Sunbelt Rentals’ U.S. Revenue Declines Only 4.9 Percent in Fiscal First Half

Sunbelt Rentals in the United States posted $2,746.9 million in revenue for the fiscal first half, compared to $2,887.5 million in the fiscal first half of 2019, a 4.9-percent decline. Sunbelt Canada grew its revenue from C$200.3 million last year to C$220.2 million this year, a 9.9-percent jump, with help from an acquisition.

In the fiscal second quarter of 2020, Ashtead as a whole posted £1,351 million in total revenue compared to £1,403 million in the fiscal second quarter of 2019, a 3.7-percent drop. Profit before taxation declined year over year in the second quarter from £413 million to £365 million, an 11.6-percent tumble.

“I am delighted to report a strong quarter of market outperformance across the business contributing to rental revenue down only 4 percent in the half year at constant exchange rates,” said chief executive Brendan Horgan. “Our dedicated team members throughout North America and the United Kingdom have made this possible, once again delivering for all our stakeholders.  I am extraordinarily proud of, and grateful for, their collective response and execution, all while keeping our leading value of safety at the forefront of what we do.

“This performance illustrates the successful execution of our long-term strategy, which we embarked upon after the last recession, to broaden and diversify our end markets and strengthen our balance sheet. This positioned us to capitalize on our ever-increasing scale, while remaining agile, particularly during these unprecedented times. The actions we took to optimize cash flow, reducing capital expenditure and operating costs, resulted in record free cash flow for the first half of £822m (2019: £228m) contributing to reduced leverage of 1.7 times compared to 1.9 times at year end, in the lower half of our target range.

“Looking forward, the strength of our business model and balance sheet positions the group well in markets that are likely to remain uncertain. Based on our half year performance and assuming no further significant adverse impact on our business resulting from the COVID-19 pandemic, we now expect full year results ahead of our previous expectations. The benefit we derive from the diversity of our products, services and end markets, coupled with ongoing structural change, enables the board to look to the future with confidence.”

“While trading volumes were lower than last year as a result of the pandemic, this has been mitigated, in part, by emergency response efforts throughout the business but particularly within specialty businesses," said the company in a statement. “Sunbelt Rentals is designated as an essential business in the U.S, U.K. and Canada and has supported government and private sector responses to the pandemic. This includes providing vital equipment and services to first responders, hospitals, alternative care facilities, testing sites, food services and telecommunications and utility companies, while continuing to service ongoing construction sites and increased facility maintenance and cleaning. In addition, we have responded to other emergencies across the U.S. including wildfires in the west and an active storm season impacting a number of states.

“As a result of these market dynamics, first half rental-only revenue in the U.S. was only 6 percent lower than last year. Within this overall performance, our general tool business was 8 percent lower than last year (second quarter 7 percent lower than prior year), while the specialty businesses demonstrated the benefit of a broader range of products and end markets with rental only revenue 12 percent higher than last year, including a storm-impacted second quarter that was 18 percent higher than last year. This contributed to group rental revenue in the first half 4 percent lower than the prior year at constant exchange rates. The degree of impact on volume has varied significantly across our geographical markets and is correlated to the severity of infection rates and associated market level restrictions. Activity levels have increased consistently through the period such that fleet on rent is now broadly in line with prior year in the U.S. and Canada and higher in the UK.  

“Our performance, in a challenging environment, reflects the benefit of our long-term strategy which is focused on broadening and diversifying our end markets, while at the same time increasing our scale and market share.  Our business model allows us to operate successfully in wide ranging market conditions as we allocate capital strategically, based on a consistently applied policy which takes account of the macroeconomic backdrop and our leverage. 

“Looking forward, we believe that the impact of the COVID-19 pandemic will continue to give rise to market uncertainties over the coming months.  However, with strong positions in all our markets, supported by good quality fleets and a strong financial position, we believe that we are well positioned to respond to this market uncertainty and continue to support our customers and team members as well as taking advantage of opportunities to invest for the longer-term strength of the business."

Sunbelt Rentals, Fort Mill, S.C., is No. 2 on the RER 100.