Ahern makes losses but continues network expansion

Ahern Rentals in Las Vegas, US, is to continue its policy of expanding its network, with plans to open up to 15 new locations by the end of 2010. The company reported net losses of US$16.5 million for the three months to 30 September, with interest payments amounting to $9.2 million on its $610 million of debt.

Ahern said in its financial statement that it was negotiating with its lenders relief on financial covenants and was talking to other potential investors about providing finance for the company.

Revenues for the three months were down 28.5% to $72.5 million. Like-for-like revenues decreased 33%, but were offset by a contribution of $5.9 million in revenues from the 15 new stores opened since the same quarter of 2008.

The strategy to open new depots is designed to fully utilize Ahern's existing fleet, where time utilization has decreased from 70% in the third quarter of 2008 to 56% in 2009.

"Opening new branch locations does not require significant capital because most of the fleet that will be deployed in a new branch will be moved from existing branches", said Ahern Rentals, "This strategy is particularly important as large projects, such as the City Center project in Las Vegas, Nevada, approach a point where large amounts of our equipment will be coming off rent due to the project nearing completion."

Ahern said it believed it has sufficient liquidity to maintain its operations for at least the next year, although decreases in used equipment values could have an impact on its ability to borrow. "Because of this, we have been working with the lenders that finance our credit facility to negotiate covenant relief and we have had discussions with other potential investors to provide financing to the company so that future decreases, if any, in equipment values would not have an effect as significant on our borrowing availability."