When Essex began announcing its monthly rental rates, figures in its Q4 2008 results showed that in Q4 2007 it had achieved average monthly rental rates of $17,740. This quarter’s figure, of $17,562, is the lowest the company has released. In the last quarter of 2009, the company achieved average monthly rental rates of $19,180. A year ago, in Q1 2009, the figure was $22,794.
Essex said, “The decrease in average crane rental rate was the result of anaemic demand due to the weakening economy and the difficult commercial credit environment compounded by the expiration of existing rental agreements executed at higher rental rates in the prior year and earlier.”
Crane utilisation was also at a record low. Calculated on a (conservative) days method, the company achieved utilisation rates of 30.0%, down from 57.9% in the first quarter of 2009, and 34.8% in Q4 2009. The company said, “We experienced our lowest utilisation rate during the month of January 2010. Since January 2010 and through the date of this release, we have experienced steadily increasing utilisation in each subsequent month.”
The company’s rental related revenue for the month, including equipment rental, repair and maintenance, and transportation services, was $7.3m, down from $15.3m in Q1 2009, and $8.7m last quarter.
President and CEO Ron Schad said, “As expected, the first quarter 2010 operating results were significantly less than prior year results due to the material decreases in utilisation and average rental rates, attributable to the weakened economy. Despite the decline in utilisation and average rental rates that we have been experiencing, the company generated positive cash flows from operations of $400,000 for the quarter ended March 31, 2010.”
“During the quarter, we continued to take advantage of opportunities to liquidate rental equipment with lighter lifting capacities and lower utilisation rates and invested in rental equipment that we believe will be in greater demand with higher rental rates as utilisation improves. During the quarter ended March 31, 2010, we sold two used cranes with an average lifting capacity of 175USt at an average price in excess of 120% of orderly liquidation value. In addition, we completed the purchase of one new crane with related attachments with a lifting capacity of over 400USt. At quarter end, the company had in excess of $48m available on our revolving credit facility which provides liquidity for future growth opportunities.”
