10.05.2009

Essex crane slips 15%

US crawler crane rental company Essex Crane, has reported first quarter revenues down 15 percent to $17 million, rental related revenues (Revenues less used crane sales) dropped 13 percent to $15 million.

While revenues fell, the company managed to marginally improve pre-tax profits to $3.3 million, thanks to lower salary and interest costs.

The company says that during the latter portion of the quarter it began to see a pick up in quoting activity to a level consistent with the same time last year, which it believes will convert to an improvement in actual business. Rental revenue backlog declined to $20.6 million by the end of March, from $30.3 million at the end of December.

The average monthly crane rental rate increased 18.9 percent to $22,794 for the quarter, from $19,163 for the same period last year. The increase reflected both rental rate increases and Essex's continuing efforts to optimise its fleet mix through the purchase of new, heavier lift cranes. The investment in new larger cranes is being partially financed through the sale of older smaller cranes. The company invested $8.6 million in new cranes during the quarter.

The total number of crane rental days totalled 57.2 percent of the total available days, compared to 72.6 percent in the same quarter last year. The decline in utilisation was partially offset by the increase in average monthly crane rental rates.

Ron Schad, chief executive of Essex, said: "The sluggish booking activity we experienced towards the end of the fourth quarter of 2008 continued through the first quarter of 2009, stemming from the difficult commercial credit environment and general economic uncertainty that affected our customers across the board. However, in the latter part of the first quarter of 2009, we started to experience a pick up in quoting activity to levels that were experienced in the same period of 2008. We anticipate an increase in bookings in the second half of 2009 as recent inquiry and quoting activity has led us to believe that orders are close to being released for infrastructure projects. This is specifically related to heavy highway work and other projects included in the Federal Stimulus Bill that targets many of our end markets."

"In the interim, we have slowed our capital expenditure program and implemented several cost cutting initiatives. This included reducing headcount, eliminating discretionary expenses wherever possible, decreasing the use of third party vendors that were performing maintenance on our cranes and reducing overtime and the associated expenses. We believe that these actions are prudent in light of the current macro-economic environment and will not detract from the long-term value of the business."

"In order to take full advantage of our strategy to reposition our fleet towards higher lifting capacity cranes that generate higher rental and utilization rates, it is crucial to have access to liquidity when needed. At March 31, 2009, we had approximately $46.3 million of availability on our $190 million credit facility and believe in the predictability and visibility of our earnings stream and Essex's ability to generate strong free cash flow.”