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Essex Rental Corp. Reports 2012 Fourth Quarter And Year-End Results

Stocks in this article: ESSX

Conference Call

Essex’s management team will conduct a conference call to discuss the operating results at 9:00 a.m. ET on Monday, March 18, 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, Essex Crane Rental Corp. and Coast Crane Company, 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
       

Three Months Ended December 31,

Year Ended December 31,
2012 2011 2012 2011
(Unaudited) (Unaudited)
 
REVENUES
Equipment rentals $ 12,851,649 $ 10,711,093 $ 46,863,695 $ 41,970,190
Retail equipment sales 661,191 2,142,662 4,087,127 14,206,479
Used rental equipment sales 1,470,833 3,282,153 17,258,089 6,523,789
Retail parts sales 2,415,079 2,092,091 9,207,802 9,834,844
Transportation 2,398,618 1,395,229 7,474,839 5,413,609
Equipment repairs and maintenance 3,394,225 2,846,303 13,369,302 11,636,068
                     
TOTAL REVENUES 23,191,595 22,469,531 98,260,854 89,584,979
 
COST OF REVENUES
Salaries, payroll taxes and benefits 2,637,053 3,148,977 10,994,834 10,635,150
Depreciation 4,970,293 5,470,307 20,458,784 21,146,477
Retail equipment sales 559,831 1,792,335 3,474,161 11,878,546
Used rental equipment sales 1,036,569 2,765,160 14,353,793 5,462,818
Retail parts sales 1,837,773 1,564,411 7,091,209 7,230,864
Transportation 2,262,100 1,225,190 6,823,282 5,081,504
Equipment repairs and maintenance 2,870,965 2,511,972 10,663,327 12,452,736
Yard operating expenses 775,469 700,026 3,069,344 2,599,646
                     
TOTAL COST OF REVENUES 16,950,053 19,178,378 76,928,734 76,487,741
 
GROSS PROFIT 6,241,542 3,291,153 21,332,120 13,097,238
 
Selling, general and administrative expenses 6,828,709 7,381,670 26,986,797 28,535,612
Other depreciation and amortization 316,118 352,910 1,274,466 1,338,378
                     
LOSS FROM OPERATIONS (903,285 ) (4,443,427 ) (6,929,143 ) (16,776,752 )
 
OTHER INCOME (EXPENSES)
Other income 8,369 2,084 41,230 316,492
Interest expense (2,676,318 ) (2,915,480 ) (11,334,705 ) (11,455,390 )
Foreign currency exchange gains (losses)   (80,121 )   2,559     5,484     (6,999 )
TOTAL OTHER INCOME (EXPENSES)   (2,748,070 )   (2,910,837 )   (11,287,991 )   (11,145,897 )
 
LOSS BEFORE INCOME TAXES (3,651,355 ) (7,354,264 ) (18,217,134 ) (27,922,649 )
 
BENEFIT FOR INCOME TAXES   (646,365 )   (3,049,182 )   (5,564,179 )   (10,775,749 )
 
NET LOSS $ (3,004,990 ) $ (4,305,082 ) $ (12,652,955 ) $ (17,146,900 )
 
Weighted average shares outstanding:
Basic 24,555,818 24,428,092 24,545,041 23,824,119
Diluted 24,555,818 24,428,092 24,545,041 23,824,119
 
Loss per share:
Basic $ (0.12 ) $ (0.18 ) $ (0.52 ) $ (0.72 )
Diluted $ (0.12 ) $ (0.18 ) $ (0.52 ) $ (0.72 )
 
 
Essex Rental Corp. & Subsidiaries
Segment Revenues and Gross Profit
       
Three Months Ended December 31, Year Ended December 31,
2012 2011 2012 2011

(Unaudited)

(Unaudited)

 
Segment revenues

 

Equipment rentals $ 17,957,436 $ 16,591,029 $ 76,276,705 $ 58,859,497
Equipment distribution 661,191 2,142,662 4,087,127 14,206,479
Parts and service   4,572,968   3,735,840   17,897,022   16,519,003
Total revenues $ 23,191,595 $ 22,469,531 $ 98,260,854 $ 89,584,979
 
