Nesco Holdings, Inc. Reports Fourth Quarter And Full Year 2019 Financial Results
FORT WAYNE, Ind., March 12, 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 fourth quarter and full year ended December 31, 2019.
FULL YEAR 2019 HIGHLIGHTS
-- Total revenue of $264.0 million (+7.2% from 2018)
-- Equipment rental revenue of $182.7 million (+5.5% from 2018)
-- Equipment sales revenue of $34.1 million (-23.2% from 2018)
-- Parts, tools, and accessories revenue of $47.2 million (+64.8% from
2018)
-- Consolidated net loss of $27.1 million (includes $15.9 million of
transaction and process improvement costs)
-- Adjusted EBITDA of $127.5 million (+4.8% from 2018)
-- Adjusted EBITDA including a full year of Truck Utilities of $134.5
million
-- Closed acquisition of Truck Utilities on November 4, 2019
Lee Jacobson, Chief Executive Officer of Nesco, said, "The fourth quarter capped off another year of solid growth for Nesco. Our core specialty rental equipment remains in high demand in each of our end-markets, as evidenced by more than 8% year-over-year equipment rental revenue growth in the fourth quarter, excluding the impact from Truck Utilities and another quarter of record equipment on rent, which is also up more than 8% year-over-year in the fourth quarter. Parts, tools and accessories segment revenue increased more than 70% on a year-over-year basis in the fourth quarter, excluding Truck Utilities, driven by a combination of new regional locations and increased spend within our equipment rental customer base."
"Demand within our core electrical transmission and distribution, telecom and rail end markets remain robust," continued Jacobson. "Our largest contractor customers reported another quarter of record, or near record, revenue backlogs in our core end markets and our average customer rental contract period exceeded 13 months for most of 2019, a record for Nesco. Looking ahead, we expect 2020 will be a period of strong growth for our business. Our recent investment in new fleet will allow us to capture many previously lost rental opportunities due to equipment availability. We will also benefit from the investment we made in expanding our parts, tools and accessories service locations from two to seven in 2019 and one additional expected in 2020; and a full year of contribution from the Truck Utilities acquisition. We plan to take a measured approach toward capital spending in 2020 in order to generate positive free cash flow, reduce leverage and focus on maintaining high fleet utilization."
FULL YEAR 2019 RESULTS
Total Revenue
Total revenue in 2019 was $264.0 million, an increase of $17.7 million, or 7.2%, from 2018. Excluding equipment sales, revenue grew $28.0 million or 13.9%, from 2018. Truck Utilities contributed $8.5 million to revenue since the acquisition was completed in November 2019, split nearly evenly between both the Equipment Rental and Sales ("ERS") and Parts Tools and Accessories ("PTA") segments.
ERS segment revenue declined 0.4% to $216.8 million in 2019, compared to $217.6 million for the same period in 2018. Equipment rental revenue increased 5.5% to $182.7 million, primarily due to a 6.1% increase in average equipment on rent, which grew to $477.5 million in 2019, compared to $450.2 million in 2018. Fleet utilization was 80.7% in 2019, compared to 82.3% in 2018. After adjusting for new units that have not yet entered into service, Truck Utilities and the prior year's benefit from storm recovery in Puerto Rico, utilization was down 0.4% year-over-year. Equipment sales revenue of $34.1 million was a reduction from the prior year of $10.3 million or 23.2% leading to an overall decline in ERS revenue for the year. Equipment sales can be lumpy in nature, but any timing difference that may reduce used sales provides Nesco with the opportunity to continue to rent this equipment.
PTA segment revenue grew 64.8% to $47.2 million in 2019, compared to $28.7 million in 2018. PTA revenue growth was driven by increased penetration of Nesco's equipment rental customer base and a ramping of revenues at the new PTA locations.
Net Loss
The Company reported a net loss in 2019 of $27.1 million, compared to a net loss of $15.5 million for the same period in 2018. The year-over-year increase in net loss was primarily driven by a $13.3 million increase in deal-related transaction and business acquisition expenses.
