RERMAG

Sunbelt Rentals Revenue Drops 33.8 Percent in Fiscal First Half

Sunbelt Rentals, the U.S.’s third-largest rental company, posted $576.1 million in revenues for its fiscal first half ended Oct. 30, compared with $870.2 million for the same period last year, a 33.8-percent drop-off. EBITDA was $199.3 million, compared with $320.8 million for the year-ago period, a 37.9-percent decline. Operating profit was $80 million, compared with $187.9 million for the same period in 2008, a 57.2-percent decline.

For parent company Ashtead Group, which includes U.K.-based rental chain A-Plant, fiscal first-half revenue was £441 million (about $730.4 million), compared with £581.1 million for the same period last year, a 24.1-percent decline. For the fiscal second quarter, Ashtead posted £218.2 million (about U.S. $361.4 million), a 29-percent year-over-year decrease.

During the first half, Ashtead reduced its net debt from £1.04 billion to £847 million. A £1.3 billion refinancing of its asset-based loan through November 2013 provides the group with substantial resources and flexibility for future growth, the company said.

“These results show that, while market conditions have remained difficult throughout the first half, the actions we took last winter to cut costs and reduce fleet size prepared our businesses for the conditions ahead and ensured that margins held up well,” said Ashtead chief executive Geoff Drabble. “Our operational performance is strong and we are clearly gaining market share. This has helped our profitability and delivered strong cash generation in the first half.”

Drabble said that by extending the maturity of Ashtead’s asset-based loan, the company is able to concentrate on preparing for the recovery.

“We continue to believe in the fundamentals of our markets,” Drabble added. “With a restructured business delivering good margins and gaining market share, together with the flexibility given by recently extended debt facilities, the board believes that Ashtead is well placed to benefit when markets recover.”

Rental revenues declined 31 percent for Sunbelt to $534.4 million, and 26.6 percent for A-Plant to £78.9 million (about U.S. $130.7 million). Average fleet on rent in the first half dropped 13 percent year over year for Sunbelt and 16 percent for A-Plant. Yield dropped 20 percent year over year for Sunbelt and11 percent for A-Plant. Sunbelt reduced costs 31 percent, while A-Plant reduced expenses by 24 percent.

Regarding future outlook, the company said it expects market conditions to remain difficult throughout the second half of the current financial year as more private sector projects funded prior to the downturn are completed and overall activity declines. “However, there are reasons to believe that this seasonally difficult period may represent the bottom or near bottom of our cycle,” the company added. “Beyond the end of this fiscal year, we anticipate that markets will remain difficult in 2010 but that the effect of U.S. stimulus work and a recovering residential construction market will benefit us until general economic recovery brings an improvement in commercial construction, most likely towards the end of our 2010/11 fiscal year.”

Average age of Sunbelt’s fleet was 42 months at the end of the period, compared with 34 months at the same time a year ago, with aerial work platforms averaging 42 months and the remainder of its fleet averaging 40 months. A-Plant’s fleet had an average age of 32 months (23 months a year ago).

Sunbelt had 397 locations as of Oct. 31, compared with 430 a year before. A-Plant had 111 compared with 180 a year earlier. Sunbelt’s store numbers include 90 Sunbelt at Lowes stores.

Based in Fort Mill, S.C., Sunbelt Rentals is No. 3 on the RER 100. Ashtead Group is based in London.

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