15.03.2010

Essex Crane down 39%

US crawler crane rental company Essex Crane has reported full year 2009 revenues of $52.3 million a fall of more than 39 percent on 2008. Rental revenues were down 44 percent to $34.6 million.

In spite of the fall the company posted a pre-tax profit for the year of $1.2million compared to a loss of $4.7 million in 2008. The key differences were a $24 million goodwill write down last year and around $7 million of AG&A costs associated with the acquisition of the business.

The fourth quarter was worse than the year as a whole with rental revenues falling 60 percent to $6.3 million, as utilisation dropped from 73 percent last year to just 35 percent in the fourth quarter 2009. Total revenues, which also includes sales of used equipment, transport and services, fell 58 percent to $9 million. The business reported a quarterly loss of $619,000, compared to a loss in the fourth quarter 2008 of $14.4 million (Write down and acquisition costs).

Chief executive Ron Schad said: "While we are disappointed with Essex's results for 2009, in light of the current economic conditions we were satisfied with our ability to successfully manage costs thereby enabling us to optimize free cash flow. The decrease in utilisation rates and to a lesser extent average rental rates had a significant negative impact on total revenues.”

“Despite the difficult operating environment, we had positive cash flow from operations of approximately $15.1 million and had $48.7 million of borrowing capacity under our revolving credit facility at year end. We expect that our fleet utilisation will improve throughout 2010. Although we have begun 2010 with low levels of utilisation, our expectation for improvement should result in 2010 average utilisation near or above the average experienced in 2009.”

Essex says that it expects the first quarter to be worse than the fourth quarter, but says that it is now seeing a pick up in utilisation and bookings with the first two months being better than the whole first quarter of 2008.

Shad continued "We are likely to reduce our investment in new crane purchases in 2010 to maximise the returns on the nearly $40.0 million investment in new rental equipment over the last 24 months. Opportunities for the sale of smaller capacity, older cranes continue to exist at values in excess of our orderly liquidation value. We continue to believe that our strategy to sell under utilised lighter equipment and reinvest into heavier lifting capacity higher equipment positions us well to meaningfully participate in the recovery."