Ashtead : Audited results for the year and unaudited results for the fourth quarter ended 30 April 2021

15 June 2021

Audited results for the year and unaudited results for the fourth quarter ended 30 April 2021

	Fourth quarter			Year
	2021	2020	Growth1	2021	2020	Growth1
	£m	£m	%	£m	£m	%
Revenue	1,271	1,125	23%	5,031	5,054	3%
Rental revenue	1,098	1,039	15%	4,473	4,606	1%
EBITDA	552	464	30%	2,301	2,376	1%
Operating profit	264	155	95%	1,135	1,224	-3%
Adjusted2 profit before taxation	235	114	133%	998	1,061	-2%
Profit before taxation	220	98	158%	936	983	-1%
Adjusted2 earnings per share	38.8p	20.2p	122%	166.0p	175.0p	-1%
Earnings per share	36.3p	17.4p	143%	155.7p	162.1p	1%

Full-year highlights3

• Strong market outperformance
• Revenue up 3%1; rental revenue up 1%1
• Operating profit of £1,135m (2020: £1,224m)
• Adjusted pre-tax profit of £998m (2020: £1,061m)
• Adjusted earnings per share of 166.0p (2020: 175.0p)
• £718m of capital invested in the business (2020: £1.5bn)
• Record free cash flow of £1,382m (2020: £792m)
• £125m spent on bolt-on acquisitions (2020: £453m)
• Net debt to EBITDA leverage1,3 of 1.4 times (2020: 1.9 times)
• Proposed final dividend of 35.0p, making 42.15p for the full year (2020: 40.65p)
• Sunbelt 3.0, the next phase of our strategic plan, launched in April

1. Calculated at constant exchange rates applying current period exchange rates.
2. Adjusted results are stated before exceptional items and amortisation.
3. Throughout this announcement we refer to a number of alternative performance measures which provide additional useful information. The directors have adopted these to provide additional 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 and reconciled in the Glossary on page 39.

Ashtead's chief executive, Brendan Horgan, commented:

"We returned to growth in the fourth quarter with rental revenue up 15% over last year and up 14% when compared with the fourth quarter of 2018/19, both at constant exchange rates. This completes a year of market outperformance across the business with full year rental revenue up 1% at constant exchange rates. I am extraordinarily proud of, and grateful to, all our dedicated team members who have made this possible, delivering for all our stakeholders, all while keeping our leading value of safety at the forefront of what we do.

Our performance this year illustrates the benefits of our long-term strategy to broaden and diversify our end markets and strengthen our balance sheet. This has enabled us to capitalise on our increasing scale while, at the same time, maintaining the business' agility. The last year has proven the strength in our business model during a difficult period in the economic cycle, through responding in the manner we did to the challenges arising as a result of the pandemic. Our performance during this period resulted in record free cash flow for the twelve months of £1,382m (2020: £792m) contributing to reduced leverage of 1.4 times compared to 1.9 times a year ago and adjusted pre-tax profit of £998m, only 2% lower than a year ago on a constant currency basis.

We have shown that our business can perform in both good times and more challenging ones. We enter the new financial year with clear momentum, strong positions in all our markets, supported by high quality fleet, a strong financial position and our exciting new Sunbelt 3.0 strategic plan, positioning us well to respond to market conditions and capitalise on opportunities. We will invest to drive long-term sustainable growth and returns and strengthen the business. The benefit we derive from the diversity of our products, services and end markets, our investment in technology and ongoing structural change, enhanced by the environmental and social aspects of ESG, enables the Board to look to the future with confidence."

Contacts:
Will Shaw	Director of Investor Relations	+44	(0)20 7726 9700
Neil Bennett	Maitland/AMO	+44	(0)20 7379 5151
James McFarlane	Maitland/AMO	+44	(0)7584 142665

Brendan Horgan and Michael Pratt will hold a conference call for equity analysts to discuss the results and outlook at 10am on Tuesday, 15 June 2021. The call will be webcast live via the Company's website at www.ashtead-group.comand 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 3:30pm (10:30am EST).

