8 March, 2022

Unaudited results for the nine months and third quarter ended 31 January 2022

Read and download the unaudited results for the nine months and third quarter ended 31 January 2022. You can also view the latest webcast.

  Third quarterNine months
Rental revenue1,8151,44925%5,3604,37921%
Operating profit44934829%1,5031,13033%
Adjusted2 profit before taxation42730440%1,40699041%
Profit before taxation39328438%1,28293038%
Adjusted2 earnings per share72.7¢51.5¢41%235.1¢165.1¢42%
Earnings per share66.9¢48.2¢38%214.4¢154.9¢37%

Nine month highlights3

  • Strong momentum across the business
  • Revenue up 19%1; rental revenue up 21%1
  • 81 locations added in North America
  • $1.7bn of capital invested in the business (2021: $672m)
  • $938m spent on 19 bolt-on acquisitions (2021: $nil) and a further $270m in Q4
  • $311m (£226m) allocated to share buybacks (2021: $nil)
  • Net debt to EBITDA leverage1,3 of 1.5 times (2021: 1.6 times)
  • We expect full year results slightly ahead of our previous expectations

1. Calculated at constant exchange rates applying current period exchange rates.
2. Adjusted results are stated before exceptional items and 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 and reconciled in the Glossary on page 33.

Ashtead’s chief executive, Brendan Horgan, commented:

“The Group continues to perform strongly across its geographies with rental revenue up 21% in the nine months over the Covid affected prior year and 17% when compared with 2019/20, both at constant currency.  This market outperformance across the business is only possible through the dedication of our team members who deliver for all our stakeholders every day, while ensuring our leading value of safety remains at the forefront of all we do.

Sunbelt 3.0 is embedded in the business and we are making good progress across all actionable components.  In the nine months, we invested $1.7bn in capital across existing locations and greenfields and $938m on 19 bolt-on acquisitions, adding a combined total of 81 locations in North America.  This significant investment takes advantage of the ongoing structural growth opportunity that we continue to see in the business as we seek to deliver on our strategic priorities to grow general tool and amplify specialty, all achieved while remaining at the lower end of our target leverage range.

We expect capital expenditure for the full year to be slightly ahead of our previous guidance at c.$2.5bn.  Looking forward to 2022/23, our initial plans are for gross capital expenditure of $3.2 - 3.4bn, as we look to take advantage of strong market conditions, particularly in the US.  This should enable low to mid-teens rental revenue growth in the US.

Our business continues to perform strongly and is well positioned to manage and benefit from the unique market circumstances we face, including supply chain constraints, inflation and labour scarcity, which we believe to be drivers of ongoing structural change. We now expect full year results to be slightly ahead of our previous expectations and the Board looks 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 142665

Brendan Horgan and Michael Pratt will hold a conference call for equity analysts to discuss the results and outlook at 10am on Tuesday, 8 March 2022.  The call will be webcast live via the Company’s website at www.ashtead-group.com 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 3pm (10am 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.

Change in presentational currency

Effective from 1 May 2021, the Group changed its presentational currency from sterling to US dollars to allow for greater transparency in the Group’s performance for investors and other stakeholders and to reduce exchange rate volatility in reported figures, given that c. 80% of the Group’s revenue and c. 90% of the Group’s operating profit originate in US dollars.  Accordingly, the Group’s financial statements within this announcement are presented in US dollars.  Further details were provided in our announcement ‘Change in presentational currency’ released on 15 June 2021 and in the Group’s Annual Report & Accounts 2021, available via the Company’s website at www.ashtead-group.com.

Nine months' trading results

 2022 20212022202120222021
UK in £m547.1444.1 164.9135.5 71.638.8
Canada in C$m463.1356.6 211.8153.8 110.463.9
UK in $m750.3576.5226.2175.998.250.4
Canada in $m370.2269.1169.3116.188.248.2
Group central costs   -   -(20.8)(12.3)(21.6)(13.0)
5,884.14,879.8 2,709.02,271.11,578.71,191.0
Net financing costs(173.0)(200.8)
Profit before amortisation,
exceptional items and tax
Exceptional items(47.1)   -
Profit before taxation1,282.4929.6
Taxation charge(326.3)(235.8)
Profit attributable to equity holders of the Company956.1693.8

1  Segment result presented is adjusted operating profit.

Group revenue increased 21% (19% at constant currency) to $5,884m in the nine months
(2021: $4,880m) against COVID-19 affected comparatives.  This revenue growth, combined with strong operational execution, resulted in adjusted profit before tax increasing 42% to $1,406m (2021: $990m).

