Speedy Hire (SDY) H2 2024 earnings summary

Executive summary

• Launched a five-year Velocity growth strategy, currently in the enabling phase focused on technology, people, and operational improvements, with progress as planned in year one.

• Achieved resilient UK Hire performance, with national customers stable or slightly growing despite challenging market conditions, while regional customers faced tougher conditions and contraction.

• Secured significant contract wins and renewals, including a new long-term agreement with Amey and renewals with Morgan Sindall, Babcock, and Balfour Beatty, and maintained a strong pipeline.

• Invested in specialist business growth, including the acquisition of Green Power Hire, battery storage, and a joint venture for hydrogen-powered access.

• Transitioned trade and retail segment to a digital-only model, improving profitability and exiting all B&Q concessions.

Financial highlights

• Revenue declined 4.3% year-over-year to £421.5m, with hire revenue down 1.7% and service revenue down 1.6%.

• Gross margin stable at 54.6%; EBITDA margin at 23.0%, maintained despite inflationary pressures and a 7% pay rise for staff.

• Free cash flow more than doubled to £23.5m, supporting dividend payments; operating cash flow conversion from EBITDA reached 98%.

• Net debt at year-end was £101.3m, with leverage at 1.5x EBITDA and strong banking facilities of £180m expiring July 2026.

• Profit before tax fell 52.1% to £14.7m, impacted by high operational gearing and lower joint venture profits.

Outlook and guidance

• Trading in the first months of the new year is in line with expectations, with contract wins and strategic progress expected to drive growth.

• FY2025 CapEx guidance is approximately £55m, potentially higher due to new contracts and specialist acquisitions.

• Expect second-half weighting due to seasonality and contract mobilizations.

• Targeting revenue growth to £650m and EBITDA margin expansion to 28% by FY2028.

• Final dividend maintained at 1.80p per share, supported by free cash flow.