Crane rental up at Essex

Fourth quarter and year-end 2011 financial results at Essex Rental Corp included some positive highlights for the US crane rental house.

Over the year crawler crane utilisation increased to 39.8% from the 37.5% for the 12 months ending 31 December 2010. The average monthly crawler crane rental rate increased US$523 to $16,391 for the three months ended 31 December 2011, from $15,868 for the previous quarter of 2011.

Utilisation in the rough terrain crane fleet for 2011 was 62.0%, fitting well with the strategy of increasing the number of RTs in the rental fleet by 25.5% over the preceding 12 months. It was also up on large tower cranes, by 2.5% and to 60% in some classes but remained flat in self erecting towers over sequential quarters.

Equipment rentals segment revenue, which is 73.8% of the total, was $16.6 million for the three months ended 31 December 2011, up 15.1 % on the $14.4 million for the previous quarter. Sales of new, used and rental equipment was $5.4 million for the last three month period of 2011, down 6.9% from the $5.8 million for the previous quarter.

Commenting on the results Ron Schad, Essex president and CEO, said, "During the fourth quarter of 2011 we generated results that were consistent with the business levels that we have experienced throughout the entire year. Rental rates continue to be stable and on a full year basis we achieved a 2.3% increase in crawler crane utilisation from 37.5% in 2010 to 39.8% in 2011. We are continuing to focus on selling rental fleet assets with low utilisation such as certain classes of crawler cranes and other non-core assets with shorter economic lives, which we believe generate a return of capital instead of a return on capital. These non-core assets that were acquired as part of the Coast acquisition include aerial work platforms and forklifts."

Integration with Coast and implementation of Essex IT systems will generate around $350,000 in annual savings, Schad continued.

There are bright spots in Schad's outlook for 2012. A recent trend for a modest increase in crawler crane utilisation has accelerated "for the five month period ended February 29, 2012, our expected revenues from signed bookings are up approximately 55.5% as compared to the same prior year period. Expected revenues are up 24.4% as compared to same period two years ago after excluding the orders of crawler cranes for levee work.

"Equally as important, the lease duration of bookings during the five months ended February 29, 2012 increased by over 1.8 months per order versus the five month period ended February 28, 2011. Historically, as lease duration increases, our average utilisation generally improves. The number of orders that we booked during the five month period ended February 29, 2012 was the highest since the five month period ended February 29, 2008.

"We would expect that consistent with previous cycles, given the nature of our equipment, an increase in our bookings typically lags that of general construction equipment rental companies by 6 to 12 months. As a result of the improvement in bookings, we expect to see increasing rental revenues during 2012."

Also positive is that, "On a very selective basis we are beginning to increase rental rates on certain crawler crane asset classes where utilisation exceeds 60%. In addition, we expect that our investment of approximately $24 million in new equipment during 2011, primarily in rough terrain cranes and boom trucks, the majority of which we received during the latter half of the year, will contribute to improved rental revenues in 2012. This equipment is specifically focused on increasing our rental capacity in the asset classes where we have experienced the highest utilisation of our rental fleet."