Essex Rental Corp. Announces 2009 Third Quarter Results

http://www.businesswire.com/news/home/20091103006842/en

BUFFALO GROVE, Ill.--(Business Wire)--
Essex Rental Corp. (OTCBB: ERNT; ERNTW; ERNTU) ("Essex") today announced its
unaudited consolidated results for the third quarter ended September 30, 2009.
The following unaudited results are those of Essex Rental Corp. and its
consolidated subsidiaries, including Essex Crane Rental Corp. ("Essex Crane"),
its operating subsidiary, which was acquired by Essex in October 2008 through
the acquisition of Essex Holdings, LLC ("Essex Holdings"), the direct parent of
Essex Crane. Included below is a comparison of Essex's results of operations for
the three months ended September 30, 2009 to the corresponding results of Essex
Holdings (the predecessor) for the three months ended September 30, 2008.

Third Quarter 2009 Financial Highlights - Versus Third Quarter of 2008

* Total rental related revenue (excluding used rental equipment sales) was $9.7
million, compared to $20.2 million. The decline was primarily due to lower
equipment rental revenue attributable to lower utilization rates of cranes and
attachments.
* Selling, general and administrative expenses were $2.9 million, a decrease
from $3.1 million despite an increase in costs associated with being a publicly
traded company.
* Rental EBITDA was $3.0 million, versus $11.6 million, due to lower utilization
rates.

Ron Schad, President & CEO of Essex, stated, "Our performance in the third
quarter reflects weakness in many of our end markets, which resulted in lower
crane fleet utilization and rental revenues. While we are disappointed that we
experienced a decline in profitability in the third quarter, we are highly
focused on maximizing free cash flow through cost cutting initiatives, which
thus far have included a lower headcount, reduction in salaries, decrease in
overtime and labor hours, elimination of certain outsourced services, reduction
of other operational expenditures and the sale of older, underutilized lighter
lifting equipment. As a result of these actions, during the third quarter 2009,
we were able to continue to reduce our debt outstanding and as of September 30
we have excess liquidity of $48.5 million available."

Mr. Schad continued, "In addition, during the quarter we remained focused on our
growth strategy of repositioning the fleet to heavier lifting capacity cranes
that generate higher rental and utilization rates. This strategy has been
validated by higher utilization rates over the last nine months for most of our
cranes with lifting capacities in excess of 200 tons as compared to cranes with
lifting capacities of 200 tons or less. Consistent with our business strategy,
during this calendar year we have sold 12 used cranes with an average lifting
capacity of 163 tons, at an average price in excess of 115% of orderly
liquidation value. We have used these sale proceeds, in conjunction with our
free cash flow, to fund the purchase of ten new larger lifting capacity cranes
and attachments with an average lifting capacity of 330 tons. This in turn has
improved our fleet`s mix, average age and market position, further enhancing
Essex`s future earnings power. As a result of our direct purchase relationships
with key equipment suppliers, we have secured this new equipment on terms that
we believe will generate an attractive return on capital."

Third Quarter Overview

Essex`s total rental related revenue for the third quarter of 2009, which
includes revenue from equipment rentals, repair and maintenance, and
transportation services, but excludes used rental equipment sales, was $9.7
million compared to the predecessor`s total rental related revenue of $20.2
million for the 2008 period. The decline was primarily due to lower equipment
rental revenue driven by lower utilization rates on cranes and attachments which
represented 64.0% of total revenue, or $7.1 million for the three months ended
September 30, 2009, compared to $16.3 million in the predecessor`s comparable
period in 2008. Equipment rental income was also impacted by a 6.9% decrease in
the average monthly crane rental rate to $20,716 relative to the predecessor`s
average monthly crane rental rate of $22,258 for its comparable period in 2008.
The decrease in average crane rental rate was primarily the result of a change
in the mix of cranes on rent toward lower rental rate cranes as well as a
decrease in rental rates for the same models of equipment quarter over quarter
due to excess capacity in the market.

The crane utilization rate (on a days method) for the third quarter 2009 equaled
38.6%, compared to 72.8% in the predecessor`s period in 2008. Crane utilization
for Essex`s heavier lifting equipment meaningfully exceeded the utilization rate
for its entire fleet.

Cost of revenues for the three months ended September 30, 2009 was $7.8 million,
compared to the predecessor`s cost of revenues of $8.4 million for the 2008
period. The decrease in cost of revenues is due to the lower revenue level and
the cost cutting initiatives outlined earlier, offset by increases in the net
book value of rental equipment sold and in depreciation expense resulting from
the step up in asset basis related to the acquisition accounting. Excluding the
net book value of rental equipment sold and depreciation expense, costs were
$3.8 million for the three months ended September 30, 2009, compared to the
predecessor`s costs of $5.5 million for the 2008 period.

Selling, general and administrative expenses were $2.9 million for the three
months ended September 30, 2009 compared to $3.1 million for the predecessor`s
comparable period last year, a 6.4% decrease despite an increase in costs
associated with being a publicly traded company.

