14.06.2022

Another strong year for Ashtead

Ashtead has published its full year results to the end of April, showing strong growth in revenues and profits across all three operating divisions.

Total revenues - now published in dollars - were $7.96 billion, up 19 percent on last year led by Sunbelt USA but with strong contributions from the UK and Canada. Pre-tax profits for the year increased 35 percent to $1.67 billion.
Net debt increased from $5.8 to $7.16 billion, driven by $1.3 billion spent on 25 ‘bolt on’ acquisitions, $414 million spent on share buy backs, and more than $2 billion of net capital expenditure.

Sunbelt Rentals USA saw revenues increase 20 percent to $6.5 billion, of which rental revenues made up $4.8 billion also 20 percent up on the year. Of this 16 percent came from organic growth (same store and greenfield), while acquisitions contributed approximately four percent. The rental revenue growth came from a larger fleet, improved utilisation and higher rental rates, “in what is a better rate environment than we have seen for a number of years” says the company.
Operating profit jumped 29 percent to $1.85 billion.

Sunbelt Rentals UK The UK business saw revenue growth of 14.5 percent to £725 million, of which rental revenues were £403 million, up 11% on the year. The company benefitted from its support to the Department of Health in its Covid-19 response efforts, which accounted for 30 percent of UK revenue for the 12 months. Operating profits were 43 percent higher at £86.8 million.

Sunbelt Canada The Canadian operation increased revenues by 25 percent to c$ 626 million, of which rental revenues were c$456 million - up 26 percent. Operating profits jumped 47 percent to c$143.6 million.

Total capital expenditure more than doubled - 2.5 fold - to $2.4 billion, while $365 million of used equipment was sold from the fleet. The company says it held on to more equipment than planned, in order to cope with strong demand. As a result, the average age of the fleet remains relatively high at 40 months, although that compares to 41 months last year. The company says that it is planning to spend between $3.3 and 3.6 billion in the current year.

Chief executive Brendan Horgan said: "I am delighted to be able to report a year of record performance for the group. We performed strongly across all geographies with rental revenue up 22 percent at constant currency. We invested $2.4 billion in capital across existing locations and greenfields and $1.3bn on 25 bolt-on acquisitions, adding a combined total of 123 locations in North America during the year. This significant investment is enabling us to take advantage of the substantial structural growth opportunity that we see for the business as we deliver our strategic priorities to grow general tool and amplify specialty. We are achieving all this while maintaining a strong and flexible balance sheet with leverage at the lower end of our target range.”

“Our business has demonstrated its ability over the last two years to perform in both good times and more challenging ones. The new financial year has started well, and the business has clear momentum. We are well positioned to navigate the challenges and capitalise on the opportunities arising from the market circumstances we face, including supply chain constraints, inflation, labour scarcity and economic uncertainty, all factors which we believe to be drivers of ongoing structural change. The board looks to the future with confidence."

Vertikal Comment

This is another fantastic result from Ashtead, which continues to outperform the market. This year the company is likely to see a substantial drop in UK revenues as the government wins down its Covid testing programme which has buoyed revenues and profits in the year just gone.
There is not much else to say, but it is encouraging to see such a strong result and hear of the company’s capital expenditure plans for 2022/2023.