3 September, 2014

Unaudited results for the first quarter ended 31 July 2014

Read and download the unaudited results for the first quarter ended 31 July 2014 for the Ashtead Group. You can also view the latest webcast

Financial summary

 2014 2013 Growth1
Underlying results2
Rental revenue417.7373.222%
Operating profit133.5110.433%
Profit before taxation120.499.533%
Earnings per share15.3p12.4p36%
Statutory results
Profit before taxation117.597.433%
Earnings per share14.9p12.1p36%

1   at constant exchange rates
2   before intangible amortisation


  • Group rental revenue up 22%1
  • Record Q1 pre-tax profit2 of £120m, up 33% at constant exchange rates
  • Group EBITDA margin improves to 46% (2013: 43%)
  • £284m of capital invested in the business (2013: £279m) and full year guidance increased
  • Group RoI of 19% (2013: 17%)
  • Net debt to EBITDA leverage1 of 1.9 times (2013: 2.0 times)

Ashtead’s Chief Executive, Geoff Drabble , commented:

"We are pleased to report another strong quarter as we continue to capitalise on recovering markets and take further market share in both Sunbelt and A-Plant. Sunbelt delivered 22% rental revenue growth and A-Plant 19% which, together with a focus on operational efficiency, helped to deliver record underlying pre-tax profits of £120m.

We invested £284m in capital expenditure and a further £32m on bolt-on acquisitions in the quarter as we continue our strategy focussed on organic growth supplemented by bolt-on acquisitions. Given the momentum evident in the business, we are increasing our full year guidance for capital expenditure to a range of £825m to £875m. While we continue to invest heavily in the business, our strong margins allow us to do this while maintaining our leverage discipline.

As a result of this strong performance, and with a strong balance sheet to support future growth, we now anticipate a full year result ahead of our previous expectations."


Geoff DrabbleChief executive020 7726 9700
Suzanne WoodFinance director020 7726 9700
Brian HudspithMaitland

020 7379 5151

Geoff Drabble and Suzanne Wood will hold a conference call for equity analysts at 9.30am on Wednesday, 3 September 2014. Dial in details for this call have already been distributed but any analyst not having received them should contact the Company’s PR advisors, Maitland (Astrid Wright) on 020 7379 5151. The call will be webcast live via the link at the top of this release and there will also be a replay available from shortly after the call concludes. There will, as usual, also be a separate call for bondholders at 4.00pm UK time (11.00am EST).

Analysts and bondholders have already been invited to participate in the analyst call and conference call for bondholders but any eligible person not having received dial-in details should contact the Company’s PR advisers, Maitland (Astrid Wright) at +44 (0)20 7379 5151.


Forward looking statements

This announcement contains forward looking statements. These have been made by the directors in good faith using information available up to the date on which they approved this report. The directors can give no assurance that these expectations will prove to be correct. Due to the inherent uncertainties, including both business and economic risk factors underlying such forward looking statements, actual results may differ materially from those expressed or implied by these forward looking statements. Except as required by law or regulation, the directors undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.


Trading results

 RevenueEBITDAOperating profit
Sunbelt in $m638.4526.3311.1243.0206.9160.7
Sunbelt in £m376.7343.9183.6158.7122.1104.9
Group central costs  -  -(2.3)(2.4)(2.3)(2.4)
Net financing costs    (13.1)(10.9)
Profit before tax and amortisation120.499.5
Amortisation    (2.9)(2.1)
Profit before taxation    117.597.4
Taxation    (42.8)(36.7)
Profit attributable to equity holders of the Company74.760.7
Sunbelt  48.7%46.2%32.4%30.5%
A-Plant  35.3%30.5%16.9%11.8%
Group  45.8%43.0%29.2%26.9%

Group revenue increased 12% to £458m in the quarter (2013: £411m) with strong growth in both businesses. This revenue growth, combined with ongoing operational efficiency, generated record underlying profit before tax of £120m (2013: £99m).

Over the course of the last year we have completed 13 acquisitions in the US which, together with greenfields, have added 58 locations across a range of market sectors with different characteristics. This, combined with same-store growth, does impact a number of our metrics in the short term and to aid the understanding of our performance, we have included the following breakdown of year on year revenue growth for the quarter:

2013 rental only revenue 371
Same stores (in existence at 1 May 2013)+17%61
Bolt-ons and greenfields since 1 May 2013+7%27
2014 rental only revenue+24%459
Ancillary revenue+18%127
2014 rental revenue+22%586
Sales revenue 52
2014 total revenue 638


Our end markets are clearly now at the early stages of recovery and are up circa 8% year on year. Our ability to capitalise on this opportunity is evidenced by our same-store growth of 17% as we continue to take further market share. In addition, bolt-ons and greenfields have contributed a further 7% growth as we execute our long-term structural growth strategy of expanding our geographic footprint and our specialty businesses.

