BUFFALO GROVE, Ill.--(BUSINESS WIRE)--Essex Rental Corp. (Nasdaq: ESSX) ("Essex") today announced its unaudited consolidated results for the fourth quarter and year ended December 31, 2010. The results are those of Essex Rental Corp. and its wholly owned subsidiaries, including Essex Crane Rental Corp. ("Essex Crane"), Essex Finance Corp. (“Essex Finance”), Coast Crane Company (“Coast Crane”, formerly known as CC Bidding Corp.) and Coast Crane Ltd. (“Coast Crane Ltd.”). Included below is a comparison of Essex's results of operations for the quarter and year ended December 31, 2010 to the corresponding results for the quarter and year ended December 31, 2009. Many of the explanations provided below relate to the impact of Coast Crane, which are comprised of the operations of Coast Crane and its wholly-owned subsidiary, Coast Crane Ltd. acquired on November 24, 2010. The financial tables included herein show the separate financial results of Coast Crane Company including its wholly-owned subsidiary, Coast Crane Ltd. These amounts are included in the consolidated results of operations for the fourth quarter and year-ended December 31, 2010, also included herein.
Management Comments on 2010
Ron Schad, President & CEO of Essex, stated, “The fourth quarter was an exciting and busy quarter for Essex Rental Corp. As previously announced, we completed the acquisition of Coast Crane’s assets in late November and we have been pleased with the acquisition to date. During the fourth quarter of 2010, Essex Crane experienced both increasing utilization rates and the stabilization of average rental rates.”
Mr. Schad continued, “During the fourth quarter, the cyclical upturn continued although we experienced moderate seasonal softness which is typical during the winter months. We continue to believe that we are well positioned to substantially increase utilization as we move through 2011.”
Fourth Quarter 2010 Overview
Equipment rental revenue for the fourth quarter of 2010 was $8.1 million compared to equipment rental revenue of $6.4 million for the quarter ended December 31, 2009. The increase in equipment rental revenue was related primarily due to equipment rental revenue of $1.7 million provided by Coast Crane during the five week post-acquisition period as well as an increase in utilization rates. The crawler crane utilization rate (on a days method) for the quarter ended December 31, 2010 equaled 44.7%, compared to 34.8% in the comparable period in 2009 and also improved sequentially from the 40.2% for the third quarter ended September 30, 2010. Partially offsetting the increase in equipment rental income due to the increase in utilization rates was a 19.2% decrease in the average monthly crane rental rate to $15,493 compared to the average monthly crane rental rate of $19,181 for the comparable period in 2009. The decrease in average crane rental rate was the result of a change in the mix of cranes on rent and lower rental rate pricing due to weakened demand caused by the slower economic recovery and difficult commercial credit environment. This was compounded by the expiration of existing rental agreements executed at higher rental rates in the prior years. Excluding any impact caused by the change in mix of cranes on rent, utilization rates appear to have stabilized.
Transportation revenue for the fourth quarter of 2010 was $1.6 million compared to transportation revenue of $1.0 million for the comparable period for the quarter ended December 31, 2009. The increase in transportation revenue was primarily due to the transportation revenue provided by Coast Crane during the five week post-acquisition period of $0.1 million and an increase in the mobilization of equipment. The increase in mobilization was attributable to increased utilization and was impacted by the combination of cranes and attachments rented and the specific distances that equipment had to move for various rentals.
Equipment repairs and maintenance revenue for the fourth quarter of 2010 was $1.9 million compared to equipment repairs and maintenance revenue of $1.3 million for the comparable period ended December 31, 2009. The increase in equipment repairs and maintenance revenue was primarily due to the equipment repairs and maintenance revenue provided by Coast Crane during the five week post-acquisition period of $0.8 million, which was partially offset by a decrease in equipment repairs and maintenance revenue at Essex Crane due to a decrease in equipment repair activity.
During the five week post-acquisition period ended December 31, 2010, Coast Crane contributed revenues of $1.2 million related to new and used retail equipment sales and $1.2 million related to retail parts sales.
