AT. Ashtead Technology Holdings Plc

2 September 2024

Ashtead Technology Holdings plc

("Ashtead Technology" or the "Group")

Unaudited Half Year Results for the Six-Months Ended 30 June 2024

Another record trading performance with positive outlook unchanged

Ashtead Technology Holdings plc (AIM: AT.), a leading subsea equipment rental and solutions provider for the global offshore energy sector, announces its unaudited results for the six months ended 30 June 2024 ("HY24" or "the period").

Financial Performance (£'m)

Additional Statutory Accounting Measures (£'m)

·           Strong year-on-year increase in revenue (61.4%) driven by continued high demand across both offshore renewables and offshore oil and gas

o  16% organic growth, outperforming underlying markets, and 47% growth from the acquisition of ACE Winches that was completed during H2 2023, with the delta due to FX headwind

o  Offshore renewables revenue increased by 41.9% to £23.1m (HY23: £16.3m)

o  Offshore oil and gas revenue increased by 70.9% to £57.3m (HY23: £33.5m)

·           Adjusted EBITA increased by 45.6% to £22.6m (HY23: £15.5m) driven by top line growth with an adjusted EBITA margin of 28.1% (HY23: 31.1%) in line with expectations

·           Increased adjusted basic earnings per share of 19.1p (HY23: 14.0p)

·           Delivered ROIC of 25.3% (HY23: 25.4%), well in excess of our cost of capital

·           Robust balance sheet with net debt of £72.0m (HY23: £26.4m) representing leverage of 1.2x (1.0x proforma)

Operational Highlights and Outlook

·           Year to date investment of £16.4m in rental fleet capital expenditure (HY23: £8.0m) with full year forecast of £30m.  Organic growth remains a key priority as we continue to expand our capabilities and international reach

·           Promoted Brett Lestrange into the newly created role of Chief Operating Officer as we continue to strengthen the team at all levels through the organisation.  Head count increased from 527 to 559 through HY24

·           ACE Winches acquisition completed in November 2023, integration progressing well with strengthening sales pipeline into 2025 and beyond

·           M&A continues to be a key element of the strategy as we focus on broadening both our product and services offering, and our geographic exposure to build a platform to sustain medium term double digit organic revenue growth

·           The Board is encouraged by the Group's performance in HY24 which gives us increased confidence on our full year 2024 outturn and our expectations remain unchanged

Allan Pirie, Chief Executive Officer, said:

"I am extremely pleased to deliver another record trading performance as we build on the strong momentum seen through 2023.  We have continued to execute on our strategy to expand the breadth and depth of our offering through both organic and inorganic investment, increasing the resilience and differentiated nature of our business model.

The outlook for our business remains positive given the strength of the global offshore energy market and our continued investment to support longer term growth.  The Board is encouraged by the Group's performance in HY24 which gives us increased confidence on our full year 2024 outturn and our expectations remain unchanged."

For further information, please contact:

*See Note 1 for an explanation of the prior period restatement.  Negative impact on Adjusted EBITDA and Adjusted EBITA in HY23 is £0.2m

¹Adjusted EBITDA is defined as operating profit adjusted to add back depreciation, amortisation, foreign exchange movements and non-trading items as shown in Note 18 of the HY24 accounts

²Adjusted EBITA is defined as operating profit adjusted to add back amortisation, foreign exchange movements and non-trading items as shown in Note 18 of the HY24 accounts

³Adjusted profit before tax is defined as profit before tax adjusted to add back amortisation, foreign exchange movements and non-trading items as shown in Note 18 of the HY24 accounts

⁴Return on Invested Capital (ROIC) is defined as LTM⁶ Adjusted EBITA divided by Invested Capital.  Invested capital is defined as average net debt plus average equity

⁵Leverage is defined as net debt divided by LTM Adjusted EBITDA

⁶LTM is defined as latest twelve months to 30 June 2024

Notes to editors:

Ashtead Technology is a leading subsea equipment rental and solutions provider for the global offshore energy sector.  Ashtead Technology's specialist equipment, advanced-technologies and support services enable its customers to understand the subsea environment and manage offshore energy production infrastructure.

