Hss Hire Share Discussion Threads

[zulu_principle] 25/4/2022 07:53

Results are due at 7:00am on Thursday (28th):



Some financial sites have incorrectly stated the 25th.

[mjneish] 25/4/2022 07:28

Is it definitely today?

[1pigshit] 23/4/2022 20:09

hi q smelly you stink but not as much as me

[philmac56] 23/4/2022 11:44

Well hopefully we should know more on Monday.
Divi of 0.5p per share anyone???

[qsmeily456] 23/4/2022 09:09

10p anyone?

No divi and spending all their cash on expansion

Trading good but its what they've done that will kill investors 🤣🤣

[zulu_principle] 21/4/2022 16:54

Good to see so many apparent buys but it does raise an element of caution that some MMs are obviously prepared to fill sizeable orders at just below the mid-point.

They must have a lot of shares available to sell given the price is only moving upwards very slowly (I'm pretty sure that if those transactions had really been sales the price would have fallen away very quickly).

As stated earlier I'm happy with my current holding and not adding any more until next week's earnings release makes the situation clearer.

[bg97] 21/4/2022 16:38

My buy today at 15.862p has shown up as a sell. I assume people are loading up for the results next week which should be good ones I hope

[zulu_principle] 21/4/2022 14:01

Difficult telling buys from sells at the moment. Just processed two dummy orders on Halifax for 50k and was quoted 15.862p each time. Already holding enough of these but happy to continue holding for the medium term.

[my retirement fund] 20/4/2022 11:29

double post

[my retirement fund] 20/4/2022 11:00

Recent hire specialist VP had a trading update it was pretty straight forwards and ahead, this bodes well for HSS.

They said:

Expected performance ahead of expectations driven by increased demand

[qsmeily456] 12/4/2022 08:15

14p pre results selling 🛩💥

[philmac56] 08/4/2022 13:04

25th I thought

[mjneish] 08/4/2022 13:00

Actually, I'm not sure that it's the 26th. I thought I'd seen it mentioned somewhere but now I can't find it. It was the 29th last year so their results are likely to be close to that date this year.

[mjneish] 08/4/2022 12:41

What matters is how the situation is today, and what the outlook is. In their RNS of the 10th of November they reported that their interest charges will be cut down to just £3 million from £10 million, and that trading is slightly ahead of expectations. Whether there is a nasty or two to be revealed on the 26th remains to be seen, but on the information available things definitely seem to be looking up.

[she-ra] 08/4/2022 11:49

Through placings (increasing the amount of shares) and selling off businesses.

[mjneish] 08/4/2022 11:39

Was about £230 million in 2018 and has steadily been paid down.

[she-ra] 08/4/2022 11:22

They have net debt of approx £40-50 million

[mjneish] 08/4/2022 10:54

£81.256 million in cash at the last interims. Current market cap. £111.4 million.

[baddeal] 08/4/2022 10:04

Cash per share is 73%?

[mjneish] 08/4/2022 09:42

Well that's a pretty old article.

What I think is worth noting here is that they are trading below book value and that cash per share is currently 73%. They announced a new refinancing in November that will cut their annual interest charge from £16.3 million to £3 million. This ought to drive up EPS.

So either the market is missing something blindingly obvious, or something sinister is brewing that isn't apparent in any of their RNSs.

[baddeal] 08/4/2022 09:11

Thanks for posting a reasonably well informed and written article for a change!

[cravencottage] 07/4/2022 21:16

For those that haven't seen the IC Article from Last set of numbers...

A cheery sequel for HSS
Overhaul of branch network and move into builders' merchants provides a lower-cost route to market
November 18, 2021
By Michael Fahy


The slew of private equity-backed companies that have come to market this year suggests investors remain willing to buy into a well-presented growth story. Building equipment hire company HSS is a reminder that such stories do not always have happy endings. However, investors may be set to enjoy an altogether more cheery sequel.

