Unaudited results for 9 months & Q3 ended 31/1/25

4 March 2025

Unaudited results for the nine months and

third quarter ended 31 January 2025

Nine month highlights

· Group rental revenue up 5%2; revenue flat; US rental revenue up 4%; revenue flat

· Operating profit of $2,034m (2024: $2,093m), with $108m lower gains on disposal

· Adjusted3 profit before taxation of $1,698m (2024: $1,785m)

· Adjusted3 earnings per share of 290.8¢ (2024: 307.2¢)

· $2.1bn of capital invested in the business (2024: $3.5bn)

· Free cash inflow1 of $858m (2024: outflow of $463m)

· Net debt to adjusted EBITDA leverage2 of 1.7 times (2024: 1.9 times)

· We expect full year results in line with our previous expectations

Ashtead's chief executive, Brendan Horgan, commented:

The business is focused on executing against the five actionable components of our Sunbelt 4.0 strategic growth plan: Customer; Growth; Performance; Sustainability and Investment. I want to thank all our team members for the hard work and professionalism they exhibit every day as we deliver on this strategy and our commitment to provide exceptional service to our customers, safely.

The Group delivered record nine month rental revenue and EBITDA, with growth of 5% and 3% respectively. In North America, the strength of mega projects and hurricane response efforts have more than offset the lower activity levels in local commercial construction markets. These local construction markets have been affected by the prolonged higher interest rate environment. However, underlying demand continues to be strong and we expect this segment to recover as interest rates stabilise. Adjusted profit before taxation was $1,698m (2024: $1,785m) with the difference, as expected, a result of lower used equipment sales resulting in gains on sale of $58m (2024: $165m).

The investments in and expansion of the business over Sunbelt 3.0 and into Sunbelt 4.0 are enabling us to take advantage of the diverse opportunities that we see while maintaining discipline and balance sheet strength that affords us considerable flexibility and optionality. In the period we invested $2.1bn in capital across existing locations and greenfields and $56m on three bolt-ons, adding a total of 54 new locations in North America.

We are in a position of strength, with the operational flexibility and financial capacity to take advantage of the ongoing structural growth opportunities we see for the business and enhance returns to shareholders as we follow our Sunbelt 4.0 plan. We expect full year results in line with our previous expectations and the Board looks to the future with confidence.

Contacts:

Brendan Horgan and Alex Pease will hold a conference call for equity analysts to discuss the results and outlook at 12pm (7am EST) on Tuesday, 4 March 2025. 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 and bondholder calls but any eligible person not having received details should contact the Company's PR advisers, H/Advisors Maitland (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.

Nine months' trading results

1 Adjusted operating profit.

Group revenue was $8,262m (2024: $8,231m) in the nine months. This revenue and our focus on the cost base resulted in adjusted EBITDA increasing 3% to $3,874m (2024: $3,752m), but with lower used equipment sales and after higher depreciation and interest costs, adjusted operating profit decreased 3% to $2,127m (2024: $2,185m) and adjusted profit before tax was $1,698m (2024: $1,785m). The higher increase in the depreciation charge relative to revenue growth reflects lower utilisation of a larger fleet and the ongoing impact of life cycle fleet inflation, contributing to the decline in operating profit. In addition, increased financing costs due to higher average debt levels resulted in adjusted profit before tax being 5% lower than the comparative period.

In the US, rental only revenue of $5,203m (2024: $4,993m) was 4% higher than the prior year, driven by both volume and rate improvement. Organic growth (same-store and greenfields) was 3%, while bolt-ons since 1 May 2023 contributed 1% of rental only revenue growth. In the nine months, our General Tool business grew 1%, while our Specialty businesses grew 14%, demonstrating the benefits of our strategy of growing our Specialty businesses and broadening our end markets. Rental revenue increased 4% to $6,578m (2024: $6,337m). We estimate that hurricane response efforts contributed $90 - 100m to rental revenue in the period. This hurricane impact, in part, mitigated the weaker local commercial construction market. US total revenue, including new and used equipment, merchandise and consumable sales, was $7,047m (2024: $7,072m). As expected, this reflects a lower level of used equipment sales than last year when we took advantage of improving fleet deliveries and strong second-hand markets to catch up on deferred disposals.

We invested in the infrastructure of the business during Sunbelt 3.0 to support the growth of the business now and into the future. Our intention is to leverage this infrastructure during Sunbelt 4.0 as we look to improve operating performance. This, combined with our focus on the cost base and lower scaffold erection and dismantling revenue, contributed to US rental revenue drop through to EBITDA of 71% for the period. This resulted in an EBITDA margin of 49.2% (2024: 48.0%). Lower used equipment sales and weaker second-hand values resulted in lower gains on sale. This, combined with higher depreciation on a larger fleet, contributed to segment profit decreasing by 4% to $1,996m (2024: $2,081m) with a margin of 28.3% (2024: 29.4%).

