US crane hire company Maxim Crane Works has reported mounting losses and falling revenues for the first quarter of 2002.
For the three months that ended 31 March 2002 Maxim saw its total revenues fall 18% to $93.0 million, compared to $113.7 million for the first quarter of 2001.
Earnings before interest, taxes, depreciation and amortisation (Ebitda) decreased 27.5% to $21.0 million, down from $29.1 million for the same period in the year. before.
Net loss increased 27.4%, to $8.1 million, compared to $6.4 million for 2001’s first quarter.
Revenues from equipment rentals were down 14% to $89.6 million, a fall attributed to ‘delays in large projects, especially in the petrochemical industry, as a result of the continuing economic slowdown’.
The sale of equipment brought in $3.4 million in revenue in the first quarter, which is a 65% decrease on the $9.7 million raised in previous year’s first quarter. ‘This decrease is primarily due to the continued decrease in sales volume for both new and used equipment sold as part of the company’s fleet management program, as well as softer pricing,’ the company said.
Total gross profit fell 27% to $24.5 million for the quarter. Gross profit from equipment rentals decreased 27% to $24.1 million for the quarter. Margins were also off, down from 31.7% in 2001 to 26.9% this time. The company explained: ‘This decrease in gross profit margins principally reflected the following factors. First, the company experienced increased operating costs, including employee benefit costs and union benefits, repair and maintenance costs and other direct operating costs, as well as higher depreciation expense on rental equipment. At the same time, decreases in equipment utilisation and soft industrial markets further resulted in the decreased gross margin. The decrease in gross profit margin was reduced in part by the effects of the implementation of the company’s restructuring program, aimed at reducing unbilled labour and direct operating costs.’
Selling, general and administrative expenses (overheads) were reduced 7% to $20.0 million as a result of various cost savings initiatives implemented by the management in late 2001. ‘These reductions in selling, general and administrative expenses were partially offset by an increase in insurance expense as a continuing result of the tightening of the insurance markets during the second half of 2001,’ the company added. In the end, the ratio of overheads to total revenues was up from 19.0% for first quarter 2001 to 21.6% for the first quarter of 2002.
During the first quarter of 2002 Maxim spent $4.5 million on rental equipment, including cranes, compared to $22.1 million in the first three months of 2001. Proceeds from the sale of assets was $3.0 million and $6.2 million, respectively.