Adjusted EBITDA
Adjusted EBITDA increased $5.8 million, or 4.8%, from $121.7 million for the year ended December 31, 2018 to $127.5 million for the year ended December 31, 2019. Adjusted EBITDA including a full year of Truck Utilities was $134.5 million for the year ended December 31, 2019. The year over year increase in Adjusted EBITDA was primarily driven by an $11.6 million, or 8.6%, increase in core rental gross profit, excluding depreciation to $147.2 million ($76.6 million, including depreciation), compared to $135.5 million ($71.4 million, including depreciation) in 2018. This increase was partially offset by an increase in selling, general and administrative expenses due largely to increased expenses related to becoming a public company.
FOURTH QUARTER 2019 RESULTS
Total Revenue
Total revenue in the fourth quarter was $77.2 million, an increase of $8.6 million or 12.5% from the fourth quarter 2018. Excluding equipment sales, revenue grew $14.4 million or 27.6% from the fourth quarter 2018. Truck Utilities contributed $8.5 million to revenue since the acquisition was completed in November 2019, split nearly evenly between both segments.
ERS segment revenue declined 1.2% to $60.8 million in the fourth quarter, compared to $61.5 million for the same period in 2018. Equipment rental revenue increased 11.3% (or 8.1% excluding Truck Utilities) to $50.0 million. This growth is primarily due to a 10.0% increase in average equipment on rent, which grew to $508.7 million in the fourth quarter, compared to $462.4 million in the same quarter of 2018. Fleet utilization was 81.5% in the fourth quarter compared to 83.5% in the same period of 2018. After adjusting for new units that have not yet entered into service and Truck Utilities, utilization was approximately flat year-over-year. The Company's average rental rate per day was $138 and $140 in the fourth quarter of 2019 and 2018, respectively. The Company continues to realize gains in pricing by product line, but average reported rate remains relatively constant due to a changing fleet mix as a result of increased investment in relatively lower cost telecom and rail equipment. Equipment sales revenue of $10.8 million was a reduction from the prior year quarter of 34.9% (or 51.7% excluding Truck Utilities) leading to an overall decline in ERS revenue for the quarter.
PTA segment revenue grew 129.9% (or 70.6% excluding Truck Utilities) to $16.4 million in the fourth quarter, compared to $7.1 million for the same period in 2018. PTA revenue growth was driven by increased penetration of Nesco's equipment rental customer base and a ramping of revenues at the newer PTA locations.
Net Loss
The Company reported net income in the fourth quarter of $3.1 million, compared to a net loss of $3.4 million for the same period in 2018. The year-over-year increase in net earnings was primarily driven by an income tax benefit of $7.3 million due to tax valuation allowance reductions from the rental equipment acquired in the Truck Utilities acquisition.
Adjusted EBITDA
Adjusted EBITDA increased slightly to $35.6 million, as compared to the same period in 2018. Adjusted EBITDA reflects a $4.5 million or 12.5% increase in core rental gross profit excluding depreciation to $40.8 million ($21.5 million, including depreciation), compared to $36.3 million ($18.7 million, including depreciation) in 2018. This increase was partially offset by an increase in selling, general and administrative expenses due largely to increased expenses related to becoming a public company.
Liquidity and Capitalization
On March 10, 2020, the Company completed an increase in the size of its asset-based lending facility from $350 million to $385 million with the addition of MUFG Bank, Ltd. as a new lender under the facility. Nesco made significant investments in its fleet and acquired Truck Utilities in 2019. The increase in facility size expands liquidity, enabling continued flexibility for Nesco to grow its fleet and opportunistically pursue mergers and acquisitions.
As of December 31, 2019, the Company had total cash of $6.3 million and availability on its asset-based lending facility of $96.9 million, which does not reflect the impact of the increased size of the asset-based facility. Total debt outstanding, including capital leases, was $756.6 million at the end of the fourth quarter 2019.
Investing Activities
Average fleet count increased to 4,172 units in 2019, from 3,839 units in 2018. Total purchases of rental fleet and property and equipment in 2019 was $109.7 million, including $36.7 million of maintenance expenditures and $73.0 million of growth expenditures. Nesco accelerated the timing of some capital expenditures planned for 2020 into the fourth quarter of 2019 in order to capture potential upside from market demand in 2019 and is reducing 2020 target capital expenditures as a result. The Company received $28.5 million from sale of rental equipment and parts and insurance proceeds from damaged equipment in 2019, resulting in total net capital expenditures of $81.3 million.