Rental EBITDA was $3.0 million for the quarter ended September 30, 2009 as
compared to $11.6 million for the predecessor in its 2008 period.

Outlook

Mr. Schad continued, "The latest six months showed improving booking trends.
Based on our monitoring of anticipated construction projects, it appears that
stimulus funded projects have been slow to develop but we are confident that
infrastructure construction should occur and will help our business recover lost
utilization over the next 12 to 24 months. However, the shape and speed of the
recovery remains uncertain and we expect our operating environment to remain
challenging through the end of the fiscal year."

Mr. Schad concluded, "We will continue to focus on free cash flow generation and
debt reduction and believe that we have an appropriate cost structure and
business strategy in place to generate significantly greater profitability as
our utilization increases. Our capital structure is stable and we have more than
adequate liquidity; I am confident that we will emerge from this downturn
well-positioned to participate in the recovery."

Conference Call

Essex's management team will conduct a conference call to discuss the operating
results tomorrow, November 4, 2009, at 9:00 a.m. ET. Interested parties may
participate in the call by dialing 706-902-1803. Please call in 10 minutes
before the call is scheduled to begin, and ask for the Essex Rental Corp. call
(conference ID# 33502968).

The conference call will also 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.

Headquartered outside of Chicago, Essex, through its subsidiary, Essex Crane, is
one of North America's largest providers of lattice-boom crawler crane and
attachment rental services. With over 350 cranes and attachments in its fleet,
Essex supplies cranes for construction projects related to power generation,
petro-chemical, refineries, water treatment & purification, bridges, highways,
hospitals, shipbuilding, offshore oil fabrication and industrial plants, and
commercial construction.

Some of the statements in this press release and other written and oral
statements made from time to time by the Company 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 (through its subsidiary, Essex Crane), 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
subsequent 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 Rental EBITDA, 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 Rental EBITDA serves to enhance understanding of Essex's and
Essex Crane's operating performance, Rental EBITDA 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 and Essex Crane's operating performance. Rental EBITDA has been
presented as a supplemental disclosure because EBITDA is a widely used measure
of performance and basis for valuation. A reconciliation of Rental EBITDA to
income from operations is included in the financial tables accompanying this
release.

Essex Rental Corp.
Consolidated Statements of Operations
(Unaudited)

Successor Predecessor (1) Successor Predecessor (1)
Three Months Three Months Nine Months Nine Months
Ended June 30, Ended September 30, Ended September 30, Ended September 30,
2009 2008 2008 2009 2008 2008
REVENUE
Equipment rentals $ 7,116,473 $ - $ 16,276,398 $ 28,195,939 $ - $ 45,968,559
Used rental equipment sales 1,389,469 - 1,915,000 6,074,322 - 6,709,034
Transportation 1,023,087 - 1,989,125 3,930,877 - 6,177,380
Equipment repairs and maintenance 1,585,859 - 1,902,526 4,795,140 - 5,510,554

TOTAL REVENUE 11,114,888 - 22,083,049 42,996,278 - 64,365,527

COST OF REVENUES
Salaries, payroll taxes and benefits 1,375,677 - 1,979,188 4,577,779 - 5,905,781
Depreciation 2,807,741 - 2,071,199 8,362,978 - 6,212,574
Net book value of rental equipment sold 1,217,004 - 888,127 5,293,847 - 3,186,106
Transportation 803,207 - 1,774,788 2,917,583 - 5,248,177
Equipment repairs and maintenance 1,234,936 - 1,287,578 3,710,663 - 4,950,783
Yard operating expenses 405,952 - 428,120 1,170,746 - 1,337,341

TOTAL COST OF REVENUES 7,844,517 - 8,429,000 26,033,596 - 26,840,762

GROSS PROFIT 3,270,371 - 13,654,049 16,962,682 - 37,524,765

Selling, general and administrative expenses 2,877,630 160,834 3,074,844 8,711,528 419,975 8,994,334
Other depreciation and amortization 191,259 - 31,531 601,118 - 98,479

INCOME (LOSS) FROM OPERATIONS 201,482 (160,834 ) 10,547,674 7,650,036 (419,975 ) 28,431,952

OTHER INCOME (EXPENSES)
Other income (expense) - - (207,045 ) - - (179,065 )
Interest income 128 442,661 - 327 1,325,769 -
Interest expense (1,673,637 ) - (2,232,677 ) (5,027,639 ) - (7,073,864 )
Interest rate swap - - 90,842 - - (524,259 )
TOTAL OTHER INCOME (EXPENSES) (1,673,509 ) 442,661 (2,348,880 ) (5,027,312 ) 1,325,769 (7,777,188 )

