The Emeco Holdings Limited (ASX: EHL) share price surged 6.67% higher today following the release of the mining equipment group's first-half results.
Emeco supplies equipment rental solutions to the earthmoving industry and also supplies external maintenance and component rebuild services for earthmoving equipment.
What did Emeco announce?
Emeco announced its 2020 interim results this morning for the half-year ended 31 December 2019.
Operating revenue came in at $246.5 million, up by 10% from $224.3 million in the prior corresponding period (pcp).
Emeco reported operating earnings before interest, tax, depreciation and amortisation (EBITDA) of $119.1 million which represented a 16% increase on the pcp. This result was in line with previous operating EBITDA guidance from Emeco of between $118 million to $120 million with further growth expected in the second half of FY20.
Meanwhile, operating EBITDA margins also improved, increasing to 48.3%, up from 45.8% in 1H19 and 46.2% in 2H19.
Emeco also reported it is due to complete the Pit N Portal acquisition on 28 February 2020. This achievement will see the company entering hardrock underground equipment and mining services and will more than double its gold exposure.
The Aussie mining equipment company commented that new project wins achieved during the half in gold and iron ore further diversify its commodity exposure and increase earnings.
Its total iron ore exposure doubled in during the first half of FY20 compared to FY19 and is up a very impressive 10 times since the first half of FY19.
Emeco is continuing with its strategy and target to become the lowest cost, highest quality provider of earthmoving equipment services.
On the safety front, the company reported zero lost time injuries and its current total recordable injury frequency rate is 4.3, reduced from 4.6 at 30 June 2019.
Rental and workshop divisions
In terms of segment results, Emeco's Rental division recorded strong growth during the period. This was predominantly due to strong demand from customers in metallurgical coal, improving conditions in Western Australia and earnings from growth assets.
Operating utilisation came in at 65%, up from to 62% in the pcp, while gross utilisation rate of 91% was achieved compared to 90% in 1H19.
In the company's Workshops division, activity was reported to have increased significantly. This was driven by internal activity as Emeco subsidiary Force supported the redeployment of Western Region fleet to new projects and the rebuilding of critical components for the rental fleet. With this, internal portion of Workshops activity increased to 56%, up from 42% in the pcp.