Analysts and bondholders have already been invited to participate in the analyst call and conference call for bondholders but any eligible person not having received details should contact the Company's PR advisers, Maitland/AMO (Audrey Da Costa) at [phone].

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.

Overview and markets

This year has been dominated by the impact of the COVID-19 pandemic. The response of our team members to these unprecedented times has been inspiring. Our robust model has enabled us to deliver for all our stakeholders in all our geographies. Throughout this period our focus has been on our people, our customers, our communities and our investors.

Our performance in these challenging conditions has been impressive with rental only revenue in the US only 2% lower than last year, as we returned to growth in the fourth quarter. Within this overall performance, our general tool business was 4% lower than last year (fourth quarter 7% higher than prior year), while the specialty businesses demonstrated the benefit of a broader range of products and end markets with rental only revenue 13% higher than last year. This contributed to Group rental revenue for the year 1% higher than the prior year at constant exchange rates.

The Group's skilled workforce is instrumental to our long-term success and we made every effort to preserve our committed workforce for when markets recovered. Therefore, we did not make any team members redundant as a result of the impact of COVID-19 and did not seek assistance from any government support programmes. Furthermore, we have recognised the hard work and dedication of our skilled trade workforce, making additional discretionary payments during the year.

Our performance, in a challenging environment, reflects the benefit of our long-term strategy which is focused on broadening and diversifying our end markets, while at the same time increasing our scale and market share. Our business model allows us to operate successfully in wide ranging market conditions as we allocate capital strategically, based on a consistently applied policy which takes account of the macroeconomic backdrop and our leverage.

Looking forward, the COVID-19 pandemic may continue to contribute to some market uncertainty in the coming months. However, on the back of the vaccination roll-out, we expect all of our end markets to continue to recover well. In April we launched the next phase of our strategic plan, Sunbelt 3.0, based on growth and resilience. This is a plan imbued with ambition and purpose to engage all our stakeholders and is designed to capitalise on the many growth opportunities available, while enhancing the Group's resilience in more challenging times. With leadership positions in all our markets, supported by high quality fleet and a strong financial position, we are well positioned to respond to market conditions and support our customers and team members as we embark on Sunbelt 3.0.

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Trading results		Revenue	EBITDA		Profit1
	2021	2020	2021	2020	2021		2020
US in $m	5,417.5	5,489.9	2,634.5	2,721.0	1,444.6	1,560.0
Canada in C$m	500.9	420.7	218.9	157.0	97.8	54.5
US in £m	4,105.7	4,335.7	1,996.6	2,149.0	1,094.8	1,232.1
UK	635.1	469.2	192.8	148.6	60.9	36.4
Canada in £m	290.3	248.7	126.8	92.8	56.7	32.2
Group central costs		-		-	(14.8)	(14.6)	(15.6)	(15.4)
	5,031.1	5,053.6	2,301.4	2,375.8	1,196.8	1,285.3
Interest expense							(199.3)	(224.5)
Profit before amortisation,
exceptional items and tax							997.5	1,060.8
Amortisation							(61.5)	(61.7)
Exceptional items								-		(16.3)
Profit before taxation							936.0		982.8
Taxation charge							(238.6) (243.1)
Profit attributable to equity holders of the Company			697.4	739.7
Margins
US					48.6%	49.6%	26.7%		28.4%
UK					30.4%	31.7%	9.6%	7.8%
Canada					43.7%	37.3%	19.5%		13.0%
Group					45.7%	47.0%	23.8%		25.4%

1 Segment result presented is operating profit before amortisation.

Group revenue of £5,031m was 3% higher than the prior year at constant exchange rates (2020: £5,054m). Our performance relative to the prior year improved as we progressed through the year, with all our geographies delivering year-over-year growth in the fourth quarter. The lower activity levels, particularly in the first half of the year, had a significant impact on profit in the year as a large proportion of our costs are fixed in the short term. This profit impact reflects, in part, our decision to not make team members redundant as a result of COVID-19 and ensure we had a committed workforce ready to take advantage of improving market conditions, when the recovery came. As a result, adjusted profit before tax for the year was £998m (2020: £1,061m).

