Equipment rental represented 72.4% of total revenue, or $6.3m for quarter three, 2010, compared to 64% of total revenue, or $7.1m for the same period in 2009.
Ron Schad, president and CEO of Essex, said of the results: “Third quarter results were consistent with our expectations, and we continued to see some of our end markets recover and, accordingly, demand for our heavy-lifting equipment increase. During the quarter, we witnessed the continued stabilisation of rental rates. However, our average monthly rental rate declined marginally primarily due to the mix of cranes on rent.
“More importantly, on a sequential quarter basis we experienced a meaningful increase in utilisation rates when compared to the three months ended June 30, 2010. Rental related revenues increased sequentially by 18.5%, or $1.3m, to $8.6m for the three months ending September 30 2010 from $7.3m for the three months ended June 30, 2010.
“We are optimistic that the benefit of the cyclical upturn that we are experiencing will exceed the slight seasonal downturn usually experienced during the fourth quarter. We have significant projects scheduled to start in November which provides some assurance that utilization will continue to climb through the fourth quarter, which would put the company in a position to substantially increase utilization as the spring construction cycle begins in early 2011.”
The decline in rental equipment was related to a 22.1% decrease in the average monthly crane rental rate from $20,716 in 2009, to $16,137 for the third quarter in 2010. Essex cites the reduction as being caused by a change in the mix of cranes available for rent, and lower rental rates, due to weak demand driven by the state of the difficult commercial environment.
Essex states that the period saw the expiration of a number of rental agreements.
Crane utilisation for the firm increased: for the quarter ending September 30, 2010, the crane utilisation rate was 40.2%, up from 38.6% in the same period in 2009, and 35.1% for the quarter ending June 30, 2010.
Shad is optimistic for the remainder of the year and 2011: “We expect utilisation rates to continue their upward trend and believe [they] will reach levels that will allow us to achieve higher rental rates in the foreseeable future.
“Essex believes that our continued improvement in fleet utilisation, combined with the leveling off of declining rental rates is our best indication of the ongoing recovery taking place in the heavy lifting crane rental business sectors that we serve.”