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Emeco turnaround continues

Leading mining equipment hire group Emeco Holdings (ASX: EHL) has reported a 15% jump in March quarter earnings as its turnaround continues.
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Staff reporter

Earnings before interest, tax, depreciation and amortisation rose to A$41 million for the quarter, while the EBITDA margin was 41%.

Revenue was up by 22% quarter-on-quarter to $101.2 million, which the company attributed to a full quarter of contribution from newly acquired Force Equipment and the ramp-up of projects, taking utilisation to 61% at the end of the quarter.

"With operating EBITDA doubling over the last 12 months, Emeco has continued its strong operational performance with further improvement to earnings, assisting with our aggressive deleveraging strategy," Emeco CEO and managing director Ian Testrow said.

"In the third quarter, underlying momentum in the business was driven by the redeployment of fleet into a large project, new project wins and existing project scope expansions."

Testrow said earnings were expected to further improve in the current quarter and into the 2019 financial year.

"We continue to see strengthening market conditions and an increasing pipeline of opportunities for FY19," he said.

"The team remains committed to delivering a compelling value proposition for our customers to help them get the most out of every piece of equipment we provide."

Testrow said integration of the Force acquisition was on track and Emeco was growing Force's component rebuild capability.

"Emeco has already started to benefit from servicing a significant portion of its enlarged fleet in these workshops, supporting our dedication to remaining disciplined in controlling our operating costs and capital expenditure to maximise profitability," he said.

"In addition to this, the drive for operational excellence continues with a focus on labour productivity assisted by our technology-facilitated centralised planning hub."

Shares in Emeco are up more than 11% in the past week, capitalising the company at A$845 million (US$652 million).