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| Share Name | Share Symbol | Market | Stock Type |
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| Ashtead Technology Holdings plc | AT | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
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| 0.00 | 0.00% | - |
| Open Price | Low Price | High Price | Close Price | Previous Close |
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| Top Posts |
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Posted at 28/4/2024 17:30 by wilmdav I have now had a closer look at how AT is likely to have arrived at an ROIC figure of 28.6% for 2023.My post 399 above noted that three different formulae provided by Investopedia produce three different figures for the denominator of ROIC. This remains the case but the figures are all in same rather wide ball park. Having read the Morgan Stanley 44 page article I am going to settle for the following Investopedia definition of Investment Capital, while bearing in mind that the MS article demonstrates how ROIC can be significantly affected by various adjustments that might be necessary. IC = Total assets - cash - non interest bearing current liabilities (including tax and account payables) The denominator is the average of IC over the reported year. This would normally be calculated by adding figures for the reported year and its predecessor and dividing by 2. In AT's case this would be problematic because of the final one month increase of investment in Ace Winches. To calculate the 2023 IC the company appears to have taken the 2022 figure and added one twelfth of the difference between IC for the two years - or something along those lines. However IC for 2024 will be affected by Ace Winches for the whole year. Hence an indication of ROIC for 2024 can be gleaned by simply using the 2023 IC as denominator. During the analyst presentation the company said it was looking for an ROIC going forward of high teens. The numerator is NOPAT (net operating profit (EBIT) after tax). In AT's case they appear to have used adjusted EBITA minus tax, which would be in accordance with Morgan Stanley's advice. AT has conveniently provided a figure for adjusted ETITA of 36.2m. My calculations suggest they have also followed MS advice in adding the interest component of operating lease expense, which brings the NOPAT figure up to 37.4m or 29.9m after deduction of a notional 20% tax. The outcome of all this is an ROIC of 26.9% and around 18% going forward, which is close enough for the purpose of showing the kind of calculations the company is likely to have made. I should add that MS makes a point that companies need some cash in their working capital to operate. They suggest a figure between 2% and 5%, depending on the company's size and maturity. This would reduce the outcome of ROIC calculations somewhat. The current p/e on 2023 earnings is 24.3 and 21.4 for 2024 earnings. The PEGs are 1.8 and 1.4 respectively. |
Posted at 22/4/2024 11:16 by wilmdav I thought it would be instructive to try to replicate AT's quoted ROIC ratio of 28.6% for 2023.The numerator is normally straightforward (EBIT - tax). Investopedia gives three alternative method's for calculating the denominator. These should all arrive at the same figure. My attempts to follow the instructions produce three different figures for 2023 between £168.6m and £159.3m and between £103.6m and £105.8m for 2022. Closer inspection and consideration will no doubt iron out the variations. At present the only way I can get near an ROIC of 28.6% is to use AT'S 2023 adjusted EBIT (EVITA minus amortisation) minus tax for the numerator and my lowest figure for the 2022 denominator. On this basis ROIC comes out at just above or below 28.6% depending on what tax figure is used (paid/charged). I had expected the denominator utilised would be an average between that of 2022 and 2023, which would result in an ROIC in the region of 21.8%. It would be further reduced to around 18.8% if reported EBIT minus tax is used for the numerator. Obviously the crucial thing in comparing one company's ROIC with another is to be consistent in one's own calculations. Edited at 11:36am |
Posted at 21/4/2024 11:44 by sogoesit Wilmdav..."It is not difficult to find shares in a strong growth trend but I currently feel underequipped to make an independent assessment of such a share's future growth prospects and the extent to which a share price or P/E is justified." True (there are many companies that do exhibit strong growth trends, especially at present). However, the ROIC measure, for me and others, exhibits the strength of management's (historic) performance using in part OUR capital and the leveraging of Debt (WACC). This performance is based on financial and operating skills and judgement of (future) valuation when engaging in M&A and the impact of M&A synergies with its existing business. If Returns are consistent over (historic) time then the probabilities are in favour of that management's performance being consistent in future. Of course the future is unpredictable and management may err or slip-up but investing is a game of probability and not of deterministic certainty. In general one's investing chances of good returns accrue from good management and this is exemplified by companies that have them (eg Steve Jobs/Jony Ive, Tim Cook, Nooyi, Bezos, Wolfson etc.). ROIC measures how well management uses our capital in a domain of risk and return (cf WACC) where we as investors can quickly see the competitive use of our capital and choose to remain or go elsewhere (based on our own cost-of-capital). Always seek and buy good management imv (and spot it with ROIC performance). Here are some high ROIC performers: Inditex (20%+), HSY (20%+), LLY (20%+), MSFT (25%+), PEP (18%), LVMH (14%), Hermes (Paris) (24%), Frasers (12%+), Next (20%+), MPC, AMR etc. P/E is another issue. It is one of valuation of present/past value against market participants' future growth expectations and can be both fickle and volatile. Investors, especially "Value" investors, can get easily confused when judging companies by P/E, especially when looking at historic (TTM) ratios and fall into the trap of not looking at forward valuations. The problem is exacerbated in the UK due to the infrequency of financial reporting (half-yearly, and late, versus US quarterly). The PEG Ratio is therefore the best measure for this imv and the inventor, Jim Slater, wrote about it in The Zulu Principle. His son, Mark Slater, applies the principles in a Fund he manages, The Slater Growth Fund. This fund offers insights to growth company valuation and investing. (NB. Growth company investing should not be confused with Momentum (Trend) investing albeit that when they combine returns do significantly outperform in my experience). |
Posted at 19/4/2024 21:51 by sogoesit Yes, there are many metrics, and definitions, around and their meanings need to be "dug into" to understand them and what they say about the business's performance.Anything to do with cash, albeit important, is more to do with profitability and thus not necessarily the same as profit returns on the investment to make the business run and deliver an overall return (capital efficiency). ROIC definition is fairly "simple" in my view. It is the overall return of the enterprise, all warts and benefits included, divided by the investment applied in the business. So the numerator is Net Profit After Tax (NPAT). The aim of measuring this is to determine how much in excess of the business's applied WACC is attained, capital allocation efficiency wise, and therefore how robust this is compared to market, sector or competitor's returns. High ROIC companies compound well in excess of competitor companies and therefore are good long term growth investments. Arriving at the denominator is not always clear but it too simply comprises the applied capital in the business of which there are only two kinds, Debt + Equity. It is the (externally) sourced money that has gone into the business and its re-invested (internal) retained money. Both Equity and Debt are stated in the Balance Sheet. Cash sitting doing nothing should be deducted. Stockopaedia states, for the denominator: "Another method of calculating invested capital is to add the book value of a company's equity to the book value of its debt and then subtract non-operating assets, including cash and cash equivalents, marketable securities, and assets of discontinued operations." ROIC's cousin, to my mind, in DCF modelling is Capital Intensity. |
Posted at 17/4/2024 10:42 by sogoesit About "exceptionals", albeit taking carcosa's comments, AT is a (part) M&A company, having 17%+ growth from inorganic acquisitions (plus adherent restructuring costs) on a regular basis.Like its bigger sibling AHT it seems to go with the rental business territory. To my mind, while its M&A strategy continues in this growth phase these costs/benefits, being regular, are not exceptional. That said, when working my analysis for forward growth estimates in "growth stocks", I do separate the different business "activities" otherwise one can be deceived where growth originates and what the costs/benefits are. The "costs" don't just appear in the "adjusted" figures they also appear in the Balance Sheet as increased equity or, in this case, increased use of Debt, or vice versa less Debt with increased "profits". This impacts ROIC which, commendably, the management of this company uses as an appropriate measure of returns. The CFO said: "Our 51% revenue growth was derived from organic growth (35%), M&A (17%) (being the full year impact of the WeSubsea and Hiretech acquisitions completed in 2022 plus one-month trading from our most recent acquisition, ACE Winches), with a small decrease from FX rates (-1%)." The issue is what will the proportion of growth due to M&A be in FY2024 and its impact on ROIC. Anyone guess? (PS. I am not a fan of modern accounting and its potential to be manipulated, if only in presentation, by managements potentially hiding the true nature of their businesses... whether "standard" or not. I don't think these are "standard" By the way.) Reminder: if one investor accepts "standards", or doesn't, in measurement and buys/sells on those "standards", or others, they may do themselves an injustice compared to other investors' views on performance metrics. This creates arbitrage and risk; an example of which happened yesterday... and may persist!! |
Posted at 27/2/2024 15:49 by zho >>For just the combination of the businesses (Winch + AT. Base) I get 34.4 x 22 (P/E) = 756. No growth.>>I would have thought that the eps figures at are likely to be more accurate than those on Market Screener. These are 29.7p for calendar 2023, 37.1p for the current year, and 42.6p for 2025 - decent growth. And if you look at the corresponding figures for AT.'s PTP and then look at the PTP* for Rathmay Ltd (the parent company of ACE Winches) to 3/23 - as suggested by Tudes100, above - you can see why he thinks that the 2024 and 2025 figures for PTP on AT.'s web pages may be unduly cautious. * Pretax profit of £12.2m, post tax profit of £10.3m |
Posted at 27/2/2024 04:56 by tudes100 This is still looking very cheap based on broker forecasts for FY24. Recent acquisition ACE Winches delivered PBT 12.2m in their last full FY detailed in Companies House accounts of their parent Co. If you apply a tax rate in line with AT's recent % and assume no growth in this side of the business FY24 broker consensus numbers still suggest the rest of the AT business will be going backwards at a double digit percentage (this also ignores the incremental rev's/profitability from Wesubsea & Hiretech). Given organic revenue growth at the HY was +40.5% this stretches the bounds of credibility imo. They did flag at the H1 results that comparables at the back end of the year would be tougher but I still think it's highly unlikely they will do less than 45p EPS next year.It's also worth keeping an eye on the reporting of their key customers such as Technic FMC, Saipem, Subsea 7, etc. There is no indication that their markets are doing anything other than accelerating - "longer term visibility is also improving with clients securing capacity for projects that extend to 2030", "many tangible signs that support our view that this will be an extended market cycle", "tendering activity remains high with continued improvement in pricing", "best Q3 in Co's history", "record order intake and backlog", "we will remain fully booked for 4 years", "there are two trends in this market - a rise in rates & an increase in the length of contract". |
Posted at 30/11/2023 07:05 by bigbigdave 30 November 2023Ashtead Technology Holdings plc ("Ashtead Technology" or the "Group") Acquisition of ACE Winches Ashtead Technology acquires ACE Winches Ashtead Technology Holdings plc (AIM: AT.), a leading subsea equipment rental and solutions provider for the global offshore energy sector, is pleased to announce the acquisition of the entire share capital of Rathmay Limited, the parent company of ACE Winches, from its founders Alfie and Valerie Cheyne, for a total cash consideration of £53.5m (on a cash and debt free basis) (the "Transaction"). The Transaction will be funded through drawing on the Group's revolving credit facility and is expected to be materially earnings enhancing in FY2024 and beyond, with ROIC materially ahead of the Group's weighted average cost of capital in year one. About ACE Winches Established in 1992, UK headquartered ACE Winches is a market-leader in the design, assembly and rental of lifting, pulling and deployment solutions. The company's core offering supports the installation, inspection, maintenance & repair and decommissioning of offshore energy infrastructure which is highly complementary to Ashtead Technology's existing equipment and services portfolio. Through a combination of its comprehensive rental fleet and 31 years of proven engineering experience and expertise, ACE Winches has built up an unrivalled reputation amongst its traditional oil and gas customers and has more recently seen success in expanding into the offshore renewables market. The company's in-house designed and assembled equipment rental fleet is one of the most comprehensive and diverse ranges of back deck machinery in the industry and is designed to deliver reliable, fully integrated solutions to address all complex lifting, pulling and deployment challenges. With nearly 80 per cent. of ACE Winches' revenue generated outside of the UK, supported by operations in Norway and sales offices in the UAE and USA, the acquisition offers a significant opportunity for Ashtead Technology to further expand its global offering across its existing international footprint. ACE Winches is Ashtead Technology's eighth acquisition in the last six years and follows the Group's acquisitions of WeSubsea and Hiretech, in 2022. ACE Winches will form part of the Group's enlarged Mechanical Solutions offering, a core area of focus for inorganic expansion. Gary Wilson, current Chief Commercial Officer at ACE Winches will run the day to day operations reporting to Ashtead Technology management with founder, Alfie Cheyne, remaining with the business as an advisor for 12 months to provide strategic and commercial input through a handover and integration period. As at 31 March 2023, ACE Winches reported gross assets of £55.7m and for the 12 months to December 2023 ACE Winches is expected to generate revenues of c. £43.4m, adjusted EBITDA of £13.7m and adjusted EBITA of £10.0m. Organic growth rates for the enlarged Group are expected to be in line with previous medium term guidance. Pro forma leverage for the enlarged Group as at 31 December 2023 is expected to be less than 1.4x, with the Group de-leveraging to less than 1x by December 2024. Current Trading The Board continues to be very encouraged by the Group's performance through H2 2023 and now expects FY23 to be comfortably ahead of its previous expectations before taking into account the additional growth from ACE Winches. |
