Welcome to the RSC Holdings second quarter 2008 conference call. (Operator Instructions) I will now turn the call over to Gerry Gould, the company’s Vice President Investor Relations.

Joining me today from the company are Erik Olsson, President and Chief Executive Officer and David Mathieson, Sr. Vice President and Chief Financial Officer. We published our second quarter results and updated our 2008 guidance in a press release issued approximately one hour ago. There’s also a second quarter results slide presentation that accompanies this earnings call, press release, as well as the webcast, and its accompanying slide presentation, and any non-GAAP reconciliation tables that are warranted can all accessed on the RSC Holdings website at www.rscrental.com in the Investor’s section under the About Us tab. This conference is being recorded for replay purposes. If you have any questions after this call, please call me. At this time, please turn to slide number two. Before the presentation and comments begin, RSC would like to alert you that some of the comments such as the company's outlook and responses to your questions include forward-looking statements. As such, they are based on certain assumptions of future events and are subject to a number of risks and uncertainties that may not prove to be accurate. Actual future results may vary materially. In addition, the factors underlying the company's outlook are dynamic and subject to change and, therefore, this outlook and all other information mentioned today speaks only as of today, and RSC does not intend to update this information to reflect future events or circumstances. RSC encourages you to read this risks and uncertainties discussed in the company's annual report on form 10K for the year ended December 31, 2007 and our other SEC filings. I will now turn the call over to Erik Olsson.

I will go over some highlights of the quarter and David will then talk in more detail about our financials. I will also talk about our outlook for 2008 and we will end with Q&A. Beginning on slide number three, we were very pleased with our performance in the second quarter, delivering organic rental revenue growth of 5.3%, while raising our rental rates on a sequential basis from the first quarter by 0.9%. Profit margins were strong with adjusted EBITDA reaching 46.1% and we are enjoying a very strong underlying free cash flow. This is how we believe the business should be run at this time. The strong focus on high profit margins generating free cash flow. A growth rate could have been even higher in the second quarter, but would have come at the expense of higher CapEx and lower rates and margins. Instead, we have proactively chosen to curb CapEx to support rates and profit margins and generate free cash flow. The second quarter performance demonstrates the strength and flexibility of our business model. The main elements of which are a strong and proactive business discipline, which includes pricing, demanding the CapEx, balancing the fleet we sell versus that which we buy, to always have a high demand fleet mix on hand, and a dedication to operating with optimal efficiency. Secondly, our commitment to providing customers superior service and reliable access to one of the youngest, safest, and most diverse fleets in the industry. Third, a diverse customer base covering both the non-residential construction and industrial or non-construction markets. And finally, a broad and national presence, which enables us to redeploy our fleets to areas of highest customer demand, which helps us maximize utilization and returns. Turning now to slide number four and that’s where we are beginning…

I would like to spend the next few minutes going over some additional detail on our second quarter financial statements beginning with slide ten, which shows our rate and volume transfer into revenues Rental volumes increased a solid 5.8%. In strategy to protect profit margins and in a pricing discipline, we redeployed fleet from weaker areas or from closed or consolidated stores to areas with better returns and rates rather than adding fleet and chasing volume growth at the expense of pricing. As we said, as a result of our disciplined approach to pricing, sequential rates were up 0.9% in the quarter, keeping the year-over-year decline to a mere 0.5% in a very competitive market. As we have stated before, our objective is continue to manage rates very tightly and focus on value selling and service as opposed to price competition and thereby protect profit margins. Of course, we’re now completely insulated from the competitive environment and we will have to continue to monitor pricing on a daily basis and continue to manage rates such as volume growth very carefully in this environment to protect profit margins. Moving to slide 11, rental revenues are up a solid 5.3% for the quarter, despite a more challenging economic environment. Merchandise revenues were down 7%, and on a same store basis have increased slightly over the first quarter. Used equipment sales are down as planned, as we want to preserve fleet in order to minimize capital expenditures going forward. Our margins are also strong. Our fleet age at the end of the quarter it was 28 months and as Erik has mentioned this gives us tremendous flexibility going forward in manage of CapEx investments. Margins on rentals are down principally due to the higher depreciation and larger fleet rental equipment and higher fuel…