The Company's service offering is applicable across the lifecycle of offshore wind farms and offshore oil and gas infrastructure.

In the fast-growing offshore wind sector, Ashtead Technology's specialist equipment and services are essential through the project development, construction and installation phases. Once wind farms are operational, Ashtead Technology supports customers with inspection, maintenance and repair ("IMR") equipment and services.  In the more mature oil and gas sector, Ashtead Technology's focus is on IMR and decommissioning.

Headquartered in the UK, the Group operates globally, servicing customers from its twelve facilities located in key offshore energy hubs.

Cautionary Statement

This announcement contains certain forward-looking statements, including with respect to the Group's current targets, expectations and projections about future performance, anticipated events or trends and other matters that are not historical facts.  These forward-looking statements, which sometimes use words such as "aim", "anticipate", "believe", "intend", "plan", "estimate", "expect" and words of similar meaning, include all matters that are not historical facts and reflect the directors' beliefs and expectations, made in good faith and based on the information available to them at the time of the announcement.  Such statements involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement and should be treated with caution.  Any forward-looking statements made in this announcement by or on behalf of Ashtead Technology speak only as of the date they are made.  Except as required by applicable law or regulation, Ashtead Technology expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

CEO STATEMENT

Ashtead Technology delivered another record trading performance for the first six months of the financial year, maintaining the strong momentum seen through 2023.  We have continued to execute on our strategy to expand the breadth and depth of our offering through both organic and inorganic investment, increasing the resilience and differentiated nature of our business model.

Revenue growth of 61% on the prior year is split 16% organic growth and 47% from the ACE Winches acquisition completed during H2 2023, offset by a FX headwind.  EBITDA and EBITA margins of 39% and 28% respectively are in line with expectations and we have delivered an EPS increase of 36% over the past 12 months.

Our markets

Market dynamics remain strong with continued evidence of long-term structural growth.  Rystad's latest market forecast remains unchanged at 11% CAGR from 2023 through to 2027 with the total addressable market expected to reach close to $3.5bn by 2027. 

Ashtead Technology's customers continue to increase the size and quality of their backlogs which are extending in duration to 2026 and beyond as evidenced by published backlogs from our larger listed customers.  This creates a multi-year growth runway for the business.

As the offshore energy market evolves, Ashtead Technology's expanding geographical footprint, fungible equipment fleet (>85% fungible across oil and gas and renewables), own technology development credentials, and increasing services capability, all position the business well to support the growing international market. 

Within oil and gas, the global market remains very buoyant with global offshore greenfield committed capex increasing by 65% in 2023 compared to the average of the previous eight years. Overall, Rystad forecasts a 8% CAGR in oil and gas markets with a 5% CAGR in decommissioning spend from 2023 through 2027.

Within offshore wind, activity remains high with Rystad forecasting a 23% CAGR market growth in the period 2023 through to 2027.  The sector shows significant promise with 2023 final investment decision (FID) activity reaching record breaking capacity levels in Europe at 8.6GW, up from an average 4.3GW in the previous three years despite cost inflation and higher interest rates.  Globally, excluding China, 2024 auction activity is forecast to hit a record 64.6GW, the majority of which is in Europe.  This provides Ashtead Technology with significant confidence in the scale of the future opportunity given our ability to provide support across the lifecycle of offshore wind infrastructure.

Continuing organic growth investment

Our primary focus remains on organic investment which continues to deliver strong revenue growth.

The expansion of our new survey and ROV tooling equipment operations in Norway during 2024 to complement the acquired ACE Winches Norway operation is progressing well with the recruitment of a local survey & robotics and ROV tooling team to service the increasing opportunities in country. 