IC TIP:
Buy
Tip style
VALUE
Risk rating
HIGH
Timescale
MEDIUM TERM
Bull points
Costs cut
Debt cut
Interest bill cut
Bear points
Uncertain end markets
Disposals reduce scale
All too often, companies that are brought to market by private equity players prove to have debt levels that fuelled past performance but impinge future progress. HSS Hire (HSS) falls into this category. The prospectus for its IPO in January 2014 cited a compound annual growth rate of 17 per cent between 2011 and September 2014, with an earnings growth rate of 19 per cent over the same period. The float at 210p per share valued the company at £325m. The prospectus pledged to use £85m to repay some of the debt that had been loaded onto the business, with the company carrying £275m of loans and other borrowings. Most of the rest of its £419m of total liabilities were trade payables relating to money owed equipment bought to hire out.

HSS:LSE
HSS Hire Group PLC

1mth
Today change
2.76%Price (GBP)
15.80
Getting borrowings, and the accompanying substantial interest bill, under control proved difficult. The company’s revenue increased only marginally over the four years before the pandemic and fell back below pre-IPO levels last year. Although HSS has made an operating profit in all but two of the years since float, the burden of servicing its debt meant it has declared a pre-tax loss from continuing operations every year.

By 2017, net debt (£234m excluding leases) stood at a hairy 4.8 times cash profits in 2017. But some breathing room was won in 2018 with the £60.5m sale of its UK Platforms business and at the end of last year it managed to raise a very welcome £53m by selling new shares at 10p a pop.



Cutting back
Although Covid-19 presented challenges, with revenue declining by 18 per cent as HSS was forced to close many branches, it also provided the opportunity to step up transformation plans.

HSS decided to close 134 out of its 234 branches last year and lay off 300 staff. This led to it incurring £7.4m in property-related costs and £4.6m of associated charges, including £1.6m of redundancy expenses. However, the company estimates the move will reduce its overheads by £15m a year.

It is also confident of being able to substitute sales lost through shuttered branches. It has improved its online offer, with remote sales teams driving more business to click-and-collect locations.

A trial that began in 2019 to house HSS concessions within builders’ merchants was also stepped up, with 24 concessions operating at the end of last year.

By the end of the third quarter of 2020, sales had returned to 90 per cent of pre-pandemic levels with just a fifth of its pre-Covid branch network open. As a result, it managed to generate positive adjusted earnings throughout the year.

The builders’ merchants’ trial has been extended this year to 43 locations by the end of the first half. Operating profit for the six months came in at £22.6m compared with a £700,000 loss last year and revenue grew by 22 per cent to £150.5m. Online revenue grew by 75 per cent year on year and stood at 24 per cent of total transactions.

The increased profit and the sale of an Irish business unit, Laois Hire, for £10m after expenses (on which it made a £3.2m profit) helped to bring its net borrowings down to £98m, or 1.7 times last year’s cash profits. The debt reduction has continued apace with the sale of All Seasons Hire at the end of September for £55m. Adjusted for the lost profits associated with the disposal, this puts the company's net debt-to-cash profit ratio at just one times. That's a major transformation of the balance sheet (see graph).






Profit without the kit
HSS has agreed deals with the companies it has sold off to continue to offer their equipment for hire through its online platform. Although rehire agreements won’t be as profitable, it means the company can still make some money from these businesses without having the same hefty capital commitments.

Utilisation rates for specialist kit such as access platforms and lifting gear is also typically higher than for smaller tools, but they’re also a much bigger drain on profits when not being used.

By the end of last year, the number of product lines HSS offered had been slimmed down to around 1,000. Utilisation rates stood at 56.5 per cent in the first half of this year.

HSS’s reduced borrowing requirement has allowed the company to refinance its remaining debt. It agreed a new £70m term loan and £25m revolving credit facility with HSBC (HSBA) and NatWest (NWG) earlier this month. It will be charged interest rates of between 275 and 350 basis points over the interbank rate, which means last year’s interest charge of £16.3m should fall to about £3m. A £12.7m saving on top of the £15m taken out of operating cost.

HSS’s share price is up almost 75 per cent since the start of this year – just after the company completed the equity raise. Most of the gains were in the first few months of the year, though, and the share price has remained largely flat over the past six months.