Before we go to Q&A, I want to give you our outlook for 2008. Overall we believe the way we manage our business and the actions we’ve taken in the competitive but comparably benign first and second quarters of 2008 have prepared us for the more challenging conditions ahead. Thanks to the work we have done, we expect to enter and ultimately exit this period a more efficient and effective company, affirming our best in class status in terms of management, store performance, and fleet utilization. Moving to slide number 18, the outlook for the second half of 2008 for the overall economy and specifically the construction end markets has progressively weakened and visibility is more limited. The lingering credit crunch, historically low activity levels, as measured by the architectural building index, and all prices as where they are today make it very difficult to project performance beyond the next few months. Rising fuel costs and the reduced outlook for non-residential construction activity represent meaningful changes from the assumptions we previously used for determining our guidance. In line with our strategy, we will continue to prioritize rate stability over volume resulting in slightly lower rental revenues than previously anticipated, but also in a higher free cash flow. This requires us to alter the guidance we have given. So at this time we are revising our full year guidance on rental revenue growth to 3 to 5% down from 4 to 7% we previously expected. Adjusted EBITDA is now seen in a range of $790 to $810 million and diluted earnings per share $1.27 to $1.39, down from previous estimates of $835 to $860 million and $1.44 and $1.56 respectfully. As noted, we expect approximately $20 million more of free cash flow than previously estimated and we should be in the…

(Operator Instructions). The first question comes from Emily Shanks of Lehman Brothers.

I have a question really around fuel. Thank you, David, for the commentary you said I believe it was up about 50% year-to-date. Can you give us a sense if you, one, if you utilize a fuel surcharge at all. Two, we get the sense that it sounds like competitors are not passing through those fuel costs increases in total, and want to get a sense of how long that had been going on. Also, finally, where exactly does fuel fall in your PNO?

Most of the fuel falls in the cost of rental, some in SG&A for sales for example, but most of it falls in customer rental. In the first half of the year, our fuels went from $16 million to $25 million. So we suffered a $9 million increase in the first half and that’s just continuing. We have kicked off a surcharge as applicable the end of July. So we will begin to call some of that back, but we don’t expect to call all of it back, Emily.

Are you seeing your competitors utilize a fuel surcharge as well?

No, generally no.

Your next question comes from Philip Volpicelli from Goldman Sachs.

With regard to rental rates, can you give us a sense of what your outlook includes in terms of rental rates year-over-year and for the second half and if you could comment regionally what you’re seeing with rates?

Yes, Phillip, our focus is on sequential rate improvements and that’s where we put the emphasis and we were very successful as we said in the second quarter of getting sequential improvement in each individual month of the quarter and that’s what we’re going to do going forward. So we put our emphasis there and we don’t expect to deteriorate from the level we are at now on a year-over-year basis. On a regional sector, we see exactly the same we saw in the first quarter back then. Most of the price pressure is seen in this market down sharply, Florida, California, and like we reported back in the first quarter, we also continue to see price pressure in northeast markets.

Okay, you’re going to hold rate as best you can and the decline, the 20 to 25%, is mostly going to be utilization?

We are down half percent on a year-over-year basis and if we match our sequential basis what we did last year, we would be down a half a percent for the full year as well. So that translates to more if you take that over our revenues.

One of your competitors suggest that a one rate change, a change of 1% in rate, is about $25 million EBITDA. How does that compare for you guys?

That’s about $15 million for us.

The next question comes from Manish Zumaya with Citigroup.

I did see that your pricing went up sequentially. How much was that associated with seasonality and how much the actions that you took in the quarter?

There’s really no seasonality in our pricing. So I would say all of it is due to the actions that we have taken.

It looks like you created a new position with hiring Kevin on the acquisition front and I just want to get a sense as to what kind of opportunities are you seeing, and furthermore, what kind of flexibility do you have with your bank agreement to make acquisitions?

We’ve added, Kevin, in the financial business development. It’s more than just acquisitions that we talked about many times. We see there are tremendous opportunities in different ways for us to grow and we’ve added resource and extra horse power with the addition of Kevin there. At this point, we keep looking, we have the pipeline of smaller type acquisitions. We closed one here in July and we’re looking at others as well.

Our second wind is probably the most restrictive covenant. Cumulatively we can spend up to $150 million, but even then we can find different ways to finance things. It’s not insurmountable. We don’t see any issues at this point.

Erik mentioned the used equipment market continues to be strong. Can you give us a perspective on how that market looks?

We sell almost 80% of our used is going retail. So we don’t have a perfect picture of where the equipment ends up in the end. I believe there is a strong global demand still though and that’s what we hear. We have good margins as you’ve seen in our report and we get good margins actually on all product, different product categories at this time. So we don’t see any softness in any category of what we’re selling.

The next question comes from Henry Kern with UBS.

Quick question on the industrial customers. How do you view them holding up right now and have you seen any signs of degradation in demand there?

They’re holding up very well. I think we are growing with our existing customers, but we’re also adding a lot of industrial customers. We’ve seen being very strong. We’ve seen some delays of some turned around projects in the petrochem area, but we expect those to come back online here later in the third quarter. Overall we see no softness in that segment.

As far as the fleet, when you look at the equipment categories, can you give a sense of where you might be cutting more and where you might be cutting less or adding?

Generally speaking of our fleet mix, we would have two trends or many significance to mention and that’s our equipment continues to shrink as a percentage of the total fleet and is now down to 17% down from 18 to 18 and a half percent or so a year go, while our boom category has grown by a percentage point or so to 30% of our fleet now. Other than that, it’s very much the same mix.

Are there any changes going forward?

Our fleet is determined of what we sell and what we buy and what we sell and what we buy is determined by the demand level from the field. So there may be changes, but they will be customer-driven or demand-driven. Your next question comes from Scott Schneeberger.

Following up on the questions about the used sales market or your activity within, you guys were a bit lower than we had expected in the quarter obviously going into the aging of the fleet stage. Erik, your thoughts on what we should expect going forward?

Roughly similar levels in the second half as we had in the first half, Scott.

With regard to utilization, how are you doing with fleet that’s not available for rental? Are you making good progress on that measure?

Like we said, it’s getting increasingly difficult to improve an already low number and we were at 8% here in the second quarter as well.

I think you had been looking for 20 new starts this year and you said you are going to reduce that and you did have some closures. Could you just speak a little bit to geographies where this is occurring?

Closed stores all over the country. It’s not limited to anyone geography. We closed a store in Michigan, in Ohio, West Virginia, Illinois, Maryland, Nebraska, Virginia, Arizona, Kentucky, and New Mexico. So we started a program earlier this year to look at low performing stores, stores that weren’t earning the cost of capital. Erik and I have reviewed every one of those. We call them the weakers and if you’re on the weakers, you want to get off that as quickly as you can. That’s what we’re doing and it’s not a geographic thing. It’s more an individual store-by-store. And the same goes for the stores that we’re looking to open and we’re guided to just over 20 for the year. I think we cut that back by at least 25% now and we’re looking at each one of the remaining ones on a stand alone basis to see if it makes sense to open them now or if we should postpone them to 2009 or at another date and again, it’s all over the country. There’s no specific areas.

For the stores that you’re calling, is there a target number you pursue or is it just you look at the ones on the list that in question and attempt to turn around. Store-by-store or is there quote is not a fair word but it’s kind of what I’m going for.

It’s on a store-by-store basis and we’re not targeting a specific number. Each one stands on their own and, like we said, we did ten in the second quarter. We expect a similar number, maybe slightly higher in the third quarter, and then that’s what we’re going to do.

Your next question comes from Vance Elfin with Morgan Stanley.

I was wondering what the trends are for the price of new equipment for when you are more in a buying mode and the impact that that might have on CapEx going forward?

We negotiate lock-in prices a year in advance. So we have locked in our prices for 2008. Obviously, what 2009 will bring is too early to tell. There’s been a lot of inflation in the raw materials area and we can only look back and see last time this happened back in 2003-2004 when steel prices also exploded. We saw an increase in the producer price index of about 3% in the two years following that. We don’t expect to see any major price pressure, but obviously there will be some.

Just to follow up on something earlier. So the visibility is obviously low right now, but based on what you’re seeing on the front lines in terms of the weak economy, do you have a feel for how bad this downturn is compared to what you’ve seen in past recessions and can you take any stab on when you think it might improve?

It’s too early to tell and compare this to others. I think the last downturn we had in 2001-2002 was really a bad one, but that was driven by a lot of industry-specific elements as well as some external elements like the 911. This one, it’s too early to tell. I think the important thing to note here is that we’re taking the appropriate steps to be very flexible, to go into this more challenging times as lean as possible and with high utilization, with a focus on rates, a focus on reducing CapEx, and generate free cash flow. In doing that, we will be able to tackle whatever comes next.

Your next question comes from Mike Schneider from Chris Doherty with Oppenheimer.

Erik, just in terms of your fleet, I know if you sort of look at your net CapEx guidance and sort of look where you are now, it looks like you’re going to spend a little bit more on the fleet, but I’m just wondering from a unit standpoint, is that up or is there some cost inflation to replacement CapEx?

