8-7-13 6:06 PM EDT | Email Article

Essex Rental Corp. (Nasdaq: ESSX) ("Essex") today announced its unaudited consolidated results for the three months ended June 30, 2013.

Second Quarter 2013 Highlights

  • EBITDA before non-cash compensation and non-recurring expenses for the three month period ended June 30, 2013 increased to $5.5 million as compared to $4.3 million for the three month period ended June 30, 2012;
  • Crawler crane utilization increased to 46.6% for the three month period ended June 30, 2013 compared to 39.4% and 43.9% for the three month periods ended June 30, 2012 and March 31, 2013, respectively. Crawler crane utilization has increased on a quarter over quarter basis in each of the past five quarters and is at its highest level since the first quarter of 2009;
  • Utilization of boom trucks increased to 60.4% for the three month period ended June 30, 2013, compared to 43.1% for the three month period ended June 30, 2012;
  • Utilization of self erecting tower cranes increased to 43.3% for the three month period ended June 30, 2013, compared to 26.5% for the three month period ended June 30, 2012;
  • Equipment rental revenue increased by 10.0% to $12.2 million for the three month period ended June 30, 2013 compared to $11.1 million for the three month period ended June 30, 2012; and
  • Total debt decreased by $6.9 million over the three month period ended June 30, 2013, and has decreased by $17.2 million or 7.5% over the past 18 months, due to both free cash flow from operations and the disposition of excess rental equipment at an average of 110.1% of Orderly Liquidation Value (“OLV”).

CEO Comments

Ron Schad, President and CEO of Essex stated, “The continued year over year improvement in our operating results in addition to the increased demand for our product offerings is encouraging. We are pleased to be reporting our highest quarterly EBITDA before non-cash compensation and non-recurring expenses since 2009.”

“Particularly encouraging is crawler crane utilization, which is at its highest level since the first quarter of 2009. Crawler cranes make up approximately 75% of the value of our rental fleet, and the increased utilization was a key reason why equipment rental revenue increased by $1.1 million or 10.0% compared to the prior year. Utilization of our heavy lift hydraulic crawler crane class was 67.6% for the three month period ended June 30, 2013. Average rental rates have also increased on a model by model basis by an average of about 6% for these types of crawler cranes compared to the second quarter of 2012. These hydraulic crawler cranes have high dollar rental rates and account for approximately 70% of the value of our crawler crane fleet and approximately 50% of the value of our total fleet.”

Second Quarter 2013 Overview

Equipment rentals segment revenues were $18.9 million for the three month period ended June 30, 2013 versus $20.6 million for the three month period ended June 30, 2012. Equipment rentals segment revenues include rental, transportation and used rental equipment sales. The $1.7 million decrease is primarily driven by a $2.5 million decrease in used rental equipment sales and a $300,000 decrease in transportation revenues. Used rental equipment sales in the second quarter of 2012 included approximately $600,000 associated with aerial work platform units, which we completed the divestiture of in January 2013. These decreases were partially offset by a $1.1 million increase in equipment rental revenue. The increase in equipment rental revenues was driven by an increase in both days on rent and average monthly rental rate for our crawler crane, self-erecting tower crane, and boom truck equipment. Despite the decrease in equipment rentals segment revenues, gross profit increased by $700,000 or 17.1% to $4.7 million for the three month period ended June 30, 2013, compared to $4.0 million for the three month period ended June 30, 2012. The majority of the improvement in gross profit was due to the $1.1 million increase in equipment rental revenue.

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, was $900,000 for the three month period ended June 30, 2013 compared to $1.3 million for the three month period ended June 30, 2012. While equipment distribution revenue for the three month period ended June 30, 2013 was down on a year over year basis, we are encouraged by the outlook for this segment. Specifically, in the month of July 2013, our revenues exceeded those generated in the entire quarter ended June 2013. Furthermore, the revenues generated in the six months ended June 30, 2013 have already surpassed those generated in the entire year of 2012.

Parts and service revenue equaled $5.4 million for both of the three month periods ended June 30, 2013 and June 30, 2012. Parts and service segment revenues include retail parts sales, billable service work done on our own equipment and servicing customer owned equipment. Gross profit increased to $1.6 million for the three month period ended June 30, 2013 compared to $1.3 million for the three month period ended June 30, 2012.

Total gross profit increased 19.5% to $6.4 million for the three months ended June 30, 2013 from $5.3 million for the three months ended June 30, 2012. Gross profit margin increased by approximately 5.6% to 25.2% for the three months ended June 30, 2013 from 19.6% for the three months ended June 30, 2012.