Canada's rental only revenue increased 16% to C$530m (2024: C$457m). Markets relating to the major part of the Canadian business are performing in a manner similar to the US with volume growth and rate improvement. In addition, following settlement of the Writers Guild of America and Screen Actors Guild strikes, activity in the Specialty Film & TV business has recovered, although it is below pre-strike levels, which is likely to be the new normal. Rental revenue increased 16% to C$662m (2024: C$573m), while total revenue was C$733m (2024: C$676m). 

Our Canadian business continues to develop and invest to expand its network and broaden its markets. This, combined with the recovery in the Film & TV business, contributed to an EBITDA margin of 44.6% (2024: 40.2%) and a segment profit of C$139m (2024: C$106m) at a margin of 19.0% (2024: 15.7%).

The UK business generated rental only revenue of £357m, up 2% on the prior year (2024: £350m). Rental only revenue growth has been driven by both rate and volume improvement. Rental revenue increased 4% to £461m (2024: £441m), while total revenue increased 2% to £536m (2024: £524m).

In the UK, the focus remains on delivering operational efficiency and long-term, sustainable returns in the business. While we continue to improve rental rates, this remains an area of focus. The UK generated an EBITDA margin of 28.6% (2024: 27.9%) and a segment profit of £44m (2024: £41m) at a margin of 8.1% (2024: 7.9%).

Overall, Group adjusted operating profit decreased to $2,127m (2024: $2,185m). After increased financing costs of $428m (2024: $400m), reflecting higher average debt levels, Group adjusted profit before tax was $1,698m (2024: $1,785m). After a tax charge of 25% (2024: 25%) of the adjusted pre-tax profit, adjusted earnings per share were 290.8ȼ (2024: 307.2ȼ).

Statutory profit before tax was $1,606m (2024: $1,692m). This is after non-recurring costs of $6m (2024: $nil) associated with the move of the Group's primary listing to the US and amortisation of $86m (2024: $92m). Included within the total tax charge is a tax credit of $22m (2024: $23m) which relates to the amortisation of intangibles and non-recurring costs. As a result, basic earnings per share were 274.6¢ (2024: 291.4¢).

Capital expenditure and acquisitions

Capital expenditure for the nine months was $2,141m gross and $1,741m net of disposal proceeds (2024: $3,509m gross and $2,848m net). As a result, the Group's rental fleet at 31 January 2025 at cost was $18bn and our average fleet age was 47 months (2024: 46 months) on an original cost basis.

We invested $56m (2024: $906m) in three bolt-on acquisitions during the nine months, as we continue to both expand our footprint and diversify our end markets. Further details are provided in Note 15.

Return on Investment

The Group return on investment was 15% (2024: 17%). In the US, return on investment (excluding goodwill and intangible assets) for the 12 months to 31 January 2025 was 20% (2024: 25%), while in Canada it was 12% (2024: 12%). The reduction in US return on investment reflects principally the impact of lower utilisation of a larger fleet. In the UK, return on investment (excluding goodwill and intangible assets) was 7% (2024: 6%). Return on investment excludes the impact of IFRS 16.

Cash flow and net debt

The Group generated free cash flow of $858m (2024: outflow of $463m) during the period, which is after capital expenditure payments of $2,434m (2024: $3,752m). During the period, we spent $88m on share buybacks.

Net debt at 31 January 2025 was $10,607m (2024: $11,166m). Excluding the effect of IFRS 16, net debt at 31 January 2025 was $7,860m (2024: $8,563m), while the ratio of net debt to adjusted EBITDA was 1.7 times (2024: 1.9 times) on a constant currency basis. The Group's target range for net debt to adjusted EBITDA is 1.0 to 2.0 times, excluding the impact of IFRS 16. Including the effect of IFRS 16, the ratio of net debt to adjusted EBITDA was 2.1 times (2024: 2.3 times) on a constant currency basis.

At 31 January 2025, availability under the senior secured debt facility was $3,174m with an additional $6,434m of suppressed availability - substantially above the $475m level at which the Group's entire debt package is covenant free.

The Group's debt facilities are committed for an average of six years at a weighted average cost of 5%.

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. As we execute on Sunbelt 4.0, we expect a number of years of strong earnings and free cash flow generation. Given this outlook, we have the opportunity to enhance returns to shareholders, while maintaining leverage towards the middle of our target range of 1.0 to 2.0 times net debt to adjusted EBITDA (excluding the IFRS 16).

Current trading and outlook

We are in a position of strength, with the operational flexibility and financial capacity to take advantage of the ongoing structural growth opportunities we see for the business and enhance returns to shareholders as we follow our Sunbelt 4.0 plan. We expect full year results in line with our previous expectations and the Board looks to the future with confidence.

1 Represents change in year-over-year rental revenue at constant exchange rates

2 Stated at C$1=$0.75 and £1=$1.27

CONSOLIDATED INCOME STATEMENT

FOR THE THREE AND NINE MONTHS ENDED 31 JANUARY 2025

* EBITDA is presented here as an alternative performance measure as it is commonly used by investors and lenders. This and other adjusted alternative performance measures are detailed in the Glossary of Terms on page 29.

