Your Trusted Crane Sales Company Across The Country

BUFFALO GROVE, Ill.--(BUSINESS WIRE)-- Essex Rental Corp. (Nasdaq: ESSX) ("Essex") today announced its consolidated results for the fourth quarter and year ended December 31, 2013.
Fourth Quarter and Year-End 2013 Highlights
  • Adjusted EBITDA before non-cash compensation and non-recurring expenses increased by 6.5% to $18.3 million for the year ended December 31, 2013 compared to $17.2 million for the year ended December 31, 2012;
  • Retail equipment sales revenue increased by 334.8% to $2.9 million for the three month period ended December 31, 2013 compared to$700,000 for the three month period ended December 31, 2012;
  • Sold seven traditional crawler cranes in the three month period ended December 31, 2013 at 110.6% of OLV;
  • Utilization of self-erecting tower cranes increased to 48.7% for the three month period ended December 31, 2013, compared to 41.6% and 32.6% for the three month periods ended December 31, 2012 and September 30, 2013, respectively. Self-erecting tower crane utilization and rental rate is at its highest level since the acquisition of these assets in late 2010;
  • Average rental rates for the hydraulic crawler crane fleet, when measured on a model by model basis, have increased by an average of $1,094or 4.3% for the three month period ended December 31, 2013 compared to the three month period ended December 31, 2012;
  • Crawler crane rental backlog as of December 31, 2013 increased by 18.9% compared to the backlog as of December 31, 2012;
  • Selling, general & administrative expenses excluding non-cash compensation and non-recurring expenses decreased by 11.7% to $5.5 millionfor the three month period ended December 31, 2013 compared to $6.2 million for the three month period ended December 31, 2012; and
  • Total debt decreased by $19.1 million or 8.3% over the past two years, due to both free cash flow from operations and the disposition of excess rental equipment at an average of 110.9% of Orderly Liquidation Value ("OLV").

CEO Comments

Nick Matthews , President and CEO of Essex stated, "Despite year to date EBITDA within our updated guidance, we are disappointed at how the year ended in 2013. While we anticipated the sequential softening in utilization levels and earnings in the fourth quarter due to seasonality, the residual effects of the soft third quarter are shown in our results."

"We are encouraged by the improvement in our retail distribution line. The growth of this segment provides opportunities that should enhance future earnings of our other segments, and also strengthens the relationships we have with our key suppliers. We feel that with our current distribution agreements in place, we are well positioned to take advantage of the recovering end markets."

"As we have stated in the past, we continue to look for opportunities to sell rental fleet assets that were underutilized during historic peak demand periods. We have accelerated our efforts by selling seven traditional crawler cranes in the fourth quarter of 2013 and listed several others in a sealed bid auction that we announced earlier this year. We continue to manage our overhead costs and selling, general & administrative expenses excluding non-cash compensation and non-recurring expenses have decreased by 11.7% versus the same period last year. "

Fourth Quarter 2013 Overview

Equipment rentals segment revenues were $15.2 million for the three month period ended December 31, 2013 versus $16.6 million for the three month period ended December 31, 2012. Equipment rentals segment revenues include rental, transportation and used rental equipment sales. The 8.8% or$1.4 million decrease is primarily driven by a $1.6 million decrease in equipment rental revenues and a $900,000 decrease in transportation revenues offset by a $1.1 million increase in used rental equipment sales. The decrease in equipment rental revenues was driven by a decrease in utilization for our rough terrain, large tower crane and crawler crane fleet, partially offset by an increase in utilization of our self-erecting tower 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 334.8% to $2.9 million for the three month period ended December 31, 2013 compared to $700,000 for the three month period ended December 31, 2012.

Parts and service revenue equaled $4.4 million for the three month period ended December 31, 2013 compared to $5.9 million for the three month period ended December 31, 2012. Parts and service segment revenues include retail parts sales, billable service work done on our own equipment and servicing customer owned equipment.

Total gross profit decreased 25.6% to $4.6 million for the three month period ended December 31, 2013 from $6.2 million for the three month period ended December 31, 2012. Gross profit margin decreased by approximately 6.2% to 20.7% for the three month period ended December 31, 2013 from 26.9% for the three month period ended December 31, 2012.

EBITDA before non-cash compensation and non-recurring expenses decreased to $3.9 million for the three month period ended December 31, 2013compared to $5.0 million for the three month period ended December 31, 2012. Non-cash compensation and non-recurring expenses equaled$800,000 for the three month period ended December 31, 2013 and $600,000 for the three month period ended December 30, 2012.

Outlook for 2014

Mr. Matthews  continued, "While we are disappointed with our fourth quarter results, we remain cautiously optimistic for 2014. Although we are coming off of a lower basis than we started from in the beginning of 2013 in terms of utilization, early indicators in 2014 are encouraging. Since the beginning of the year, which is historically a soft seasonal period, expected rental revenue from signed crawler crane rental orders has increased by approximately 20% as compared to the same period in the prior year. In addition, we have seen a trend of increasing utilization on the rough terrain cranes and boom trucks as measured against units on rent at December 31, 2013."