EBITDA before non-cash compensation and non-recurring expenses increased by 27.1% to $5.5 million for the three months ended June 30, 2013 compared to $4.3 million for the three months ended June 30, 2012. Non-cash compensation equaled $500,000 in the quarter ended June 30, 2013 and $400,000 in the quarter ended June 30, 2012. Non-recurring expenses related to severance costs equaled $300,000 in the quarter ended June 30, 2013. EBITDA before non-cash compensation and non-recurring expenses for the three month period ended June 30, 2013 was the highest since the second quarter of 2009.

Outlook for 2013

Mr. Schad continued, “The construction market is continuing its gradual recovery. Operating initiatives implemented throughout 2012 are yielding an improvement of both gross profit and EBITDA, in both dollars and percentage margin as compared to the prior year. Adjusted EBITDA before non-cash compensation and non-recurring expenses was $20.2 million for the trailing twelve month period ended June 30, 2013 compared to $12.0 million for the trailing twelve month period ended June 30, 2012. We have outperformed prior year results in nine of the past ten quarters by an average of 61% and the past six consecutive quarters by an average of 78%. We expect this trend of quarter over quarter improvement to continue for the remainder of the year.”

“Given the overall gradual recovery in the end markets that we serve, and while we have been experiencing year over year improvement in our operating results, we remain cautiously optimistic for the remainder of 2013. Based on our actual first half results and our visibility for the remainder of the year, we reaffirm that our full year 2013 EBITDA before non-cash compensation and non-recurring expenses is expected to be in the range of $21 million to $26 million, which is consistent with the earnings guidance that we provided at the beginning of this fiscal year.”

Conference Call

Essex’s management team will conduct a conference call to discuss the operating results at 9:00 a.m. ET on Thursday, August 8,2013. Interested parties may participate in the call by dialing (877) 407-8291 (Domestic) and (201) 689-8345 (International). Please call in 10 minutes before the call is scheduled to begin, and ask for the Essex Rental Corp. call.

The conference call will be webcast live via the Investor Relations section ("Events and Presentations") of the Essex Rental Corp. website at www.essexrentalcorp.com. To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. If you are unable to listen live, the conference call will be archived on the website.

About Essex Rental Corp.

Essex, through its subsidiaries, is one of North America's largest providers of rental and distribution for mobile cranes (including lattice-boom crawler cranes, truck cranes and rough terrain cranes), self-erecting cranes, stationary tower cranes, elevators and hoists, and other lifting equipment used in a wide array of construction projects. In addition, the Company provides product support including installation, maintenance, repair, and parts and services for equipment provided and other equipment used by its construction industry customers. With a large fleet, consisting primarily of cranes, as well as other construction equipment and unparalleled customer service and support, Essex supplies a wide variety of innovative lifting solutions for construction projects related to power generation, petro-chemical, refineries, water treatment and purification, bridges, highways, hospitals, shipbuilding, offshore oil fabrication and industrial plants, and commercial and residential construction.

Some of the statements in this press release and other written and oral statements made from time to time by Essex and its representatives are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include statements regarding the intent and belief or current expectations of Essex and its management team and may be identified by the use of words like "anticipate", "believe", "estimate", "expect", "intend", "may", "plan", "will", "should", "seek", the negative of these terms or other comparable terminology. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from Essex's expectations include, without limitation, the continued ability of Essex to successfully execute its business plan, the possibility of a change in demand for the products and services that Essex provides, intense competition which may require us to lower prices or offer more favorable terms of sale, our reliance on third party suppliers, our indebtedness which could limit our operational and financial flexibility, global economic factors including interest rates, general economic conditions, geopolitical events and regulatory changes, our dependence on our management team and key personnel, as well as other relevant risks detailed in our Annual Report on Form 10-K and other periodic reports filed with the Securities and Exchange Commission and available on our website, www.essexrentalcorp.com. The factors listed here are not exhaustive. Many of these uncertainties and risks are difficult to predict and beyond management's control. Forward-looking statements are not guarantees of future performance, results or events. Essex assumes no obligation to update or supplement forward-looking information in this press release whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results or financial conditions, or otherwise.

This press release includes references to adjusted EBITDA, an unaudited financial measure of performance which is not calculated in accordance with generally accepted accounting principles, or GAAP. Adjusted EBITDA represents the sum of net income, tax benefit, foreign currency exchange gains and losses, interest expense, other income, depreciation and amortization. Adjusted EBITDA is used internally when evaluating our operating performance and allows investors to make a more meaningful comparison between our core business operating results over different periods of time, as well as with those of other similar companies. Management believes that adjusted EBITDA, when viewed with the Company's results under GAAP and the accompanying reconciliation, provides useful information about operating performance and period-over-period growth, and provides additional information that is useful for evaluating the operating performance of our core business without regard to potential distortions. Additionally, management believes that adjusted EBITDA permits investors to gain an understanding of the factors and trends affecting our ongoing cash earnings. However, adjusted EBITDA is not a measure of financial performance or liquidity under GAAP and, accordingly, should not be considered as an alternative to net income or cash flow from operating activities as indicators of operating performance or liquidity. Adjusted EBITDA has been presented as a supplemental disclosure because adjusted EBITDA is a widely used measure of performance and basis for valuation. A reconciliation of adjusted EBITDA to net loss is included in the financial tables accompanying this release.