Posted at 03/5/2023 07:04 by bigbigdave NiceAshtead Technology Holdings plc (AIM: AT.), a leading subsea equipment rental and solutions provider for the global offshore energy sector, announces its full-year results for the period ended 31 December 2022. Highlights Financial Results · Group revenue up 31% to £73.1m (2021: £55.8m), primarily driven by organic growth (23.7%) favourable FX rates (c.5.5%) and M&A (1.7%). · Revenues from offshore renewables and offshore oil and gas markets up 22% and 35%, respectively. · Gross profit up 34% to £54.3m (2021: £40.5m), with gross margin of 74% (2021: 73%), benefitting from increased pricing and utilisation. · Adjusted EBITA1 increased 47% to £20.1m (2021: £13.7m), with an Adjusted EBITA1 margin of 28% (2021: 25%). · Adjusted earnings per share of 19.6p (2021: 13.2p) and basic earnings per share of 15.9p (2021: 3.6p). · ROIC of 21% for the period (2021: 17%). · RCF refinanced and increased in April 2023 to £100m (plus accordion of £50m) to support growth opportunities. · Final dividend of 1p per share recommended. Operational Highlights · Meaningfully expanded operational capabilities and technical expertise through bolt-on acquisitions in H2: o Hiretech, completed December 2022, adding a multi-purpose fleet of marine and subsea equipment rental assets and skilled personnel o WeSubsea, completed September 2022, providing high performance, in-house designed dredge systems to complement existing product and service offering · Continued to invest in high-quality equipment rental fleet, increasing number of items from 17,000 to over 19,000 through organic investment (£13.1 million capex in our equipment rental fleet), as well as WeSubsea and Hiretech acquisitions. · Employee headcount 260 at year end, up from 204, with business continuing to scale up to support future growth. · New senior leadership appointments to grow international footprint and bolster technical capabilities across our services. · Strong progress towards sustainability goals - increased revenues from offshore renewables, secured ISO14001 environmental management certification. Outlook · Market outlook remains strong, with customer backlogs at record levels. Demand remained high in Q1 2023 across both offshore oil and gas and offshore renewables markets with pricing and utilisation continuing to track upwards. · Inflationary pressures remain, but increased pricing is expected to continue to offset impact on the business. · The Board remains confident in the business' near and medium-term prospects and is focused on leveraging its market position and offering to drive further progress. · Given the performance to date, the Board expects the outturn for the full year to be materially ahead of its previous expectations. Allan Pirie, Chief Executive Officer, commented: "This has been a very successful and busy year for Ashtead Technology. We believe we are well-positioned to exploit the many growth opportunities that lie before us in 2023 and beyond, driven by higher activity levels across both oil and gas and offshore renewables markets. With a full year's benefit of our two recent acquisitions, coupled with enhanced financial firepower, we will look to further expand our offering whilst continuing to grow within our existing markets." |
Posted at 19/1/2023 16:41 by whittler100 I agree with Carcosa’s comments above.A few quick scribbles on AT. placings On the last two secondary placings. July 22 (10m shares placed @ 200p) & Nov 22 (4.8m placed @260p), on both occasions they were placed at around a 14% discount to the previous day’s closing price. Maybe it’s a sign of appetite for AT. that this placing was successful at only a 6% discount to yesterday’s (18/01/22) close price. The 18/01 RNS said “BP Bidco has indicated an intention to sell at least 11m shares”; it rather seems that the appetite for the share was strong as they actually placed 15m shares rather than the 11m; that’s the largest placing by some distance & interestingly at the lowest discount, 6%. Following this sale, BP Bidco will only hold 7m shares = 9% of co; so, the original pair that owned the AT. prior to flotation will be totally out shortly assuming we see another BP Bidco placing in the next few months post-lock-in period. IMO this is possibly a good thing making the stock easier to trade. Note the CEO placed 425k shares (previous to placing held 2.17m) & the CFO 35k shares (previous to placing held 301k) Note: the CEO has some easy LTIP awards coming his way over the next couple of years 406k (almost matching his placing and the CFO 257k coming her way (IMO already money in the bank as the targets for the awards are in my view easy). So, both the CEO & CFO retain plenty of skin in the game with some LTIP to be awarded shortly. So, was today a buying opportunity? In truth, who knows but IMO AT. has a touch of right time /right place about the business. BP Bidco will almost certainly place again in the next few months once past the lock-in; so if AT. is still trading well, possibly another little buying opportunity. Remember as Carcosa said above, there is no dilution and the number of shares in AT. is currently unchanged plus we should see improved liquidity. |
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