15.11.2011

HSS up 7.7%

UK based general rental company HSS has reported nine month revenues up 7.7 percent as third quarter profits slip back.

Revenues for the nine months to the end of September were £136.4 million, while Earnings Before Interest, Depreciation and Amortization were up 3.1 percent to £30.7 million.

In the third quarter the company, which is privately held, saw revenues climb five percent to £46.9 while EBITDA fell almost eight percent to £11.2 million. The company says that this is entirely due to the roll out costs of a new logistics and operational platform. It also spent £8.2 million on new equipment a 35 percent increase on the same period last year.

During the quarter the company announced a number of major new contract wins including a five year sole supplier agreement with British Waterways and a strategic alliance with Enterprise, one of the largest infrastructure maintenance businesses in the UK.

Chief executive Chris Davies said: “We have delivered another quarter of sustained growth, establishing several major new long-term strategic partnerships based on the things we do best and that customers value most – safety, value, availability and support. We continue to see that big businesses recognise the value of the great service we offer, the expertise of our people and our open and transparent approach to business.”

“As planned, we invested in the roll-out of our new logistics and operating network which is due to be completed in line with our plans by the end of 2011. Whilst costs associated with supporting this transition have impacted our earnings in the short term, we have now laid the foundations for strong efficiency gains, higher utilisation and service level improvements into 2012. By investing for the future we ensure that we always offer an unrivalled hire experience.”

Vertikal Comment

HSS is does not publish a great deal of information however it is clear that the company is outperforming at least one of its two main rivals A-Plant- part of the Ashtead group and Speedy Hire.

Growth percentages for the July to September quarter compared to Speedy are greater, however Speedy is a significantly larger business than HSS these days. On the other hand it looks as though HSS has overtaken A-Plant in terms of revenues and appears to be well ahead in terms of profitability.

At one time HSS led the UK tool hire/general rental market but slipped badly as ownership and management changes, along with a poorly times acquisition in the USA caused the company to decline.

The business has been under new ownership since 2007 and having reorganised itself during the recession, has gone from strength to strength. While we cannot see any detail, this is clearly a strong result that bodes well for 2012.