04.11.2009

Essex Crane plunges 50%

US Crawler crane rental specialist Essex Crane has reported third quarter revenues of $11.1 million down 50 percent on the same quarter in 2008. The company also posted a pre-tax loss of $1.5 million compared to a profit of $282,000 in 2008.

Nine month year to date revenues dropped 33 percent to $43 million, while pure rental revenue declined by almost 40 percent to $28.2 million. Pre-tax profits for the nine months were $906,000 compared to $20.6 million last year.

Physical crane utilisation for the third quarter 2009 dropped to 38.6 percent, compared to 72.8 percent during the same period of 2008.

The company says that it has noticed improving booking trends over the past six months and believes that the stimulus funded projects have been slow to develop but should begin to kick in and boost utilisation over the next 12 to 24 months.

Chief executive Ron Schad said: "Our performance in the third quarter reflects weakness in many of our end markets, which resulted in lower crane fleet utilisation and rental revenues”.

“While we are disappointed that we experienced a decline in profitability in the third quarter, we are highly focused on maximizing free cash flow through cost cutting initiatives, which thus far have included a lower headcount, reduction in salaries, decrease in overtime and labour hours, elimination of certain outsourced services, reduction of other operational expenditures and the sale of older, underutilised lighter lifting equipment. As a result of these actions, during the third quarter 2009, we were able to continue to reduce our debt outstanding and as of September 30 we have excess liquidity of $48.5 million available."

"In addition, during the quarter we remained focused on our growth strategy of repositioning the fleet to heavier lifting capacity cranes that generate higher rental and utilisation rates. This strategy has been validated by higher utilisation rates over the last nine months for most of our cranes with lifting capacities in excess of 200 tons as compared to cranes with lifting capacities of 200 tons or less”.

“Consistent with our business strategy, during this calendar year we have sold 12 used cranes with an average lifting capacity of 163 tons, at an average price in excess of 115 percent of orderly liquidation value. We have used these sale proceeds, in conjunction with our free cash flow, to fund the purchase of 10 new larger lifting capacity cranes and attachments with an average lifting capacity of 330 tons”.

“This in turn has improved our fleet's mix, average age and market position, further enhancing Essex's future earnings power. As a result of our direct purchase relationships with key equipment suppliers, we have secured this new equipment on terms that we believe will generate an attractive return on capital."