INCOME (LOSS) BEFORE INCOME TAXES (1,472,027 ) 281,827 8,198,794 2,622,724 905,794 20,654,764

PROVISION (BENEFIT) FOR INCOME TAXES (764,498 ) 58,360 2,989,030 808,149 227,900 7,727,440

NET INCOME (LOSS) $ (707,529 ) $ 223,467 $ 5,209,764 $ 1,814,575 $ 677,894 $ 12,927,324

Weighted average shares outstanding:
Basic 14,109,060 15,750,000 14,108,458 15,750,000
Diluted 14,109,060 15,750,000 15,559,441 15,750,000

Earnings (loss) per share:
Basic $ (0.05 ) $ 0.01 $ 0.13 $ 0.04
Diluted $ (0.05 ) $ 0.01 $ 0.12 $ 0.04

(1) On October, 31, 2008, Essex Rental Corp. consummated the acquisition of Essex Holdings, LLC and its wholly owned subsidiary, Essex Crane Rental Corp. (collectively, the "Predecessor"). The consolidated statements of operations for the three and nine months ended September 30, 2008 include the actual results of the Predecessor. Additional information regarding Essex Rental Corp.'s acquisition of the Predecessor as well as proforma financial information is available in our annual and quarterly reports
filed with the Securities and Exchange Commission.

Essex Rental Corp.
Rental and Utilization Statistics
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008

Average crane rental rate per month $ 20,716 $ 22,258 $ 21,714 $ 20,908

Utilization Statistics - Cranes
"Days" Method Utilization 38.6 % 72.8 % 46.6 % 72.6 %
"Hits" Method Utilization 43.1 % 76.7 % 51.4 % 77.1 %
(See definitions in the proxy statement filed with SEC)

Reconciliation of Income from Operations
to Total EBITDA and Rental EBITDA
(Unaudited)

Successor Predecessor Successor Predecessor
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008

Income from Operations $ 201,482 $ 10,547,674 $ 7,650,036 $ 28,431,952
Add: Depreciation 2,807,741 2,071,199 8,362,978 6,212,574
Add: Other depreciation and amortization 191,259 31,531 601,118 98,479
Total EBITDA 3,200,482 12,650,404 16,614,132 34,743,005
Minus: Used rental equipment sales (1,389,469 ) (1,915,000 ) (6,074,322 ) (6,709,034 )
Add: Net book value of rental equipment sold 1,217,004 888,127 5,293,847 3,186,106
Rental EBITDA $ 3,028,017 $ 11,623,531 $ 15,833,657 $ 31,220,077

Essex Rental Corp.
Consolidated Balance Sheets
(Unaudited)

September 30, December 31,
2009 2008
(Unaudited)

ASSETS

CURRENT ASSETS
Cash and cash equivalents $ 115,355 $ 139,000
Accounts receivable, net of allowances for doubtful accounts and 5,543,862 11,350,561
credit memos of $2,205,000 and $660,000, respectively
Other receivables 3,724,930 3,167,773
Deferred tax assets 2,084,840 1,859,071
Prepaid expenses and other assets 418,062 440,879
TOTAL CURRENT ASSETS 11,887,049 16,957,284

Rental equipment, net 258,229,515 255,692,116
Property and equipment, net 7,002,471 8,176,143
Spare parts inventory, net 3,715,877 3,276,858
Identifiable finite lived intangibles, net 2,460,352 3,518,667
Loan acquisition costs, net 2,020,906 2,377,442

TOTAL ASSETS $ 285,316,170 $ 289,998,510

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable $ 2,165,939 $ 2,510,564
Accrued employee compensation and benefits 757,787 2,160,960
Accrued taxes 5,706,959 5,203,485
Accrued interest 303,643 440,667
Accrued other expenses 725,310 1,390,864
Current portion of capital lease obligation 6,161 -
Unearned rental revenue 924,547 2,176,906
TOTAL CURRENT LIABILITIES 10,590,346 13,883,446

LONG-TERM LIABILITIES
Revolving credit facility 133,286,583 137,377,921
Deferred tax liabilities 64,196,173 63,266,773
Interest rate swap 2,624,028 3,424,613
Capital lease obligation 18,675 -
TOTAL LONG-TERM LIABILITIES 200,125,459 204,069,307

TOTAL LIABILITIES 210,715,805 217,952,753

STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value, Authorized 1,000,000 shares, none issued - -
Common stock, $.0001 par value, Authorized 40,000,000 shares; 1,412 1,410
issued and outstanding 14,117,639 shares at September 30, 2009 and
14,106,886 shares at December 31, 2008
Paid in capital 84,629,679 84,383,579
Accumulated deficit (8,403,828 ) (10,218,403 )
Accumulated other comprehensive loss, net of tax (1,626,898 ) (2,120,829 )
TOTAL STOCKHOLDERS' EQUITY 74,600,365 72,045,757

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 285,316,170 $ 289,998,510

Essex Rental Corp.
Martin Kroll, 847-215-6502
Chief Financial Officer
mkroll@essexcrane.com
or
Investor Relations:
The Equity Group Inc.
Melissa Dixon, 212-836-9613
Senior Account Executive
mdixon@equityny.com
or
Devin Sullivan, 212-836-9608
Senior Vice President
dsullivan@equityny.com

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