12.03.2012

Essex sees a pick-up

Essex Crane has reported a slightly better set of results for 2011, with a much more optimistic outlook for 2012.

Total revenues for the 12 months were $89.6 million- more than double last year’s $41.5 million, although most of the improvement comes from the acquisition last year of Coast Crane. Rental revenues in the period were $41.97 million, compared to $25 million in 2010. The company reduced its pre-tax loss from 14.9 to $27.9 million in the same period.

Looking at the fourth quarter, total revenues were $22.5 million compared to $15.4 million a year earlier. Of this rental was $10.7 million up from 8.1 million in the final quarter of 2010. However the pre-tax loss during the quarter increased from $5.3 to $7.3 million due to higher interest and other costs.

Crawler crane utilisation increased to 39.8 percent for the year, up over two percentage points, while average rental rates for crawler crane increased by $523 to $16,391 in the fourth quarter, although utilisation eased a little in the same period.

However the Rough Terrain crane fleet increased to 62 percent, in spite of a 25 percent increase in the fleet over the year. Self-erecting tower crane utilisation was relatively flat at just under 60 percent.

Chief executive Ron Schad said: "During the fourth quarter of 2011 we generated results that were consistent with the business levels that we have experienced throughout the entire year. Rental rates continue to be stable and on a full year basis we achieved a 2.3 percent increase in crawler crane utilisation. We are continuing to focus on selling rental fleet assets with low utilisation such as certain classes of crawler cranes and other non-core assets with shorter economic lives, which we believe generate a return of capital instead of a return on capital.”

“These non-core assets that were acquired as part of the Coast Crane acquisition include aerial work platforms and forklifts. Following the implementation of our IT systems at Coast, we commenced a number of proactive initiatives which are aimed at enhancing both our equipment rental and our parts and service profitability. We have also successfully completed the consolidation of Coast's finance and accounting functions within our Illinois headquarters. We expect that this consolidation will generate approximately $350,000 in annual savings."

"As we noted in our third quarter earnings release, our monthly crawler crane bookings were pointing towards modest utilisation improvements. This trend has accelerated somewhat. Specifically, for the five month period ended February 29, 2012, our expected revenues from signed bookings are up approximately 55.5 percent. The number of orders that we booked was the highest since the five month period ended February 29, 2008.As a result of the improvement in bookings, we expect to see increasing rental revenues during 2012."

"On a very selective basis we are beginning to increase rental rates on certain crawler crane classes where utilisation exceeds 60 percent. In addition, we expect that our investment of approximately $24 million in new equipment during 2011, primarily in Rough Terrain cranes and boom trucks, the majority of which we received during the latter half of the year, will contribute to improved rental revenues in 2012. “

"As of December 31, 2011, Essex had approximately $48 million of liquidity, consisting of $9 million in cash and amounts available under our revolving credit facilities. The decline in liquidity as compared to September 30, 2011 is almost entirely related to the addition of $10 million of new equipment in the quarter. Additionally, we have approximately $6 million of borrowing base assets in excess of our total revolving credit facility limits."