17.03.2014

Poor fourth quarter for Essex

US based Essex Crane Rental saw a further deterioration in the fourth quarter, capping a poor year in terms of results.

Total revenue for the 12 months was $95.54 million almost three percent lower than in the same quarter of 2012. Pre-tax losses were reduced from an $18.2 million loss in 2012 to a loss of $14.7 million in 2013. The only positive news was new equipment sales which more than tripled to over $11 million. Rental revenues were flat for the full year, while all other sectors, including used equipment sales, transport, parts and repairs were all lower.

Moving on to the fourth quarter, total revenues were down almost four percent to $22.45 million, while the pre-tax loss increased to $5.1 million from $3.65 million in 2012. The company sold seven old friction crawler cranes, which helped lift utilisation for these units slightly, while utilisation for hydraulic crawler cranes and all other crane types except self-erecting tower cranes were down.

The company says that it managed to cut its net debt by 8.3 percent, while rental rates for its core hydraulic crane fleet improved by 4.3 percent. The company is not forecasting any improvement for 2014, although it says that it is cautiously optimistic.

Chief executive Nick Matthews said: “Despite year to date EBITDA being within our updated guidance, we are disappointed at how the year ended. While we anticipated the sequential softening in utilisation levels and earnings in the fourth quarter due to seasonality, the residual effects of the soft third quarter are shown in our results.”

“We are encouraged by the improvement in our retail distribution line. The growth of this segment provides opportunities that should enhance future earnings for our other segments, and also strengthens the relationships we have with our key suppliers. We feel that with our current distribution agreements in place, we are well positioned to take advantage of the recovering end markets.”

“As we have stated in the past, we continue to look for opportunities to sell rental fleet assets that were underutilised during historic peak demand periods. We have accelerated our efforts by selling seven traditional crawler cranes in the fourth quarter of 2013 and listed several others in a sealed bid auction that we announced earlier this year. We continue to manage our overhead costs and selling, general & administrative expenses excluding non-cash compensation and non-recurring expenses have decreased by 11.7 percent versus the same period last year.”

“While we are disappointed with our fourth quarter results, we remain cautiously optimistic for 2014. Although we are coming off of a lower basis than we started from in the beginning of 2013 in terms of utilisation, early indicators in 2014 are encouraging. Since the beginning of the year, which is historically a soft seasonal period, expected rental revenue from signed crawler crane rental orders has increased by approximately 20 percent, as compared to the same period in the prior year. In addition, we have seen a trend of increasing utilization on the rough terrain cranes and boom trucks as measured against units on rent at December 31, 2013.”

“That being said, we are not projecting any significant revenue increases in our 2014 guidance, but instead are forecasting conservative growth throughout the year. We are not projecting any significant net capital expenditures in excess of anticipated equipment sales in 2014.”

Vertikal Comment

Another dismal set of numbers from Essex, which show that the company still has a long way to go before it turns the corner. If it can dispose of all its older cranes and continue to see a recovery in new equipment sales, it ought to have a far better year in 2014.