8% to $461.1 million. The Company invested in
fleet growth in 2019 and in the first half of 2020 but reduced
utilization resulting from COVID-19 related project delays resulted
in relatively flat equipment on rent year over year
|
|
|
◦
|
Fleet utilization
declined 8.9% to 71.3% due to project delays resulting from the
COVID-19 pandemic
|
|
|
◦
|
Rental rate per day
held steady at $136.7
|
|
•
|
Equipment sales
revenue increased 18.0% to $10.4 million, elevated in part due to
new dealer inventory investments in 2019
|
|
|
Parts, Tools and
Accessories Segment (22.0% of revenue)
|
|
•
|
Revenue increased
64.1% to $15.1 million, compared to $9.2 million
|
|
•
|
Parts rental revenue
increased 21.5% to $4.0 million primarily due to an expanded
footprint of PTA locations
|
|
•
|
Parts sales revenue
increased 87.5% to $11.1 million primarily due to the acquisition
of Truck Utilities
|
|
|
|
COVID-19 BUSINESS UPDATE
Nesco implemented several initiatives during the second quarter
and beginning of the third quarter to reduce costs in the face of
the pandemic, including a reduction in capital expenditures
relative to pre-COVID planned spend, improvements in working
capital, a freeze on all non-essential hiring, a headcount
reduction and cuts to travel and other non-essential expenses. The
Company expects to realize $2.5
million of annualized benefits from the headcount-related
portion of cost cuts alone.
Nesco has taken steps to ensure the health and safety of its
team members, while keeping all business and service locations
operational throughout the pandemic with little to no disruptions.
Nesco continues to fully support its customers' needs to help them
provide critical infrastructure maintenance and construction
services and to-date has not experienced any meaningful
interruptions to its supply chain.
LIQUIDITY AND CASH FLOW
The Company had cash of $5.3
million and availability of $78.3
million on its asset-based lending facility, resulting in
total liquidity of $83.6 million as
of June 30, 2020. Net debt
outstanding, including capital leases, was $765.9 million at the end of the second quarter
2020. The Company has no near-term debt maturities, with the
$385.0 million credit facility and
$475.0 million senior secured notes
both maturing in 2024.
Nesco reported cash flow from operating activities of
$22.5 million, an increase of
$21.2 million compared to second
quarter in 2019. Net cash outflow from investing activities of
$8.0 million declined from
$28.8 million for the same period in
2019 as Nesco curtailed capital expenditures. Free cash flow
increased to $14.4 million from
negative free cash flow of $27.6
million in the second quarter 2019.
Average fleet count increased 12.9% to 4,615 units, compared to
4,086 units a year ago. Total net capital expenditures in the
second quarter were $8.1 million.
Gross capital expenditures, which include purchases of rental fleet
and property and equipment, were $19.0
million. The Company received $10.9
million from sale of rental equipment and parts as well as
insurance proceeds from damaged equipment. Year to date, Nesco has
invested $35.3 million in net capital
expenditures.
2020 OUTLOOK
As previously stated in first quarter financial results, the
Company has withdrawn its previous full year 2020 guidance as a
result of the unpredictable nature of the COVID-19 pandemic. The
Company continues to assess the evolving situation and will update
its revenue and Adjusted EBITDA outlook when there is greater
visibility and economic conditions become reasonably
predictable.
The Company is reintroducing its outlook for net capital
expenditures to between $35 to
$40 million for the full year
2020(1).
"As we look to the third quarter and the remainder of the year,
we remain laser focused on driving short-term execution and
disciplined capital spending while remaining committed to our
long-term goals of continued growth, free cash flow generation,
leverage reduction and driving shareholder value," Mr. Jacobson
said.
(1) Net capital expenditures is a non-GAAP financial
measure. Please see the historical non-GAAP reconciliation tables
included at the end of this press release.