Although COVID-19 impacted the Group's performance adversely, it highlighted the benefits of our strategy to broaden and diversify our end markets, which has contributed to this resilient performance. This has provided the foundation for the launch of the next phase of our strategy, Sunbelt 3.0, again underpinned with long-term growth being driven by organic investment (same- store and greenfield) supplemented by bolt-on acquisitions.

In the US, rental only revenue of $3,976m was only 2% lower than the prior year

(2020: $4,065m), representing a strong market outperformance and demonstrating the benefits of our strategy of growing our specialty businesses and broadening our end markets. In the year, our specialty businesses grew 13% while the general tool business declined 4%. US total revenue, including new and used equipment, merchandise and consumable sales, decreased 1% to $5,418m (2020: $5,490m).

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The UK business generated rental only revenue of £362m, an increase of 10% on a comparable basis (2020: £349m). This was a strong performance as the breadth of our product offering and commitment of our team members enabled us to provide essential support to the Department of Health in its COVID-19 response efforts. Total revenue increased 35% to £635m (2020: £469m) reflecting the higher level of ancillary and sales revenue associated with the work for the Department of Health, which accounted for c. 29% of UK revenue in the year.

Canada's rental only revenue increased 27% on a reported basis. Excluding the contribution from William F. White ('WFW'), rental only revenue of the legacy business declined only 2% and returned to growth in the fourth quarter (18%). Canadian total revenue was C$501m

(2020: C$421m).

In all our markets we took action to reduce operating costs and eliminate discretionary expenditure. However, our broad customer base ensures there continues to be good opportunities to grow the business and we focused on disciplined investment as the Group returned to growth towards the end of the year. We took early decisions not to make any team members redundant as a result of COVID-19 or seek assistance from any government support programmes but to continue investment in the business, including our technology platform and our rental fleet. As a result, in the US, 50% of the rental revenue decline dropped through to EBITDA. This contributed to a reported EBITDA margin of 49% (2020: 50%) and a 7% decrease in operating profit to $1,445m (2020: $1,560m) at a margin of 27% (2020: 28%).

Last financial year we launched Project Unify in the UK with the objective of improving operational efficiency and returns in the business. This has resulted in significant investment in the operational infrastructure of the business which, when combined with the impact of COVID-19, contributed to an EBITDA margin of 30% (2020: 32%). Operating profit of £61m (2020: £36m) at a margin of 10% (2020: 8%) reflected these factors and a property impairment charge of c. £10m as we reshape the business to drive operational improvement.

Canada is in a growth phase as we invest to expand its network and develop the business. In December 2019 we acquired WFW, which serves the film and TV production industries. While WFW contributed virtually no revenue in the first quarter, it bounced back strongly from September onwards generating record levels of revenue for the business and an operating profit of C$29m at a 23% margin. The legacy Canadian business, excluding WFW, increased its EBITDA margin to 43% (2020: 38%) and generated an operating profit of C$69m (2020: C$56m) at a 18% margin (2020: 15%). This performance reflects a strong focus on operational efficiency and the cost base.

Overall, Group adjusted operating profit decreased to £1,197m (2020: £1,285m), down 3% at

constant exchange rates. After financing costs of £199m (2020: £224m), Group profit before

amortisation of intangibles and taxation was £998m (2020: £1,061m). After a tax charge of 25%

(2020: 25%) of the adjusted profit before taxation, adjusted earnings per share decreased to

166.0p (2020: 175.0p).

Statutory profit before taxation was £936m (2020: £983m). This is after amortisation of £62m

(2020: £62m) and, in the prior year, an exceptional interest cost of £16m. After a tax charge of

25%, basic earnings per share were 155.7p (2020: 162.1p). The overall cash tax charge was 34%.

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