Used Fleet Sales Fuels Essex’s Q2 Increase

Crane rental company Essex Rental Corp. this week posted total revenue of $27.2 million for the second quarter ended June 30, a 21.7-percent increase compared with $22.3 million for the same period a year ago. Equipment rental revenue was $11.1 million for the quarter, compared with $10.2 million in the second quarter of 2011, a 9.3-percent boost.

Total revenue for the first six months of 2012 was $50.9 million, compared with $43.8 million a year ago, a 16.2-percent hike, while rental revenue increased from $20.6 for the first six months of 2011 to $21.4 million this year, a 4.2-percent increase.

The biggest increases for Essex came in sales of used equipment, which more than quadrupled from $1.7 million in the year-ago quarter to $7.3 million in this year’s second quarter.

Average monthly crawler crane rental rates increased by $808, or 5 percent to $17,041 on a sequential quarterly basis, compared to $16,233 for the first quarter. On a year-over-year basis, average monthly crawler crane rental rates jumped $1,694 or 11 percent compared with $15,347 for last year’s second quarter. Average monthly crawler crane rental rates are at their highest level since the first quarter of 2010.

Utilization of rough-terrain cranes increased to 67.6 percent in the second quarter of 2012, compared to 54.8 percent for the first quarter. Utilization of heavy tower cranes and elevator lifts increased to 55.1 percent in the second quarter, compared to 47.9 percent for the first quarter of 2012.

“We are satisfied with the results achieved during the second quarter of 2012 and believe that the results represent a validation of our decision to broaden our equipment portfolio to include rough-terrain cranes, boom trucks and tower cranes as well as add predictable business lines such as third-party aftermarket parts and service sales,” said president and CEO Ron Schad. “Much of the increase in earnings on both a sequential quarter and year-over-year basis is as a result of operating improvements that have been implemented over the last six months. Utilization in equipment categories that represent the majority of our OLV continues to improve gradually, albeit off a low base.

“Specifically in the second quarter of 2012, we experienced sequential quarterly increases in utilization for crawler cranes, rough-terrain cranes and large tower cranes, which are our three largest equipment types as measured by original equipment cost. Rental rates are trending higher across many of our primary equipment categories. We are pleased with the level of rental fleet asset sales, particularly of non-core assets including aerial work platforms and forklifts that were acquired as part of the Coast acquisition. Proceeds from those sales were used to reduce debt.”

Schad presented a bullish outlook for the rest of the year. “Demand for our equipment continues to improve, particularly for infrastructure and maintenance-related energy projects,” he said. “The expected duration of new crawler crane orders year to date through July has increased 15.5 percent compared to the prior year’s orders. The increased average crawler crane lease duration is providing greater visibility, and if this trend continues, is likely to have a positive impact on utilization for the remainder of 2012 and 2013.”

Schad added that the company reduced its consolidated revolving debt balance by $7.9 million or 3.4 percent since the end of 2011.

Based in Buffalo Grove, Ill., Essex Rental Corp. is No. 29 on the RER 100.

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