FINANCIAL OUTLOOK
The Company's current expectations for the full year 2020 are as follows:
-- Total revenue of $330 to $360 million (25% to 36% growth)
-- Adjusted EBITDA((1)) of $142 to $154 million (11% to 21% growth)
-- Net capital expenditures (after proceeds from equipment sales)((2) )of
$45 to $55 million
(1) Adjusted EBITDA is a non-GAAP
financial measure. Further
information including both
historical and forward-looking
reconciliations for this non-GAAP
measure to the most directly
comparable financial measure under
GAAP is included at the end of
this press release.
(2) 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.
This outlook includes anticipated results from Truck Utilities Inc. This guidance is subject to risks and uncertainties, including those described in "Forward-Looking Statements" below.
NEW INDEPENDENT BOARD MEMBER
On March 2, 2020, the Company announced that it had appointed Gerard E. Holthaus to serve as an independent director. Mr. Holthaus is the non-executive Chairman of the Board of WillScot Corp, a leading provider of modular space solutions in North America. He is the former non-executive chairman of Algeco Scotsman Global S.à.r.l., the leading global provider of modular space solutions. He previously served as executive chairman and CEO of Algeco Scotsman, where he was responsible for its North American and European operations, and as executive chairman, president and CEO of WSII prior to its acquisition by Algeco Scotsman in 2007. Mr. Holthaus is also a former director of BakerCorp International, Inc. and Neff Corporation, two equipment rental companies that completed strategic sales. Mr. Holthaus is also currently Non-Executive Chairman of FTI Consulting.
"As Nesco continues to grow so does the breadth and expertise of our board, and we are eager to welcome Gerry's voice and insight to the organization. Gerry brings a proven track record of success in the specialty equipment rental arena most recently as Chairman of WillScot. His specialty rental industry expertise is complemented by his strong financial background and makes him a perfect addition to our board," said William Plummer, Chairman of the Board.
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, 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 March 12, 2020, to discuss the fourth quarter and full year 2019 financial results. The conference call can be accessed by dialing 866-211-4094 (United States) or 647-689-6722 (International) using the conference ID 1032839. 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 approximately 4,600 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: 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 (including Nesco's estimates of the Adjusted EBITDA impact of contributions from Truck Utilities); 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 Capitol's final prospectus and definitive proxy statement filed with the Securities and Exchange Commission on June 4, 2019 (as supplemented on June 24, 2019 and July 11, 2019, the "Proxy Statement/Prospectus") and incorporated by reference in the Current Report on Form 8-K filed with the SEC on August 1, 2019, as well as to our subsequent filings with the SEC. The forward-looking statements contained herein speak only as of the date hereof, and Nesco undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
INVESTOR CONTACT
Noel Ryan, IRC
720.778.2415
investors@nescospecialty.com
Table 1: Unaudited Condensed Consolidated Balance Sheets
Nesco Holdings, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in $000s, except share
data) December 31, 2019 December 31, 2018
---
Assets
Current Assets
Cash $
6,302 $
2,140
Accounts receivable, net
of allowance of $4,654
and $7,562,
respectively 71,323 52,559
Inventory 33,001 11,435
Prepaid expenses and
other 5,217 2,483
Total current assets 115,843 68,617
Property and equipment,
net 6,561 2,763
Rental equipment, net 383,420 320,722
Goodwill and other
intangibles, net 308,747 299,454
Notes receivable 713
Total Assets $
815,284 $
691,556
Liabilities and Stockholders' Deficit
Current Liabilities
Accounts payable $
41,172 $
20,867
Accrued expenses 27,590 20,383
Deferred rent income 2,270 4,762
Current maturities of
long-term debt 1,280 2,531
Current portion of
capital lease
obligations 5,451 4,866
Total current
liabilities 77,763 53,409
Long-term debt, net 713,023 756,872
Capital leases 22,631 28,418
Deferred tax liabilities 12,288 11,191
Other liabilities 1,709 422
Total long-term
liabilities 749,651 796,903
Commitments and
contingencies -
Stockholders' Deficit
Common stock -$0.0001
par value, 250,000,000
shares authorized,
49,033,903 and
21,660,638 shares
issued and outstanding,
at December 31, 2019
and December 31, 2018,
respectively 5 2
Additional paid-in
capital 432,577 259,298
Accumulated deficit (444,712) (417,660)
Accumulated other
comprehensive loss - (396)
Total stockholders'
deficit (12,130) (158,756)
Total Liabilities and
Stockholders' Deficit $
815,284 $
691,556
Table 2: Unaudited Condensed Consolidated Statements of Operations
Nesco Holdings, Inc.
