05.09.2024

Subdued start for Ashtead

Ashtead, owner of Sunbelt Rentals in the USA, Canada and the UK has published its first quarter results for the three months to the end of July.

Group revenues increased two percent to $2.75 billion, driven by rental growth in all three markets. At the same time Pre-tax profit dropped seven percent to $544 million, due to higher central and interest costs.

Results by country
US Revenues: totalled $2.34 billion +2% with an Operating profit of $669.4 million - 3%
Canadian Revenues: were c$248.4 million +16.5% with an Operating profit of c$46.5 million +15.5%
UK Revenues: came in at £186.3 million +5% with an Operating profit of £17.6 million +11.5%

Capital expenditure & fleet age Capital expenditure for the quarter was $855 million, down from $1.13 billion in the same period last year, yet the average age of the fleet at the end of the period was 46 months, compared with 48 months at the same point last year.

Acquisitions: The company has also spent $53 million on two ‘bolt on' tool rental acquisitions - RentalMax, a tool rental business in Illinois, acquired on May 21 and in late June Sunbelt Canada took over Wave Equipment, a tool rental business in Ontario. The new green field additions added 33 new locations over the quarter.

Net Debt at the end of January was 11 percent higher at $10.76 billion, due to high capex, acquisitions and share buybacks.

Forecast for current year rental revenue growth
The full year forecasts remain unchanged at:
USA: +4 to 7%
Canada: +15 to 19%
UK: +3 to 6%
Total: +5 to 8%

Chief executive, Brendan Horgan said:"The group is performing well with rental revenue up 7% and revenue up 2% in the first quarter. In North America, the increasing proportion of mega projects and the strength of our specialty businesses has more than offset the lower activity levels in local commercial construction markets. As expected, lower used equipment sales and a higher increase in depreciation and interest costs, resulted in adjusted profit before taxation of $573 million.”

“The investments in and expansion of the business over Sunbelt 3.0 and into Sunbelt 4.0 are enabling us to take advantage of the diverse opportunities that we see while maintaining a balance sheet that affords us considerable flexibility and optionality. In the quarter we invested $855 million in capital across existing locations, greenfields and $53m on two bolt-ons, adding a total of 33 new locations in North America.”

“We are in a position of strength, with the operational flexibility and financial capacity to capitalise on the structural growth opportunities we see for the business. We have started the year well and expect full-year results will be in line with our expectations. The board looks to the future with confidence."

Vertikal Comment

These numbers are little more subdued than we have become used to from Sunbelt, but are still fairly positive. The overall revenues growth has been held back by slower sales of both new and used equipment and ancillary equipment, probably due to the uncertainty in all three markets during that time. There are however positive signs on the horizon and Ashtead still looks well set to benefit.