In the US, rental only revenue of $3,549m (2021: $2,990m) was 19% higher than the prior year (and 12% higher than 2020), representing continued market outperformance and demonstrating the benefits of our strategy of growing our specialty businesses and broadening our end markets.  In the nine months, our general tool business grew 15%, from the depressed activity levels in the prior year, while our specialty businesses, which grew throughout last year, grew 27%.  While rental revenue growth has been driven by volume, with a larger fleet and improved utilisation, it has benefitted from improved rates in what is a better rate environment than we have seen for a number of years.  US total revenue, including new and used equipment, merchandise and consumable sales, increased 18% to $4,764m (2021: $4,034m).

The UK business generated rental only revenue of £301m, up 14% on the prior year
(2021: £265m).  While our performance continued to benefit from our essential support to the Department of Health in its COVID-19 response efforts, our core business is performing strongly and is benefitting from the operational improvements in the business which are ongoing.  Total revenue increased 23% to £547m (2021: £444m) reflecting the higher level of ancillary and sales revenue associated with the work for the Department of Health, which accounted for c. 32% of UK revenue in the nine months.  Following the UK government’s announcement that free mass COVID testing will stop from April 2022, we expect the majority of this revenue to effectively cease as of this date.

Canada’s rental only revenue increased 32% to C$340m (2021: C$258m).  While this rate of growth reflects the depressed comparatives last year, it is driven by the strong performance of the original Canadian business and lighting, grip and studio since lockdowns eased.  That said, the lighting, grip and studio business was affected further by COVID induced production restrictions in the third quarter.  Canada’s total revenue was C$463m (2021: C$357m).

Last year, we took action to reduce operating costs and eliminate discretionary expenditure in all our markets.  While we continue to maintain a focus on the cost base, a number of these costs have returned to the business, reflecting the increased activity levels.  In addition, we continue to invest in our technology platform and face inflationary pressures across all cost lines but, particularly in relation to labour, transportation and fuel.  As a result, in the US, 41% of the rental revenue increase dropped through to EBITDA.  This contributed to a reported EBITDA margin of 49% (2021: 49%) and a 28% increase in segment profit to $1,414m (2021: $1,105m) at a margin of 30% (2021: 27%).

The UK business continues to be focused on delivering operational efficiency and improving returns in the business, while continuing to support the Department of Health.  These factors contributed to an EBITDA margin of 30% (2021: 31%) and a segment profit of £72m (2021: £39m) at a margin of 13% (2021: 9%).

The development of our Canadian business continues as it invests to expand its network and broaden its markets.  Growth has been achieved across the business while delivering a 46% EBITDA margin (2021: 43%) and generating a segment profit of C$110m (2021: C$64m) at a margin of 24% (2021: 18%).  The margin improvement reflects the contribution from the lighting, grip and studio business, which saw depressed profitability in the prior year due to the shutdown of production activities in the early part of the year.

Overall, Group adjusted operating profit increased to $1,579m (2021: $1,191m), up 32% at constant exchange rates.  After net financing costs of $173m (2021: $201m), Group profit before exceptional items, amortisation of intangibles and taxation was $1,406m (2021: $990m).  After a tax charge of 25% (2021: 25%) of the adjusted pre-tax profit, adjusted earnings per share increased 42% at constant currency to 235.1ȼ (2021: 165.1ȼ).  The tax charge in the period includes a $10m charge, reflecting an increase in the UK deferred tax liability due to UK legislation being enacted which increases the UK corporate tax rate from 19% to 25% from 1 April 2023.

Statutory profit before tax was $1,282m (2021: $930m).  This is after amortisation of $76m
(2021: $61m) and, in the current year, exceptional interest costs of $47m.  Included within the total tax charge is a tax credit of $31m (2021: $15m) which relates to exceptional items and the amortisation of intangibles.  As a result, basic earnings per share were 214.4¢ (2021: 154.9¢). The overall cash tax charge was 11%.

