Rental Revenue Jumps 26.6 Percent in Third Quarter for Sunbelt Rentals U.S.

Sunbelt Rentals U.S. posted £907.5 million (about U.S. $1,195.3 million) in rental revenue for its fiscal third quarter ended Jan. 31, compared to £717 million in the same period a year ago, a 26.6-percent increase. Sunbelt Canada recorded £44.7 million compared to £34.6 million a year ago, a 29.1-percent hike. A-Plant in the U.K. posted £96.9 million compared to £93.9 million a year ago, a 3.2-percent increase.

The three divisions combined for £1,143.4 million in the fiscal third quarter compared to £916.1 million a year ago, a 24.8-percent boost.

For the first nine months of the year, Sunbelt Rentals U.S. posted total revenue in dollars of $3,759.1 million compared to $3,118.8 million last year, a 20.5-percect increase. For the nine-month period, Sunbelt Canada recorded total revenue of CDN $256.6 million compared to $161 million a year ago, a 59.4 percent hike. The total group posted £3,393.8 million compared to £2,815.2 million a year ago, a 20.5-percent jump.

“The Group delivered a strong quarter with good performance across the Group,” said Ashtead chief executive Geoff Drabble. “As a result, Group rental revenue increased 18 percent to £888 million, both at constant exchange rates. We continue to experience strong end markets in North America and are executing well on our strategy of organic growth supplemented by targeted bolt-on acquisitions. We invested £1,1290 million in capital and a further £491 million on bolt-on acquisitions in the period, which has added 112 locations and resulted in rental fleet growth of 18 percent. This investment reflects the structural growth opportunity that we continue to see in the business as we broaden our product offering and geographic reach and increase market share.

Sunbelt U.S., A-Plant and Sunbelt Canada delivered 19 percent, 5 percent and 72 percent in rental-only revenue growth respectively. The dramatic growth in Sunbelt Canada reflects the impact of acquisitions, particularly the acquisition of CRS in August 2017.

“Reflecting this opportunity for profitable growth, we expect capital expenditure for the year to be towards the upper end of our previous guidance (about £1.6 billion). Looking forward to 2019/20, we anticipate a similar level of capital expenditure to this year as we execute on our strategic plan through to 2021.

“Whilst these are significant investments, we remain focused on responsible growth so, after spending £550 million to date on our share buyback program, we have maintained net debt to EBITDA leverage at 1.8 times. Therefore, we remain well within our target range of 1.5 to 2.0 times reflecting the strength of our margins and free cash flow. Our business continues to perform well in supportive end markets. Accordingly, we expect full year results to be in line with our expectations and the board continues to look to the medium term with confidence.”

In the United States, Sunbelt’s revenue growth is from organic growth and greenfields, and bolt-on acquisitions. The company added 89 new stores in the U.S. in the nine-month period, the majority of which were specialty locations. Hurricane-related revenue was less for Sunbelt. While revenue was impacted in the clean-up efforts following hurricanes Florence and Michael, it was much less than the previous year with estimated incremental rental revenue of $30 million to $35 million compared to $75 million to $85 million in the previous year.

In Canada, the acquisitions of CRS and Voisin’s tripled the size of Sunbelt Canada’s business. Excluding acquisitions, rental-only revenue increased 20 percent in western Canada, while in eastern Canada, the CRS and Voisin’s businesses grew 21 percent.

As of Jan. 31, Sunbelt Rentals has 744 rental locations in the United States, and 67 in Canada. A-Plant in the U.K. had 197 as of Jan. 31.