Cost of revenues for the quarter ended December 31, 2010 was $13.1 million compared to $6.9 million for the same period in 2009. The increase in cost of revenues was primarily due to the cost of revenues incurred by Coast Crane during the five week post-acquisition period of $4.9 million. Excluding the non-cash costs of net book value of rental equipment sold and depreciation expense, costs were $7.9 million for the quarter ended December 31, 2010, compared to $3.7 million for the same period in 2009, with the increase primarily due to the activity of Coast Crane during the five week post-acquisition period and the expense of preparing the fleet for rental agreements starting during the quarter and in the near term as evidenced by the increase in the crawler crane utilization rate to 44.7% for the fourth quarter of 2010 from 34.8% for the comparable period in 2009.
During the five week post-acquisition period ended December 31, 2010, Coast Crane incurred costs related to retail equipment sales and parts sales of $1.0 million and $0.8 million, respectively.
Selling, general and administrative expenses increased to $5.1 million for the quarter ended December 31, 2010 from $1.8 million for the same period in the prior year. The increase was primarily due to selling, general and administrative expenses incurred by Coast Crane during the five week post-acquisition period of $1.4 million, transaction related expenses of $1.2 million incurred as a result of the acquisition of Coast Crane’s assets as well as an increase in legal and professional fees.
EBITDA before rental equipment sales, excluding the $1.2 million of selling, general and administrative expenses incurred as a result of the acquisition of Coast Crane’s assets was $2.3 million for the quarter ended December 31, 2010 compared to $3.1 million for the quarter ended December 31, 2009. A reconciliation of EBITDA before rental equipment sales to Income (Loss) from Operations, the closest comparable measure under generally accepted accounting principles, is provided herein.
Outlook for 2011
Mr. Schad continued, “We are excited about the opportunities that 2011 will provide based on increasing utilization and strong quoting activity, particularly to construction jobs that have already been awarded to contractors. In 2011, we will focus our efforts on implementing systems at Coast Crane that provide visibility into quote and order activity similar to what we have at Essex Crane. In addition, we will also focus on expanding the products that Coast Crane currently distributes and services to expand the retail sales and repair and maintenance lines of business. Based on the high utilization of certain classes of Coast Crane’s equipment and the continued improvement in demand for those assets, Essex’s Board of Directors has approved a capital investment of over $20 million in new equipment for Coast Crane’s rental fleet. In addition to our continuing distribution of Manitowoc’s Potain crane lines as discussed in our press release issued on February 18, 2011, Coast Crane will announce its representation of other crane manufacturers within the coming weeks.”
Mr. Schad concluded, “As previously announced, since December 31, 2010 Essex has received approximately $19.8 million in warrant exercise proceeds and has a substantial amount of liquidity in the form of our cash balances and amounts available under our revolving credit facilities. We are confident that the construction rental equipment, sales and service markets are improving and are optimistic about what the future holds for Essex Rental Corp. and its shareholders.”
Conference Call
Essex’s management team will conduct a conference call to discuss the operating results later this morning, March 14, 2010 at 9:00 a.m. ET. Interested parties may participate in the call by dialing 1 (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.essexcrane.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, Essex Crane Rental Corp. and Coast Crane Company, is one of North America's largest providers of 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 fleet of over 1,000 cranes and 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.essexcrane.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 EBITDA before rental equipment sales, an unaudited financial measure of performance which is not calculated in accordance with generally accepted accounting principles, or GAAP. While management believes that the presentation of EBITDA before rental equipment sales serves to enhance understanding of Essex's operating performance, EBITDA before rental equipment sales should be considered in addition to, but not as substitutes for, or more meaningful than, income from operations, the most directly comparable GAAP measures, as an indicator of Essex's operating performance. EBITDA before rental equipment sales has been presented as a supplemental disclosure because EBITDA is a widely used measure of performance and basis for valuation. A reconciliation of EBITDA before rental equipment sales to income from operations is included in the financial tables accompanying this release.
