Essex expects strong 2012 with high utilisation

Sales of used rental equipment made up the majority of the equipment rental segment's revenues, which accounts for 76.3% of Essex Crane Rental's total revenue, however the firm says it is seeing new equipment quoting increase as customers become more confident in the US economic recovery.

Of these, $5.3m of used rental equipment sales helped the firm to reduce its revolving debt balance by $4m by selling at an average of 110.3% of orderly liquidation value (OLV).

Rental rates for the company's crawler cranes were up by an average $717 to $16,233 on the same period last year while overall utilisation rates for crawlers also increased to 37% from 33.9% for Q1 2011, with the average lease time increasing from 5.5 months to 6.9 months.

Essex also saw improved utilisation for its rough terrain and tower cranes, which improved on the Q4 2011 by 3%, to 54%, and 10.6% respectively. The firm pointed out that for some classes of tower crane utilisation tops 60%, and with these two crane types being the firm's second and third largest equipment types as measured by original equipment cost, is pleased with the improvement.

The firm also sees the growth in rough terrain utilisation, mainly for maintenance and energy sector applications as vindication of its policy of investing $17m in rough terrain cranes last year.

Essex Crane Rental president and CEO Ron Schad commented that the first quarter of the year is typically the company's worst performing quarter of the year, and based on the performance so far is optimistic for the rest of 2012.

He said: "During the first quarter of 2012 we continued to see positive trends in our rental and service segments. Rental rates remain stable and, in certain asset types including heavy lift rough terrain equipment and certain crawler crane classes we have achieved utilisation levels that provide us the opportunity to increase rental rates.

"We achieved sequential quarterly increases in the utilization of many of our equipment classes, including our rough terrain and large tower crane fleets. We are experiencing increased demand from energy and petrochemical related customers located in the Gulf Coast region, central California and in the Pacific Northwest.

"We were pleased with the level of rental fleet asset sales, particularly of non-core assets including aerial work platforms and forklifts that were acquired as part of the Coast acquisition. Proceeds from these sales were used to reduce our debt balance and in the future may be used to acquire new equipment in asset classes that are experiencing higher utilization levels.