Brett Lestrange, who has been with the business since 2017, was appointed to the new role of Chief Operating Officer in July as we continue to strengthen the team at all levels through the organisation.  Brett joined Ashtead Technology seven years ago and has extensive experience and a proven track record in subsea technology.  During H1 2024 we have further increased global headcount by 6% to 559, enhancing sales and technical capability to support future top line growth.  We have also expanded our in-house learning and development team to further invest in our people through training and competency development.

On capital expenditure, we have invested £16.4m (HY23 £7.8m) during HY24 to increase our rental fleet, and FY24 capital expenditure is still anticipated to be £30m. Our acquisition of ACE Winches has significantly enhanced our in-house design, engineering and manufacturing capability which has enabled us to accelerate our mechanical solutions in-house capex build programme.

We continue to broaden our range of complementary equipment and services through both in-house equipment design and supply chain partnerships, increasing our offering to our customers and ensuring that we maintain our market leading position.

M&A

M&A is also a key element of the strategy as we focus on broadening our product and services offering, and geographic exposure to build a platform to sustain medium term double digit organic revenue growth.

The ACE Winches acquisition, completed in November 2023, added critical lifting, pulling and deployment capability to our expanding service offering. Integration is on track, and, with the benefit of a broadened fleet our sales teams are already seeing increasing traction with customers as we seek to expand our packaged service offering to them.

Sustainability

At the heart of our strategy is maintaining our relevance in a changing offshore energy market and ensuring that we support our customers, and the wider energy sector, in achieving its energy transition targets.  Offshore renewables represented 29% of our revenues in HY24 with 42% growth on HY23 revenues.  A key part of our strategy is to acquire businesses that have traditionally serviced the oil and gas market and reposition them into offshore renewables leveraging Ashtead Technology's customer network.  ACE Winches revenues were predominantly derived from oil and gas on acquisition and we are already seeing an increase in renewables opportunities in the first nine months of owning the business.

Outlook

The outlook for our business remains positive given the strength of the global offshore energy market, our continued investment to support organic growth and the building of our M&A pipeline.  The Board is encouraged by the Group's performance in HY24 which gives us increased confidence on our full year 2024 outturn and our expectations remain unchanged.

Allan Pirie

Chief Executive Officer

CFO STATEMENT

The Group has continued to deliver strong financial performance through HY24 with revenue growth of 61%, split 47% growth from acquisitions and 16% organic growth, offset by a small negative impact from FX.  An EBITDA margin of 39% and EBITA margin of 28% are in line with expectations.

We grew our revenues from both renewables and oil and gas with renewables representing 29% of our business in HY24.  Renewables revenue was 42% up on HY23, while oil and gas growth was 71%.  We continue our focus on achieving 50% of our revenues from renewables within the medium term, supported by the fungibility of our fleet and the expansion of the ACE Winches offering into renewables, a market it has not traditionally focussed on.

Organically, we saw our European operations grow 9% compared to HY23 with Americas growing at 12%, APAC at 19%, and Middle East significantly outperforming at 75% revenue growth driven largely by an increase in market activity in the region.  All regions grew profits as we continue to invest in broadening out our capability across all of our international footprint.

Gross profit

The Group achieved gross profit of £61.0m (HY23: £39.3m) and a gross profit margin of 75.8% (HY23: 78.8%).  The gross margin was in line with expectations and the reduction primarily driven by revenue mix.  Our average annualised cost utilisation decreased slightly to 44% (HY23: 45%).

Administration costs

Administration costs (excluding depreciation, amortisation and exchange gain/loss) for HY24 were £30.5m (HY23: £18.8m), a £11.7m increase on HY23 of which £8.4m was due to the addition of ACE Winches.  Excluding ACE Winches, the largest increase resulted from payroll as we continue to scale the business for further growth.  Our headcount at June 2024 was 559 (HY23: 289), up 270 on June 2023 of which 203 were added through the ACE Winches acquisition.