Condensed Consolidated Statements of Operations (unaudited)
Three Months Ended Year Ended December 31,
December 31,
(in $000s, except share
and per share data) 2019 2018 2019 2018
---
Revenue
Rental revenue $
54,125 $
47,785 $
197,996 $
184,563
Sales of rental
equipment 8,600 10,457 23,767 26,019
Sales of new equipment 2,232 6,182 10,308 18,349
Parts sales and services 12,289 4,264 31,964 17,366
Total revenue 77,246 68,688 264,035 246,297
Cost of Revenue
Cost of rental revenue 13,313 11,512 50,829 49,023
Depreciation of rental
equipment 19,270 17,576 70,568 64,093
Cost of rental equipment
sales 7,649 8,636 20,302 21,689
Cost of new equipment
sales 1,902 5,460 8,520 16,099
Cost of parts sales and
services 10,131 3,091 25,052 12,339
Major repair disposals 694 375 2,216 1,436
Total cost of revenue 52,959 46,650 177,487 164,679
Gross Profit 24,287 22,038 86,548 81,618
Operating Expenses
Selling, general, and
administrative expenses 9,960 8,307 34,667 32,718
Licensing and titling
expenses 690 567 2,617 2,241
Amortization and non-
rental depreciation 858 781 3,122 3,045
Transaction expenses 247 277 7,641 440
Asset impairment - 657
Other operating expenses 613 10 1,826 10
Total operating expenses 12,368 9,942 50,530 38,454
Operating Income 11,919 12,096 36,018 43,164
Other Expense
Loss on extinguishment
of debt - 4,005
Interest expense, net 16,985 15,049 63,361 56,698
Other expense, net (855) 1 1,690 287
Total other expenses 16,130 15,050 69,056 56,985
Loss Before Income Taxes (4,211) (2,954) (33,038) (13,821)
Income Tax Expense
(Benefit) (7,316) 452 (5,986) 1,705
Net Income (Loss) $
3,105 $
(3,406) $
(27,052) $
(15,526)
Income (Loss) per share:
Basic and diluted $
0.06 $
(0.16) $
(0.82) $
(0.72)
Weighted-average common shares
outstanding:
Basic and diluted 49,033,903 21,660,638 33,066,165 21,660,638
Table 3: Unaudited Condensed Consolidated Statements of Cash Flows
Nesco Holdings, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
Year Ended December 31,
(in $000s) 2019 2018
Operating Activities
Net loss $
(27,052) $
(15,526)
Adjustments to reconcile net loss to
net cash flow from operating
activities:
Depreciation 71,548 64,312
Amortization -intangibles 3,008 2,826
Amortization -financing costs 2,913 3,537
Provision for losses on accounts
receivable 3,292 4,302
Share-based payments 1,014 1,130
Gain on sale of rental equipment and
parts (5,542) (3,644)
Gain on insurance proceeds -damaged
equipment (538)
Major repair disposal 2,216 1,436
Loss on extinguishment of debt 4,005
Change in fair value of derivative 1,709
Asset impairment and loss on asset
acquisition 657
Deferred tax (benefit) expense (6,861) 1,096
Changes in assets and liabilities:
Accounts receivable (17,073) (5,185)
Inventory (22,683) (8,023)
Prepaid expenses and other (2,578) 351
Accounts payable 7,547 (4,307)
Accrued expenses and other
liabilities 6,560 (1,203)
Unearned income (3,350) (62)
Net cash flow from operating
activities 18,792 41,040
Investing Activities
Cash paid for business acquisition,
net of cash acquired (48,425) (1,524)
Purchase of equipment -rental fleet (106,641) (58,519)
Proceeds from sale of rental
equipment and parts 26,794 33,321
Insurance proceeds from damaged
equipment 1,658
Purchase of other property and
equipment (3,065) (716)
Net cash flow from in investing
activities (129,679) (27,438)
Financing Activities
Proceeds from debt 475,000
Borrowings under revolving credit
facilities 313,000 49,000
Repayments under revolving credit
facilities (272,000) (50,000)
Repayments of notes payable (527,531) (1,658)
Capital lease payments (5,201) (8,119)
Proceeds from merger and
recapitalization 147,269
Finance fees paid (15,488) (1,645)
Net cash flow from financing
activities 115,049 (12,422)
Net Change in Cash 4,162 1,180
Cash at Beginning of Period 2,140 960
Cash at End of Period $
6,302 $
2,140
Year Ended December 31,
(in $000s) 2019 2018
Supplemental Cash Flow Information
Cash paid for interest $
53,595 $
53,763
Cash paid for income taxes 455 526
Non-Cash Investing and Financing
Activities
Transfer of parts inventory to
leased equipment 5,804 6,014
Rental equipment and property and
equipment purchases in accounts
payable 21,643 10,712
Rental equipment sales in accounts
receivable 4,684 2,750
Rental equipment on capital lease 15,388
Customer note receivable 972
Settlement of note payable with
common stock 25,000
Acquisition 3,546
Table 4: Unaudited Adjusted EBITDA Reconciliation
Nesco Holdings, Inc.
