06.08.2015

Sales pick up at Essex but losses continue

Essex crane has reported a modest rise in first half revenues but pre-tax losses continue to edge upwards too.

Total revenues for the period were $47.3 million, almost four percent higher than a year ago, due to a solid pick up in sales of new cranes, along with parts and service, offset by lower sales of used equipment. Crane rental was virtually flat. Pre-tax losses increased from $9.4 million last year to $10.5 million this year.

In the second quarter revenues improved three percent to $25.2 million, while the pre-tax loss was slightly higher than last year at £4.75 million.

Utilisation on hydraulic crawler cranes was around 10 percent higher than a year ago at 75 percent, while utilisation of other crane types were fairly stable , to marginally higher at between 50 and 60 percent depending on type, although traditional crawlers cranes dipped to 21 percent and self erecting tower cranes was down to under 31 percent.

Chief executive Nick Matthews said: “Demand for our hydraulic crawler cranes, tower cranes and heavy rough terrain cranes continued to show improvement both sequentially and year over year in the second quarter of 2015. The increased rental revenue generated from these assets, which make up the majority of the orderly liquidation value of our rental fleet, helped to offset the decrease in rental revenue generated from the large hydraulic attachments that were on rent last year.”

“We continue discussions with the lenders of the Essex Crane Revolving Credit Facility to remedy the previously disclosed events of default. We believe the best value to our shareholders and our lenders is to restructure the Essex Crane subsidiary to unlock the value of its operating model. The company and the board of directors are in the process of engaging a financial advisor to assist the company in connection with its current financial and operational performance and strategic planning.”

“The assets that make up a significant portion of the value of our rental fleet remain active. However, we are cognizant of the concerns in the market related to oil prices that remain depressed. With the broad array of end markets that our assets serve, we have been able to continue to drive high levels of utilisation in most of our key assets. While we have been encouraged by the current activity and look forward to the benefits of our recently implemented cost savings initiatives, we continue to see softness in our retail sales and our traditional crawler crane utilization levels, and we remain cautious on our outlook for the remainder of the year.”

Vertikal Comment

While the bottom line offers no positive news, there is a more optimistic feel about these numbers, and the sense that the company may have turned a corner. But of course it has a very long way to go to shed the debts accrued from the consistent losses and high costs.

One has to wonder why the company does not simply dispose of the remaining old crawler cranes in its fleet. They must be virtual museum pieces by now and surely only serve as a distraction. The utilisation numbers speak for themselves.

It will be interesting to see what happens in the second half, but in the meantime one cannot but assume that the business is ripe for acquisition at the right price of course.