Essex Rental Corp. Reports Q3 Numbers as Coast Crane Continues in Business
Essex Rental Corp., still operating as Coast Crane in the wake of the dissolution of Essex Crane Rental Corp., posted $5.2 million in third quarter pro-forma equipment rental revenue, compared to $6.47 million in the third quarter of 2015, a 19.6-percent decrease. For the first nine months of 2016, the company posted $15.2 million in rental revenue, compared to $17.3 million in the first nine months of 2015, a 12-percent slide.
Dollar utilization for rough-terrain cranes decreased to 17 percent for the third quarter, compared to 21.7 percent for the year-ago period. Dollar utilization for tower cranes dropped to 19.1 percent for the quarter, compared to 24.6 percent in the year-ago frame.
“We continue to operate in a challenging market that has been negatively impacted by reduced activity in the energy sector, particularly related to oil and gas,” said Essex president and CEO Nick Matthews. “Our rental and equipment sales lines of business were most impacted by this softer demand, specifically in the Gulf, Alaska, and Southern California. The year-over-year declines in dollar utilization were primarily attributable to a decline in time utilization, which was driven by the softer demand and the timing of tower crane project starts and ends. As a result, we are being more aggressive with respect to rental rates in an effort to increase utilization in some of our asset classes.
“We also believe that our business at Coast Crane was negatively affected by the protracted foreclosure process at Essex Crane. Despite our proactive communication with customers, the public nature of the foreclosure process naturally led to concerns for end users as to the future of Coast Crane, and we believe that our competitors sought to gain a competitive advantage by fueling these customer concerns. We continue to provide assurances to our customers about Coast Crane’s ongoing business, which, together with a rebranding process at the company to focus on the Coast Crane brand, has begun to resonate within the industry.”
Matthews added that the company expects rental demand to soften for most classes of rental assets as the holiday season approaches.
“We anticipate, however, that utilization of our tower crane assets will improve during the fourth quarter based on expected orders, pending tower crane rental starts and our view of the continued strength in tower crane demand,” Matthews said. “While utilization of this asset class is expected to improve, we do not expect utilization to match levels we experienced in the fourth quarter of 2015. With the divestiture of Essex Crane, we continue to investigate ways to reduce our cost structure to align it with the size of the remaining organization and current business levels. We are optimistic about the 2017 crane rental market with most third-party industry estimates at or around middle-single digit growth for construction spending.”
Matthews also said the company is working on refinancing the Coast Crane revolving credit facility.
