Wider Q4 Loss at Essex Rental - Analyst Blog

Essex Rental Corp. ESSX reported fourth-quarter 2013 adjusted net loss of 15 cents a share, significantly wider than the Zacks Consensus Estimate of loss of 9 cents and year-ago quarter loss of 12 cents.

The weak earnings resulted from lower revenues and increasing expenses at the company.

Operational Update

Essex Rental's revenues totaled $22.4 million during the reported quarter. The top line decreased 3.2% year over year due to lower revenues generated from equipment rentals, equipment repairs and maintenance and transportation. However, higher used rental equipment sales and retail equipment sales limited the downside.

Total cost of revenues of Essex Rental came in at $17.8 million, up 5% year over year. An increased expense level was driven by higher costs of retail equipment sales and used rental equipment sales. However, lower salaries, payroll taxes and benefits, depreciation and lower costs of retail parts sales and transportation limited the upside.

Higher expenses and soft revenues led to a decline in gross profit for Essex Rental. Gross profit of $4.6 million for the fourth quarter declined 25.6% year over year.

Selling, general and administrative expenses during the quarter decreased 8.3% year over year to $6.3 million.

Full-Year 2013 Highlights

Essex Rental reported full year 2013 adjusted net loss of 39 cents per share, which narrowed from the adjusted net loss of 52 cents reported in 2012. Full year results improved on the back of lower cost of revenues and selling, general and administrative expenses.

Total revenue grossed $95.5 million in 2013, down 2.8% year over year. The decline was primarily attributable to lower used rental equipment sales and lower equipment repairs and maintenance services revenue.

Financial Update

Total assets of Essex Rental stood at $332.8 million compared with $354.1 million as of Dec 31, 2012 level.

Essex Rental had cash and cash equivalents of $1.3 million as of 2013-end compared with $8.4 million recorded as of 2012-end.

Total shareholder's equity stood at $66.1 million at the end of 2013, declining from $74.2 million reported at the end of 2012.

2014 Outlook

For 2014, Essex Rental expects its adjusted EBITDA (earnings before interest, tax, depreciation and amortization) before non-cash compensation and non-recurring items to range between $18 and $22 million. This new guidance is higher than $16.5 million of EBITDA reported in 2013. Additionally, the company expects total interest expense to amount to approximately $11 million during 2014, which stood at nearly $11.7 million in 2013.

Zacks Rank

Essex Rental presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the business services industry that are worth mentioning include SouFun Holdings Ltd. SFUN, ExamWorks Group, Inc. EXAM and Rentrak Corp. RENT. All these stocks carry a Zacks Rank #2 (Buy).