Market Overview

Nesco Holdings, Inc. Reports Second Quarter 2019 Financial Results


FORT WAYNE, Ind., Aug. 9, 2019 /PRNewswire/ -- Nesco Holdings, Inc. (NYSE:NSCO, ", Nesco", or the ", Company", )), a leading provider of specialty rental equipment to the electric utility, telecom and rail end-markets, today reported financial results for the quarter ended June 30, 2019.

Nesco Logo (PRNewsfoto/Nesco Holdings, Inc.)


  • Total revenue of $62.9 million (+12.6% from the second quarter 2018)
  • Net loss available to common stockholders of $5.4 million (+0.3% from the second quarter 2018)
  • Adjusted EBITDA of $30.5 million (+7.4% from the second quarter 2018)
  • Full year 2019 revenue and Adjusted EBITDA outlook reaffirmed

Lee Jacobson, President and CEO of Nesco, remarked: "Demand conditions remain strong across all of our key end-markets, as evidenced by our 12th consecutive quarter of growth in Adjusted EBITDA.  Within the electric utility market, several of our customers' project backlogs increased materially during the first half of 2019, a positive indicator that supports our outlook for multi-year growth in T&D specialty rental demand.  Within the telecom market, we continue to see significant opportunities around wireless infrastructure investment related to 5G adoption, together with ongoing investments in wireline backhaul services and small cell implementation.  Within our rail market, ongoing maintenance of existing rail lines, together with growth in commercial and commuter rail traffic, stand to provide another stable base of demand for our product offering."

"Looking ahead, we remain focused on growing our fleet while maintaining high utilization rates," continued Jacobson.  "With the completion of our merger with Capitol Investment Corp. IV in July, we believe that Nesco's balance sheet is now positioned to support sustained investments in fleet expansion and related strategic initiatives.  Over time, we expect these targeted investments will drive continued growth in Adjusted EBITDA and free cash flow."


Total Revenues

Total revenue in the second quarter was $62.9 million, an increase of $7.0 million or 12.6% from the second quarter 2018.  The increase was driven by growth of $3.3 million in the Equipment Rental and Sales segment ("ERS") and growth of $3.7 million in the Parts, Tools and Accessories segment ("PTA").  

ERS segment total revenue grew 6.7% to $53.0 million in the second quarter from $49.6 million for the same period in 2018.   Notably, second quarter 2018 ERS segment revenue included a net benefit of $1.4 million related to non-recurring hurricane-related power restoration work in Puerto Rico.  Equipment on rent increased 3.7% to $468.0 million in the second quarter from $451.4 million in the same period of 2018.  Fleet utilization was 78.7% in the second quarter, versus 80.9% in the same period of 2018.  Fleet utilization was impacted by a higher volume of net fleet additions in the second quarter 2019, as compared to the prior-year period.  These fleet additions were not immediately available for rent but are included in the utilization calculation from the day they are delivered to the Company.  Utilization in the second quarter 2018 benefited from non-recurring Puerto Rico-related work. Adjusted for these factors, fleet utilization would have been approximately 1% higher in the second quarter 2019 than in the prior-year period.  Average rental rate per day was $137 in the second quarter, versus $139 in the same period of 2018, due to a shift in the mix of equipment on rent during the period toward lower cost equipment, primarily used in the telecom and rail end-markets.

PTA segment total revenue grew 59.4% to $9.9 million in the second quarter, versus $6.2 million for the same period in 2018.  PTA revenue growth was driven by the opening of two new locations in April 2019 and from the addition of product lines, including a variety of insulated products, from the N&L acquisition, which occurred in the third quarter 2018.  The Company's PTA footprint expansion from two to six locations by September 30, 2019 is progressing on schedule, with an additional facility planned for 2020.

Net Income (Loss)

The Company reported a net loss in the second quarter of $5.4 million, versus a net loss of $5.4 million for the same period in 2018.  During the second quarter, the Company reported a $7.0 million increase in total revenue and a $1.4 million decline in total selling, general and administrative expenses.  These factors were offset by a $2.2 million increase in the cost of parts sales and service, a $1.6 million increase in the cost of equipment sales, a $1.6 million increase in transaction expenses related to our merger with Capitol Investment Corp. IV ("Capitol") that closed on July 31, 2019, and a $1.4 million increase in the depreciation of rental equipment. 

Adjusted EBITDA

For the three months ended June 30, 2019, Total Adjusted EBITDA increased 7.4% to $30.5 million, up from $28.4 million in the same period in 2018, mainly due to higher equipment on rent within the ERS segment and an increase in the number of service locations and product lines within the PTA segment.

Liquidity and Capitalization

As previously announced, on July 31, 2019, Nesco and Capitol Investment Corp. IV completed their business combination.  In connection with the merger, Nesco reduced its net debt of $821 million as of July 31, 2019 to approximately $679 million.  In July, the Company issued $475 million of Senior Secured Second Lien Notes due 2024 and established a new five-year senior secured asset-based revolving credit facility ("ABL Facility") of up to $350.0 million, subject to a borrowing base.  As of July 31, 2019, the Company's balance on the ABL Facility was $175 million.

Investing Activities

Average fleet count increased to 4,205 units in the second quarter, from 3,930 units in the same period of 2018.  During the three months ended June 30, 2019, the Company continued its fleet expansion program that began in the first quarter, shifting capital expenditures planned for the second half of 2019 into the first half of 2019.  The acceleration in planned capital expenditures resulted in the addition of 130 units to the fleet during the second quarter 2019, versus 51 units in the same period of 2018.  Total net capital expenditures in the second quarter were $29.5 million, including $16.2 million of maintenance expenditures and $23.8 million of growth expenditures.   The Company received $10.5 million from used equipment sales in the second quarter of 2019. 


The Company remains party to a non-binding letter of intent that was entered into on May 13, 2019, to acquire a privately held entity in the equipment rental business. The terms of the non-binding letter of intent provide for purchase consideration of approximately $42.0 million, implying an approximately 5x multiple of reported Adjusted EBITDA prior to synergies and the full-year impact of recent fleet additions.  The consummation of the business combination is subject to the satisfactory completion of further diligence and negotiation of a final definitive agreement. There can be no assurance that this transaction will be consummated, including the consideration to be issued therein, as the terms of the non-binding letter of intent are subject to change.


Nesco management reaffirms its outlook on revenue and Adjusted EBITDA for the full-year 2019 of $278 million and $137 million, respectively, as set forth in the investor presentation related to the merger with Capitol.  This guidance is subject to the risks and uncertainties described in the "Forward-Looking Statements" below.


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.


The Company has scheduled a conference call at 4:30 p.m. Eastern Time on August 9, 2019 to discuss the second quarter 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 6228956.  A replay of the call will be available at the Company's investor relations website at


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 more than 4,200 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


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; 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, 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.


Noel Ryan, IRC

Table 1: Unaudited Condensed Consolidated Balance Sheets

Nesco Holdings I, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

(in thousands, except share data)

June 30, 2019

December 31, 2018


Current Assets






Accounts receivable, net of allowance of $2,505 and $7,562, respectively






Prepaid expenses and other



Total current assets



Property and equipment, net



Rental equipment, net



Other Assets


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