11th Sep 2018 12:10
LONDON (Alliance News) - Ashtead Group PLC on Tuesday said it will increase and extend its current share buyback plans following growth in the first quarter profit on the back of a weak pound and acquisitions.
The industrial equipment rental company said revenue in the three months to the end of July rose 22% to GBP1.05 billion from GBP880.1 million reported a year earlier, pushing pretax profit up 23% to GBP274.4 million from GBP228.9 million. Total rental revenue rose to GBP961.0 million from GBP828.8 million.
Underlying operating profit increased 19% to GBP316 million from GBP267 million, despite operating costs jumping to GBP543.7 million from GBP449.0 million.
Staff costs rose year-on-year to GBP231.5 million from GBP203.6 million, while interest expenses climbed to GBP30.8 million from GBP28.0 million.
Earnings before interest, tax, depreciation and amortization increased by 20% to GBP503.7 million from GBP431.1 million a year earlier.
Ashtead said the improved results were driven by strong organic growth and bolt-on acquisitions, most notably the purchase of Canadian bulldozers retailer CRS Contractors Rental Supply in August last year.
As a result, the company's Sunbelt Canada division tripled its size, with revenue jumping to CAD77 million, about GBP44.9 million, from CAD20 million a year before.
In June, Sunbelt Canada also bought Voisin's Equipment Rental Ltd and Universal Rental Services Ltd for GBP18 million, with a contingent consideration of GBP1 million depending on revenue performance of the acquired business.
It also purchased equipment rental business Richlock Rentals Ltd in July for GBP7 million.
Meanwhile, the company's core US unit added 30 new stores in the in the quarter, the majority of which were specialty locations. Quarterly revenue for Sunbelt US increased by 21% to USD1.17 billion from USD968 million reported in the first quarter of 2017.
The third A-Plant division - which serves the UK rental market - generated revenue of GBP126 million in the first quarter, up 5.9% year-on-year driven by increased fleet on rent.
During the quarter, the company bought back 4.1 million shares, totalling GBP94 million. To date, Ashtead has spent GBP300 million under the share buyback programme that it announced in December last year.
The company said it intends to increase and extend its buyback plans, increasing the spend to GBP125 million per quarter and resulting in a total outlay of GBP675 million in financial 2019. It also revealed plans of a new share buyback programme for financial 2020, with an anticipated spend of at least GBP500 million.
In addition, Ashtead said it invested GBP145 million in five bolt-on acquisitions during the period as it continues to both expand its footprint and diversify into specialty markets. As a result, the company's debt rose to GBP3.03 billion as at the end of July, up from GBP2.57 billion at the same date in 2017.
Looking forward, Ashtead said it continued to perform well, benefiting from a weaker pound.
"The group delivered a strong quarter," said Chief Executive Geoff Drabble. "We expect full-year results to be ahead of our expectations, and the board continues to look to the medium-term with confidence."
Ashtead shares were up 4.8% on Tuesday afternoon at 2,390.00 pence each, the best performer in the FTSE 100 index of London large-cap stocks.
Related Shares:
Ashtead Group