Essex Rental Corp. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
         
Three Months Ended June 30,Six Months Ended June 30,
2013201220132012
 
 
REVENUES
Equipment rentals $ 12,191,496 $ 11,085,583 $ 23,644,846 $ 21,184,905
Retail equipment sales 855,245 1,277,506 4,564,929 2,193,952
Used rental equipment sales 4,858,005 7,341,332 8,657,175 12,670,194
Retail parts sales 2,173,193 2,136,954 3,950,723 4,654,196
Transportation 1,878,405 2,130,566 3,070,990 3,474,629
Equipment repairs and maintenance 3,257,411 3,218,898 6,389,546 6,751,148
       
TOTAL REVENUES 25,213,755 27,190,839 50,278,209 50,929,024
 
COST OF REVENUES
Salaries, payroll taxes and benefits 2,750,305 2,822,915 5,501,163 5,706,051
Depreciation 4,657,607 5,139,624 9,328,743 10,385,811
Retail equipment sales 677,857 1,107,288 3,808,477 1,827,103
Used rental equipment sales 4,008,164 6,132,181 6,610,130 10,836,080
Retail parts sales 1,630,306 1,600,625 2,981,171 3,486,651
Transportation 1,810,070 1,897,681 2,941,275 3,034,654
Equipment repairs and maintenance 2,598,172 2,395,681 5,479,188 5,365,673
Yard operating expenses 718,257 768,261 1,542,276 1,556,319
       
TOTAL COST OF REVENUES 18,850,738 21,864,256 38,192,423 42,198,342
 
GROSS PROFIT 6,363,017 5,326,583 12,085,786 8,730,682
 
Selling, general and administrative expenses 6,312,810 6,544,866 12,394,010 13,532,821
Other depreciation and amortization 258,426 310,051 542,327 636,455
       
 
LOSS FROM OPERATIONS (208,219 ) (1,528,334 ) (850,551 ) (5,438,594 )
 
OTHER INCOME (EXPENSES)
Other income 1,037 17,986 5,589 2,426
Interest expense (2,985,288 ) (2,874,300 ) (5,500,476 ) (5,782,982 )
Foreign currency exchange losses   (212,434 )   (90,619 )   (328,469 )   (55,080 )
TOTAL OTHER INCOME (EXPENSES)   (3,196,685 )   (2,946,933 )   (5,823,356 )   (5,835,636 )
 
LOSS BEFORE INCOME TAXES (3,404,904 ) (4,475,267 ) (6,673,907 ) (11,274,230 )
 
BENEFIT FOR INCOME TAXES   (1,472,932 )   (1,583,270 )   (2,578,685 )   (3,685,891 )
 
NET LOSS $ (1,931,972 ) $ (2,891,997 ) $ (4,095,222 ) $ (7,588,339 )
 
Weighted average shares outstanding:
Basic 24,653,513 24,543,308 24,632,629 24,534,205
Diluted 24,653,513 24,543,308 24,632,629 24,534,205
 
Loss per share:
Basic $ (0.08 ) $ (0.12 ) $ (0.17 ) $ (0.31 )
Diluted $ (0.08 ) $ (0.12 ) $ (0.17 ) $ (0.31 )
 
Essex Rental Corp. and Subsidiaries
Utilization Statistics
(Unaudited)
     
Three Months Ended
June 30,March 31,June 30,
201320132012
 
Utilization Statistics - "Days" Utilization
Crawler Cranes - Hydraulic 67.6 % 60.5 % 55.0 %
Crawler Cranes - Traditional 30.5 % 31.2 % 28.3 %
Rough Terrain Cranes 60.3 % 58.4 % 67.6 %
Boomtrucks 60.4 % 43.4 % 43.1 %
Self-Erecting Tower Cranes 43.3 % 46.7 % 26.5 %
City & Other Tower Cranes 42.4 % 58.4 % 55.1 %
 
(See definitions in the quarterly and annual reports filed with the SEC)
 
Essex Rental Corp. and Subsidiaries
Segment Revenues and Gross Profit
(Unaudited)
       
Three Months Ended June 30,Six Months Ended June 30,
2013201220132012
Segment revenues
Equipment rentals $ 18,927,906 $ 20,557,481 $ 35,373,011 $ 37,329,728
Equipment distribution 855,245 1,277,506 4,564,929 2,193,952
Parts and service   5,430,604   5,355,852   10,340,269   11,405,344
 
