8 December, 2020

Unaudited results for the half year and second quarter ended 31 October 2020

Read and download the unaudited results for the half year and second quarter ended 31 October 2020. You can also view the latest webcast.

 Second quarterFirst half
 2020 2019 Growth120201 2019 Growth1
Underlying results2,3      
Rental revenue1,2161,282-1%2,2972,447-4%
Profit before taxation330371-7%538690-21%
Earnings per share54.3p60.5p-6%89.0p111.8p-19%
Statutory results
Operating profit365413-8%614771-19%
Profit before taxation314356-8%506660-22%
Earnings per share51.6p57.9p-7%83.6p107.0p-20%

Half-year highlights3

  • Strong market outperformance during the COVID-19 pandemic
  • Revenue down 3%1; rental revenue down 4%1
  • Operating profit of £614m (2019: £771m)
  • Pre-tax profit2 of £538m (2019: £690m)
  • Earnings per share2 of 89.0p (2019: 111.8p)
  • Record free cash flow of £822m (2019: £228m)
  • Net debt to EBITDA leverage1,3 of 1.7 times (2019: 1.9 times)
  • Interim dividend maintained at 7.15p per share (2019: 7.15p per share)
  • Expect full-year results ahead of our previous expectations

1   Calculated at constant exchange rates applying current period exchange rates.
2   Underlying results are stated before intangible amortisation.
3   Throughout this announcement we refer to a number of alternative performance measures which provide additional useful information. The directors have adopted these to provide additional information on the underlying trends, performance and position of the Group. The alternative performance measures are not defined by IFRS and therefore may not be directly comparable with other companies’ alternative performance measures, but are defined in the Glossary on page 32.

Ashtead's chief executive, Brendan Horgan, commented:

“I am delighted to report a strong quarter of market outperformance across the business contributing to rental revenue down only 4% in the half year at constant exchange rates. Our dedicated team members throughout North America and the United Kingdom have made this possible, once again delivering for all our stakeholders.  I am extraordinarily proud of, and grateful for, their collective response and execution, all while keeping our leading value of safety at the forefront of what we do.

This performance illustrates the successful execution of our long-term strategy, which we embarked upon after the last recession, to broaden and diversify our end markets and strengthen our balance sheet.  This positioned us to capitalise on our ever increasing scale, while remaining agile, particularly during these unprecedented times.  The actions we took to optimise cash flow, reducing capital expenditure and operating costs, resulted in record free cash flow for the first half of £822m (2019: £228m) contributing to reduced leverage of 1.7 times compared to 1.9 times at year end, in the lower half of our target range.

Looking forward, the strength of our business model and balance sheet positions the Group well in markets that are likely to remain uncertain.  Based on our half year performance and assuming no further significant adverse impact on our business resulting from the COVID-19 pandemic, we now expect full year results ahead of our previous expectations.  The benefit we derive from the diversity of our products, services and end markets, coupled with ongoing structural change, enables the Board to look to the future with confidence.”


Will ShawDirector of Investor Relations+44 (0)20 7726 9700
Neil BennettMaitland/AMO+44 (0)20 7379 5151
James McFarlaneMaitland/AMO+44 (0)7584 142 665

Brendan Horgan and Michael Pratt will hold a conference call for equity analysts to discuss the results and outlook at 10am on Tuesday, 8 December 2020.  The call will be webcast live via the link at the top of this release and a replay will be available via the website shortly after the call concludes. A copy of this announcement and the slide presentation used for the call are available for download on the Company’s website.  The usual conference call for bondholders will begin at 3.30pm (10.30am 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 details should contact the Company’s PR advisers, Maitland/AMO (Audrey Da Costa) 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.

Overview and markets

Our first half has been dominated by the impact of the COVID-19 pandemic.  Our response to these unprecedented times has been impressive.  Our robust model has enabled us to continue to serve all our customers in all our geographies.  Throughout this period our focus has been on our people, our customers, our communities and our investors, in particular:

  • ensuring the health and safety of our team members and customers;
  • continuing to serve the needs of our customers and communities, including supporting government and private sector responses to the pandemic; and
  • taking steps to optimise cash flow, reduce operating costs and strengthen further our liquidity position during a period of suppressed activity.