NON-GAAP FINANCIAL MEASURES
The Company uses a variety of operational and financial metrics,
including non-GAAP financial measures such as Adjusted EBITDA, free
cash flow, fleet utilization, original equipment cost on rent, net
capital expenditures, among other metrics, to enable it to analyze
its performance and financial condition. The Company utilizes
these financial measures to manage its business on a day-to-day
basis and believes that they are the most relevant measures of
performance. Some of these measures are commonly used in the
specialty rentals industry to evaluate performance. The
Company believes these non-GAAP measures provide expanded insight
to assess revenue and cost performance, in addition to the standard
GAAP-based financial measures. There are no specific rules or
regulations for determining non-GAAP measures, and as such, they
may not be comparable to measures used by other companies within
the industry. The presentation of non-GAAP financial
information should not be considered in isolation or as a
substitute for, or superior to, the financial information prepared
and presented in accordance with GAAP. The definitions of
non-GAAP financial measures along with a reconciliation of non-GAAP
financial information to GAAP are included in the supplemental
financial schedules.
CONFERENCE CALL INFORMATION
The Company has scheduled a conference call at 8:30 A.M. Eastern Time on August 6, 2020, to discuss the second quarter
2020 financial results. The conference call can be accessed by
dialing 800-920-3351 (United
States) or 212-231-2922 (International) using the conference
ID 21966791. A replay of the call will be available on the
Company's investor relations website at
investors.nescospecialty.com.
ABOUT NESCO
Nesco is one of the largest providers of specialty equipment,
parts, tools, accessories and services to the electric utility
transmission and distribution, telecommunications and rail markets
in North America. Nesco offers its specialized equipment to a
diverse customer base for the maintenance, repair, upgrade and
installation of critical infrastructure assets including electric
lines, telecommunications networks and rail systems. Nesco's
coast-to-coast rental fleet of over 4,500 units includes aerial
devices, boom trucks, cranes, digger derricks, pressure drills,
stringing gear, hi-rail equipment, repair parts, tools and
accessories. For more information, please
visit investors.nescospecialty.com.
FORWARD-LOOKING STATEMENTS
This press release includes "forward-looking statements" within
the meaning of the "safe harbor" provisions of the United States
Private Securities Litigation Reform Act of 1995 and within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as
amended. When used in this press release, the words
"estimates," "projected," "expects," "anticipates," "forecasts,"
"plans," "intends," "believes," "seeks," "may," "will," "should,"
"future," "propose" and variations of these words or similar
expressions (or the negative versions of such words or expressions)
are intended to identify forward-looking statements. These
forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside Nesco's management's control,
that could cause actual results or outcomes to differ materially
from those discussed in this press release. This press release is
based on certain assumptions that Nesco has made in light of its
experience in the industry as well as Nesco's perceptions of
historical trends, current conditions, expected future developments
and other factors Nesco believes are appropriate in these
circumstances. As you read and consider this press release, you
should understand that these statements are not guarantees of
performance or results. Many factors could affect Nesco's actual
performance and results and could cause actual results to differ
materially from those expressed in this press release. All
forward-looking statements attributable to Nesco or persons acting
on their behalf are expressly qualified in their entirety by the
foregoing cautionary statements. Important factors, among others,
that may affect actual results or outcomes include: the impact of
the COVID-19 pandemic on Nesco's business and operations as well as
the overall economy; Nesco's ability to execute on its plans to
develop and market new products and the timing of these development
programs; Nesco's estimates of the size of the markets for its
solutions; the rate and degree of market acceptance of Nesco's
solutions; the success of other competing technologies that may
become available; Nesco's ability to identify and integrate
acquisitions, including Nesco's ability to integrate its
acquisition of Truck Utilities and realize the anticipated benefits
thereof; the performance and security of Nesco's services;
potential litigation involving Nesco; and general economic and
market conditions impacting demand for Nesco's services. For a more
complete description of these and other possible risks and
uncertainties, please refer to Nesco's Annual Report on Form 10-K
for the year ended December 31, 2019,
as filed with the Securities and Exchange Commission on
March 16, 2020, as updated by Nesco's
quarterly reports on Form 10-Q.
