Emeco Holdings Shares Uplifted After Reporting Strong Operating Performance For Q1 2019 At AGM

  • Nov 15, 2018 AEDT
  • Team Kalkine
Emeco Holdings Shares Uplifted After Reporting Strong Operating Performance For Q1 2019 At AGM

Emeco Holdings Limited (ASX: EHL) held its Annual General Meeting on 15 November 2018 following which the share price of the company uplifted by 3.333 percent. While providing a recap of FY 2018, the Managing Director of the company Mr. Ian Testrow informed that the operating utilization of the company increased from 56 percent to 62 percent throughout FY18 and returned the business to positive operating NPAT for the first time since FY13. The operating EBITDA of FY 2018 was $153 million which was an increase of 83% compared to last year while operating EBIT was up nearly 600% on FY17 at $83 million. The company has expanded the operating EBITDA margins from 35.8 percent in FY17 to 40.2 percent in FY18. In FY 2018 the company reduced its leverage to 2.6x which was down from 3.9x in the previous year, in line with Emeco’s aggressive deleveraging strategy. In November 2017 the company acquired Force Equipment which has provided low capital-intensive earnings and the capability to rebuild components.

In July 2018, the company acquired Matilda Equipment, which is a high margin rental business specializing in late model ancillary equipment. In September 2018, the company further strengthened and de-risked its balance sheet by replacing its $35 million cash advance and $5 million bank guarantee facility expiring March 2020 with a new three-year $65 million credit facility expiring in September 2021. Due to the larger facility and expanded hedging program, S&P Global Ratings upgraded the company credit rating to “B” which is going to support the company’s objective of refinancing the notes on more attractive terms. The operating performance in the Q1 FY19 has been solid with operating utilization at 64%, up from 62% at the start of the quarter.

While discussing the outlook of the company Mr. Ian Testrow informed that the management of the company is seeing high levels of activity and demand for the fleet from its customers and the company is expecting its fleet’s operating utilization to further increase throughout FY19, particularly in the second half. He further informed about the strong eastern region mining markets and told that the company has actually transferred a few assets from the west to the east in response to the strong immediate demand.

Mr. Ian further informed that the company would continue building its asset management and maintenance capabilities. It is going to push to extend component lives without jeopardizing machine availability or reliability. The company is in the process of expanding Force’s workshop capacity to grow its retail maintenance workshops business. Further, the company is continuing to assess its options to refinance its notes on more attractive terms and optimize its capital structure.

In the last six months, the share price of the company decreased by 3.23 percent as on 14 November 2018, traded at a PE ratio of 69.770x. EHL shares traded at $0.310 with a market capitalization of circa $953.66 million as on 15 November 2018 (AEST 4:00 PM).


Disclaimer

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.

 

 

All pictures are copyright to their respective owner(s).Kalkinemedia.com does not claim ownership of any of the pictures displayed on this website unless stated otherwise. Some of the images used on this website are taken from the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image.

 

There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.

Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.

As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.

CLICK HERE FOR YOUR FREE REPORT!
   
x
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK