Ashtead Group PLC (ASHTF) Q4 2025 Earnings Call Highlights: Record EBITDA and Strategic Growth ...
Group Rental Revenue: Increased by 4%.
Group EBITDA: Grew by 3% to $5 billion.
Pre-Tax Profit: $2.1 billion.
Earnings Per Share: $3.70.
EBITDA Margin: 47%.
Capital Expenditure: $2.4 billion.
Free Cash Flow: Near record of $1.8 billion.
Dividends Paid: $544 million.
Share Buybacks: $342 million.
New Customers Added: 42,000.
New Locations Added: 61 in North America.
North America General Tools Rental Revenue: Grew by 1% to $5.9 billion.
North America Specialty Rental Revenue: Increased by 8% to $3.3 billion.
UK Rental Revenue: Increased by 5% to $778 million.
Operating Profit Margin: 25%.
Interest Expense: $559 million.
Adjusted Earnings Per Share: $3.70.
Guidance for Fiscal Year 2026: Group rental revenue growth between flat and 4%.
Planned Capital Expenditure for Fiscal Year 2026: $1.8 billion to $2.2 billion.
Expected Free Cash Flow for Fiscal Year 2026: $2.0 billion to $2.3 billion.
Warning! GuruFocus has detected 3 Warning Signs with XAIR.
Release Date: June 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Ashtead Group PLC (ASHTF) reported record rental revenues and EBITDA for the year, with group EBITDA reaching $5 billion and a margin of 47%.
The company successfully added 42,000 new customers, contributing to $1.9 billion in rental revenue growth.
Ashtead Group PLC (ASHTF) achieved near-record free cash flow of $1.8 billion, despite significant capital investments.
The company launched a $1.5 billion share buyback program, demonstrating confidence in its cash-generative growth model.
The Specialty business segment showed strong performance, with an 8% increase in rental revenue, and is expected to drive higher returns in the future.
Total revenue was down 1% due to a planned lower level of used equipment sales, impacting overall profitability.
The UK segment showed lower returns with an operating profit margin of only 8% and ROI of 7%, indicating room for improvement.
The North American general tools segment experienced a decline in operating profit, attributed to lower gains on equipment sales and higher depreciation charges.
The company anticipates flat to 4% rental revenue growth for the next fiscal year, reflecting ongoing market challenges.
There is a noted slowdown in the Specialty segment's growth rate, with some areas like film and TV and oil and gas experiencing significant declines.
Q: Can you provide an update on May trading and the current rental revenue guidance? A: Brendan Horgan, Chief Executive, noted that May saw a 2% increase in North America on a billing per day basis. The rental revenue guidance is expected to be between flat and 4%, with specialty business likely in the mid-single-digit range and general tool in the lower single-digit range. The UK is expected to be relatively flat. The growth is anticipated to be more back-half weighted due to factors like hurricane revenue in the first half of the previous year.
Q: What are the opportunities for margin improvement and cost controls? A: Alexander Pease, Chief Financial Officer, explained that the company has taken actions to align its cost structure, particularly after significant investments during Sunbelt 3.0. The focus is now on leveraging these investments through logistics optimization and maintenance activities. Brendan Horgan added that the company is confident about margin progression over the course of Sunbelt 4.0, with a strong start in the first year.
Q: How do you view the long-term split between general tool and specialty businesses, and will your M&A strategy reflect a greater emphasis on specialty? A: Brendan Horgan stated that the specialty business is expected to continue growing, potentially reaching closer to 50% of the total business over time. The M&A strategy will likely focus on specialty, given its robust landscape and potential for growth. However, the actual split will depend on market conditions and opportunities.
Q: Could you elaborate on the market share gains and the impact of competitor disruptions? A: Brendan Horgan highlighted that Ashtead Group has been successful in adding new customers, with 42,000 new accounts generating over $400 million in revenue in the current fiscal year. The company is gaining market share across various customer segments, including large strategic accounts. Horgan did not comment on competitor disruptions but emphasized the positive impact of industry consolidation.
Q: What is the impact of potential changes in bonus depreciation rules on free cash flow? A: Alexander Pease explained that reinstating 100% bonus depreciation could reduce cash tax by around 10 percentage points, translating to approximately $200 million in cash impact. This would be upside to the current guidance, which is based on the existing tax regime.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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