INVESTOR CONTACT
Josh
Boone, CFO
(800) 252-0043
investors@nescospecialty.com
Nesco Holdings,
Inc.
Condensed
Consolidated Statements of Operations (unaudited)
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
(in $000s, except
share and per share data)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
Revenue
|
|
|
|
|
|
|
|
|
Rental
revenue
|
$
|
46,984
|
|
|
$
|
48,125
|
|
|
|
$
|
97,978
|
|
|
93,767
|
|
Sales of rental
equipment
|
4,982
|
|
|
4,332
|
|
|
|
14,075
|
|
|
11,731
|
|
Sales of new
equipment
|
5,418
|
|
|
4,480
|
|
|
|
12,995
|
|
|
6,830
|
|
Parts sales and
services
|
11,097
|
|
|
5,918
|
|
|
|
25,176
|
|
|
12,019
|
|
Total
Revenue
|
68,481
|
|
|
62,855
|
|
|
|
150,224
|
|
|
124,347
|
|
Cost of
Revenue
|
|
|
|
|
|
|
|
|
Cost of rental
revenue
|
14,311
|
|
|
12,843
|
|
|
|
28,097
|
|
|
23,900
|
|
Depreciation of
rental equipment
|
19,696
|
|
|
16,944
|
|
|
|
39,808
|
|
|
33,675
|
|
Cost of rental
equipment sales
|
3,536
|
|
|
3,871
|
|
|
|
11,264
|
|
|
10,005
|
|
Cost of new equipment
sales
|
4,777
|
|
|
3,697
|
|
|
|
11,431
|
|
|
5,303
|
|
Cost of parts sales
and services
|
9,224
|
|
|
4,471
|
|
|
|
20,584
|
|
|
9,321
|
|
Major repair
disposals
|
595
|
|
|
384
|
|
|
|
1,295
|
|
|
1,146
|
|
Total cost of
revenue
|
52,139
|
|
|
42,210
|
|
|
|
112,479
|
|
|
83,350
|
|
Gross
Profit
|
16,342
|
|
|
20,645
|
|
|
|
37,745
|
|
|
40,997
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
11,018
|
|
|
7,305
|
|
|
|
22,636
|
|
|
14,884
|
|
Licensing and titling
expenses
|
736
|
|
|
583
|
|
|
|
1,557
|
|
|
1,236
|
|
Amortization and
non-rental depreciation
|
800
|
|
|
749
|
|
|
|
1,516
|
|
|
1,519
|
|
Transaction
expenses
|
227
|
|
|
1,559
|
|
|
|
963
|
|
|
4,069
|
|
Other operating
expenses
|
1,042
|
|
|
629
|
|
|
|
1,758
|
|
|
779
|
|
Total Operating
Expenses
|
13,823
|
|
|
10,825
|
|
|
|
28,430
|
|
|
22,487
|
|
Operating
Income
|
2,519
|
|
|
9,820
|
|
|
|
9,315
|
|
|
18,510
|
|
Other
Expense
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
15,949
|
|
|
14,850
|
|
|
|
31,963
|
|
|
29,843
|
|
Other (income)
expense, net
|
783
|
|
|
(9)
|
|
|
|
6,804
|
|
|
(22)
|
|
Total other
expense
|
16,732
|
|
|
14,841
|
|
|
|
38,767
|
|
|
29,821
|
|
Loss Before Income
Taxes
|
(14,213)
|
|
|
(5,021)
|
|
|
|
(29,452)
|
|
|
(11,311)
|
|
Income Tax Expense
(Benefit)
|
(1,063)
|
|
|
402
|
|
|
|
(333)
|
|
|
836
|
|
Net
Loss
|
$
|
(13,150)
|
|
|
$
|
(5,423)
|
|
|
|
$
|
(29,119)
|
|
|
(12,147)
|
|
Loss per
Share:
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
|
(0.27)
|
|
|
$
|
(0.25)
|
|
|
|
$
|
(0.59)
|
|
|
$
|
(0.56)
|
|
Weighted-average-common shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
49,033,903
|
|
|
21,660,638
|
|
|
|
49,033,903
|
|
|
21,660,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nesco Holdings,
Inc.
