07.05.2012

Essex edges upwards

US crawler crane company Essex Crane lifted revenues by 10% in the first quarter as activity and rates improve.

Total revenues for the period were $23.7 million, 10 percent higher than in the same quarter last year. At the same time the Pre-Tax loss was reduced from $7.05 million last year to $6.8 million this year.

In spite of the modest improvement, Essex said that rental utilisation for both crawler and large tower cranes was up, as were rates. New equipment sales collapsed, although this was more than compensated for by higher used equipment sales. The company also says that the number and value of quotations it is making for new equipment has improved significantly.

Chief executive Ron Schad said: "During the first quarter we continued to see positive trends in our rental and service segments. Rental rates remain stable and, in certain asset types including heavy lift rough terrain equipment and certain crawler crane classes we have achieved utilisation levels that provide us the opportunity to increase rental rates. We achieved sequential quarterly increases in the utilisation of many of our equipment classes, including our rough terrain and large tower crane fleets. We are experiencing increased demand from energy and petrochemical related customers located in the Gulf Coast region, central California and in the Pacific Northwest.”

“We were pleased with the level of rental fleet asset sales, particularly of non-core assets including aerial work platforms and forklifts that were acquired as part of the Coast acquisition. Proceeds from these sales were used to reduce our debt balance and in the future may be used to acquire new equipment in asset classes that are experiencing higher utilisation levels. Both our improving utilisation trends and progress in our rental asset sale program have continued into our second quarter. The implementation of the new IT system at Coast has allowed us to proactively manage this business unit more effectively and in conjunction with increased utilization we experienced a meaningful improvement in Coast's operating performance in the first quarter of 2012."

Vertikal Comment

While the market seems to be improving Essex still has a long way to go in order to turn this business around. The substantial reduction in new equipment sales from the acquired Coast Crane business is surprising, but might only be a timing thing, especially given the longer lead times from manufacturers.

If it had not been for the sale of its aerial lift fleet and other used equipment that did not need to be replaced, these results would have been seriously negative.

On the plus side the company has paid down debt and is pulling the two quite different businesses together into a single unit. The half year results will be far more indicative of the progress than this three month glimpse.