"That being said, we are not projecting any significant revenue increases in our 2014 guidance, but instead are forecasting conservative growth throughout the year. We anticipate that 2014 EBITDA before non-cash compensation and non-recurring items will be in the range of $18 million to $22 million. Our blended cost of debt is approximately 4.41% and we expect consolidated interest expense in 2014 to be approximately $11 million. We are not projecting any significant net capital expenditures in excess of anticipated equipment sales in 2014."

Conference Call

Essex's management team will conduct a conference call to discuss the operating results at 9:00 a.m. ET on Thursday, March 13, 2014. Interested parties may participate in the call by dialing (877) 407-8291 (Domestic) and (201) 689-8345 (International). Please dial 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 atwww.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, we believe, 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 EndedDecember 31, Year EndedDecember 31,
2013 2012 2013 2012
(Unaudited) (Unaudited)
REVENUES
Equipment rentals $ 11,149,409 $ 12,757,636 $ 46,596,363 $ 46,498,363
Retail equipment sales 2,874,896 661,191 11,211,876 4,087,127
Used rental equipment sales 2,514,747 1,470,833 12,436,843 17,258,089
Retail parts sales 1,855,241 2,509,092 7,633,022 9,573,134
Transportation 1,491,934 2,398,618 5,912,240 7,474,839
Equipment repairs and maintenance 2,564,861 3,394,225 11,747,091 13,369,302
TOTAL REVENUES 22,451,088 23,191,595 95,537,435 98,260,854
COST OF REVENUES
Salaries, payroll taxes and benefits 2,597,982 2,637,053 10,771,700 10,994,834
Depreciation 4,681,784 4,970,293 18,662,640 20,458,784
Retail equipment sales 2,491,726 559,831 9,550,397 3,474,161
Used rental equipment sales 1,743,804 1,036,569 9,183,230 14,353,793
Retail parts sales 1,453,122 1,837,773 5,909,310 7,091,209
Transportation 1,542,977 2,262,100 5,883,765 6,823,282
Equipment repairs and maintenance 2,480,056 2,870,965 10,242,468 10,663,327
Yard operating expenses 813,850 775,469 3,146,103 3,069,344
TOTAL COST OF REVENUES 17,805,301 16,950,053 73,349,613 76,928,734
GROSS PROFIT 4,645,787 6,241,542 22,187,822 21,332,120
Selling, general and administrative expenses 6,260,367 6,828,709 24,376,920 26,986,797
Other depreciation and amortization 246,193 316,118 1,039,434 1,274,466
LOSS FROM OPERATIONS (1,860,773 ) (903,285 ) (3,228,532 ) (6,929,143 )
OTHER INCOME (EXPENSES)
Other income 2,631 8,369 561,689 41,230
Interest expense (3,086,615 ) (2,676,318 ) (11,662,168 ) (11,334,705 )
Foreign currency exchange gains (losses) (157,337 ) (80,121 ) (379,712 ) 5,484
TOTAL OTHER INCOME (EXPENSES) (3,241,321 ) (2,748,070 ) (11,480,191 ) (11,287,991 )
LOSS BEFORE INCOME TAXES (5,102,094 ) (3,651,355 ) (14,708,723 ) (18,217,134 )
BENEFIT FOR INCOME TAXES (1,455,323 ) (646,365 ) (5,064,126 ) (5,564,179 )
NET LOSS $ (3,646,771 ) $ (3,004,990 ) $ (9,644,597 ) $ (12,652,955 )
Weighted average shares outstanding:
Basic 24,721,013 24,555,818 24,660,170 24,545,041
Diluted 24,721,013 24,555,818 24,660,170 24,545,041
Loss per share:
Basic $ (0.15 ) $ (0.12 ) $ (0.39 ) $ (0.52 )
Diluted $ (0.15 ) $ (0.12 ) $ (0.39 ) $ (0.52 )
Essex Rental Corp.and Subsidiaries
Utilization Statistics
(Unaudited)
Three Months Ended
December 31, September 30, December 31,
2013 2013 2012
Utilization Statistics - "Days" Utilization
Crawler Cranes - Hydraulic 56.7% 70.9% 63.0%
Crawler Cranes - Traditional 32.2% 31.4% 31.2%
Rough Terrain Cranes 54.1% 50.5% 61.9%
Boomtrucks 51.7% 52.0% 54.0%
Self-Erecting Tower Cranes 48.7% 32.6% 41.6%
City & Other Tower Cranes 32.6% 33.5% 56.0%
(See definitions in the quarterly and annual reports filed with theSEC)
Essex Rental Corp.and Subsidiaries
Segment Revenues and Gross Profit
Three Months EndedDecember 31, Year EndedDecember 31,
2013 2012 2013 2012
(Unaudited) (Unaudited)
Segment revenues
Equipment rentals $ 15,156,090 $ 16,627,087 $ 64,945,446 $ 71,231,291
Equipment distribution 2,874,896 661,191 11,211,876 4,087,127
Parts and service 4,420,102 5,903,317 19,380,113 22,942,436
Total revenues $ 22,451,088 $ 23,191,595 $ 95,537,435 $ 98,260,854
Segment gross profit (loss)
Equipment rentals $ 3,261,651 $ 4,462,945 $ 15,815,361 $ 14,922,405
Equipment distribution 239,290 (44,178) 1,046,151 16,059
Parts and service 1,144,846 1,822,775 5,326,310 6,393,656
Total gross profit $ 4,645,787 $ 6,241,542 $ 22,187,822 $ 21,332,120
Essex Rental Corpand Subsidiaries
Reconciliation of Net Loss
to Adjusted EBITDA
(Unaudited)
Three Months EndedDecember 31, Year EndedDecember 31,
2013 2012 2013 2012
Net loss $ (3,646,771 ) $ (3,004,990 ) $ (9,644,597 ) $ (12,652,955 )
Benefit for income taxes (1,455,323 ) (646,365 ) (5,064,126 ) (5,564,179 )
Foreign currency exchange (gains) losses 157,337 80,121 379,712 (5,484 )
Interest expense 3,086,615 2,676,318 11,662,168 11,334,705
Other income (2,631 ) (8,369 ) (561,689 ) (41,230 )
Loss from Operations (1,860,773 ) (903,285 ) (3,228,532 ) (6,929,143 )
Depreciation 4,681,784 4,970,293 18,662,640 20,458,784
Other depreciation and amortization 246,193 316,118 1,039,434 1,274,466
Adjusted EBITDA (1) $ 3,067,204 $ 4,383,126 $ 16,473,542 $ 14,804,107
(1) Includes non-cash stock compensation and non-recurring expenses of$0.8 millionand$0.6 millionfor the three months endedDecember 31, 2013and 2012, respectively and$1.8 millionand$2.4 millionfor the years endedDecember 31, 2013and 2012, respectively.
Essex Rental Corp.and Subsidiaries
Consolidated Balance Sheets
December 31, December 31,
2013 2012
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,348,558 $ 8,389,321
Accounts receivable, net of allowances 14,058,878 14,658,198
Other receivables 2,412,614 2,282,104
Deferred tax assets 2,878,214 3,022,625
Inventory
Retail equipment 3,416,027 1,815,670
Retail spare parts, net 1,597,625 1,386,412
Prepaid expenses and other assets 1,790,959 1,494,751
TOTAL CURRENT ASSETS 27,502,875 33,049,081
Rental equipment, net 287,859,918 306,892,373
Property and equipment, net 5,204,653 6,610,976
Spare parts inventory, net 3,247,522 3,145,129
Identifiable finite lived intangibles, net 1,069,285 1,403,571
Goodwill 1,796,126 1,796,126
Loan acquisition costs, net 6,095,357 1,170,354
TOTAL ASSETS $ 332,775,736 $ 354,067,610
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,703,030 $ 5,342,637
Accrued employee compensation and benefits 2,011,693 1,999,143
Accrued taxes 3,908,905 3,211,400
Accrued interest 654,918 1,359,017
Accrued other expenses 1,006,178 1,358,036
Unearned rental revenue 1,667,443 1,520,701
Customer deposits 293,067 73,795
Term loan - short term 2,000,000 -
Purchase money security interest debt - short term 959,157 828,610
Promissory notes - 5,130,870
Capital lease obligation - 3,154
TOTAL CURRENT LIABILITIES 18,204,391 20,827,363
LONG-TERM LIABILITIES
Revolving credit facilities 165,482,210 210,592,909
Term loan 36,500,000 -
Promissory notes 3,655,213 -
Purchase money security interest debt 1,975,279 2,147,349
Deferred tax liabilities 40,868,968 46,258,254
TOTAL LONG-TERM LIABILITIES 248,481,670 258,998,512
TOTAL LIABILITIES 266,686,061 279,825,875
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock,$.0001par value, Authorized 1,000,000 shares, none issued - -

Common stock,$.0001par value, Authorized 40,000,000 shares; issued and outstanding 24,743,513 shares atDecember 31, 2013and 24,555,818 shares atDecember 31, 2012

2,474 2,456
Paid in capital 125,952,025 124,460,238
Accumulated deficit (59,875,535 ) (50,230,938 )
Accumulated other comprehensive gain, net of tax 10,711 9,979
TOTAL STOCKHOLDERS' EQUITY 66,089,675 74,241,735
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 332,775,736 $ 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

Source: Essex Rental Corp. 

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