It’s easy to understand why investors who endured years of losses and declining valuations may be reluctant to buy back in. HSS’s move from the main market onto Aim in January this year will preclude some from doing that.

There’s also no guarantee that the positive momentum experienced by the company over the past 18 months or so will be maintained.

The home improvement market has witnessed double-digit growth this year, but this rate is likely to slow in 2022, according to the Construction Products Association. Other sectors, such as the fit-out market for retail and hospitality sectors as well as infrastructure and energy services, are likely to post stronger growth, though.



A crowded market
HSS estimates the size of the UK hire industry to be around £4bn, and prior to this year's disposals it had a share of about 8 per cent. That concurs with estimates by Ashtead (AHT) , which regards its Sunbelt Rentals brand as the market leader with a 9 per cent share, ahead of Speedy Hire’s (SDY) 7 per cen and VP Group (VP) at 6 per cent. This shows how fragmented the market is, with the remaining 72 per cent split between independent operators.

The four big national players enjoy some competitive advantage given their nationwide coverage, but their pricing power is limited. The Office for National Statistics said there were 4,165 companies registered in the sector last year, with a lack of differentiation leaving most firms to compete on price. The annual growth rate for hire services was 1.5 per cent in the third quarter, which was well below the overall construction output price index growth of 5.1 per cent – the highest since records began in 2014.




The sector is therefore unlikely to provide runaway growth, but HSS’s reduction in overheads and significantly lower finance costs should provide the opportunity for better returns. Recent forecast upgrades bode well. Broker Numis last week upgraded its earnings forecast for next year by 147 per cent, to 2.6p a share. By this metric, HSS’s shares trade at only seven times next year’s earnings – below peers such as Speedy Hire and VP and significantly below high-flying Ashtead, which now makes most of its money from the US market. Numis also increased its price target on HSS’s shares from 28p to 33p.

The company is in much better financial shape now than when it floated, but with investors losing faith over many years, its valuation has sunk – its current market capitalisation stands at £125m, which is only just above its net asset value of £121m. Exponent Private Equity, the firm that brought HSS onto the London Stock Exchange, is still its biggest shareholder with a stake of almost 34 per cent. If the company’s share price continues to languish below peers, it wouldn’t be such a shock if either its biggest backer or one of its peers sees an opportunity to take it out of shareholders’ hands.

Last IC View, Sell at 31p, 6 April 2018

Company Details Name Mkt Cap Price 52-Wk Hi/Lo
HSS Hire (HSS) £129m 19p 25.0p / 9.5p
Size/Debt NAV per share* Net Cash / Debt(-) Net Debt / Ebitda Op Cash/ Ebitda
15p -£151m - 61%
Valuation Fwd PE (+12mths) Fwd DY (+12mths) FCF yld (+12mths) EV/Sales
10 - - 1.0
Quality/ Growth EBIT Margin ROCE 5yr Sales CAGR 5yr EPS CAGR
- 6.3% -2.9% -
Forecasts/ Momentum Fwd EPS grth NTM Fwd EPS grth STM 3-mth Mom 3-mth Fwd EPS change%
510% 20% -2.6% 45.5%
Year End 31 Dec Sales (£m) Profit before tax (£m) EPS (p) DPS (p)
2018 353 5.1 2.39 nil
2019 328 3.1 1.65 nil
2020 270 -6.3 -2.03 nil
f'cst 2021 292 6.8 0.63 nil
f'cst 2022 303 19.2 1.99 nil
change (%) +4 +182 +216 –
Source: FactSet, adjusted PTP & EPS figures
NTM = Next 12 months
STM = Second 12 months (ie, one year from now)
*Includes intangible assets of £696m, or 23p a share

[qsmeily456] 05/4/2022 16:36

24p equivalent....if you assume they burnt all the £54m with no transformation, improvement or value adding assets 🤣

[baddeal] 05/4/2022 15:24

Exactly there is no relevance to 60p as the company had 200m shares then not 700m