Ashtead Group plc

Hello and welcome to the analyst call for Ashtead Group PLC Q1 results. I will shortly be handing you over to Brandon Horgan and Michael Pratt, who will take you through today's presentation. There will be an opportunity for Q&A later in the call. So now, over to Brandon Horgan and Michael Pratt at Ashtead Group PLC.

Thank you, operator, and good morning, everyone, and welcome to the Ashtead Group Q1 results presentation. I'm speaking this morning from our U.S. Support Office, and I'm joined on the line by Michael Pratt and Will Shaw in London. It's not been long since we saw many of you in Atlanta and then in June following our four-year results, and so this morning will be a light touch with a brief update on our progress. Turning to slide three, I'd like to start this morning by addressing our Sunbelt team members and recognize their engagement, learning, enthusiasm, and early focus in executing on our Sunbelt 4.0 plan. Beyond the clear and actionable plans surrounding the five primary elements of 4.0, customer, growth, performance, sustainability, and investment, there are the foundational elements, which are people, platform, and innovation. The team has leaned into their strengths of people and culture to not only make early advancements within each actionable component, but also the health and safety of our people, our customers, and the members of the communities we serve. This is demonstrated by following our best ever safety performance year, which we've shared as last year, with another record quarter in the very same leading and lagging measures the team delivered on last year. This further emphasizes our cultural mindset surrounding safety. It is not one of reaching a destination, rather achieving milestones. As is the case with many things, complacency is the ultimate threat. So to our team, thank you. Thank you, thank you for your efforts in the first quarter and your ongoing commitment to engage for life. Moving into the slides, let's begin with the highlights for the quarter on slide four. Strong revenue growth continued in the quarter with group rental revenue and total revenue up 7% and 2% respectively, while U.S. rental revenue improved by 6% and total revenue by one. Group EBITDA improved 5% to a record 1.3 billion, And as expected, lower used equipment sales and increases in depreciation and interest costs on a larger fleet resulted in adjusted PBT of $573 million and EPS of $0.97. From a capital allocation standpoint, and in accordance with our priorities, we invested $855 million in CAPEX, which fueled existing location replacement and fleet growth and greenfield openings. We expanded our North America footprint by 33 locations, by 22 greenfield openings and a further 11 through two bolt-on acquisitions costing a combined 53 million. Following these investments, our net debt to EBITDA leverages 1.7 times, which is towards the middle of our new long-term range of one to two times. These results and investment activities demonstrate our confidence in the ongoing health of our end markets and the fundamental strength in our cash generating growth model. And accordingly, We expect full year results in line with our June guidance. On that note, I'll hand it over to Michael, who will cover the financials and outlook.

Thanks, Brendan, and good morning. The group's results for the first quarter are shown on slide six. We've had a good first quarter with trading in line with our expectations when we announced our full year results in June. Group rental revenue increased 7% on a constant currency basis, This growth was delivered with strong margins, an EBITDA margin of 47% and an operating profit margin of 26%. After an interest expense of $144 million, which increased 22% compared with this time last year, reflecting principally higher absolute debt levels, adjusted pre-tax profit was 7% lower than last year at $573 million. Adjusted earnings per share were 97.4 cents for the quarter. Turning now to the businesses. Slide seven shows the performance in the US. Rental revenue for the quarter grew by 6% over last year, which in turn was up 16% on the prior year. This has been driven by a combination of volume and rate improvement in overall healthy end markets. The total revenue increase of 1% reflects lower levels of used equipment sales than last year, when we took advantage of improving fleet deliveries and strong secondhand markets to catch up on deferred disposal. The third actual component of Sunbelt 4.0 is performance. As we look to leverage the infrastructure and scale we developed during 3.0 and improve margins. This, combined with our focus on the cost base and lower scaffold erection and dismantling revenue, contributed to drop through for the quarter of 69% and an EBITDA margin of 49%. Reflecting the impact of gains $42 million lower than a year ago due to lower used equipment sales, And the high depreciation charge on a larger fleet operating profit was $669 million at a 29% margin. And ROI was a healthy 22%. Turning now to Canada on slide eight. Rental revenue was 21% higher than a year ago at $222 million, aided by the recovery of the film and TV business. The major part of our Canadian business is performing in a manner similar to the US, with rental revenue up 16%, driven by volume and rate improvement, as it takes advantage of its increasing scale and breadth of product offering. Following settlement of the strikes in the North American film and TV industry, activity levels in our film and TV business have recovered, although they are yet to reach pre-strike levels. This contributed to an EBITDA margin of 43% and an operating profit of $46 million at the 19% margin, while ROI is 11%. Turning now to slide 9, UK rental revenue was 6% higher than a year ago at £160 million. In line with the 4.0 strategy, the focus in the UK remains on delivering operational efficiency and long-term sustainable returns in the business. While we continue to make progress on rental rates, these need to progress further. As a result, the UK business delivered an EBITDA margin of 29% and generated an operating profit of 18 million pounds at a 9% margin and ROI was 7%. Slide 10 updates our debt position at the end of July. The increase in debt in the quarter relates principles of lease liabilities with external borrowings declining slightly. As a result, excluding these lease liabilities, leverage was 1.7 times net debt to EBITDA. Our expectation continues to be that we'll operate within our new target leverage range of one to two times net debt to EBITDA, but most likely towards the middle of that range. Turning now to slide 11 and our guidance for revenue, capital expenditure, and free cash flow for this year. We are reaffirming the guidance we gave in June with U.S. rental revenue growth in the 4% to 7% range 15% to 19% rental revenue growth in Canada, aided by the recovery of the film and TV business, and 3% to 6% rental revenue growth in the UK. From a capital expenditure standpoint, our range of $3 billion to $3.3 billion is unchanged, although as we sit here today, we believe we'll be around the bottom end of this range. Based on this unchanged guidance, we expect free cash flow at at least $1.2 billion with the big variable being where we land on capital expenditure. And with that, I'll hand back to Brendan.