Essex Rental Corp., Buffalo Grove, Ill., reported equipment rentals segment revenues for the third quarter of 2016 of $5.8 million compared to $7.1 million for the third quarter of 2015. Equipment rentals segment revenues include equipment rentals and transportation. The $1.3 million decrease was driven by a $700,000 decrease in tower crane rental revenue, a $500,000 decrease in rough terrain crane rental revenue and a $100,000 decrease in boom truck rental revenue, the company says.
Total gross profit decreased by 28.4 percent or $1.4 million to $3.6 million for third quarter 2016 from $5.0 million in the third quarter of 2015.
“We continue to operate in a challenging market that has been negatively impacted by reduced activity in the energy sector, particularly related to oil and gas,” said Nick Matthews, president and CEO of Essex. “Our rental and equipment sales lines of business were most impacted by this softer demand, specifically in the Gulf, Alaska and Southern California. The year-over-year declines in dollar utilization were primarily attributable to a decline in time utilization, which was driven by the softer demand and the timing of tower crane project starts and ends. As a result, we are being more aggressive with respect to rental rates in an effort to increase utilization in some of our asset classes.”
“Consistent with the typical impact of seasonality, we expect rental demand for most classes of rental assets in our fleet to begin to soften as we approach the holiday season,” Matthews added. “We anticipate, however, that utilization of our tower crane assets will improve during the fourth quarter based on expected orders, pending tower crane rental starts and our view of the continued strength in tower crane demand. While utilization of this asset class is expected to improve, we do not expect utilization to match levels we experienced in the fourth quarter of 2015.”
