Glossary
- "Bare" Crane Rental
- Renter must supply operator and maintain crane while on rent
- CAGR
- Compound Annual Growth Rate
- Free Cash Flow ("FCF")
- Rental EBITDA – Maintenance Capital Expenditure – Interest Expense – Taxes – Net Crane Investment
- Net Crane Investment
- Equipment Purchases – Equipment Sales
- OLV
- Orderly Liquidation Value as assessed by independent specialist equipment appraisers on December 31, 2007
- Rental EBITDA
- Earnings Before Interest, Taxes, Depreciation and Amortization generated in the ordinary course of business, which does not include sales of used rental equipment
- Replacement Value
- The estimated cost required to replicate the current aggregate lifting tonnage of Essex's fleet with crawlers being produced today
- Return on Capital VS. Return of Capital
- Given the long useful life of Essex's assets, the relatively short payback period relative to the useful life and the limited maintenance Cap-ex requirements, Essex management believes that the free cash flow generated by the business is a Return on Capital. This distinguishes Essex from many other rental companies which, we believe, operate under a Return of Capital model.
- Total EBITDA
- Rental EBITDA + gain on sale of equipment
- Unlevered Free Cash Flow ("FCF")
- Rental EBITDA – Maintenance Capital Expenditure
- Utilization Methods:
- "Days method" -After Essex implemented a new ERP (Enterprise Resource Planning) software system in 2002, it began to measure utilization using the method referred to as the "days" method. Essex's management believes that this method, while it may reflect lower utilization rates than the "hits" method, is the most accurate method for measuring equipment utilization and correlates the most closely with rental revenue. Under this method, a real time report is generated from the ERP system for each piece of equipment on rent in a period. The report includes the number of days each piece of equipment was on rent on a particular lease and the base monthly rental rate. The total number of days on rent of all pieces of equipment provides the numerator for determining utilization. The denominator is all equipment rental assets owned times the number of days in the month. The "days" method is the utilization measurement currently used by Essex, and Essex anticipates that the "days" method will be the basis for future disclosure of utilization rates for Essex's cranes and attachments.
"Hits method" - Historically, Essex measured equipment utilization using what was referred to as the "hits" method. In this method, a piece of equipment on rent for anytime in a month counted as a utilization hit. This meant that if a piece of equipment were on rent for one day in a month it would be treated the same in the utilization statistic as a piece of equipment on rent for all 30 days in a month. Essex's management believes that the "hits" utilization measurement had a less direct correlation with equipment rental revenue.
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