Condensed
Consolidated Balance Sheets (unaudited)
|
(in $000s, except
share data)
|
June 30,
2020
|
|
December 31,
2019
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
Cash
|
$
|
5,300
|
|
|
$
|
6,302
|
|
Accounts receivable,
net of allowance of $4,881 and $4,654 respectively
|
57,438
|
|
|
71,323
|
|
Inventory
|
32,111
|
|
|
33,001
|
|
Prepaid expenses and
other
|
5,369
|
|
|
5,217
|
|
Total current
assets
|
100,218
|
|
|
115,843
|
|
Property and
equipment, net
|
5,795
|
|
|
6,561
|
|
Rental equipment,
net
|
369,269
|
|
|
383,420
|
|
Goodwill and other
intangibles, net
|
307,327
|
|
|
308,747
|
|
Notes
receivable
|
626
|
|
|
713
|
|
Total
Assets
|
783,235
|
|
|
$
|
815,284
|
|
Liabilities and
Stockholders' Deficit
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$
|
14,856
|
|
|
$
|
41,172
|
|
Accrued
expenses
|
27,206
|
|
|
27,590
|
|
Deferred rent
income
|
1,212
|
|
|
2,270
|
|
Current maturities of
long-term debt
|
1,280
|
|
|
1,280
|
|
Current portion of
capital lease obligations
|
8,080
|
|
|
5,451
|
|
Total current
liabilities
|
52,634
|
|
|
77,763
|
|
Long-term debt,
net
|
732,805
|
|
|
713,023
|
|
Capital
leases
|
16,290
|
|
|
22,631
|
|
Deferred tax
liabilities
|
13,267
|
|
|
12,288
|
|
Interest rate
collar
|
8,476
|
|
|
1,709
|
|
Total long-term
liabilities
|
770,838
|
|
|
749,651
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Stockholders'
Deficit
|
|
|
|
Common stock -
$0.0001 par value, 250,000,000 shares authorized, 49,033,903 shares
issued and outstanding, at June 30, 2020 and December 31,
2019
|
5
|
|
|
5
|
|
Additional paid-in
capital
|
433,589
|
|
|
432,577
|
|
Accumulated
deficit
|
(473,831)
|
|
|
(444,712)
|
|
Total stockholders'
deficit
|
(40,237)
|
|
|
(12,130)
|
|
Total Liabilities
and Stockholders' Deficit
|
$
|
783,235
|
|
|
$
|
815,284
|
|
Nesco Holdings,
Inc.
Condensed
Consolidated Statements of Cash Flows (unaudited)
|
|
Six Months Ended
June 30,
|
(in
$000s)
|
2020
|
|
2019
|
Operating
Activities
|
|
|
|
Net loss
|
$
|
(29,119)
|
|
|
$
|
(12,147)
|
|
Adjustments to
reconcile net loss to net cash from operating
activities:
|
|
|
|
Depreciation
|
40,369
|
|
|
34,176
|
|
Amortization -
intangibles
|
1,462
|
|
|
1,448
|
|
Amortization -
financing costs
|
1,515
|
|
|
1,380
|
|
Provision for losses
on accounts receivable
|
1,421
|
|
|
1,112
|
|
Share-based
payments
|
1,012
|
|
|
180
|
|
Gain on sale of
rental equipment and parts
|
(3,838)
|
|
|
(3,260)
|
|
Gain on insurance
proceeds - damaged equipment
|
(233)
|
|
|
(387)
|
|
Major repair
disposal
|
1,295
|
|
|
1,146
|
|
Change in fair value
of derivative
|
6,767
|
|
|
—
|
|
Deferred tax
(benefit) expense
|
979
|
|
|
544
|
|
Changes in assets and
liabilities:
|
|
|
|
Accounts
receivable
|
10,935
|
|
|
(13,357)
|
|
Inventory
|
(4,313)
|
|
|
(8,864)
|
|
Prepaid expenses and
other
|
(152)
|
|
|
(2,412)
|
|
Accounts
payable
|
(6,988)
|
|
|
8,020
|
|
Accrued expenses and
other liabilities
|
(385)
|
|
|
(683)
|
|
Unearned
income
|
(1,058)
|
|
|
(1,719)
|
|
Net cash flow from