Total rental only revenue growth of 24% can be broken down to a 21% increase in fleet on rent and a net 2% improvement in yield. The overall yield improvement reflects good rate growth and the drag of the greenfield and bolt-on activity as well as mix. We have seen an increase in longer term rentals in the period which does have a short term adverse impact on yield. However, more positively, this does reflect the effect of a number of new major account wins, a trend we expect to continue, and the nature of the work in the early stages of what appears to be a strong non-residential recovery.

A-Plant continues to perform well and delivered total rental revenue of £72m, up 19% on the prior year (2013: £61m). This reflects 9% more fleet on rent and a 9% improvement in yield. Yield has benefitted from an improved pricing environment and the diversification of the product line.

Sunbelt’s strong revenue growth resulted in a record first quarter EBITDA margin of 49% (2013: 46%) as 60% of revenue growth dropped through to EBITDA. Drop through reflects the impact of greenfield openings and acquisitions. Excluding this effect, approximately 65% of revenue growth dropped through to EBITDA. This contributed to an operating profit of $207m (2013: $161m). A-Plant’s EBITDA margin improved to 35% (2013: 31%) and operating profit rose to £14m (2013: £8m). As a result, Group operating profit increased 21% to £133m (2013: £110m).

Net financing costs increased to £13m (2013: £11m), reflecting the higher average debt during the period and the additional $400m senior secured notes issued in December, partially offset by the lower margin on our senior debt facility.

Group profit before amortisation of intangibles and taxation was £120m (2013: £99m). After a tax charge of 36% (2013: 38%) of the underlying pre-tax profit, underlying earnings per share increased 23% to 15.3p (2013: 12.4p). The cash tax charge increased to 17% following the utilisation of brought forward tax losses during the year.

Statutory profit before tax was £118m (2013: £97m) and basic earnings per share were 14.9p (2013: 12.1p).


Capital expenditure and acquisitions

Capital expenditure for the quarter was £284m gross and £264m net of disposal proceeds (2013: £279m gross and £257m net). As a result of this investment, the Group’s rental fleet at 31 July 2014 at cost was £2.8bn with an average age of 26 months (2013: 29 months).

Sunbelt’s fleet size at 31 July was $3.9bn. This larger fleet supported strong fleet on rent growth of 21% year on year. Average first quarter physical utilisation was 72% (2013: 73%).

We spent £32m (2013: £40m) on three acquisitions in the quarter, including £25m on Metrolift, a Chicago-based aerial business. Immediately following the quarter end, we completed the acquisition of Lone Star Rentals, an energy-related rental and service company, for £21m.

With the strong demand in both our end markets and an ongoing greenfield opening programme, we are increasing our full year capital expenditure guidance to around £825m to £875m. However, we will continue to monitor market conditions and adjust our plans appropriately.


Return on Investment1

Sunbelt’s pre-tax return on investment (excluding goodwill and intangible assets) in the 12 months to 31 July 2014 was 26% (2013: 25%), well ahead of the Group’s pre-tax weighted average cost of capital. In the UK, return on investment (excluding goodwill and intangible assets) improved to 11% (2013: 7%). For the Group as a whole, returns (including goodwill and intangible assets) are 19% (2013: 17%).

1 Underlying operating profit divided by the sum of net tangible and intangible fixed assets, plus net working capital but excluding net debt and deferred tax.


Cash flow and net debt

As expected, debt increased during the quarter as we invested in the fleet, made a number of bolt-on acquisitions and experienced the usual seasonal increase in working capital.

Net debt at 31 July 2014 was £1,300m (2013: £1,187m) while, reflecting our strong earnings growth, the ratio of net debt to EBITDA reduced to 1.9 times (2013: 2.0 times) on a constant currency basis.

The Group’s debt package remains well structured and flexible, enabling us to take advantage of prevailing end market conditions. The Group’s debt facilities are committed for an average of six years. At 31 July 2014, ABL availability was $717m, with an additional $1,059m of suppressed availability - substantially above the $200m level at which the Group’s entire debt package is covenant free.


Current trading and outlook

Our strong performance continued in August. With both divisions performing well we now anticipate a full year result ahead of our previous expectations.