Adjusted EBITDA Reconciliation (unaudited)
Three Months Ended Year Ended December 31,
December 31,
(in $000s) 2019 2018 2019 2018
---
Net income (loss) $
3,105 $
(3,406) $
(27,052) $
(15,526)
Interest expense 16,985 15,049 63,361 56,698
Income tax expense
(benefit) (7,316) 452 (5,986) 1,705
Depreciation expense 19,444 17,634 71,548 64,312
Amortization expense 836 723 3,008 2,826
EBITDA 33,054 30,452 104,879 110,015
Adjustments:
Non-cash purchase
accounting impact
(1) 940 1,324 1,802 3,631
Transaction and
process improvement
costs (2) 1,190 535 15,866 2,536
Major repairs (3) 694 375 2,216 1,436
Share-based
payments (4) 551 280 1,014 1,130
Other non-recurring
items (5) - 2,609 2,909
Change in fair value
of derivative (6) (843) 1,709
Adjusted EBITDA $
35,586 $
35,575 $
127,486 $
121,657
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, 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 the
credit agreement governing the
Company's asset-based lending
facility (the "credit agreement").
(2) For the years ended December 31, 2019
and 2018, represents transaction
costs related to the agreement and
plan of merger with Capitol, which
are comprised of professional
consultancy fees, transaction costs,
and the loss on extinguishment of
debt. Additionally, pursuant to the
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. For
the year ended December 31, 2019,
these costs include startup expenses
associated with the new PTA
locations (which include training,
travel, and process setup costs),
transaction expenses related to the
acquisition of Truck Utilities, Inc.
and expenses associated with the
Company's closure of its Mexican
equipment rental and sales
operations.
(3) Represents the undepreciated cost of
replaced chassis 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 in 2019 and
the Class B Profits Interest Awards
by NESCO Holdings, LP (our ultimate
parent) on February 26, 2014, which
is an adjustment pursuant to our
credit agreement.
(5) For the year ended December 31, 2018,
represents other adjustments
pursuant to the credit agreement:
Rental expense incurred in 2018 for
fleet equipment that had been rented
under the terms of an operating
lease that was terminated in 2018.
(6) Represents the charge to earnings for
our interest rate collar (which is
an undesignated hedge) in the year
ended December 31, 2019.
Table 5: Reconciliation of Adjusted EBITDA including a Full Year of Truck
Utilities (Unaudited)
(in $000s) Year Ended
December 31, 2019
Adjusted
EBITDA(1) $
127,486
Truck Utilities
Adjusted
EBITDA since
acquisition
(2) (936)
Truck Utilities
Adjusted
EBITDA for the
year ended
September 30,
2019 (3) 7,983
Adjusted EBITDA
including a
full year of
Truck
Utilities $
134,533
(1) See the unaudited Adjusted EBITDA
reconciliation for the year
ended December 31, 2019 in Table
4.
