Speedy Hire lifts expectations after positive first half

Speedy Hire reported continued momentum in its half-year results on Wednesday, with underlying revenue from continuing operations rising 28.2% to £186.6m, as it lifted its expectations for the full year.

The London-listed tools and equipment rental specialist recorded a 29.9% year-on-year improvement in EBITDA for the six months ended 30 September, to £49.1m, while its adjusted operating profit was £9.9m higher at £16.2m.

Its adjusted earnings per share were 1.28p firmer compared to the first half of the 2021 financial year, at 1.81p.

Speedy Hire said revenue grew throughout the period, noting a strong performance in hire where growth was 3.4%.

It also pointed out that its adjusted profit before tax from continuing operations was ahead of both the 2021 and 2020 financial years.

Continued improvement in asset utilisation was put down to the use of artificial intelligence (AI), with utilisation up 1.8% to 57.3% as at the period end on 30 September.

Costs were said to have been “tightly controlled”, with prior-year efficiency initiatives reinvested in growth priorities, notably people, environmental, social and governance (ESG) and digital capabilities.

Further market share gains were made, the board said, with a number of new contracts and renewals with key customers including Costain, MGroup, Redrow Homes and Willmott Dixon.

On the strategic front, Speedy Hire reported an “improved customer experience” through its upgraded digital platform, adding that a trial in 16 B&Q stores in the first half was successful in expanding its retail proposition through a seven-day offering.

Its environmental, social and governance (ESG) initiatives were also said to be delivering “good progress”, with the firm’s new ‘innovation centre’ in Milton Keynes opened in November.

Looking at the balance sheet, Speedy Hire reported cash and facility headroom of £131.0m, down from £142.3m at the end of March, with its bank facilities of £180m renewed to July 2024, providing “significant” headroom for growth.

Net debt widened to £47.9m from £33.2m on 31 March, with leverage rising to 0.7x from 0.5x over the same period.

The company said it made a “significant” £37.6m investment in its hire fleet over the period, with a focus on carbon-efficient ‘ECO’ products.

Looking ahead, Speedy Hire said its results for the 2022 financial year were expected to be ahead of current market expectations, given positive market conditions.

It said the infrastructure and construction sectors were being bolstered by major projects, while customer demand was continuing to improve into the second half.

An agreement had been signed with Kingfisher to open at 23 further B&Q locations from the second half, generating incremental revenue, while targeted price increases were offsetting cost pressures.

Improvements to “simplify and standardise” its operating model were being carried out, with Speedy Hire’s internal digital capabilities improved through the successful implementation of a new cloud-based enterprise resource planning system in October, and an improved consumer platform under development to simplify the digital customer journey.

The company’s board said it was maintaining its dividend policy, returning to interim payments with a proposed dividend of 0.75p per share.

During 2022, the directors would consider returns to shareholders of any capital in excess of the group's needs, consistent with Speedy Hire’s capital allocation policy.

“We have delivered another strong set of results through the strength of our offering, efficient operational delivery and a supportive market backdrop,” said chief executive officer Russell Down.

“Our focus on ESG, digital and customer service including our four-hour delivery promise, has once again yielded customer renewals and market share gains.

“Positive trading momentum in recent months and the significant growth opportunities presented by major infrastructure projects give us confidence in delivering full year results ahead of current market expectations and sustainable growth in the medium term.”

At 0855 GMT, shares in Speedy Hire were up 4.86% at 66.9p.