All revenue and profit is generated from continuing operations.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED 31 JANUARY 2025

CONSOLIDATED BALANCE SHEET AT 31 JANUARY 2025

Contingent consideration liabilities have been re-classified from current and non-current provisions to trade and other payables and other non-current liabilities in the January 2024 comparative period.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE NINE MONTHS ENDED 31 JANUARY 2025

CONSOLIDATED CASH FLOW STATEMENT FOR THE NINE MONTHS ENDED 31 January 2025

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. General information

Ashtead Group plc ('the Company') is a company incorporated and domiciled in England and Wales and listed on the London Stock Exchange. The condensed consolidated interim financial statements as at, and for the nine months ended 31 January 2025, comprise the Company and its subsidiaries ('the Group') and are presented in US dollars.

The condensed consolidated interim financial statements for the nine months ended 31 January 2025 were approved by the directors on 3 March 2025.

The condensed consolidated interim financial statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The statutory accounts for the year ended 30 April 2024 were approved by the directors on 17 June 2024 and have been mailed to shareholders and filed with the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include a reference to any matter by way of emphasis and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

Details of principal risks and uncertainties are given in the Review of Third Quarter, Balance Sheet and Cash Flow accompanying these condensed consolidated interim financial statements

2. Basis of preparation

The condensed consolidated interim financial statements for the nine months ended 31 January 2025 have been prepared in accordance with relevant UK-adopted International Accounting Standards ('IFRS'), including IAS 34, Interim Financial Reporting, the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and the accounting policies set out in the Group's Annual Report & Accounts for the year ended 30 April 2024.

In preparing the financial statements, the exchange rates used in respect of the pound sterling (£) and Canadian dollar (C$) are:

The directors have adopted various alternative performance measures to provide additional useful 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 within the Glossary of Terms on page 29.

The condensed consolidated interim financial statements have been prepared on the going concern basis. The Group's internal budgets and forecasts of future performance, available financing facilities and facility headroom (see Note 12), provide a reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future and consequently the going concern basis continues to be appropriate in preparing the financial statements.

3. Segmental analysis

Three months to 31 January 2025 (unaudited)

Three months to 31 January 2024 (unaudited)

Nine months to 31 January 2025 (unaudited)

4. Operating costs and other income

5. Net financing costs

6. Taxation

The tax charge for the period has been determined by applying the expected effective tax rates in each jurisdiction for the year as a whole, based on the tax rates in force as at 31 January 2025 of 25% in the US (2024: 25%), 26% in Canada (2024: 25%) and 25% in the UK (2024: 25%). This results in a blended effective rate for the Group as a whole of 25% (2024: 25%) for the period.

The tax charge of $407m (2024: $419m) on the profit before taxation of $1,606m (2024: $1,692m) can be explained as follows:

Following its state aid investigation, in April 2019 the European Commission announced its decision that the Group Financing Exemption in the UK controlled foreign company ('CFC') legislation constitutes state aid in some circumstances. In common with the UK Government and other UK-based international companies, the Group did not agree with the decision and lodged a formal appeal with the General Court of the European Union. The Group's appeal was stayed while the appeals put forward by the UK Government and ITV plc proceeded. 

On 8 June 2022 the General Court of the European Union dismissed the appeals put forward by the UK Government and ITV plc. However, they appealed the decision to the Court of Justice of the European Union. The Court of Justice of the European Union held a hearing on the case in January 2024 and the Advocate-General's opinion was published in April 2024, proposing that the Court of Justice of the European Union set aside the judgement of the General Court and annul the decision made by the European Commission. On 19 September 2024, the Court of Justice of the European Union followed the recommendation of the Advocate-General's opinion and annulled the European Commission decision.

Despite the UK Government appealing the European Commission's decision, His Majesty's Revenue & Customs ('HMRC') was required to assess the tax liability which would arise if the decision was not appealed successfully. Accordingly, HMRC issued a charging notice stating that the tax liability due was £36m, including interest payable. The Group appealed the charging notice but had to settle the amount assessed on it, including interest, in line with HMRC requirements. As a result of the Court of Justice of the European Union decision to annul the European Commission decision, the Group has no liability in relation to this matter and the entire amount paid is recoverable from HMRC.

The £36m ($44m at January 2025 exchange rates) paid has been recognised as a current asset on the balance sheet. It has been re-classified from non-current assets based on an expectation that amounts will be repaid by HMRC during the next 12 months.

7. Earnings per share

Basic and diluted earnings per share for the three and nine months ended 31 January 2025 have been calculated based on the profit for the relevant period and the weighted average number of ordinary shares in issue during that period (excluding shares held by the Company and the ESOT over which dividends have been waived). Diluted earnings per share is computed using the result for the relevant period and the diluted number of shares (ignoring any potential issue of ordinary shares which would be anti-dilutive). These are calculated as follows: