another view

Nat. Hire Up
August 16 2006 - curtosy of Australasian Investment Review – (AIR) (www.aireview.com.au)


National Hire has shown the benefits that exist of being a consolidator in a diverse industry like equipment hire with a sharp rise in sales, margins and profits for the 2006 financial year.
The company completed several acquisitions in the past 18 months or so and this helped boost after tax earnings jumped 54 per cent to $17.1 million on revenue which doubled to $233.4 million for the 2006 year.

The company said it was able to extract higher operating margins through "strong cost control and improved operating efficiencies" and group earnings before depreciation, interest and tax (EBITDA) grew strongly to $72.0 million, a 129 per cent rise on the previous year.

The 2006 figures included 12 months' contribution from the Allight Holdings Pty Ltd and The Cat Rental Store® WA acquisitions, and a half year contribution from AH Plant Hire.

The company said "the successful integration of these major acquisitions has delivered the platform for considerable growth in FY2006.

"Total assets increased by $181.6 million to $472.9 million principally due to: the acquisition in January of AH Plant Hire for a total consideration of $113.0 million; investment in property, plant and equipment of $ 96.8 million was predominantly due to the expansion of the hire fleet and exceeded depreciation expense of $37.5 million by $59.3 million.

"Total liabilities increased by $170.0 million to $240.1 million, resulting from increased borrowings due to the acquisition of AH Plant Hire and the significant capital expenditure program. Gearing (net debt/equity) has increased from 14% to 86% which is consistent with the Company’s expectation.
At a time of rising interest rates, that’s a bit of a negative but directors seem to understand that.

Directors have declared a final fully franked dividend of 4 cents a share taking the annual payout to 7 cents per share fully franked.

The company says it will move its focus away from housing towards the resources and mining sectors.

Chairman Ray Romano said while the final profit results were lower than the company's initial expectations, there were still positives to be drawn.

"It was a little disappointing that we didn't quite get those numbers, but we still have the ability to squeak more performance out of our existing fleet, and we're excited about new opportunities in Queensland and Western Australia," he said.

"We don't have any imminent acquisitions on the table at the moment, but we're certainly interested in any opportunities and we're going to keep our eyes and ears open," he said.

The company also declared a fully franked final dividend of four cents, taking dividends for the year to seven cents compared to 2.5 cents in 2005.