While trading volumes were lower than last year as a result of the pandemic, this has been mitigated, in part, by emergency response efforts throughout our business but particularly within our specialty businesses.  Sunbelt Rentals is designated as an essential business in the US, UK and Canada and has supported government and private sector responses to the pandemic.  This includes providing vital equipment and services to first responders, hospitals, alternative care facilities, testing sites, food services and telecommunications and utility companies, while continuing to service ongoing construction sites and increased facility maintenance and cleaning.  In addition, we have responded to other emergencies across the US including wild fires in the west and an active storm season impacting a number of states.

As a result of these market dynamics, first half rental only revenue in the US was only 6% lower than last year.  Within this overall performance, our general tool business was 8% lower than last year (second quarter 7% lower than prior year), while the specialty businesses demonstrated the benefit of a broader range of products and end markets with rental only revenue 12% higher than last year, including a storm impacted second quarter that was 18% higher than last year.  This contributed to Group rental revenue in the first half 4% lower than the prior year at constant exchange rates.  The degree of impact on volume has varied significantly across our geographical markets and is correlated to the severity of infection rates and associated market level restrictions.  Activity levels have increased consistently through the period such that fleet on rent is now broadly in line with prior year in the US and Canada and higher in the UK.  

The Group’s skilled workforce is instrumental to our long-term success and we made every effort to preserve our committed workforce for when markets recovered.  Therefore, we have not made any team members redundant as a result of the impact of COVID-19 and have not sought assistance from any government support programmes such as the UK’s Coronavirus Job Retention Scheme or similar schemes in Canada.

Our performance, in a challenging environment, reflects the benefit of our long-term strategy which is focused on broadening and diversifying our end markets, while at the same time increasing our scale and market share.  Our business model allows us to operate successfully in wide ranging market conditions as we allocate capital strategically, based on a consistently applied policy which takes account of the macroeconomic backdrop and our leverage. 

Looking forward, we believe that the impact of the COVID-19 pandemic will continue to give rise to market uncertainties over the coming months.  However, with strong positions in all our markets, supported by good quality fleets and a strong financial position, we believe that we are well positioned to respond to this market uncertainty and continue to support our customers and team members as well as taking advantage of opportunities to invest for the longer-term strength of the business.

First half trading results

 2020 20192020201920202019
US in $m2,746.92,887.51,373.71,502.0781.6947.0
Canada in C$m220.2200.392.985.033.240.4
US in £m2,153.12,304.81,076.71,198.9612.6755.9
Canada in £m128.3120.654.151.219.424.3
Group central costs--(6.0)(8.8)(6.4)(9.2)
Net financing costs(107.4)(111.1)
Profit before amortisation,
exceptional items and tax
Profit before taxation506.2660.2
Taxation charge(131.7)(166.3)
Profit attributable to equity holders of the Company374.5493.9

1   Segment result presented is operating profit before amortisation

Group revenue decreased 5% (3% at constant exchange rates) to £2,554m in the first half (2019: £2,681m).  However, the sudden fall in activity levels in March and April had a significant impact on profit in the first half as a large proportion of our costs are fixed in the short term.  This profit impact reflects, in part, our decision to not make team members redundant as a result of COVID-19 and ensure we had a committed workforce ready to take advantage of improving market conditions, when the recovery came.  We used the opportunity presented by lower activity levels both to ensure our fleet was well maintained and serviced in preparation for activity levels improving and to identify market opportunities to drive revenue.  As a result, underlying profit before tax for the first half was £538m (2019: £690m).

Although COVID-19 has influenced the Group’s short-term planning and actions, our strategy remains unchanged with long-term growth being driven by organic investment (same-store and greenfield) supplemented by bolt-on acquisitions.  In the US and UK, we experienced 6% and 2% rental only revenue declines respectively, while in Canada, rental only revenue increased 17% with the benefit of the William F White (‘WFW’) acquisition.

In the US a moderate rental only revenue decline represents a strong market outperformance, demonstrating the benefit of our strategy of growing our specialty business and broadening our end markets.  In the half year, our specialty business grew 12% while the general tool business declined 8%.  We estimate that hurricane response efforts contributed $35-40m of revenue in the second quarter. US total revenue, including new and used equipment, merchandise and consumable sales, decreased 5% to $2,747m (2019: $2,887m).