Capital expenditure and acquisitions

Capital expenditure for the nine months was $1,708m gross and $1,469m net of disposal proceeds (2021: $672m gross and $400m net).  With strong demand and slower fleet deliveries than expected during the year due to supply chain delays, we have deferred certain fleet disposals.  As a result, the Group’s rental fleet at 31 January 2022 at cost was $13.2bn and our average fleet age is now 40 months (2021: 40 months).

For the full year, we expect capital expenditure to be slightly ahead of our previous guidance at c.$2.5bn.  For 2022/23, our initial plans are for gross capital expenditure to be in the range of $3.2 - 3.4bn, which should enable low to mid-teens rental revenue growth in the US next year.

We invested $938m (2021: $nil) in 19 bolt-on acquisitions during the nine months as we continue to both expand our footprint and diversify our end markets.  Since the period end, we have invested a further $270m in bolt-ons.

Return on Investment

Following the adverse impact of COVID-19, return on investment (excluding goodwill and intangible assets) continues to improve across the business.  In the US, return on investment for the 12 months to 31 January 2022 was 24% (2021: 18%).  In the UK, reflecting the benefits of increased volumes supporting the Department of Health and operational improvements, return on investment (excluding goodwill and intangible assets) increased to 15% (2021: 6%).  In Canada, return on investment (excluding goodwill and intangible assets) was 22% (2021: 9%).  This reflects improved performance across the business and an increasing contribution from our lighting, grip and studio business.  For the Group as a whole, return on investment (including goodwill and intangible assets) was 18% (2021: 13%).  Return on investment excludes the impact of IFRS 16.

Cash flow and net debt

The increased scale of the business enabled the Group to generate free cash flow of $738m (2021: $1,377m) during the period, despite capital expenditure payments of $1,591m
(2021: $697m).  During the nine months, we spent $307m (£224m) on share buybacks.

In August 2021, the Group took advantage of good debt markets and refinanced its debt facilities by issuing $550m 1.500% senior notes maturing in August 2026 and $750m 2.450% senior notes maturing in August 2031.  The net proceeds of the issues were used to repurchase the Group’s $600m 4.125% senior notes due 2025 and $600m 5.250% senior notes due 2026, pay related fees and expenses and repay an element of the amount outstanding under the ABL facility.  In addition, the Group also increased and extended its asset-based senior bank facility, with $4.5bn committed until August 2026.  Other principal terms and conditions remain unchanged.  These actions ensure the Group’s debt package continues to be well structured and flexible, enabling us to optimise the opportunity presented by end market conditions.  The Group’s debt facilities are now committed for an average of six years at a weighted average cost of 3%.

Net debt at 31 January 2022 was $6,894m (2021: $5,870m).  Excluding the effect of IFRS 16, net debt at 31 January 2022 was $5,031m (2021: $4,363m), while the ratio of net debt to EBITDA was 1.5 times (2021: 1.6 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 2.0 times (2021: 2.0 times) on a constant currency basis.

At 31 January 2022, availability under the senior secured debt facility was $2,681m with an additional $2,788m of suppressed availability – substantially above the $450m level at which the Group’s entire debt package is covenant free.

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.

Current trading and outlook

Our business continues to perform strongly and is well positioned to manage and benefit from the unique market circumstances we face, including supply chain constraints, inflation and labour scarcity, which we believe to be ongoing drivers of structural change.  We now expect full year results to be slightly ahead of our previous expectations and the Board looks to the future with confidence.

 Previous guidanceCurrent guidance
Rental revenue1
- US18 – 20%20 – 22%
- Canada25 – 30%27 – 30%
- UK9 – 12%10 – 12%
- Group17 – 20%19 – 21%
Capital expenditure (gross) 2$2.2 – 2.4bn$2.4 – 2.5bn

Free cash flow2

$900 – 1,100m$900 – 1,100m

1 Represents change in year-over-year rental revenue at constant exchange rates
2 Stated at C$1=$0.80 and £1=$1.35