07.08.2014
Losses mount at Essex
US crawler crane rental company Essex Crane has posted its half year results with losses continuing to grow.
Total revenues for the first half totalled $45.6 million, a fall of over nine percent, while pre-tax losses increased from $6.7 million last year to $9.4 million this year. due to lower rental revenues and substantially lower sales of used equipment.
Moving on to the second quarter revenues totalled $24.5 million, a drop of almost three percent, while pre-tax losses were only marginally higher than last year at $3.5 million.
The company says though that progress in the quarter was substantial with crawler crane utilisation in June reaching the highest levels since 2008. The net effect was to see rental revenues grow by almost three percent.
The backlog for new rental contracts is also increasing sharply. Retail crane sales were well up for the quarter but were offset by substantially lower sales from the fleet and lower repair and service revenues.
Chief executive Nick Matthews said: "The strategic initiatives that we previously announced have been the primary focus of our management team in the second quarter of 2014. Although we are still in the early stages of implementation, it is encouraging that these initiatives are beginning to directly contribute to the improvement in our utilization and revenues."
"Strong hydraulic crawler crane order intake throughout the first half of 2014 has resulted in a 29.1 percent increase in units on rent at June 30, 2014 as compared to year end 2013, and also a 69.2 percent increase in backlog as compared to prior year. Hydraulic and traditional crawler crane utilization has grown each month throughout the second quarter and hydraulic crawler crane utilization for the month of June was at its highest level since 2008. Rough terrain cranes continued to increase utilization sequentially for the third consecutive quarter and are also approaching prior peak levels, while city tower cranes also showed year over year and sequential improvements."
"We believe that our success depends on our customer's success and we are fully committed to an aggressive campaign of continuous quality improvement. We remain focused on increasing utilization in all asset classes and striving to create a more customer centric, service oriented culture. We continue to analyse potential opportunities to sell rental fleet assets that were underutilized even during historic peak demand periods. The positive response from customers and the increase in utilization that we experienced is early validation that the strategic initiatives the new management team has initiated are being well received."
Vertikal Comment
While the company continues to bleed red ink, this is the most promising quarterly result for some time. The business still has a long way to go just to get back to zero, but at least now it really does look as though it is well on the way to climbing out of the hole, and we ought to see a decent second half partially compensating for the tough first half.
Watch this space.
FGB
Just to be clear
YTD loss $9,430,000
$6,030,000 loan cost on the balance sheet. That is another pure loss.
$37,000,000 deferred tax liability
Accumulated Loss on the books since going public $65,786,000
In summary, it looks worse than when Schad was there since the overall market is on the rise in the USA. In fact, their attempt to differentiate their utilization of "hydraulic" crawlers vs. "conventional" crawlers is like a restaurant saying they sold all the food that people wanted today but they have 2 years worth of unsold "soup du jour" in the refrigerator. The fact is, their fleet is comprised of "cranes".
If they don't feel they can rent the non-hydraulic crawlers, then why do they still own them? As an investor (it is publicly traded) shouldn't these questions be asked? Do they have a "rentable" fleet of under-utilized assets or are they basically as high as they can be with current fleet mix? Either way, they have major issues and the numbers indicate a DECLINE in performance vs. prior year and the market is at least 25% improved.
Just my view as supported from their report.