The UK business generated rental only revenue of £172m, down 2% on the prior year on a comparable basis (2019: £175m).  This was a strong performance as the breadth of our product offering and commitment of our team members enabled us to provide essential support to the Department of Health in its COVID-19 response efforts.  Total revenue increased 7% to £273m (2019: £256m) reflecting, in part, a higher level of ancillary and sales revenue associated with the work for the Department of Health, which accounted for almost 20% of UK revenue.

Canada’s rental only revenue increased 17% on a reported basis.  Excluding the impact of the acquisition of William F. White (‘WFW’), rental only revenue of the legacy business decreased 8%.  Total Canadian revenue was C$220m (2019: C$200m).

In all our markets we took action to reduce operating costs and eliminate discretionary expenditure.  However, we believe there continues to be good opportunities to grow the business and we remain focused on disciplined investment to position the Group for the next phase of growth.  We took early decisions not to make any team members redundant as a result of COVID-19 or seek assistance from any government support programmes but to continue investment in the business, including our technology platform and the condition of our rental fleet.  As a result, in the US, 73% of the revenue decline dropped through to EBITDA.  This contributed to a reported EBITDA margin of 50% (2019: 52%) and a 17% decrease in operating profit to $782m (2019: $947m) at a margin of 28% (2019: 33%).  Excluding the impact of used equipment sales, the EBITDA margin would have been only 1% lower than last year.

Last year we launched Project Unify in the UK with the objective of improving operational efficiency and returns.  This has resulted in significant investment in the operational infrastructure of the business which, when combined with the impact of COVID-19 on activity levels, contributed to an EBITDA margin of 32% (2019: 34%).  Operating profit of £20m (2019: £30m) at a margin of 7% (2019: 12%) reflected these factors and a property impairment charge of c. £10m as we reshape the business to drive operational improvement.

Canada is in a growth phase as we invest to expand its network and develop the business.  The most recent acquisition was WFW, which serves the film and TV production industries, and, while the prospects for this business remain bright, it was a significant drag on Canadian performance in the first half as production activity in Canada ceased in March and only restarted in September.  While WFW contributed virtually no revenue in the first quarter, we retained all the team members and infrastructure of the business.  This decision was vindicated with a strong bounce back in activity in September and October such that October saw near record revenue for the business. These factors contributed to a loss for the WFW business of C$2m in the half year which impacted Canadian margins adversely.  The legacy Canadian business, excluding WFW, increased its EBITDA margin to 45% (2019: 42%) and generated an operating profit of C$35m (2019: C$40m) at a 20% margin (2019: 20%).  This performance reflects a strong focus on operational efficiency. 

Overall, Group underlying operating profit decreased to £646m (2019: £801m), down 18% at constant exchange rates.  After net financing costs of £107m (2019: £111m), Group profit before amortisation of intangibles and taxation was £538m (2019: £690m).  After a tax charge of 26% (2019: 25%) of the underlying pre-tax profit, underlying earnings per share decreased to 89.0p (2019: 111.8p).  The underlying cash tax charge was 36%.

Statutory profit before tax was £506m (2019: £660m).  This is after amortisation of £32m
(2019: £30m).  Included within the total tax charge is a tax credit of £8m (2019: £7m) which relates to the amortisation of intangibles.  As a result, basic earnings per share were 83.6p
(2019: 107.0p).

Capital expenditure

Capital expenditure for the first half was £343m gross and £192m net of disposal proceeds
(2019: £1,010m gross and £866m net).  This is ahead of where we had planned to be at this stage of the year with additional expenditure in the North American specialty businesses to meet demand and in the UK to support the COVID-19 response efforts for the Department of Health.  As a result, we have raised our gross capital expenditure guidance for the full year to be in the range of £650m to £700m.   Second hand markets remain healthy and the Group disposed of fleet, including old oil and gas fleet, as planned.  As a result, the Group’s rental fleet at 31 October 2020 at cost was £9.1bn and our average fleet age is now 39 months (2019: 33 months).