Segment gross profit
Equipment rentals $ 4,726,624 $ 2,711,302 $ 15,834,559 $ 8,470,103
Equipment distribution (44,307) 183,901 16,029 1,607,733
Parts and service   1,559,225   395,950   5,481,532   3,019,402
Total gross profit $ 6,241,542 $ 3,291,153 $ 21,332,120 $ 13,097,238
 
 
Essex Rental Corp & Subsidiaries
Reconciliation of Net Loss
to Adjusted EBITDA
(Unaudited)
       
Three Months Ended December 31, Year Ended December 31,
2012 2011 2012 2011
 
Net loss $ (3,004,990 ) $ (4,305,082 ) $ (12,652,955 ) $ (17,146,900 )
 
Benefit for income taxes (646,365 ) (3,049,182 ) (5,564,179 ) (10,775,749 )
Foreign currency exchange (gains) losses 80,121 (2,559 ) (5,484 ) 6,999
Interest expense 2,676,318 2,915,480 11,334,705 11,455,390
Other income   (8,369 )   (2,084 )   (41,230 )   (316,492 )
 
Loss from Operations (903,285 ) (4,443,427 ) (6,929,143 ) (16,776,752 )
 
Add: Depreciation 4,970,293 5,470,307 20,458,784 21,146,477
Add: Other depreciation and amortization   316,118     352,910     1,274,466     1,338,378  
 
Adjusted EBITDA (1) $ 4,383,126   $ 1,379,790   $ 14,804,107   $ 5,708,103  
 
 

(1) Includes non-cash stock compensation and non-recurring expenses of $0.6 million and $0.7 million for the three months ended December 31, 2012 and 2011, respectively and $2.4 million and $3.3 million for the year ended December 31, 2012 and 2011, respectively.

 
 
Essex Rental Corp. and Subsidiaries
Consolidated Balance Sheets
   
December 31, December 31,
2012 2011
 
ASSETS
 
CURRENT ASSETS
Cash and cash equivalents $ 8,389,321 $ 9,030,383
Accounts receivable, net of allowances 14,658,198 14,311,343
Other receivables 2,282,104 2,712,353
Deferred tax assets 3,022,625 3,478,114
Inventory
Retail equipment 1,815,670 2,212,530
Retail spare parts, net 1,386,412 1,506,680
Prepaid expenses and other assets   1,494,751     1,944,068  
TOTAL CURRENT ASSETS 33,049,081 35,195,471
 
Rental equipment, net 306,892,373 328,955,023
Property and equipment, net 6,610,976 7,876,432
Spare parts inventory, net 3,145,129 3,380,090
Identifiable finite lived intangibles, net 1,403,571 1,893,920
Goodwill 1,796,126 1,796,126
Loan acquisition costs, net   1,170,354     1,803,167  
 
TOTAL ASSETS $ 354,067,610   $ 380,900,229  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES
Accounts payable $ 5,342,637 $ 4,893,500
Accrued employee compensation and benefits 1,999,143 1,750,956
Accrued taxes 3,211,400 3,592,912
Accrued interest 1,359,017 833,642
Accrued other expenses 1,358,036 830,295
Unearned rental revenue 1,520,701 1,106,781
Customer deposits 73,795 142,581
Promissory notes 5,130,870 -
Short-term debt obligations 828,610 673,403
Interest rate swaps - 2,470,779
Current portion of capital lease obligation   3,154     7,199  
TOTAL CURRENT LIABILITIES 20,827,363 16,302,048
 
LONG-TERM LIABILITIES
Revolving credit facilities 210,592,909 222,088,941
Promissory notes - 5,034,741
Other long-term debt obligations 2,147,349 1,851,859
Deferred tax liabilities 46,258,254 51,650,482
Capital lease obligation   -     3,150  
TOTAL LONG-TERM LIABILITIES   258,998,512     280,629,173  
 
TOTAL LIABILITIES 279,825,875 296,931,221
 

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 24,555,818 shares at December 31, 2012 and 24,428,092 shares at December 31, 2011

2,456 2,443
Paid in capital 124,460,238 122,815,398
Accumulated deficit (50,230,938 ) (37,577,983 )
Accumulated other comprehensive income (loss), net of tax   9,979     (1,270,850 )
TOTAL STOCKHOLDERS' EQUITY   74,241,735     83,969,008  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 354,067,610   $ 380,900,229  
 




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