Essex enjoys new fleet mix after Coast Crane deal
10 August 2011US rental firm Essex Crane says a new fleet mix from the recent acquisition of Coast Crane, adding boom trucks and rough terrains to its existing crawlers, improved overall utilization and buoyed revenues to $22.34m for the quarter. The firm plans $28m of spending to increase its mix further.
Essex’s rental revenues remained stable in the quarter but have been gradually rising 61.5% to $14.6m from $9m over the last year thanks to Essex’s new subsidiary Coast Crane generating revenues of $4.8m. Parts and service segment revenue was ‘stable’ in the quarter, dipping nominally to $4.1m from $4.5m the first quarter.
The average monthly rental rates for crawlers, its main segment, have been decreasing since the financial crisis in 2008, and they sunk an additional $1025 to $15,347 this quarter from $16,372 the same quarter last year. This is because of a change in the mix of cranes on offer, said Essex CEO Ron Schad during the second quarter results conference call.
Driven by oil and gas and maintenance demand, boomtrucks were utilized at 53.3%. Rough terrains were utilized at 68.9%. Essex plans on capitalizing on comparatively high utilization rates for these segments by purchasing $28m of new equipment in the third quarter.
Schad projected that crawler utilization rates will follow these rates: “Some equipment rental companies in the construction sector have reported results with significant quarterly increases in both utilization and rates, and we have seen some similar results in smaller, early-recovery equipment such as rough terrain cranes that we offer for rent, however over 80% of our assets are crawler and tower cranes which typically recover later in an expansion cycle.“
Utilization statistics for crawlers were just stable at 38.6% up from 35.1% in the second quarter of last year, although utilization viewed from a half-year on half-year basis rose from 32.6% to 40.7%.
Rental contracts for 22 crawlers used at levee-construction projects on the Gulf Coast ended prematurely incurring operating costs of $0.4m for crane renovation, said Schad. “Excluding these levee-related crawler cranes, we have continued to see a steady increase in utilization on a comparable quarter and year to date basis for this asset category,” he said.
High year-on-year total revenues of $22.34m over $9m were recorded despite the fragility of a construction market faced with high materials costs and investor insecurity.
