Essex Rental Corp. last week posted total revenue for the quarter ended Sept. 30, of $24.1 million, a 3.5-percent increase from $23.3 million in the third quarter of 2011. Equipment rental revenue was $12.6 million for the quarter, a 17.6-percent increase from $10.7 million for the third quarter of 2011 and a 13.1-percent increase from $11.1 million in the second quarter.
Total revenue for the first nine months of 2012 was $75.1 million, a 10-percent boost from $67.1 million a year ago, while rental revenue totaled $34.0 million for the first nine months, an 8.1-percent jump from $31.3 million in 2011.
Equipment rental segment gross profit increased 130.1 percent to $5.1 million for the quarter, compared to $2.2 million for the comparable period in 2011. On a sequential quarterly basis, equipment rental segment gross profit increased 27.8 percent from $4.0 million for the three months ended June 30.
Average monthly crawler crane rental rates increased by $1,692 or 10.7 percent to $17,560 in the third quarter compared to $15,868 for the year-ago period. The Q312 average monthly crawler crane rental rate was at its highest level since the first quarter of 2010.
“Improvements in equipment utilization, better rental pricing and the operating initiatives that we have initiated throughout 2012 are contributing to the improvement in our operating results,” said Ron Schad, president and CEO of Essex. “We believe that these results validate our decision in late 2010 to broaden our equipment portfolio to include rough-terrain cranes, boom trucks and tower cranes as well as to add predictable business lines such as third-party aftermarket parts and service sales. Approximately 67 percent of the year-over-year improvement in our earnings is attributable to higher utilization and rental rates, while the remainder is attributable to the operating improvements that have been implemented throughout the year.”
Utilization of crawler cranes increased to 43.4 percent in the third quarter compared to 39.5 percent for the year-ago period and 39.4 percent for the second quarter of 2012. Rough-terrain crane utilization increased to 69.3 percent compared to 63.2 percent in the third quarter of 2011, marking the highest utilization rate achieved in this asset class since the company’s acquisition of this category of assets in late 2010.
Heavy tower crane and elevator lift utilization increased to 54.7 percent in the quarter compared to 37.5 percent for same period a year ago.
“We are continuing to experience gradual improvement in utilization in the equipment categories where we have the majority of our capital employed,” Schad said. “Utilization rates on our hydraulic heavy lift crawler cranes have increased sequentially in each of the last six months and in the third quarter of 2012 were in excess of 64 percent. The hydraulic heavy lift crawler cranes have higher dollar rental rates and account for approximately 70 percent of the orderly liquidation value of our crawler cranes and approximately 50 percent of the orderly liquidation value of the total fleet. We are now selectively increasing rental rates on this sub-category of assets. In addition, lease durations on new orders received during the past two quarters for this asset sub-category have averaged approximately 6.3 months as compared to an average expected duration of approximately 4.8 months for the same time period in 2011.”
Equipment rentals segment revenues were $18.6 million for the third quarter versus $14.4 million for the year-ago period. Equipment rentals segment revenues include rental, transportation, used rental equipment sales and repairs and maintenance of rental equipment. The 29.0-percent year-over-year increase is due to an increase in days on rent for our crawler crane, tower crane, rough terrain, and boom truck equipment and an increase in used rental equipment sales of $2.1 million.
“Demand for our equipment continues to improve, particularly for infrastructure and maintenance related energy projects,” Schad said. “The expected duration of new crawler crane orders year to date through October has increased 10.8 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.
“We are highly confident that improvements in utilization and rental rates combined with cost reductions already implemented are likely to result in an improvement in fourth quarter 2012 earnings as compared to the same period in 2011 and strong earnings momentum leading into the first half of 2013.”
Based in Buffalo Grove, Ill., Essex Rental Corp. is No. 29 on the RER 100.
