Improved sales help HSS reduce debt
- Revenues climb 21% to near pre-pandemic level
- Shares are trading at less than 7 times expected earnings
A recovery in turnover and the sale of two divisions contributed Hiring HSS (HSS) continue to make inroads into debt reduction.
The tool hire business, which has reduced its branch network and opened dealerships within builders’ dealers instead, reversed a pre-tax loss of £29.6million in 2020 into a profit of £6.1m last year as it increased its revenue by 21%. at £303.3 million. It benefited from a strong recovery in the construction sector, with orders in March rising at their fastest pace in seven months, as more commercial projects got under way following the lifting of construction restrictions. the pandemic.
HSS made a combined profit of £41.2 million on the disposal of its air conditioning equipment arm All Seasons Hire Heating and its Irish equipment hire arm, Laois Hire Services.
The sales brought in nearly £65m in cash, which was used to reduce his reported net debt by 46% to £104.6m. Excluding leases, the company said net debt was reduced to 0.8 times adjusted profit, from 2.6 times 12 months earlier. Revenue for the first quarter of this year is up 13%, but the company said it will increase its investments to around £35-40m, from £34.2m in 2021, to improve its digital offer.
Shares of the company edged up 1% to 16p, less than 7 times FactSet’s consensus earnings forecast of 2.35p per share. To buy.
IC Last Seen: Buy, 19p, Nov 18, 2021