Hurricane Irma has devastated South Carolina, Florida and Georgia in the US in recent days after the category four storm swept through the Caribbean islands last week. Texas was last month hit by Hurricane Harvey, which saw many areas damaged by catastrophic flooding with more than 40 inches of rain.
Ashtead chief executive Geoff Drabble said while it was too early to quantify the impact of the two hurricanes on its business, it was “evident that it will result in an increase in demand for our fleet”. The company will provide an update at the end of the second quarter.
“Looking forward, as a minimum, we expect that the impact will help to underpin the current market assumptions in our 2021 plan and therefore the board continues to look to the medium term with confidence,” Drabble said.
First quarter profit and revenue growth
The remarks about the storms was made alongside Ashtead’s first quarter results which showed a 21% increase in underlying pre-tax profit to £238.5mln and a 17% rise in rental revenue to £828.8mln at constant currencies.
Ashtead achieved a strong performance in both its North American business Sunbelt and the UK division A-Plant with rental revenue growth of 17% and 21% respectively.
The company said its results were boosted by same-store growth, greenfield openings and bolt-on acquisitions.
Capital expenditure for the quarter was £377mln gross and £354mln net of disposal proceeds. The company spent £116mln on five bolt-on acquisitions as part of its growth into specialty markets.
In August, the group expanded in Canada through the acquisition of CRS for C$287mln, including acquired debt.
Net debt rose to £2.5mln from £2.3mln last year on the back of Ashtead’s investment in its feet and bolt-on acquisitions.
“Our strong margins ensured that, despite these levels of investment, we remain comfortably within our target range for net debt to EBITDA of 1.5 to 2 times,” Drabble said.
“A successful refinancing has provided us with a low cost, long-term platform for further responsible growth.”
The company refinanced its debt facilities in July and August, extending the maturity of its asset-based senior bank facility until July 2022.
Drabble added: “At the end of the quarter both businesses were performing well, in line with expectations and with positive momentum.”