Essex Crane Rental’s revenues grew in the fourth quarter thanks to its acquisition of Coast Crane, which was finalized during the quarter. Equipment rental revenue for the fourth quarter of 2010 was $8.1 million compared to $6.4 million for the same period in 2009, a 26.5-percent jump. The difference was the result of $1.7 million provided by Coast Crane during the five-week post-acquisition period. The company also credited an increase in utilization rates as contributing to its improved results.
Crawler crane utilization rate for the quarter was 44.7 percent, compared to 34.8 percent in the year-ago period. It also improved sequentially from the 40.2 percent in the third quarter.
Partially offsetting the increase in equipment rental income was a 19.2-percent decrease in the average monthly crane rental rate to $15,493, compared to the average monthly crane rental rate of $19,181 for the fourth quarter of 2009. The company attributed the decrease in average crane rental rate to a change in the mix of cranes on rent and lower rental rate pricing caused by weakened demand. The drop was compounded by the expiration of existing rental agreements at higher rates in previous years.
Transportation revenue for the fourth quarter of 2010 was $1.6 million compared to $1 million for the same period a year ago. An increase in the mobilization contributed to the increase, as did the transportation revenue provided by Coast Crane.
“We have been pleased with the acquisition to date,” said Ron Schad, president and CEO of Essex Crane. “During the fourth quarter of 2010, Essex Crane experienced both increasing utilization rates and the stabilization of average rental rates. During the fourth quarter, the cyclical upturn continued although we experienced moderate seasonal softness, which is typical during the winter months. We continue to believe that we are well positioned to substantially increase utilization as we move through 2011.”
Schad was optimistic about the company’s prospects for 2011, “based on increasing utilization and strong quoting activity, particularly to construction jobs that have already been awarded to contractors.”
Schad said Essex will focus efforts on implementing systems at Coast Crane that will provide visibility into quote and order activity similar to what the company already has at Essex Crane. “In addition, we will also focus on expanding the products that Coast Crane currently distributes and services to expand the retail sales and repair and maintenance lines of business,” he added. “Based on the high utilization of certain classes of Coast Crane’s equipment and the continued improvement in demand for those assets, Essex’s board of directors has approved a capital investment of over $20 million in new equipment for Coast Crane’s rental fleet. In addition to our continuing distribution of Manitowoc’s Potain crane lines, Coast Crane will announce its representation of other crane manufacturers within the coming weeks.”
Schad added that the company has received about $19.8 million in warrant exercise proceeds and “has a substantial amount of liquidity in the form of our cash balances and amounts available under our revolving credit facilities,” he said. “We are confident that the construction rental equipment, sales and service markets are improving and are optimistic about what the future holds for Essex Crane and its shareholders.”
For the full year, Essex posted $41.5 million in total revenue, compared with $52.1 million in 2009, a 20.3-percent decrease. Rental revenue declined from $34.6 million in 2009 to $25 million in 2010, a 27.7-percent plunge.
Based in Buffalo Grove, Ill., Essex Crane Rental Corp. is No. 40 on the RER 100. Coast Crane Co., based in Seattle is No. 34.