Essex Rental Corp. Third-Quarter Rental Revenues Fall 16. 8 Percent

Essex Rental Corp. this week announced third-quarter 2013 equipment rentals segment revenues were $14.4 million for the three-month period ended Sept. 30, versus $17.3 million for the year-ago period, a 16.8-percent decline. Equipment rentals segment revenues include rental, transportation and used rental equipment sales. The $2.9 million decrease is primarily driven by a $1.9 million decrease in used rental equipment sales and an $800,000 decrease in equipment rental revenues. Used rental equipment sales in the third quarter of 2012 included approximately $300,000 associated with aerial work platform units, which we completed the divestiture of in January 2013. The decrease in equipment rental revenues was driven by a decrease in utilization for rough terrain, boom truck and tower crane fleet, partially offset by an increase in utilization of crawler crane equipment.

Equipment distribution revenue, which includes the retail distribution of new and used equipment, but excludes the proceeds received from the sale of used rental equipment, increased by 206.2 percent to $3.8 million for the third quarter compared to $1.2 million for the same period a year ago.

Total gross profit decreased 14.2 percent to $5.5 million for Q313 from $6.4 million for the third quarter of 2012. Gross profit margin decreased by approximately 2.4 percent to 23.9 percent for the quarter from 26.3 percent a year ago.

EBITDA before non-cash compensation decreased by 13.4 percent to $4.5 million for Q313 compared to $5.2 million for Q312.

“While our year-to-date results display an ongoing economic recovery, our third-quarter results reflect a softening in demand for certain end markets and customers that we serve,” said Ron Schad, president and CEO of Essex.

Crawler crane utilization increased to 48.3 percent for the third quarter compared to 43.4 percent and 46.6 percent for the three-month periods ended Sept. 30, 2012 and June 30, 2013, respectively. Crawler crane utilization has increased on a quarter-over-quarter basis in each of the past six quarters and is at its highest level since the first quarter of 2009.

“Despite decreases in utilization on some of our lighter lifting equipment, crawler crane utilization is at its highest level since the first quarter of 2009,” Schad said. “Crawler cranes make up approximately 75 percent of the value of our rental fleet. Within our crawler crane fleet, utilization of our heavy lift hydraulic crawler crane class was 70.9 percent, which is the highest level this class has achieved since 2008. These hydraulic crawler cranes have high-dollar rental rates and account for approximately 70 percent of the value of our crawler crane fleet and approximately 50 percent of the value of our total fleet.”

Average rental rates for the subclasses within the hydraulic crawler crane fleet, when measured on a model by model basis, have increased by an average of $1,746 or 7.3 percent for the third quarter compared to the year-ago period.

“Despite the softening in demand for some of our rental assets and parts and service business we experienced in the third quarter of 2013, we believe the construction market will continue its gradual recovery in 2014,” Schad said. “The uncertainty within our government has slowed progress somewhat, but we are confident that the recovery will accelerate once we are provided more clarity. We continue to manage overhead in order to maximize the return on our invested capital.”

Based in Buffalo Grove, Ill., Essex Crane Rental Corp. is No. 44 on the RER 100.