Sunbelt Rentals Jumps 17.8 Percent in Fiscal Nine-Month Period

Sunbelt Rentals posted $3,118.8 million in revenue for the first nine months of its fiscal 2018, compared with $2.646.4 million for the same period in fiscal 2017, a 17.8-percent year-over-year increase. EBITDA jumped from $1,325.6 million in the year-ago period to $1,568.4 million in the recently concluded nine-month stretch, an 18.3-percent leap.

Sunbelt Canada nearly tripled its revenue from $33.3 million to $95.5 million, with the benefit of its acquisition of Contractor Rental Services in Ontario for the whole nine-month period.

Sunbelt Rentals’ sister company in the U.K., A-Plant posted £354.0 million compared to £301.7 million in the prior-year period, a 17.4 percent hike. The total group posted a 19.5-percent leap from £2,356.2 million to £2,815.2 million.

"The Group continues to perform well and delivered another strong quarter with reported rental revenue increasing 21 percent for the nine months and underlying pre-tax profit increasing by 24 percent at constant currency to £742 million,” said Ashtead chief executive Geoff Drabble. “Our end markets remain strong and a wide range of metrics have shown consistent improvement. We continue to execute well on our strategy through a combination of organic growth and bolt-on acquisitions, investing £859 million by way of capital expenditure and £315 million on bolt-on acquisitions in the period. With the continuing opportunity for profitable growth, we expect capital expenditure for the year to be towards the upper end of our guidance (about £1.2 billion). Looking forward to 2018-19, we anticipate a similar level of capital expenditure to this year as we execute on our strategic plan through to 2021.

“All our divisions continue to perform well in supportive end markets. While currency continues to be a headwind, we expect this to be mitigated by the strong underlying performance in North America. Therefore, we anticipate full year results to be line with prior expectations."

For the third quarter, underlying group rental revenue was £845.5 million compared to £729.2 million a year ago, a 15.9-percent hike.

Sunbelt Rentals added 45 branches in the United States in the nine-month period, about half of which were specialty locations. Rental revenue growth was driven by increased fleet on rent. Sunbelt U.S. has continued to support the clean-up efforts following hurricanes Harvey, Irma and Maria. While it is difficult to assess the revenue impact of the storm-related efforts, Sunbelt estimates that these efforts resulted in incremental total rental revenue of $75 million to $85 million in the period.

Average nine-month physical utilization was 73 percent, compared to 72 percent in fiscal 2017. Sunbelt U.S.’ total revenue, including new and used equipment, merchandise and consumable sales, jumped 18 percent.

“We continue to focus on operational efficiency and improving margins,” the company said in a statement. “In Sunbelt U.S., 51 percent of revenue growth dropped through to EBITDA. The strength of our mature stores’ incremental margin is reflected in the fact that this was achieved despite the drag effect of greenfield openings and acquisitions. This strong drop-through resulted in an EBITDA margin of 50 percent and contributed to a 20 percent increase in operating profit to $1,001 million (compared to $835 million in the previous year).”

Sunbelt Rentals, No. 2 on the RER 100, is headquartered in Fort Mill, S.C. Ashtead plc is based in London.