Rental revenue declined 8.1 percent for crane rental specialist Essex Rental Corp., dropping from $16.4 million in the first quarter of 2013 to $15.1 million in the recently concluded first quarter. Essex defines equipment rental segment revenue as including rental, transportation and used rental equipment sales. The decrease is primarily driven by a $1.5 million decreased in used rental equipment sales. The company completed the divestiture of its aerial work platform rental assets in January 2013, which accounts for about $400,000 of the decrease in rental equipment sales.
Equipment distribution revenue, including the retail distribution of new and used equipment dropped 64.9 percent, from $3.7 million to $1.3 million for the quarter. The decline is primarily related to a large retail sale in the first quarter of 2013 that generated approximately $2.8 million in revenue and $400,000 in gross profit.
Parts and service revenue totaled $4.6 million for the first quarter, compared to $4.9 million in the year-ago quarter. Total gross profit dropped 26.9 percent to $4.2 million for the quarter, compared to $5.7 million a year ago, primarily because of the decline in rental and retail equipment sales. EBITDA decreased to $3.4 million, compared to $4.4 million a year ago.
“We continue to work our way back from a difficult end to 2013,” said Nick Matthews, president and CEO of Essex. “We remain focused on the long-term goals and strategic initiatives in place, including reshaping our asset portfolio and repositioning the fleet, improving utilization, enhancing quality and improving customer relationships. Based on the first quarter of 2014, we continue to be optimistic regarding our outlook for the remainder of 2014. Coming out of our seasonal soft period, which is typically the fourth and first quarters, we have experienced stronger quoting activity on the crawler crane fleet when compared to last year and order intake has increased each month throughout the quarter. This trend has continued into April.
“Utilization for our hydraulic crawler cranes, while relatively flat when compared on a sequential quarterly basis, has improved each month throughout the first quarter of 2014, albeit from a low point at December 31, 2013. Rough terrain cranes and city tower cranes have experienced improved utilization on a sequential quarterly basis and revenues generated from these asset classes are approaching early 2013 levels.”
Matthews expressed optimism for the remainder of 2014.
“Regions outside of the Gulf Coast are becoming more active in the areas that demand our fleet,” he said. “As stated in our previous guidance, we anticipate conservative growth in demand throughout the year, driven by more active end market and the strategic initiatives that we have put in place. Most of these initiatives are long-term focused and should provide the company with sustainable growth in future years.”
Based in Buffalo Grove, Ill., Essex Rental Corp. is No. 45 on the new RER 100.