| Essex Rental Corp. and Subsidiaries | ||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
| REVENUES | ||||||||||||||||
| Equipment rentals | $ | 8,142,374 | $ | 6,360,757 | $ | 25,049,779 | $ | 34,556,696 | ||||||||
| Retail equipment sales | 1,238,722 | - | 1,238,722 | - | ||||||||||||
| Used rental equipment sales | 1,317,301 | 403,875 | 4,255,761 | 6,478,197 | ||||||||||||
| Retail parts sales | 1,184,042 | - | 1,184,042 | - | ||||||||||||
| Transportation | 1,616,745 | 978,469 | 4,766,328 | 4,909,346 | ||||||||||||
| Equipment repairs and maintenance | 1,927,347 | 1,345,013 | 5,036,828 | 6,140,153 | ||||||||||||
| TOTAL REVENUES | 15,426,531 | 9,088,114 | 41,531,460 | 52,084,392 | ||||||||||||
|
|
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| COST OF REVENUES | ||||||||||||||||
| Salaries, payroll taxes and benefits | 1,843,270 | 1,428,936 | 5,905,279 | 6,006,715 | ||||||||||||
| Depreciation | 4,033,476 | 2,847,494 | 12,723,951 | 11,210,472 | ||||||||||||
| Retail equipment sales | 994,119 | - | 994,119 | - | ||||||||||||
| Used rental equipment sales | 1,201,910 | 290,937 | 3,551,891 | 5,584,784 | ||||||||||||
| Retail parts sales | 775,338 | - | 775,338 | - | ||||||||||||
| Transportation | 1,413,365 | 826,012 | 4,236,326 | 3,743,595 | ||||||||||||
| Equipment repairs and maintenance | 2,475,657 | 1,162,342 | 5,833,945 | 4,873,005 | ||||||||||||
| Yard operating expenses | 386,876 | 311,625 | 1,383,068 | 1,482,371 | ||||||||||||
| TOTAL COST OF REVENUES | 13,124,011 | 6,867,346 | 35,403,917 | 32,900,942 | ||||||||||||
| GROSS PROFIT | 2,302,520 | 2,220,768 | 6,127,543 | 19,183,450 | ||||||||||||
| Selling, general and administrative expenses | 5,113,701 | 1,835,877 | 12,964,887 | 10,547,405 | ||||||||||||
| Other depreciation and amortization | 326,112 | 180,633 | 954,602 | 781,751 | ||||||||||||
| INCOME (LOSS) FROM OPERATIONS | (3,137,293 | ) | 204,258 | (7,791,946 | ) | 7,854,294 | ||||||||||
| OTHER INCOME (EXPENSES) | ||||||||||||||||
| Other income | 62,706 | 316 | 72,278 | 643 | ||||||||||||
| Interest expense | (2,359,645 | ) | (1,654,101 | ) | (7,368,904 | ) | (6,681,740 | ) | ||||||||
| Exchange gains/(losses) | (2,471 | ) | - | (2,471 | ) | - | ||||||||||
| Interest rate swaps | 159,455 | - | 159,455 | - | ||||||||||||
| TOTAL OTHER INCOME (EXPENSES) | (2,139,955 | ) | (1,653,785 | ) | (7,139,642 | ) | (6,681,097 | ) | ||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | (5,277,248 | ) | (1,449,527 | ) | (14,931,588 | ) | 1,173,197 | |||||||||
| PROVISION (BENEFIT) FOR INCOME TAXES | (2,125,047 | ) | (830,758 | ) | (5,357,930 | ) | (22,609 | ) | ||||||||
| NET INCOME (LOSS) | $ | (3,152,201 | ) | $ | (618,769 | ) | $ | (9,573,658 | ) | $ | 1,195,806 | |||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 18,530,159 | 14,117,714 | 16,102,339 | 14,110,789 | ||||||||||||
| Diluted | 18,530,159 | 14,117,714 | 16,102,339 | 15,805,191 | ||||||||||||
| Earnings (loss) per share: | ||||||||||||||||
| Basic | $ | (0.17 | ) | $ | (0.04 | ) | $ | (0.59 | ) | $ | 0.08 | |||||
| Diluted | $ | (0.17 | ) | $ | (0.04 | ) | $ | (0.59 | ) | $ | 0.08 | |||||