Profitability

Adjusted EBITA of £22.6m (HY23: £15.5m) represents an EBITA margin of 28.1% compared to 31.1% in HY23.  The EBITA margin is in line with expectations with the decrease on HY23 primarily driven by revenue mix.  ROIC remains significantly ahead of our cost of capital at 25.3%.

Finance costs of £3m (net) compares to £1.9m in HY23.  HY23 costs included a £0.5m write-off of deferred finance costs due to the refinancing which completed in April 2023.  The increase in financing costs was due to the ACE Winches acquisition which was funded entirely through RCF draw.

Profit Before Tax of £17.6m compares to £13.2m in HY23, an increase of 33%.

The tax provision for the period was £4.3m (HY22: £2.8m) representing an effective tax rate of 24.2% (HY23: 21.2%). 

Adjusting for amortisation and exceptional costs results in an Adjusted basic earnings per share of 19.1p which compares to 14.2p in HY23.

Cash flow and balance sheet

Net cash generated from operating activities was £9.7m, down from £12.9m in HY23 due to working capital.  Working capital represented 14% of trailing twelve months revenues compared to 9% at June 2023.  We expect working capital to be back in line with the long term target of 10% of TTM revenues by year end.

With the business continuing to invest in organic growth and as a result of the final completion accounts payment for ACE Winches, there was a net decrease in cash of £5m in HY24.  Overall net debt of £72m represents leverage of 1.2x (1.0x proforma).

Continued investment in our equipment rental fleet has resulted in an increase in fixed asset net book value (NBV) from £69m at FY23 to £76m.  Overall net assets increased to £110.6m, up £26.2m on HY23.

Our full year dividend for 2023 was paid in May and in line with previous periods and as the business continues its investment in growth, the Board has not recommended an interim dividend for HY24.  In line with previous guidance the Board intends to continue its small, progressive dividend policy as part of its full year reporting.

Prior year restatement

As noted in our FY23 annual report and accounts, the Group identified an error in application of IAS 38 "Intangible Assets". The correction of this error has resulted in a negligible change (<£0.1m) to HY23 profit after tax but results in a £1.4m reduction in intangible assets in our balance sheet at HY23.  Comparatives in the HY24 accounts have been restated and further details are given in Note 1 of the accounts.

Ingrid Stewart

Chief Financial Officer

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE

HALF-YEARLY FINANCIAL REPORT

The Directors of Ashtead Technology Holdings plc (set out on page 36 and 37 of the latest Annual Report and Accounts) confirm that to the best of their knowledge:

•          the condensed consolidated set of financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK;

•          the interim management report includes a fair review of the information required by:

(i)      DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(ii)     DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the Board of Directors

Consolidated income statement

for the six-month period ended 30 June 2024

*               See Note 1 for an explanation of the prior period restatement.

^               Adjusted EBITDA is calculated as earnings before interest, tax, depreciation, amortisation and items not considered part of underlying trading including foreign exchange gains and losses, is an Alternative Profit Measure used by management and is not an IFRS disclosure.  See Note 18 to the condensed consolidated interim financial statements for calculations.

^^            Adjusted EBITA is calculated as earnings before interest, tax, amortisation and items not considered part of underlying trading including foreign exchange gains and losses, is an Alternative Profit Measure used by management and is not an IFRS disclosure.  See Note 18 to the condensed consolidated interim financial statements for calculations.

^^^         Adjusted Profit After Tax is calculated as profit after tax adjusted for amortisation and items not considered part of underlying trading including foreign exchange gains and losses, all adjusted for tax, is an Alternative Profit Measure used by management and is not an IFRS disclosure.  See Note 18 to the condensed consolidated interim financial statements for calculations.

All results derive from continuing operations.

Consolidated statement of comprehensive income

for the six-month period ended 30 June 2024

*               See Note 1 for an explanation of the prior period restatement.

Consolidated balance sheet

at 30 June 2024

*               See Note 1 for an explanation of the prior period restatement.

Consolidated statement of changes in equity

for the six-month period ended 30 June 2024

*               See Note 1 for an explanation of the prior period restatement.