operating activities
|
19,669
|
|
|
5,177
|
|
Investing
Activities
|
|
|
|
Purchase of equipment
- rental fleet
|
(55,421)
|
|
|
(51,734)
|
|
Proceeds from sale of
rental equipment and parts
|
19,005
|
|
|
18,187
|
|
Insurance proceeds
from damaged equipment
|
2,191
|
|
|
1,427
|
|
Purchase of other
property and equipment
|
(1,089)
|
|
|
(3,655)
|
|
Other
|
87
|
|
|
—
|
|
Net cash flow from
investing activities
|
(35,227)
|
|
|
(35,775)
|
|
Financing
Activities
|
|
|
|
Borrowings under
revolving credit facilities
|
37,574
|
|
|
43,000
|
|
Repayments under
revolving credit facilities
|
(19,074)
|
|
|
(9,000)
|
|
Repayments of notes
payable
|
(232)
|
|
|
(365)
|
|
Capital lease
payments
|
(3,712)
|
|
|
(2,613)
|
|
Finance fees
paid
|
—
|
|
|
20
|
|
Net cash flow from
financing activities
|
14,556
|
|
|
31,042
|
|
Net Change in
Cash
|
(1,002)
|
|
|
444
|
|
Cash at Beginning
of Period
|
6,302
|
|
|
2,140
|
|
Cash at End of
Period
|
$
|
5,300
|
|
|
$
|
2,584
|
|
Supplemental Cash
Flow Information
|
|
|
|
Cash paid for
interest
|
$
|
29,502
|
|
|
$
|
28,708
|
|
Cash paid for income
taxes
|
156
|
|
|
240
|
|
Non-Cash Investing
and Financing Activities
|
|
|
|
Transfer of inventory
to leased equipment
|
5,203
|
|
|
2,618
|
|
Rental equipment and
property and equipment purchases in accounts payable
|
2,316
|
|
|
19,021
|
|
Rental equipment
sales in accounts receivable
|
2,453
|
|
|
623
|
|
Insurance recoveries
accrued in accounts receivable
|
702
|
|
|
224
|
|
Nesco Holdings,
Inc.
Adjusted EBITDA
Reconciliation (unaudited)
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
(in
$000s)
|
2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
Net loss
|
$
|
(13,150)
|
|
$
|
(5,423)
|
|
$
|
(29,119)
|
|
$
|
(12,147)
|
|
Interest
expense
|
15,949
|
|
14,850
|
|
31,963
|
|
29,843
|
|
Income tax expense
(benefit)
|
(1,063)
|
|
402
|
|
(333)
|
|
836
|
|
Depreciation
expense
|
19,992
|
|
17,180
|
|
40,369
|
|
34,176
|
|
Amortization
expense
|
771
|
|
724
|
|
1,462
|
|
1,448
|
|
EBITDA
|
22,499
|
|
27,733
|
|
44,342
|
|
54,156
|
|
Adjustments:
|
|
|
|
|
Non-cash
purchase accounting impact (1)
|
178
|
|
125
|
|
1,095
|
|
736
|
|
Transaction and
process improvement costs (2)
|
1,639
|
|
2,183
|
|
3,718
|
|
4,693
|
|
Major repairs
(3)
|
595
|
|
384
|
|
1,295
|
|
1,146
|
|
Share-based
payments (4)
|
453
|
|
52
|
|
1,012
|
|
180
|
|
Change in fair value of derivative (5)
|
804
|
|
—
|
|
6,767
|
|
—
|
|
Adjusted
EBITDA
|
$
|
26,168
|
|
$
|
30,477
|
|
$
|
58,229
|
|
$
|
60,911
|
|
Adjusted EBITDA is defined as net income (loss) plus
interest expense, provision for income taxes, depreciation, and
amortization, and further adjusted for (1) non-cash purchase
accounting impact, (2) transaction and process improvement costs,
including the effect of the cessation of operations in Mexico, (3) major repairs, (4) share-based
payments, (5) other non-recurring items, if any, and (6) the change
in fair value of derivative instruments. This non-GAAP
measure is subject to certain limitations.
