Further progress and strong cash generation
Quality firms often use a crisis as a catalyst to streamline operations and improve services: not only building in downside resilience, but also winning market share as smaller rivals struggle. We think plant hire specialist Vp falls into this camp. Today saying that revenues had climbed from 55% of pre-Covid levels back in April, to 80% in July - and were now running at circa 85%. Not surprisingly though, the pace of recovery has softened due to recent Covid related conditions. They have prudently said that 17 (or <7%) of its 250+ depots (120 mothballed) would close, resulting in 150 redundancies. Leading to we ‘guesstimate’ an approx one-off cash cost of between £2m-£4m, yet equally generating a similar level of annualised savings from FY22 onwards. In H1 alone, the group generated £41m of cashflow (split +£22m Q1 & +£19m Q2) thanks to tight working capital management, deferral of VAT/rent/rates, staff furloughing and a material reduction in costs, salaries & fleet capex. With net debt closing Sept at £118.7m vs £159.8m in Mar’20. All told, meaning that to us at 650p there appears to be significant potential upside for patient investors. With the shares trading on modest FY’20 multiples of 7.2x PER, 1.5x Price:Book and 3.9x EV/EBITDA.
Herc Holdings is an equipment rental supplier. The company conducts its operations through subsidiaries, including Herc Rentals Inc. Operations are conducted under the Herc Rentals brand in the U.S. and Canada and under the Hertz Equipment Rental brand in other international locations. The company sells used equipment and contractor supplies such as construction consumables, tools, small equipment and safety supplies; provides repair, maintenance and equipment management services and safety training to certain of its customers; provides equipment re-rental services and provides on-site support to its customers; and provides ancillary services such as equipment transport, cleaning, refueling and labor.
Northbridge Industrial Services is engaged in the sales and hire of industrial equipment on a global basis for use in applications in the oil and gas, shipping, construction, and power and utility sectors. Co. has two main reportable segments: Crestchic loadbanks and transformers, which is involved in the manufacture, hire and sale of loadbanks and transformers; and Tasman oil tools and loadcells, which is involved in the hire and sale of oil tools and loadcells.
United Rentals is an equipment rental company that operates throughout the United States and Canada, and Europe. The company's general rentals segment includes the rental of construction, aerial and industrial equipment, general tools and light equipment, and related services and activities. This segment's customers include construction and industrial companies, manufacturers, utilities, municipalities and homeowners. The company's trench, power and fluid solutions segment includes the rental of construction products and related services. This segment consist of: Trench Safety region, Power and Heating, Ventilating and Air Conditioning region; and Fluid Solutions and Fluid Solutions Europe regions.
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