Essex Rental Corp.last week announced its unaudited consolidated results for the third quarter ended Sept. 30. Total rental-related revenue was $9.7 million in the third-quarter, a 52-percent decline compared to $20.2 million in the year-ago period. The decline was primarily due to lower equipment rental revenue driven by lower utilization rates on cranes and attachments which represented 64.0 percent of total revenue, or $7.1 million for the three months ended Sept. 30, compared to $16.3 million in the comparable period in 2008. Equipment rental income was also impacted by a 6.9-percent decrease in the average monthly crane rental rate to $20,716 relative to the average monthly crane rental rate of $22,258 for its comparable period in 2008.
The decrease in average crane rental rate was primarily the result of a change in the mix of cranes on rent toward lower rental rate cranes as well as a decrease in rental rates for the same models of equipment quarter over quarter due to excess capacity in the market.
Selling, general and administrative expenses were $2.9 million, a decrease from $3.1 million despite an increase in costs associated with being a publicly traded company. Rental EBITDA was $3.0 million, versus $11.6 million, due to lower utilization rates.
“Our performance in the third quarter reflects weakness in many of our end markets, which resulted in lower crane fleet utilization and rental revenues,” said Ron Schad, Essex president and CEO. “While we are disappointed that we experienced a decline in profitability in the third quarter, we are highly focused on maximizing free cash flow through cost-cutting initiatives, which thus far have included a lower headcount, reduction in salaries, decrease in overtime and labor hours, elimination of certain outsourced services, reduction of other operational expenditures and the sale of older, underutilized lighter lifting equipment. As a result of these actions, during the third quarter 2009, we were able to continue to reduce our debt outstanding and as of September 30 we have excess liquidity of $48.5 million available.”
The crane utilization rate for the third quarter 2009 equaled 38.6 percent, compared to 72.8 percent in the predecessor’s period in 2008. Crane utilization for Essex’s heavier lifting equipment meaningfully exceeded the utilization rate for its entire fleet.
“The latest six months showed improving booking trends,” Schad said. “Based on our monitoring of anticipated construction projects, it appears that stimulus-funded projects have been slow to develop but we are confident that infrastructure construction should occur and will help our business recover lost utilization over the next 12 to 24 months. However, the shape and speed of the recovery remains uncertain and we expect our operating environment to remain challenging through the end of the fiscal year.”
Headquartered in Buffalo Grove, Ill., Essex, through its subsidiary, Essex Crane, is one of North America's largest providers of lattice-boom crawler crane and attachment rental services. It is No. 30 on the RER 100.