(1) Represents the non-cash impact of purchase accounting, net
of accumulated depreciation, on the cost of equipment sold.
The equipment acquired received a purchase step-up in basis, which
is a non-cash adjustment to the equipment cost pursuant to our
credit agreement.
(2) 2020: Represents transaction costs related to our
acquisition of Truck Utilities (which include post-acquisition
integration expenses incurred during the current quarterly period);
2019: Represents transaction expenses related to merger activities
associated with the transaction with Capitol that was consummated
on July 31, 2019. These expenses are
comprised of professional consultancy, legal, tax and accounting
fees. Also included are costs of startup activities (which include
training, travel, and process setup costs) associated with the
rollout of new PTA locations that occurred throughout the prior
year into the current periods. Finally, the expenses associated
with the Company's closure of its Mexican operations, which closure
activities commenced in the third quarter of 2019, are also
included for the 2020 periods presented. Pursuant to our credit
agreement, the cost of undertakings to effect such cost savings,
operating expense reductions and other synergies, as well as any
expenses incurred in connection with acquisitions, are amounts to
be included in the calculation of Adjusted EBITDA.
(3) Represents the undepreciated cost of replaced vehicle
chassis and components from heavy maintenance, repair and overhaul
activities associated with our fleet, which is an adjustment
pursuant to our credit agreement.
(4) Represents non-cash stock compensation expense associated
with the issuance of stock options and restricted stock units.
(5) Represents the charge to earnings for our interest rate
collar (which is an undesignated hedge) in the three and six months
ended June 30, 2020.
Fleet Metrics
(unaudited)
|
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
2020
|
2019
|
2020
|
2019
|
(in $000s, except
fleet count and rate per day)
|
|
|
|
|
Average equipment on
rent
|
$
|
461,100
|
|
$
|
464,700
|
|
$
|
480,400
|
|
$
|
458,400
|
|
Average fleet
count
|
4,615
|
|
4,086
|
|
4,621
|
|
4,000
|
|
Average fleet
utilization
|
71.3
|
%
|
80.2
|
%
|
73.6
|
%
|
81.1
|
%
|
Average rental rate
per day
|
$
|
136.71
|
|
$
|
136.67
|
|
$
|
137.26
|
|
$
|
137.06
|
|
OPERATIONAL AND FINANCIAL METRICS
Average equipment on rent is the average original
equipment cost of units on rent during the period. The measure
provides a value dimension to the fleet utilization
statistics.
Average fleet count is the average number of units in the
fleet during the period.
Average fleet utilization for the period is calculated as
the total number of invoiced days divided by the total number of
available equipment days.
Average rental rate per day for the period is calculated
as total rental revenue excluding freight and damaged billings
divided by the total rental days, which represents the number of
billable days in the period aggregated across all units in the
fleet.
These metrics have been adjusted to exclude Mexico, for which the Company commenced exit
activities in the third quarter of 2019.
