Ashtead (LON:AHT) has updated investors on its fourth-quarter performance this morning.
Highlights from the company statement:
· Group rental revenue up 13%1
· Group pre-tax profit2 of £793m (2016: £645m)
· £1.1bn of capital invested in the business (2016: £1.2bn)
· £319m of free cash flow generation4 (2016: £68m outflow)
· £437m spent on bolt-on acquisitions (2016: £65m)
· Net debt to EBITDA leverage1 of 1.7 times (2016: 1.7 times)
· Proposed final dividend of 22.75p, making 27.5p for the full year, up 22% (2016: 22.5p)
Ashtead's chief executive, Geoff Drabble, commented:
"I am delighted to be able to report another very successful year for Ashtead with Group rental revenue increasing 28% and underlying pre-tax profit increasing to £793m. The reported results were impacted favourably by weaker sterling but, with 13% growth in Group rental revenue at constant exchange rates, we have good momentum.
Our end markets remain strong and, most importantly, we continue to see structural change as our customers increasingly rely on the flexibility of rental. We continue to execute well on our strategy to support these changes through a combination of organic growth and bolt-on acquisitions. We made significant investments in the year, spending £1.1bn in capital expenditure and £437m on bolt-on acquisitions. In addition, we spent a further £48m on share buybacks in line with our capital allocation priorities.
Our strong margins ensured that, despite these levels of investment, we remained comfortably within our 1.5 to 2.0 times net debt to EBITDA range.
Looking forward, our markets remain good and Spring has seen a good seasonal uplift in fleet on rent, with record levels of physical utilisation for this time of year. We expect a similar level of capital expenditure in 2017/18, consistent with our 2021 strategic plan. A number of the investments we made were in the seasonally quieter second half of the year and we incurred one-off costs associated with acquisition and integration. Now that this work is behind us, we anticipate seeing the full benefit of these investments in the coming year.
Based on our plans we will, once again, see strong free cash flow which will provide us with further flexibility to enhance shareholder value. So, with both divisions performing well and a strong balance sheet to support our plans, the Board continues to look to the medium term with confidence."
Current trading and outlook
Our markets remain good and Spring has seen a good seasonal uplift in fleet on rent, together with record levels of physical utilisation for this time of year. So, with both divisions performing well and a strong balance sheet to support our plans, the Board continues to look to the medium term with confidence.