Ashtead Group– Q1 revenues up 25%
Ashstead had a “strong” first quarter with revenue up 25% to $2.3bn and adjusted profit before tax up 29% to $555m. The performance was driven by a 26% rise in equipment rental income, with contributions from both price and volume increases.
Free cash flow was down to $91m from $420m reflecting a doubling of capital expenditure to $667m. In the period Ashtead spent $119m on share buybacks and ended July with net debt of $7.7bn, which was comfortably within its target range of 1.5 to 2 times EBITDA (cash profit).
The shares were down 1.7% in early trading.
Derren Nathan, Head of Equity Research at Hargreaves Lansdown:
“Ashstead has had a solid start to the year with the US division being the main driver of growth enjoying organic growth of 20% with 6% relating to acquisitions. The UK was more muted at 5% rental growth but against strong comparatives and a much lower contribution from the decommissioning of COVID testing centres.
Ashstead is largely offsetting inflationary pressures through its own price increases and remains confident of achieving market expectations. Given the strong double digit earnings growth outlook we view the forward PE of under 14x as undemanding. It’s encouraging to see that the company is investing both internally and through M&A for the future and see Ashstead as a beneficiary of a likely uptick in Government spending globally.”
