Underlying pre-tax profit rose 17% to £1.1bn and total rental revenue gained 18% to £4.1bn in the year to the end of April 2019, supported by an increase in the fleet of equipment.
The group’s involvement in the clean-up efforts following hurricanes Florence and Michael in the US contributed estimated incremental rental revenue of US$30-35mln but this was much less than the previous year’s US$100mln.
The US Sunbelt business was the key driver of growth with rental revenue rising 22% to £3.5bn.
Rental revenue from the A-Plant arm in the UK edged up 2.7% to £416mln while the Sunbelt Canada division delivered a 54% increase in rental revenue to £167mln.
The earnings (EBITDA) margin rose to 44.3% from 43.8%, driven by an improvement in Canada.
Capital expenditure for the year amounted to £1.6bn gross or £1.4bn net of disposal proceeds and Ashtead expects a similar level of spending in the 2020 fiscal year.
During the period, the company spent £622mln on bolt-on acquisitions, compared to £392mln last year, adding 146 locations across the group.
“We continue to experience strong end markets in North America and are executing well on our strategy of organic growth supplemented by targeted bolt-on acquisitions,” chief executive Brendan Horgan said.
He added: “This investment reflects the structural growth opportunity that we continue to see in the business as we broaden our product offering, geographic reach and end markets, thus increasing market share and diversifying our business.”
The company proposed a final dividend of 33.5p, taking the total payout for the year to 40p, up 21% on last year.
Ashtead confirmed plans for a new share buyback programme of at least £500mln in 2020, having spent £675mln on share buybacks since December 2017.
“With our business performing well and a strong balance sheet to support our plans, the board continues to look to the medium term with confidence,” CEO Horgan said.
In morning trading, shares ticked up 0.7% to 1,976p.
Liberum maintained a 'buy' rating and target price of 2,390p.
"The market should be relieved that growth has continued without interruption in the fourth quarter, with management expressing confidence in end markets in the US now and into the medium term," it said.
"The shares still look cheap, having only recovered half of the macro-drive sell-off of late 2018."
Source - Proactive Investors