There’s very limited cost inflation. Like I said, we’ve locked in prices for 2008 in late 2007, so there’s very limited cost inflation in that.

That would then imply that you do plan to grow the fleet a little bit in the second half of the year?

At the end of the day, I think our fleet will shrink toward the end of the year. The vast majority, not all of the CapEx, will be just replacement CapEx.

David, just a question on the AP. I know you said that you expected to decline about $175 million a year. I think last quarter you said you expected it to fall $60 million in the second quarter. It actually went up. It looks like $40 to $50 million dollars. Was there something that changed there?

No, there’s nothing that’s changed. This is very close to what we expected. Part of the difference is in the last half. If you look at the guidance for CapEx, you’ll see CapEx in the last half of the year is staying between 70 and 80%. That again will drive down accounts payable.

I’m just looking where it was $150 last quarter and $182 this quarter and that’s up $30.

That’s because in the second quarter we had fleet from our seasonal perspective.

And the next question comes from Brandt Sakakeeny with Deutsche Bank.

Question on the SG&A. That’s up obviously year-over-year and I think you said it’s some public company cause. As we look at the back half of this year, can you just talk about the incremental SG&A and how much of that is coming from the one-time cost associated with closing some of the offices and maybe how we should look at that expense as we look out to ’09.

Only 10% of the cost of closures flows into SG&A. So that’s not tremendous. I’d expect the last half to be 9.3 to 9.5%, that kind of range, Brandt.

With respect to share buybacks, I know there are covenants that restrict that, but can you just talk about your thinking there and also your assumptions for second half interest expense.

On the share buybacks, we haven’t decided that. That’s one opportunity or alternative that we have to use our free cash flow for and the board has these questions and we’ll determine what to do with that.

Can you remind us what you’re allowed on the covenant? Is it $50 million?

It’s $50 million maximum that we can do.

On the revolver, you can purchase anything. Right?

Yeah.

David, do you have your back half interest expense or your full year interest expense assumption?

Range, $200 million.

Your next question comes from Chiana Baird with Symphony Asset Management.

My question was actually just answered about the stock buyback. Thank you.

Your next question is a follow up from Philip Volpicelli with Goldman Sachs.

Just wondering if you guys were willing to give us what you think the debt levels will be at the end of the year and you answered the share repurchase, but assuming you don’t do a share repurchase with all of the free cash flow paying down the revolver.

Yes.

Okay. So if I just take the LTN number and subtract that to free cash flow guidance, that’s where we think that will be at the end of the year?

That’s not by way to do it.

In the working capital, that could grow that if we do realize the savings that you’re talking about. Right, David?

I don’t understand what you’re talking about there.

Well if you source cash out of working capital. In other words, you’re using less cash in accounts payable and so forth. You should have more than just the capital expenditure for free cash flow. So your debt level could be a little bit lower. I’m just trying to get a sense of, you know, the number one priority here is paying down debt or is it other things?

Definitely it’s paying down debt or developing the business through acquisitions, but at this point it’s fair to assume that the majority of our free cash flow will go to debt repayment.

Your final question is a follow up from Brandt Sakakeeny with Deutsche Bank.

Just one housekeeping item. Did you have the fez charge, David, available in the quarter?

It’s a one million.

Just one other thing. Did you have the store count numbers as of the end of the quarter?

468 locations.

This completes the question-and-answer of today’s call. At this time, I’d like to turn the call back to Mr. Olsson for any closing remarks. Mr. Olsson?

Thank you for joining us today on our second quarter 2008 earnings call. We have put another strong quarter behind us with rental revenue growth of 5.3% for organic and an adjusted EBITDA margin of 46.1%. The business environment is increasingly challenging, but we are growing our company over and above the underlying markets demonstrating strong execution of our business model with disciplined pricing, lower CapEx, and producing solid results. Our underlying free cash flow generating capabilities are very strong and will be realized progressively through the year. Looking forward to what might be a more challenging environment, we will continue to adhere to our strategy of focusing on rental rates, high utilization, profit margins, and free cash flow. Furthermore, we are adapting our cost structure ahead of time as great companies do and we will continue to raise the bar for lower performing stores. We believe our flexible business model and strategy will deliver industry-leading results at any point in the cycle and create shareholder value. We look forward to reporting back to you next quarter with our business results. We appreciate your interest and support. So thank you very much and have a great evening, everyone. That concludes today’s call.