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Emeco Holdings Limited (ASX:EHL) is an industrials sector company and it is involved in renting, selling and maintaining heavy earthmoving equipment to customers in the mining industry in Australia and overseas. The segments in which the company operates is Chile, Canada and Australia. The company was incorporated in 2004. It provides heavy earth moving equipment rental solutions to contractors and mining companies.
The company today on 19 February 2019 reported 1H19 operating EBITDA of $102.8 million, representing an increase of 53.4% on 1H18 of $67.0 million. The operating EBIT was reported at $60.0 million which is up by 60.0% on 1H18 of $37.5 million. The operating NPAT of the company stood at $31.7 million, an increase of 159.8% on 1H18 of $12.2 million. The strong growth in earnings was driven by a full contribution from Force Equipment and Matilda Equipment, continued improvement in average operating utilisation to 64% (up from 57% in 1H18) and strength in the Eastern Region, particularly coal mining customer demand.Â
Operating EBITDA margin also increased significantly to 45.8%, up from 39.2% in 1H18, as a result of high margin earnings from Matilda Equipment, innovative win/win customer contracts, continued disciplined cost management, and extensive use of the Force workshops to minimise the cost of preparing equipment for projects. Emeco maintained a strategic priority of deleveraging, with its 1H19 leverage further reducing to 2.1x on a run rate basis, down from 2.6x in FY18.
The company continued its earnings growth, margin improvement, increasing utilisation and reducing leverage. In response to strong demand currently, they have committed to purchasing additional core assets to drive continued growth. Recently the company expanded workshop capacity to meet customer demands.
The Managing Director of the company, Ian Testrow, said that the safety of the people of the company remains a priority for the company. Testrow expressed his satisfaction in a way how the team has maintained a strong commitment to targeting zero harm and have been able to reduce the long-term injury frequency rate to zero. The team focused on capitalising on strong market conditions by continuing to improve utilisation and rates, integrating the Matilda Equipment business and executing business improvement initiatives to ensure that the company can provide the customers with the highest quality and lowest cost earthmoving equipment solutions. The company expects strong market conditions to continue into 2H19, particularly in the Eastern Region, with increased bidding activity in the Western Region for new projects expected to come online during 2019.
On the price-performance front, the stock of Emeco Holdings last traded at $2.110 with a decrease of ~24.911% during the dayâs trade and with a market capitalisation of $908.23 million. The stock has generated a YTD return of 39.80% and posted negative returns of 26.05%, 0.35% over the last six months, three months period respectively; however, the last one-month return stood at 12.85%. It has a 52-week high price of $4.050 and a 52-week low price of $1.860 with an average trading volume of ~1.48 million. The stock is trading at a PE multiple of 65.350x with an EPS of AUD 0.043.
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