Return on Investment

The Group’s return on investment metrics have been affected adversely by the decline in activity levels and their impact on profits from mid-March onwards as a result of COVID-19.  This has led to return on investment (excluding goodwill and intangible assets) in the US for the 12 months to 31 October 2020 of 18% (2019: 23%).  In the UK, return on investment (excluding goodwill and intangible assets) was 4% (2019: 7%).  As a result of the actions taken through Project Unify and the strategic plans for the business, we expect returns in the UK to improve post COVID-19.  In Canada, return on investment (excluding goodwill and intangible assets) was 7% (2019: 11%).  We have made a significant investment in Canada including the acquisition of William F. White last year and, as we develop the potential of the market, we expect returns to improve.  For the Group as a whole, return on investment (including goodwill and intangible assets) was 13% (2019: 17%).  Return on investment excludes the impact of IFRS 16.

Cash flow and net debt

The Group generated free cash flow of £822m (2019: £228m) during the period, a record for the business, which was used to reduce debt.  Net debt at 31 October 2020 was £4,700m
(2019: £5,237m). Excluding the effect of IFRS 16, net debt at 31 October 2020 was £3,571m, while the ratio of net debt to EBITDA was 1.7 times (2019: 1.9 times) on a constant currency basis. The Group’s target range for net debt to EBITDA is 1.5 to 2.0 times excluding the impact of IFRS 16 (1.9 to 2.4 times post IFRS 16).  Including the effect of IFRS 16, the ratio of net debt to EBITDA was 2.1 times (2019: 2.3 times) on a constant currency basis.  The Group’s borrowing facilities are committed for an average of five years at a weighted average cost of 4%. 

At 31 October 2020, availability under the senior secured debt facility was $3,089m with an additional $1,747m of suppressed availability – substantially above the $460m level at which the Group’s entire debt package is covenant free.


In line with our policy of providing a progressive dividend, having regard to both underlying profit and cash generation and to sustainability through the economic cycle, the Board has maintained the interim dividend at 7.15p per share (2019: 7.15p per share).  This will be paid on 3 February 2021 to shareholders on the register on 15 January 2021.

Capital allocation

The Group remains disciplined in its approach to allocation of capital with the overriding objective being to enhance shareholder value.  Our capital allocation framework remains unchanged and prioritises:

  • organic fleet growth;
      - same-stores;
      - greenfields;
  • bolt-on acquisitions; and
  • a progressive dividend with consideration to both profitability and cash generation that is sustainable through the cycle.

Additionally, we consider further returns to shareholders.  In this regard, we assess continuously our medium term plans which take account of investment in the business, growth prospects, cash generation, net debt and leverage.  Therefore the amount allocated to buybacks is simply driven by that which is available after organic growth, bolt-on M&A and dividends, whilst allowing us to operate within our 1.5 to 2.0 times target range for net debt to EBITDA pre IFRS 16.

The Group paused its share buyback programme in March as we took action to optimise our cash flow and strengthen further our liquidity position due to the uncertainty arising from the COVID-19 pandemic.  We have resumed greenfield openings and, within the context of our balanced capital allocation policy, leverage range and the macroeconomic backdrop, we continue to assess bolt-on opportunities and the appropriate time to resume the buyback programme.

Current trading and outlook

Looking forward, the strength of our business model and balance sheet positions the Group well in markets that are likely to remain uncertain.  Based on our half year performance and assuming no further significant adverse impact on our business resulting from the COVID-19 pandemic, we now expect full year results ahead of our previous expectations, based on our updated guidance below.  The benefit we derive from the diversity of our products, services and end markets, coupled with ongoing structural change, enables the Board to look to the future with confidence.

 Previous guidanceCurrent guidance
Rental revenue1
- US-5% to -9%-4% to -7%
- CanadaBroadly flat+15% to +20%
- UKBroadly flat+15% to +20%
- Group-5% to -9%-3% to -7%
Capital expenditure (gross) 2£485m - £540m£650m - £700m

Free cash flow2

Greater than £1bnGreater than £1.2bn

1 Represents change in year-over-year rental revenue at constant exchange rates
2 Stated at £1=$1.30 and £1=C$1.75