(2) Represents Truck Utilities
contribution included in Nesco's
reported Adjusted EBITDA in
Table 4 from November 4, 2019
(the date of acquisition) to
December 31, 2019. A
reconciliation of Adjusted
EBITDA to the most comparable
GAAP measure is as follows:
(in $000s) Three Months
Ended
December 31,
2019
Net loss $
(699)
Depreciation 907
Amortization 111
EBITDA 319
Adjustments:
Non-cash purchase accounting
impact 490
Transaction costs 127
Adjusted EBIDA $
936
(3) Derived from Truck Utilities'
audited financial statements for
the year ended September 30,
2019. Adjusted EBITDA for Truck
Utilities presented above may
not be reflective of the actual
Adjusted EBITDA for Truck
Utilities for the year ended
December 31, 2019. A
reconciliation of Adjusted
EBITDA to the most comparable
GAAP measure is as follows:
(in $000s) Year Ended
September 30,
2019
Net income $
1,620
Interest expense 116
Income tax expense 697
Depreciation 4,313
EBITDA 6,746
Adjustments:
Transaction costs 160
Other costs (a) 1,077
Adjusted EBIDA $
7,983
(a) Represents the reduction in annual compensation that was paid to
the selling shareholders pursuant to employment agreements
executed with Nesco effective November 4, 2019.
Table 6: Fleet Metrics
Three Months Ended Year Ended December 31,
December 31,
2019 2018 2019 2018
---
Average
equipment on
rent (in
$000s) $
508,658 $
462,365 $
477,493 $
450,195
Average fleet
count 4,466 3,864 4,172 3,839
Average fleet 81.5 83.5 80.7 82.3
utilization % % % %
Average rental
rate per day $
137.69 $
140.08 $
137.49 $
139.63
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. This metric has been adjusted to exclude Mexico, for which the Company commenced exit activities in 2019.
Average fleet count is the average number of units in the fleet during the period. This metric has been adjusted to exclude Mexico, for which the Company commenced exit activities in 2019.
Average fleet utilization for the period is calculated as the total number of invoiced days divided by the total number of available equipment days. This metric has been adjusted to exclude Mexico, for which the Company commenced exit activities in the third quarter of 2019.
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. This metric has been adjusted to exclude Mexico, for which the Company commenced exit activities in 2019.
Table 7: Segment Performance
Three Months Ended December 31, Three Months Ended December 31,
---
2019 2018
(in $000s) ERS PTA Total ERS PTA Total
Rental revenue $
49,985 $
4,140 $
54,125 $
44,904 $
2,881 $
47,785
Sales of rental
equipment 8,600 8,600 10,457 10,457
Sales of new
equipment 2,232 2,232 6,182 6,182
Parts sales and
services - 12,289 12,289 4,264 4,264
Total revenues $
60,817 $
16,429 $
77,246 $
61,543 $
7,145 $
68,688
Cost of revenue 21,279 12,410 33,689 25,244 3,830 29,074
Depreciation of
rental equipment 18,030 1,240 19,270 16,548 1,028 17,576
Gross profit $
21,508 $
2,779 $
24,287 $
19,751 $
2,287 $
22,038
Year ended December 31,
Year ended December 31,
---
2019 2018
(in $000s) ERS PTA Total ERS PTA Total
Rental revenue $
182,720 $
15,276 $
197,996 $
173,267 $
11,296 $
184,563
Sales of rental
equipment 23,767 23,767 26,019 26,019
Sales of new
equipment 10,308 10,308 18,349 18,349
Parts sales and
services - 31,964 31,964 17,366 17,366
Total revenues $
216,795 $
47,240 $
264,035 $
217,635 $
28,662 $
246,297
Cost of revenue 76,573 30,346 106,919 84,509 16,077 100,586
Depreciation of
rental equipment 66,228 4,340 70,568 60,436 3,657 64,093
Gross profit $
73,994 $
12,554 $
86,548 $
72,690 $
8,928 $
81,618
Table 8: Net Capital Expenditures
Year Ended December 31,
(in
$000s) 2019 2018
---
Purchase
of
equipment
-
rental
fleet $
106,641 $
58,519
Purchase
of
other
property
and
equipment 3,065 716
Total
capital
expenditures 109,706 59,235
Less:
Proceeds
from
sale
of
rental
equipment
and
parts (26,794) (33,321)
Less:
Insurance
proceeds
from
damaged
equipment (1,658)
Net
capital
expenditures $
81,254 $
25,914
Table 9: Reconciliation of 2020 Adjusted EBITDA Guidance
(in
$millions)
Full Year 2020
Net
loss $
(8.0) to $
3.0
Interest
expense 63.0 to 62.0
Income
tax
expense 2.0 to 2.0
Depreciation
and
amortization 83.0 to 84.0
Share-
based
payments 1.0 to 1.0
Other 1.0 to 2.0
Adjusted
EBITDA $
142.0 to $
154.0
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SOURCE Nesco Holdings, Inc.
