Hyde Park Acquisition Corp., the private equity group acquiring Essex Crane Rental Corp., said it expects a 40.9-percent jump in EBITDA in the third quarter ended Sept. 30, up from $8.5 million in last year’s third quarter, the company said last week. The company said it expects 2008 rental EBITDA to be $41.1 million, a 12.6-percent increase compared with Essex’s initial 2008 rental EBITDA guidance of $36.5 million. The third-quarter EBITDA figure excludes a one-time charge of about $350,000 associated with the sale of the business.
Hyde Park also said that if the acquisition of Essex is approved by Hyde Park stockholders, Hyde Park intends to initiate a $12 million open-market common stock and/or warrant buyback program, subsequent to closing the acquisition.
On March 6, Hyde Park entered into a definitive agreement to acquire the privately held Essex, which owns one of the largest specialized fleets of lattice-boom crawler cranes and attachments in North America. The stockholders are meeting to approve the transaction Oct. 31. If approved, Hyde Park will change its name to Essex Rental Corp. and seek a NASDAQ listing upon closing.
For the nine-month period ended Sept. 30, rental EBITDA is expected to jump 41.4 percent to $32.2 million (excluding acquisition charges), compared with $22.8 million for the same period last year.
The growth in projected rental EBITDA for the year is driven by strong utilization rates for Essex’s fleet and increasing average monthly crane rental rates resulting from an inventory mix shift towards higher-lift-capacity equipment. Same-crane-class rental rates have also increased year over year. For the third quarter, average monthly crane rental rates increased 34.4 percent from $16,453 in the year-ago quarter to $22,258.
“As we proceed toward completing our acquisition of Essex, we are pleased to report that Essex’s operating performance continues to exceed the March 2008 projections that the transaction value was predicated on,” said Laurency Levy, chairman and CEO of Hyde Park. “Essex’s contractual backlog and new bookings continue to be strong, particularly for its large-capacity crawler cranes.”
Levy added that uncertainty in the credit markets has not had an impact on the company’s debt facility, enabling Hyde Park to close the acquisition and “provide sufficient liquidity for future growth and investment.”
Based on the visibility provided by Essex’s existing backlog and the large amount of free cash flow the company is generating, Hyde Park’s board of directors approved a $12 million open market common stock and/or warrant buyback program, which is not expected to impact Essex’s planned strategy to continue to invest capital and reposition its fleet towards higher lifting capacity equipment.
Based in Buffalo Grove, Ill., Essex Crane Rental Corp. has more than 350 cranes and attachments in its fleet and supplies cranes for construction projects related to power generation, petro-chemical, refineries, water treatment and purification, bridges, highways, hospitals, shipbuilding, offshore oil fabrication, industrial plants and commercial construction. The company is No. 32 on the RER 100.