Ashtead Group Earnings: 16% Revenue Jump to $5.57B

Key Highlights

• Ashtead Group plc (AHT.L) reported a 16% increase in group revenue, reaching $5.573 billion in the first half of the fiscal year 2023-24, up from $4.796 billion the previous year​​.
• Adjusted earnings per share (EPS) rose by 6%, from 212.2 cents in 2022 to 225.8 cents in 2023​​.
• Capital expenditure for the first half stood at $2.526 billion, a substantial increase from $1.685 billion in the previous year, reflecting the Group’s aggressive investment strategy​​.

The latest half-year results from Ashtead Group plc (AHT.L) depict a robust financial performance, despite challenging economic conditions. The Group witnessed a substantial increase in revenue, with total revenue for the first half of the fiscal year 2023-24 reaching $5.573 billion, a 16% increase compared to $4.796 billion in the previous year. This growth was driven by a 14% increase in U.S. rental revenue and an overall 18% growth in U.S. revenue.

The Adjusted EPS also saw a notable increase, rising by 6% to 225.8 cents, compared to 212.2 cents in the previous year. This growth can be attributed to strong operational execution, a focus on drop-through, and strategic investments in the U.S. market, which demonstrated considerable market outperformance. The Group’s U.S. segment alone contributed a 15% increase in rental-only revenue.

However, the report also indicates some areas of concern. The Group’s net debt increased to $10.644 billion, up from $8.415 billion in 2022. This rise in debt is attributed to significant capital expenditure and investments in bolt-on acquisitions, totaling $705 million for 16 acquisitions. The report also notes an increased financing cost due to higher average debt levels and a rising interest rate environment, impacting the growth rate of adjusted profit before tax, which increased by only 5%.

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15% Increase in US Rental-Only Revenue

Ashtead Group’s performance varied across different regions. In the U.S., the Group’s largest market, there was a strong 15% increase in rental-only revenue, driven by organic growth and strategic acquisitions. The U.S. business showed resilience with an EBITDA margin of 48.7% and a segment profit increase of 15%. However, the Group faced challenges in Canada due to strikes affecting the Film & TV business. Canadian rental revenue increased by 11%, but the EBITDA margin decreased slightly to 42.7%. The UK business experienced a modest 11% increase in rental-only revenue but faced challenges due to the end of the Department of Health contract and inflation pressures. This led to a decrease in EBITDA margin to 28.5%.

Strategically, Ashtead Group continued its aggressive expansion with significant investments. The Group added 74 locations in North America and invested $2.5 billion in capital expenditure. These investments reflect the Group’s commitment to expanding its footprint and diversifying its market presence.

Future Outlook and Market Adaptation

Looking ahead, Ashtead Group is adjusting its strategies to adapt to changing market conditions. The Group lowered its revenue growth and earnings guidance for the full year due to reduced emergency response activity and the impact of strikes in North America. Despite these setbacks, the Group remains optimistic about its robust end markets in North America, supported by increasing mega projects and legislative acts.

The Group’s strategic plan, Sunbelt 4.0, is in preparation to capitalize on market opportunities and structural changes. With its strong operational flexibility and financial capacity, Ashtead Group is positioned to navigate through the challenges and leverage its growth opportunities effectively.