| Coast Crane and Subsidiary | ||||
| Consolidated Statement of Operations | ||||
| (Unaudited) | ||||
| Post-Acquisition | ||||
| Period | ||||
| 11/24/10 to 12/31/10 | ||||
| REVENUES | ||||
| Equipment rentals | $ | 1,663,592 | ||
| Retail equipment sales | 1,238,722 | |||
| Used rental equipment sales | 369,601 | |||
| Retail parts sales | 1,184,042 | |||
| Transportation | 125,213 | |||
| Equipment repairs and maintenance | 822,381 | |||
| TOTAL REVENUES | 5,403,551 | |||
| COST OF REVENUES | ||||
| Salaries, payroll taxes and benefits | 465,221 | |||
| Depreciation | 1,104,141 | |||
| Retail equipment sales | 994,119 | |||
| Used rental equipment sales | 322,829 | |||
| Retail parts sales | 775,338 | |||
| Transportation | 104,583 | |||
| Equipment repairs and maintenance | 1,043,781 | |||
| Yard operating expenses | 73,838 | |||
| TOTAL COST OF REVENUES | 4,883,850 | |||
| GROSS PROFIT | 519,701 | |||
| Selling, general and administrative expenses | 1,361,331 | |||
| Other depreciation and amortization | 117,920 | |||
| LOSS FROM OPERATIONS | (959,550 | ) | ||
| OTHER INCOME (EXPENSES) | ||||
| Other income | 12,354 | |||
| Interest expense | (458,565 | ) | ||
| Exchange (losses) | (2,471 | ) | ||
| Interest rate swaps | 159,455 | |||
| TOTAL OTHER INCOME (EXPENSES) | (289,227 | ) | ||
| LOSS BEFORE INCOME TAXES | (1,248,777 | ) | ||
| BENEFIT FOR INCOME TAXES | (438,463 | ) | ||
| NET LOSS | $ | (810,314 | ) | |
| Essex Crane Rental Corp. | ||||||||||||
| Rental Rate and Utilization Statistics | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||
|
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| Average crawler crane rental rate per month | $ | 15,493 | $ | 19,181 | $ | 16,391 | $ | 21,081 | ||||
| Utilization Statistics - Crawler Cranes | ||||||||||||
| "Days" Method Utilization | 44.7% | 34.8% | 37.5% | 43.6% | ||||||||
| "Hits" Method Utilization | 49.0% | 38.5% | 41.3% | 48.2% | ||||||||
| (See definitions in the quarterly and annual reports filed with the SEC) | ||||||||||||
| Coast Crane Company | ||
| Utilization Statistics | ||
| For the Month of December 2010 | ||
| (Unaudited) | ||
| "Days" Method | ||
| Utilization | ||
| Coast Crane Utilization Statistics | ||
| Rough Terrain Cranes | 60.4% | |
| Boom Trucks | 50.8% | |
| Tower Cranes | 32.0% | |
| Carry Decks and Other Equipment | 42.2% | |
| Reconciliation of Income (loss) from Operations | ||||||||||||||||||||||
| to Total EBITDA and EBITDA before Rental Equipment Sales | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| Coast Crane | ||||||||||||||||||||||
| Post-Acquisition | ||||||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | Period | ||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | 11/24/10 to 12/31/10 | ||||||||||||||||||
| Income (loss) from Operations | $ | (3,137,293 | ) | $ | 204,258 | $ | (7,791,946 | ) | $ | 7,854,294 | $ | (959,550 | ) | |||||||||
| Add: Depreciation | 4,033,476 | 2,847,494 | 12,723,951 |
11,210,472 |
1,104,141 | |||||||||||||||||
| Add: Other depreciation and amortization | 326,112 | 180,633 | 954,602 | 781,751 | 117,920 | |||||||||||||||||
