Las Vegas Sun

March 29, 2024

Building industry supplier Ahern Rentals gets credit downgrade

With the construction sector in a deep slump, Standard & Poor's Ratings Services on Monday lowered its ratings on Las Vegas-based building industry supplier Ahern Rentals Inc., including the corporate credit rating to "B-" from "B."

"Continued weakness in nonresidential construction may adversely affect cash flow," Standard & Poor's said in a ratings report.

Ahern, which has a network of 72 equipment rental branches, said it lost $20.2 million in the first quarter, a deterioration from 2009's first quarter when it lost $13.5 million. Revenue of $70.6 million in the 2009 quarter fell to $60.6 million in this year's first quarter.

The company is carrying some $642 million in debt and other liabilities. It operates in Nevada, California, Arizona, Utah, Texas, Oregon, Colorado, Georgia, Kansas, Oklahoma, New Jersey, North Carolina and New Mexico.

Ahern noted in its first quarter report that the slowdown in the Las Vegas economy has caused the percentage of its revenue from Las Vegas to decline from 29 percent in the 2009 first quarter to 19 percent this year.

"The rapid growth experienced by the Las Vegas area in past years has contributed significantly to our revenues. Based on recent trends and anticipated customer demand and market conditions, we do not believe that the strong operating results we have historically experienced in Las Vegas will continue at the same or similar levels in 2010 or beyond," the company said, adding that with the completion of CityCenter on the Las Vegas Strip it's redeploying excess equipment to branches with higher demand and to new branches.

Despite the recession, Ahern opened 17 branches in 2009 and six this year. No additional branches are planned this year, the company said.

The company said it has also significantly reduced capital spending, worked to cut costs, sold some excess equipment and is expanding into infrastructure-related, alternative energy and other markets distinct from the non-residential construction sector.

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