09.05.2010

Essex decline continues

Essex crane rental the largest crawler crane rental company in North America has reported first quarter revenues down 62 percent.

Equipment rental fell by almost 68 percent, while other activities including used equipment sales, transportation and service fared a little better.

The decline was primarily due to lower utilisation rates which fell to 30 percent , compared to 57.2 percent last year and a 23 percent fall in the average monthly crane rental rates, driven by poor demand. The company says that as the quarter progressed utilisation began to improve.

As a result of the large drop in revenues, the company posted a pre-tax loss of $3.1 million compared to a profit in the same period last year of $3.3 million.

Essex chief executive Ron Schad, said: "As expected, the first quarter 2010 operating results were significantly less than prior year results due to the material decreases in utilisation and average rental rates, attributable to the weakened economy. Despite the decline in utilisation and average rental rates that we have been experiencing, the Company generated positive cash flows from operations of $400,000 for the quarter."

“During the quarter, we continued to take advantage of opportunities to liquidate rental equipment with lighter lifting capacities and lower utilization rates and invested in rental equipment that we believe will be in greater demand with higher rental rates as utilisation improves. We sold two used cranes with an average lifting capacity of 175 tons at an average price in excess of 120 percent of orderly liquidation value. In addition, we completed the purchase of one new crane with related attachments with a lifting capacity of over 400 tons. At quarter end, the Company had in excess of $48 million available on our revolving credit facility which provides liquidity for future growth opportunities."

"We continue to expect that our fleet utilisation will improve throughout 2010. However, the lower average rental rates we have experienced over the preceding fifteen months will continue to impact Rental EBITDA until we achieve rates of utilization that approach 60 percent. In addition to recent increasing utilisation, we continue to remain optimistic about the opportunities that we are seeing in certain of the crawler crane rental sub-markets including the petrochemical turnaround repair and expansion, levee construction and wind power sub-markets."

Cashless Exchange Warrant Offer

Essex has also announced an offer to temporarily modify the terms of the company's outstanding, publicly traded warrants, to provide warrant holders with the opportunity to exchange seven warrants for two shares of the company's common stock. The number of warrants that can be exchanged will be limited to 8,000,000. The offer opens today and will expire on June 8th.

Warrant holders may also continue to exercise their warrants for the $5.00 cash exercise price in accordance with the original terms of the warrants. The warrants expire on March 4, 201