The locally based construction equipment rental company reported a year-end net loss of $73.7 million or a loss of $1.27 per diluted share, on revenue of $669 million for the year ended Dec. 31, compared with a net gain of $31.9 million, or 49 cents a share, on revenue of $558 million for the same period in 1999.
The operator of about 200 retail rental locations accrued $88.1 million in pre-tax expenses related primarily to cost reductions and restructuring.
The company expects further deterioration during the first-quarter of this year because of the traditional seasonal decline in customer demand, mostly because of weather-related obstacles to building.
A write-down on a planned sale of underused rental fleet assets accounted for $42.7 million of those costs; abandonment of an information system initiative cost the company $11.5 million; workforce reduction costs contributed another $10.1 million; facility closing costs accounted for another $7.7 million; and an increase in bad debt reserves contributed another $16.1 million to the total.
"To address these challenges, we have implemented actions to reduce annual operating costs by approximately $30 million, including a reduction of over 500 personnel, and we expect to identify additional opportunities to further reduce annual operating expenses," James. L. Kirk, NationsRent chairman and chief executive officer, says in a prepared statement.
He adds, "We expect to return to profitability in the second quarter and have favorable earnings comparisons in the second half of the year as a result of the fleet repositioning and cost reduction measures."
As part of its rebuilding plan, the company also expects improved returns on investment through a new alliance with Lowe's home improvement stores. By year's end, the company expects to open 40 sales centers by leasing space in Lowe's stores.
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