Ron Schad has resigned as president and CEO of US crane rental company Essex Rental Corp. The board of directors has begun the search for a successor, and Schad will remain as CEO until a replacement is appointed.
In the search for a replacement an executive recruiting firm and the Essex Board of Directors will assess internal and external candidates, the company said. Schad will continue to serve on Essex's Board of Directors and will remain a significant stockholder of Essex, the company said.
Schad joined Essex in 2000 and has served as the CEO for more than 13 years. During his tenure, Essex has expanded both its market position and product offerings in the North American construction industry, the company said.
"I am pleased with the accomplishments of Essex Rental Corp.,” Schad said. “I am especially proud to have worked with our dedicated employees who are focused on serving our customers and building value for our shareholders. As a public company with a tremendous foundation of people and assets, we are uniquely positioned to grow our company's offering to our customers. It is with this in mind that I have decided it is an opportune time for me to consider my next steps and professional future. I see great upside for this company, and believe that the time is right for a new CEO to build upon the strategies we have developed to drive our growth opportunities."
Laurence Levy, chairman of the board of directors of Essex Rental Corp., said, "The Board of Directors thanks Ron for his service and dedication and we look forward to working with him in the coming months to identify a new leader for the company."
Schad’s resignation comes after the release of down third-quarter financial results for Essex Crane Rental on November 5. Equipment rental segment revenue was US$14.4 million for the three month period ended September 30, 2013 versus $17.3 million for the same period in 2012. Equipment rental segment revenue includes rental, transportation and used rental equipment sales.
The company said the $2.9 million decrease is primarily driven by a $1.9 million decrease in used rental equipment sales and an $800,000 decrease in equipment rental revenue. Used rental equipment sales in the third quarter of 2012 included approximately $300,000 associated with aerial work platform units, which Essex completed the divestiture of in January 2013. The decrease in equipment rental revenues was driven by a decrease in utilization for rough terrain, boom truck and tower crane fleet, partially offset by an increase in utilization of crawler crane equipment, the company said.
On the release of the third-quarter results, Shad stated, “While our year-to-date results display an ongoing economic recovery, our third quarter results reflect a softening in demand for certain end markets and customers that we serve."
On a more positive note, he said that “despite decreases in utilization on some of our lighter lifting equipment, crawler crane utilization is at its highest level since the first quarter of 2009. Crawler cranes make up approximately 75 percent of the value of our rental fleet. Within our crawler crane fleet, utilization of our heavy lift hydraulic crawler crane class was 70.9 percent, which is the highest level this class has achieved since 2008.”
Equipment distribution revenue, which includes the retail distribution of new and used equipment, but excludes the proceeds received from the sale of used rental equipment, increased by 206.2 percent to $3.8 million for the three month period ended September 30, 2013 compared to $1.2 million for the three month period a year earlier.
Parts and service revenue was $4.6 million for the quarter compared to $5.6 million for the same quarter in 2012.
Gross profit decreased to $1.3 million compared to $1.7 million for Q3 2012. Total gross profit decreased 14.2 percent to $5.5 million from $6.4 million a year earlier.
On November 5, Schad said that despite a softening in demand for some of Essex’ rental assets and parts and service business experienced in the third quarter of 2013, he said the construction market will continue its gradual recovery in 2014.
“The uncertainty within our government has slowed progress somewhat, but we are confident that the recovery will accelerate once we are provided more clarity,” he said. “We continue to manage overhead in order to maximize the return on our invested capital. Selling, general and administrative expenses excluding non-cash compensation was down 10.5 percent in the third quarter of 2013 compared to the prior year.”
He continued that Essex has experienced a decline in utilization in the beginning of the fourth quarter, partially due to the delay in some project starts.
“Given the delay in the key drivers of our business and the fact that our fourth quarter is normally impacted by seasonality, we anticipate that 2013 EBITDA before non-cash compensation and non-recurring expenses will be in the range of $18 million to $21 million, which is lower than the earnings guidance that we provided at the beginning of this fiscal year, which was between $21 million to $26 million,” he said.
Essex, through its subsidiaries, 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.