TIDMAHT
RNS Number : 8801K
Ashtead Group PLC
27 April 2020
27 April 2020
Ashtead Group plc ("Ashtead" or "Group") COVID-19 trading
update
Introduction
At the time of our third quarter results on 3 March 2020 we were
trading in line with expectations and this continued through the
second week of March with limited impact from the consequences of
the COVID-19 virus pandemic. Since the middle of March, the
unprecedented action taken by governments and the private sector to
contain the virus has resulted in adverse conditions within the
Group's end markets. This update outlines the actions the Group has
taken in response to these changing circumstances and the impact on
current trading.
Health and Safety
Ashtead's leading value as a business is the safety, health and
wellbeing of its team members, customers and the communities we
serve. To safeguard these stakeholders, we implemented a series of
actions following guidance from government and health agencies
including:
- Restricted travel and meetings
- Enacted our Business Continuity Plan to facilitate working remotely where possible
- Reinforced guidelines to ensure colleagues and customers
follow specific health protection protocols and implemented social
distancing
- Provided touchless signature at the point of equipment delivery or pickup
- Put in place curbside pick-up to serve our non-delivered customer transactions
Current trading
With few exceptions, the Group's locations in the US, UK and
Canada remain open and active. Although trading volumes have been
impacted negatively by the measures taken to contain the virus,
this has been mitigated, in part, by emergency response efforts
throughout our business units but particularly our specialty
businesses. Sunbelt Rentals is designated as an essential business
in the US, UK and Canada, supporting government and private sector
responses to the pandemic. This includes providing vital equipment
and services to first responders, hospitals, alternative care
facilities, testing sites, food services, telecom and utility
companies while continuing to service ongoing construction sites
and increased facility maintenance and cleaning.
As a result of these market dynamics, rental-only revenue for
Sunbelt US in March was 2% higher than prior year and we expect
April US rental-only revenue to be c. 15% lower than April 2019.
This is due principally to the general tool business being c. 18%
lower than prior year while the broader based specialty (1)
businesses are expected to be c. 9% higher than last year,
consistent with their performance in March. The reduction in the
general tool business is driven by declines in volume rather than
rental rates.
Since 10 April, we have seen the level of US fleet on rent
stabilise and show a modest improvement. This positive trend
follows a period of consistent decline over the previous four
weeks. This recent trend in fleet on rent is similar in our UK and
Canadian businesses.
Given these revenue trends, the Group now expects underlying
profit before tax (2) for the year ending 30 April 2020 to be c.
GBP 1,050m.
Cash optimisation, cost base and liquidity measures
In early March we took prompt action to optimise cash flow,
reduce operating costs and strengthen further our liquidity
position during this period of suppressed revenue. These actions
include but were not limited to:
- Reducing planned capital expenditure for the year ending 30
April 2021 to c. GBP 500 million from the initial range of GBP 1.1
to GBP 1.3 billion (LTM (3) January 2020: GBP 1.6 billion)
- Suspending all current and prospective M&A activity (LTM January 2020: GBP 537 million)
- Pausing our share buyback programme from 19 March (LTM January 2020: GBP 509 million)
- Implementing a group wide freeze on new hires
- Reducing discretionary staff costs, use of third party freight
haulers and other operating expenditures consistent with reduced
activity levels
A skilled workforce is instrumental to the Group's long-term
success and we have made every effort to preserve our committed
workforce for the impending recovery. Therefore, we have not made
any team members redundant as a result of the impact of COVID-19
and currently do not intend to seek assistance from the UK
government's Coronavirus Job Retention Scheme.
Ashtead remains in a strong financial position with long-term
committed debt facilities. The Group's first debt maturity is the
senior secured credit facility maturing in December 2023. At 31
January 2020, availability under that facility was $1,446 million
with an additional $2,949 million of suppressed availability. There
is one financial performance covenant (a fixed charge ratio) under
the first priority senior credit facility. This covenant does not
apply when availability exceeds $410 million.
Effective 24 April 2020, the Group has accessed an additional
$500 million through its senior secured credit facility for one
year, increasing the facility size to $4.6bn for the next twelve
months. Following this increase, availability is c. $2.1bn, while
the minimum availability requirement increased to $460m.
In response to the COVID-19 crisis the Group has modelled a
variety of downside scenarios over the coming year reflecting
activity levels much lower than those which have been experienced
to date. Under all these scenarios the Group remains free cash flow
positive throughout the next financial year and availability
remains well above the $460 million threshold.
Brendan Horgan, Group Chief Executive, commented
"We are grateful for and extraordinarily proud of our team
members who continue to respond as essential service providers
during a time when our communities are in need. All levels of the
organisation have quickly adapted our operations to continue
servicing our customers while keeping our leading value of safety
at the forefront of all we do.
Looking forward, I am certain the swift actions we took during
these unprecedented times and the strength of our balance sheet
will serve the Group well. These factors, when combined with the
diversity of our products and end markets, contribute to the
strength of our long-term business model and put the Board in a
position of confidence to look to the coming financial year as one
of strong cash generation and strengthening our market
position."
Enquiries:
Ashtead Group Will Shaw +44 (0) 20 7726 9700
Maitland/AMO Neil Bennett +44 (0) 20 7379 5151
James McFarlane
Notes:
1. US specialty business excluding Oil and Gas division
2. Underlying results are results stated before exceptional
items and the amortisation of acquired intangibles
3. Last twelve months ending 31 January 2020
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.
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END
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