Ashtead raises profits guidance again

High-flying plant hire firm Ashtead has raised profits guidance again as its new financial year got off to a strong start.

Underlying profit before tax in the quarter ended July 31st rose 82%, or 76% on a constant currency (CC) basis, to £61.4m from £33.8m the year before.

Statutory profit before tax was up 5%, or 2% in CC terms, to £34.9m from £33.1m a year earlier; the statutory profit figure includes exceptional financing costs of £18m (of which £13m were cash costs) related to the redemption of senior secured notes, and also includes a non-cash charge of £7m relating to the revaluation of the fair value of early repayment options in the company's long-term debt.

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Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 38%, or 34% on a CC basis, to £129.3m from £93.9m in the corresponding three-month period of 2011, with group EBITDA margins pushing on to 40% from 35% a year earlier.

Underlying earnings per share (EPS) soared 82% to 7.7p from 4.3p the year before, while statutory EPS hardened 8% to 4.5p from 4.2p.

Revenue rose 21% (CC: +18%) to £325.0m from £268.6m in the same quarter of 2011.

"The markets in which we operate have performed as anticipated with gently improving conditions in the US and a more challenging outlook in the UK. We do not anticipate any significant changes to this environment in the short term," revealed Ashtead's Chief Executive, Geoff Drabble.

"Against this back-drop our continued market share gains are again reflected in our strong growth in fleet on rent and improving margins demonstrate our operational efficiency. Given the momentum established in the business, we now anticipate a full year result materially ahead of our previous expectations," Drabble said.

Ashtead is making a habit of raising profits guidance, having done so as recently as June 21st.

The group's acquisition of Sunbelt in the USA is paying off in spades, with first quarter revenue surging to $432.1m (£275.3m) from $361.1m (£222.5m) the year before.

Sunbelt's EBITDA soared to $183.6m (£116.9m) from $134.6m (£82.9m) a year earlier. Sunbelt's rental revenue grew 17% to $384m (2011: $328m), including a 13% increase in fleet on rent and a 4% improvement in yield.

In the UK, A-Plant's first quarter rental revenue grew by 6% to £45m (2011: £42m) including 7% growth in average fleet on rent offset by a small yield decline. A-Plant's total revenue rose to £39.7m from £46.1m the year before, with EBITDA climbing to £14.4m from £12.6m.

For the year as a whole Ashtead continues to anticipate spending £450m on new equipment with net capital expendutre payments of £400m after £100m of disposal proceeds. This rate of investment will hold the fleet size at around the size reached at the end of the quarter for the remainder of the year.

Net debt at the end of July was £988m, up from £848m, but the ratio of net debt to EBITDA fell to 2.4 times from 2.8 times a year earlier.

JH