| Total EBITDA | 1,222,295 | 3,232,385 | 5,886,607 | 19,846,517 | 262,511 | |||||||||||||||||
| Minus: Used rental equipment sales | (1,317,301 | ) | (403,875 | ) | (4,255,761 | ) | (6,478,197 | ) | (369,601 | ) | ||||||||||||
| Add: Costs of used rental equipment sales | 1,201,910 | 290,937 | 3,551,891 | 5,584,784 | 322,829 | |||||||||||||||||
| EBITDA before rental equipment sales | $ | 1,106,904 | $ | 3,119,447 | $ | 5,182,737 | $ | 18,953,104 | $ | 215,739 | ||||||||||||
| Essex Rental Corp. and Subsidiaries | ||||||||
| Consolidated Balance Sheets | ||||||||
| December 31, | December 31, | |||||||
| 2010 | 2009 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 3,474,314 | $ | 199,508 | ||||
| Accounts receivable, net of allowances | 12,801,772 | 4,973,995 | ||||||
| Other receivables | 4,223,435 | 3,791,845 | ||||||
| Deferred tax assets | 2,328,678 | 1,724,621 | ||||||
| Inventory | ||||||||
| Equipment inventory | 5,386,074 | - | ||||||
| Retail spare parts, net | 1,882,003 | - | ||||||
| Prepaid expenses and other assets | 3,069,976 | 410,198 | ||||||
| TOTAL CURRENT ASSETS | 33,166,252 | 11,100,167 | ||||||
| Rental equipment, net | 330,378,792 | 260,767,678 | ||||||
| Property and equipment, net | 8,727,456 | 6,981,660 | ||||||
| Spare parts inventory, net | 3,540,360 | 3,556,236 | ||||||
| Identifiable finite lived intangibles, net | 3,143,063 | 2,160,239 | ||||||
| Goodwill | 1,796,126 | - | ||||||
| Loan acquisition costs, net | 2,220,878 | 1,897,177 | ||||||
| TOTAL ASSETS | $ | 382,972,927 | $ | 286,463,157 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 2,810,672 | $ | 1,790,683 | ||||
| Accrued employee compensation and benefits | 1,482,747 | 679,078 | ||||||
| Accrued taxes | 4,504,765 | 5,663,263 | ||||||
| Accrued interest | 436,947 | 303,186 | ||||||
| Accrued other expenses | 1,836,246 | 739,639 | ||||||
| Unearned rental revenue and customer deposits | 3,592,854 | 793,797 | ||||||
| Short-term debt obligations | 783,243 | 5,170,614 | ||||||
| Current portion of capital lease obligation | 6,718 | 6,269 | ||||||
| TOTAL CURRENT LIABILITIES | 15,454,192 | 15,146,529 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Revolving credit facilities | 214,959,971 | 131,919,701 | ||||||
| Promissory notes | 4,938,611 | - | ||||||
| Other long-term debt obligations | 2,982,920 | - | ||||||
| Deferred tax liabilities | 59,264,909 | 62,935,535 | ||||||
| Interest rate swaps | 5,266,586 | 2,306,294 | ||||||
| Capital lease obligation | 10,349 | 17,067 | ||||||
| TOTAL LONG-TERM LIABILITIES | 287,423,346 | 197,178,597 | ||||||
| TOTAL LIABILITIES | 302,877,538 | 212,325,126 | ||||||
| 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 20,472,489 shares at December 31, 2010 and | ||||||||
| 14,124,563 shares at December 31, 2009 | 2,047 | 1,412 | ||||||
| Paid in capital | 101,052,367 | 84,589,119 | ||||||
| Accumulated deficit | (18,596,255 | ) | (9,022,597 | ) | ||||
| Accumulated other comprehensive loss, net of tax | (2,362,770 | ) | (1,429,903 | ) | ||||
| TOTAL STOCKHOLDERS' EQUITY | 80,095,389 | 74,138,031 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 382,972,927 | $ | 286,463,157 | ||||