“During the fourth quarter, the challenging commercial credit environment, economic uncertainty and lower oil prices impacted our customers and new order activity, including downstream power and petrochemical owners, who chose to defer certain maintenance projects,” said Ron Schad, president and CEO of Essex Crane.
“During the latter portion of the first quarter of 2009, we began to see a pick up in quoting activity that is consistent with levels in the same period last year. In addition, our quoting activity leads us to believe we will realise a benefit beginning in the second half of 2009 from infrastructure projects included in the Federal Stimulus Bill that target highway and heavy bridge construction, civil works programmes, and water and wastewater treatment. Alternative energy projects, especially wind energy, are also expected to generate higher level of quoting activity.”
For 2008, total revenue increased from $77.7m to $85.3m and gross profit grew from $39.2m to $49.1m. Within this, equipment rental revenue increased from $48.8m to $61.8m, revenue from used rental equipment sales fell from $13.2m to $8.4m, transportation revenue fell from $8.6m to $8.1m and revenue from equipment repairs and maintenance fell slightly from $7m to $6.9m. Rental EDITDA reached $43.6m compared to the $32m recorded during 2007.
The average crane rental rate per month that Essex Crane was able to charge rose from $16,266 to $21,382, although its rental revenue backlog is down from $33.5m to $30.3m.
In the fourth quarter, Essex Crane invested $2.8m in new cranes with heavier lifting capacities to replace older cranes in its fleet with lower lifting capacities, which generally provide the company lower utilisation and rental rates.
“We are very pleased with Essex Crane’s results for 2008, which included increased rental revenues and rental EBITDA,” said Schad.
“In 2008, we experienced well balanced demand across the end markets that we serve and our financial results benefited from our strategy of transitioning our fleet towards new heavier lift capacity cranes, which generate higher average monthly rental rates and have higher utilisation rates than the older lower lift capacity cranes that they are replacing. These heavier lift capacity cranes contribute significantly to our profitability and cash flow from operations.”
For the fourth quarter of 2008, the company also reported an increase in equipment rental revenue, rising from $13.6m to $15.8m. However, used rental equipment sales revenue dropped from $5m to $1.7m, transportation revenue declined from $2.2m to $1.9m and revenue from equipment repairs and maintenance was down from $1.7m to $1.5m.
This resulted in total revenue for the quarter down slightly from $22.7m to $21m. Although revenue costs also decreased slightly over the three months, the resulting gross profit for quarter four 2008 was down from $12.2m to $11.7m.