Segment
Performance (unaudited)
|
|
|
Three Months Ended
June 30,
|
Three Months Ended
June 30,
|
|
2020
|
2019
|
|
ERS
|
PTA
|
Total
|
ERS
|
PTA
|
Total
|
(in
$000s)
|
|
|
|
|
|
|
Rental
revenue
|
$
|
43,025
|
|
$
|
3,959
|
|
$
|
46,984
|
|
$
|
44,867
|
|
$
|
3,258
|
|
$
|
48,125
|
|
Sales of rental
equipment
|
4,982
|
|
—
|
|
4,982
|
|
4,332
|
|
—
|
|
4,332
|
|
Sales of new
equipment
|
5,418
|
|
—
|
|
5,418
|
|
4,480
|
|
—
|
|
4,480
|
|
Parts sales and
services
|
—
|
|
11,097
|
|
11,097
|
|
—
|
|
5,918
|
|
5,918
|
|
Total
revenues
|
53,425
|
|
15,056
|
|
68,481
|
|
53,679
|
|
9,176
|
|
62,855
|
|
Cost of
revenue
|
21,549
|
|
10,894
|
|
32,443
|
|
19,561
|
|
5,705
|
|
25,266
|
|
Depreciation of
rental equipment
|
18,559
|
|
1,137
|
|
19,696
|
|
15,889
|
|
1,055
|
|
16,944
|
|
Gross
Profit
|
$
|
13,317
|
|
$
|
3,025
|
|
$
|
16,342
|
|
$
|
18,229
|
|
$
|
2,416
|
|
$
|
20,645
|
|
|
|
|
|
Six Months Ended
June 30,
|
Six Months Ended
June 30,
|
|
2020
|
2019
|
|
ERS
|
PTA
|
Total
|
ERS
|
PTA
|
Total
|
(in
$000s)
|
|
|
|
|
|
|
Rental
revenue
|
$
|
90,078
|
|
$
|
7,900
|
|
$
|
97,978
|
|
$
|
87,762
|
|
$
|
6,005
|
|
$
|
93,767
|
|
Sales of rental
equipment
|
14,075
|
|
—
|
|
14,075
|
|
11,731
|
|
—
|
|
11,731
|
|
Sales of new
equipment
|
12,995
|
|
—
|
|
12,995
|
|
6,830
|
|
—
|
|
6,830
|
|
Parts sales and
services
|
—
|
|
25,176
|
|
25,176
|
|
—
|
|
12,019
|
|
12,019
|
|
Total
revenues
|
117,148
|
|
33,076
|
|
150,224
|
|
106,323
|
|
18,024
|
|
124,347
|
|
Cost of
revenue
|
48,869
|
|
23,802
|
|
72,671
|
|
38,215
|
|
11,460
|
|
49,675
|
|
Depreciation of
rental equipment
|
37,535
|
|
2,273
|
|
39,808
|
|
31,550
|
|
2,125
|
|
33,675
|
|
Gross
Profit
|
$
|
30,744
|
|
$
|
7,001
|
|
$
|
37,745
|
|
$
|
36,558
|
|
$
|
4,439
|
|
$
|
40,997
|
|
Net Capital
Expenditures (unaudited)
|
|
|
Six Months Ended
June 30,
|
(in
$000s)
|
2020
|
|
2019
|
Purchase of equipment
- rental fleet
|
$
|
55,421
|
|
|
$
|
51,734
|
|
Purchase of other
property and equipment
|
1,089
|
|
|
3,655
|
|
Total Capital
Expenditures
|
56,510
|
|
|
55,389
|
|
Less: Proceeds from
sale of rental equipment and parts
|
(19,005)
|
|
|
(18,187)
|
|
Less: Insurance
proceeds from damaged equipment
|
(2,191)
|
|
|
$
|
(1,427)
|
|
Net Capital
Expenditures
|
$
|
35,314
|
|
|
$
|
35,775
|
|
Free Cash Flow
(unaudited)
|
|
|
Six Months Ended
June 30,
|
(in
$000s)
|
2020
|
|
2019
|
Net cash flow from
operating activities
|
$
|
19,669
|
|
|
$
|
5,177
|
|
Less: Net capital
expenditures
|
(35,314)
|
|
|
(35,775)
|
|
Free Cash
Flow
|
$
|
(13,625)
|
|
|
$
|
(28,579)
|
|
|
|
|
|
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SOURCE Nesco Holdings, Inc.