Total revenues $ 25,213,755 $ 27,190,839 $ 50,278,209 $ 50,929,024
 
Segment gross profit
Equipment rentals $ 4,731,163 $ 4,040,802 $ 8,748,389 $ 5,779,395
Equipment distribution 29,483 18,532 438,718 64,664
Parts and service   1,602,371   1,267,249   2,898,679   2,886,623
 
Total gross profit $ 6,363,017 $ 5,326,583 $ 12,085,786 $ 8,730,682
 
Essex Rental Corp and Subsidiaries
Reconciliation of Net Loss
to Adjusted EBITDA
(Unaudited)
       
Three Months Ended June 30,Six Months Ended June 30,
2013201220132012
 
Net loss $ (1,931,972 ) $ (2,891,997 ) $ (4,095,222 ) $ (7,588,339 )
 
Benefit for income taxes (1,472,932 ) (1,583,270 ) (2,578,685 ) (3,685,891 )
Foreign currency exchange (gains) losses 212,434 90,619 328,469 55,080
Interest expense 2,985,288 2,874,300 5,500,476 5,782,982
Other (income) expense   (1,037 )   (17,986 )   (5,589 )   (2,426 )
 
Loss from Operations (208,219 ) (1,528,334 ) (850,551 ) (5,438,594 )
 
Depreciation 4,657,607 5,139,624 9,328,743 10,385,811
Other depreciation and amortization   258,426     310,051     542,327     636,455  
 
Adjusted EBITDA (1) $ 4,707,814   $ 3,921,341   $ 9,020,519   $ 5,583,672  
 
 
(1) Includes non-cash stock compensation and non-recurring expenses of $0.8 million and $0.4 million for the three months ended June 30, 2013 and 2012, respectively and $0.9 million and $1.3 million for the six months ended June 30, 2013 and 2012, respectively.
   
Essex Rental Corp. and Subsidiaries
Consolidated Balance Sheets
 
 
June 30,December 31,
20132012
(Unaudited)
ASSETS
 
CURRENT ASSETS
Cash and cash equivalents $ 2,969,642 $ 8,389,321
Accounts receivable, net of allowances 13,561,093 14,658,198
Other receivables 2,350,117 2,282,104
Deferred tax assets 3,048,003 3,022,625
Inventory
Retail equipment 4,545,060 1,815,670
Retail spare parts, net 1,369,459 1,386,412
Prepaid expenses and other assets   1,405,584     1,494,751  
TOTAL CURRENT ASSETS 29,248,958 33,049,081
 
Rental equipment, net 294,246,911 306,892,373
Property and equipment, net 6,606,393 6,610,976
Spare parts inventory, net 3,212,485 3,145,129
Identifiable finite lived intangibles, net 1,236,428 1,403,571
Goodwill 1,796,126 1,796,126
Loan acquisition costs, net   7,104,379     1,170,354  
 
TOTAL ASSETS $ 343,451,680   $ 354,067,610  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES
Accounts payable $ 7,624,910 $ 5,342,637
Accrued employee compensation and benefits 1,899,022 1,999,143
Accrued taxes 3,378,488 3,211,400
Accrued interest 912,882 1,359,017
Accrued other expenses 905,622 1,358,036
Unearned rental revenue 1,688,280 1,520,701
Customer deposits 265,481 73,795
Term loan - short term 2,000,000 -
Purchase money security interest debt - short term 852,709 828,610
Promissory notes 5,178,935 5,130,870
Capital lease obligation   -     3,154  
TOTAL CURRENT LIABILITIES 24,706,329 20,827,363
 
LONG-TERM LIABILITIES
Revolving credit facilities 164,933,361 210,592,909
Term loan 37,500,000 -
Purchase money security interest debt 2,011,895 2,147,349
Deferred tax liabilities   43,525,935     46,258,254  
TOTAL LONG-TERM LIABILITIES   247,971,191     258,998,512  
 
TOTAL LIABILITIES 272,677,520 279,825,875
 
Commitments and Contingencies
 
STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value, Authorized 1,000,000 shares, none issued - -
Common stock, $.0001 par value, Authorized 40,000,000 shares;
issued and outstanding 24,653,513 shares at June 30, 2013
and 24,555,818 shares at December 31, 2012 2,465 2,456
Paid in capital 125,091,852 124,460,238
Accumulated deficit (54,326,160 ) (50,230,938 )
Accumulated other comprehensive gain, net of tax   6,003     9,979  
TOTAL STOCKHOLDERS' EQUITY   70,774,160     74,241,735  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 343,451,680   $ 354,067,610  

Essex Rental Corp.
Kory Glen
Chief Financial Officer
(847) 215-6522 / kglen@essexrental.com
OR
Patrick Merola
Manager of Investor Relations
(847) 215-6514 / pmerola@essexcrane.com

Copyright Business Wire 2013
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