- Revenue climbs 21 per cent to near pre-pandemic level
- Shares trade at less than 7x forecast earnings
A recovery in revenue and the sale of two divisions helped HSS Hire (HSS) to continue making inroads into cutting its debts.
The tool hire firm, which has been downsizing its branch network and opening concessions within builders’ merchants instead, reversed a pre-tax loss of £29.6mn in 2020 into a profit of £6.1mn last year as it grew revenue by 21 per cent to £303.3mn. It has benefitted from a strong recovery in the construction sector, with orders in March growing at their fastest rate in seven months as more commercial projects started following the rollback of pandemic restrictions.
HSS made a combined profit of £41.2mn on the disposal of its air conditioning equipment arm All Seasons Hire heating and its Irish equipment rental arm, Laois Hire Services.
The sales brought in almost £65mn of cash, which was used to cut its reported net debt by 46 per cent to £104.6mn. Excluding leases, the company said net debt has been reduced to 0.8-times adjusted earnings, from 2.6-times 12 months earlier. Revenue for the first quarter of this year is up 13 per cent but the company said it would increase capex to around £35mn-£40mn, from £34.2mn in 2021, to improve its digital offering.
The company’s shares edged up 1 per cent to 16p, which is less than 7 times FactSet’s consensus earnings forecast of 2.35p per share. Buy.
Last IC View: Buy, 19p, 18 Nov 2021
