Essex Rental Corp. is close to divesting its Essex Crane Rental division but will continue to do business with its Coast Crane Rental subsidiary.
Essex Rental Corp. released second quarter pro forma unaudited consolidated results that did not include the operations of Essex Crane Rental, and thus presumably would only include the results of its Coast Crane Rental subsidiary. The company said it expects to have clarity on a possible divestiture of Essex Crane Rental within the next 30 days. The results are compared with last year’s results of Coast Crane Rental only.
Dollar utilization for rough terrain cranes decreased to 17.1 percent for the second quarter, compared to 20.8 percent for the second quarter of 2015. Dollar utilization for tower cranes increased to 19.7 percent for the second quarter compared to 17.8 percent for the year ago quarter.
Equipment rental revenue for the second quarter was $4.824 million, compared to $5.559 million for the same period of 2015, a 13.2-percent decline. For the first six months of 2016, the company grossed $10.012 million, compared to $10.875 million a year ago, a 7.9-percent drop.
Equipment rental segment gross profit decreased to $2.1 million for the second quarter, compared to $2.6 million for second quarter of 2015.
“The continued softness in the oil and gas end markets has negatively impacted the industry and has resulted in a decline in business results,†said Nick Matthews, president and CEO of Essex. “In order to align operating expenses with business conditions, we implemented cost savings initiatives in October 2015 and continue to investigate strategies to improve profitability.
“Assuming that Essex Crane will no longer be part of the company in the future, our focus will be on maintaining strong levels of utilization on our tower crane fleet, increasing utilization on our other assets and improving our parts and service segment. We now have concrete evidence supporting the market value of the Coast Crane subsidiary. As we work through refinancing that subsidiary, we are dedicated to reducing leverage and are excited by the opportunities to unlock the equity value of this company to increase shareholder value through growth and improving market conditions.â€
Essex said the decline in rental revenue in the second quarter was driven by a $400,000 slide in rough terrain crane rental revenue, a $300,000 drop in boom truck rental revenue and a $100,000 decline in crawler crane rental revenue, slightly offset by a $100,000 jump in tower crane rental revenue. Softness in the petrochemical end markets impacted heavy rough terrain cranes, specifically in the Pacific Northwest.
Essex Rental Corp., listed as Essex Crane Rental, is No. 53 on the RER 100.
