Ashtead Technology reports strong first-half growth

(Sharecast News) - Subsea equipment specialist Ashtead Technology reported significant financial improvements in its first half on Monday, including a 57.1% year-on-year increase in revenue to £49.8m. The AIM-traded firm said its gross Profit came in at £39.3m, an increase of 68.7%, while its gross profit margin stood at 78.8%, up by 540 basis points.

Adjusted EBITDA rose 73.7% to £21.3m, and adjusted profit before tax was £14.3m, up 87.9%.

Adjusted basic earnings per share improved by 71.1% year-on-year, to 14.2p.

Ashtead Technology reported a return on invested capital of 25.5%, up from 19.1% in the first half of 2022.

The board put the revenue growth down to sustained high demand in both offshore renewables and offshore oil and gas sectors.

Specifically, revenue from offshore renewables spiked 74.1% to £16.3m, while offshore oil and gas revenue saw a 50% increase to £33.5m.

Organic growth accounted for 40.5% of the increase, while mergers and acquisitions contributed 13.9% and favourable foreign exchange rates accounted for 2.7%.

Ashtead Technology said it successfully integrated the acquisitions of WeSubsea and Hiretech in the period, which both showed strong growth in revenues and profits.

The company invested £8m in capital expenditure, up slightly from £7.8m in the first half of last year, and was forecasting a full-year capital expenditure of £20m to expand its fleet and capabilities further.

Its large independent fleet was continuing to offer a competitive edge in the market, while quoting activities remained high, showing an increase of more than 50% in value compared to the same period last year.

The employee headcount as of 30 June was 289, an 11% increase from December, as the firm expanded its sales and technical teams to support continued growth.

Looking ahead, the board expressed optimism regarding its performance, and expected the full year to surpass previous expectations.

The company also mentioned that it was actively reviewing merger and acquisition opportunities to complement its organic growth, and was aiming to consolidate its position in a highly fragmented market.

Net debt stood at £26.4m, down from a leverage ratio of 1.0x to 0.7x due to robust cash generation and growth in last-12-months EBITDA.

"I am extremely pleased to announce our strongest ever set of interim results," said chief executive officer Allan Pirie.

"We have continued to see positive momentum through the first half of 2023 with the group benefiting from our strategic investment in people and equipment, together with further increases to both utilisation and pricing.

"Our recent acquisitions of Hiretech and WeSubsea have performed ahead of our expectations and we are benefitting from our increased breadth of capabilities."

Pirie said market fundamentals remained strong, and the firm continued to expand its offering while growing within its existing markets.

"Given the unseasonal strength of the final quarter of FY22 we expect year-on-year growth to moderate in the second half.

"Our half-year results and positive end market dynamics give the board increased confidence in the outlook for the business and we expect the full-year outturn to be comfortably ahead of our previous expectations."

At 0928 BST, shares in Ashtead Technology Holdings were up 4.59% at 410p.

Reporting by Josh White for Sharecast.com.