Essex sees benefits of diversity, better used crawler demand
14 November 2011Marginally increasing revenues in the third quarter of 2011, a year on year comparison reveals American crane rental firm Essex’s rental revenue has climbed 69% from $6.34m to $10.7m, giving its CEO, Ron Schad, a sound argument for rising demand in multiple categories: Schad foresees more used crawler sales as well as boom truck, self erecting tower crane and rough terrain category utilisation increases.
After integrating its operations with Coast Crane and adding boom trucks and rough terrains to its rental offerings, utilisation of these segments increased in the third quarter, allowing Essex to ultimately raise rental rates in the future, presumably for these segments.
Two quarters on from the acquisition, Essex is already awaiting delivery of more new rough terrain cranes and boom trucks to exploit its successes in these acquired segments.
Essex has successfully installed an IT platform at former Coast Crane and is ready now to make further mix decisions and better manage parts, servicing and distribution.
Meanwhile, in its historic crawler crane category, utilisation and rental rates have been stable, whether viewed on a quarterly sequential or yearly basis.
Crawler crane utilisation decreased a hair in the past year, wavering from 40.2% to 39.5% if one takes into account crawlers sidelined after being scheduled for work on terminated levee projects on the Gulf Coast, but utilisation increased for crawlers on other projects.
On shorter-term assessment, crawler utilisation was up from Q2 2011, with 42% of orders from power and petrochemical industries, and about this development Schad is “cautiously optimistic”. Rental rates for crawlers increased $521 in the quarter from $15,347 to $15,868.
Demand nonetheless increased for crawlers in terms of sales: Thus far in Q4 Essex has sold three used crawlers with several more either on contract or under quotation.
Schad predicted greater demand for this category: "We are experiencing an increase in inquiries about purchasing used rental equipment, particularly for crawler cranes. As we have said previously, we believe that we have as much as $25m of crawler crane and attachments in our fleet that have been underutilised even at the highest historic utilisation levels. As such, we have rededicated resources to capitalise on this interest. Through the end of the third quarter of 2011, we had sold less than $0.1m of crawler cranes and attachments, but expect to realise at least $2.0m from used crawler crane sales in the fourth quarter.”
This eventually will mean high used sales figures in Essex’s FY 2011 results; already overall used equipment sales have increased, multiplying from $0.15m in Q3 2010 to $1m in Q3 2011. The buying trend is still visible when seen from a longer term, year-to-date perspective, with a 10% increase upon $2.94m in 2010 to $3.24m in 2011.
