24.03.2015

Better quarter for Essex

US based Essex Crane has posted its 2014 results after delaying them while it reviewed potential issues with past reporting. See Essex delays results
Total revenues for the year improved eight percent to $103.4 million, while its pre-tax loss increased from $14.7 million in 2013 to a loss of over $18 million in 2014. This due to higher operational costs, and higher interest expense.

In the fourth quarter however there were signs of improvement, with revenues growing over 25 percent to $28.3 million, while the pre-tax loss was reduced from $5.1 million in 2013 to $4.5 million in 2014. Utilisation for both crawler and Rough Terrain cranes improved, while tower cranes slipped back.

Chief executive Nick Matthews said: “We set four key strategic initiatives for 2014: improving asset utilisation, reshaping our asset portfolio and repositioning the fleet, improving quality and developing a more customer centric service oriented culture to improve customer relationships. The fourth quarter results are reflective of the progress we have made on these initiatives. Strong year over year improvement in utilization of our hydraulic crawler crane, rough terrain crane and tower crane fleets have resulted in a meaningful increase in rental revenue compared to the fourth quarter of 2013. We continue to sell excess rental fleet at an accelerated pace, with $5.7 million of rental equipment sales, including nine traditional crawler cranes in the fourth quarter.”

“As part of the initiative to become more customer centric, we have refocused the parts and service segment of the company to drive revenue primarily through service oriented transactions such as assembly services and third party customer work, and less on rental end billing procedures. We have captured much of the decline in revenue from the rental end billing process with these service oriented offerings along with the growth in our retail parts line and are encouraged by the trend of this segment in the second half of the year, which paralleled the growth in our other lines of business.”

“While our actual 2014 EBITDA was marginally lower than our expectations, we remain encouraged by the manner in which the year progressed. The year over year improvements in the second half of the year have put us in a stronger position to begin 2015 as compared to 2014 and despite some uncertainty caused by the decline in the price of oil, we expect the aggregate activity of the end markets we serve to continue to demonstrate year over year improvements in 2015.”

“We are pleased to have resolved the financial reporting issues relating to our balance sheet debt classification and our segment reporting. These issues related to technical accounting guidance and were not raised by our lenders. Additionally, these technical accounting issues were not caused by the operating results of the business nor did they have any impact on previously reported net cash flows, cash position, revenues, net income or earnings per share.”

“It is disappointing that the debt presentation issues arose particularly since the applicable terms related to the Company’s revolving credit facility agreements have not changed since the inception of the agreements many years ago. We have received waivers from our lenders and are eager to focus our efforts on continuing the progress the Company made throughout 2014 and look forward to a solid 2015.”

Vertikal Comment

Essex Crane still has a very long way to go before it gets onto a firm footing, but the fourth quarter is certainly encouraging. Whether the positive economic situation will last long enough for it to return to its former health remains to be seen, but it looks like a very long road.