Sunbelt Rentals U.S. posted $1,167.5 million in the company’s fiscal first quarter ended July 31, compared to $967.9 million in the same period a year ago, a 20.6-percent rise. Sunbelt Canada almost quadrupled its revenue from CDN $19.7 a year ago to $76.9 million, reflecting the impact of recent acquisitions, most notably the acquisition of CRS in August 2017.
Total Ashtead revenue including A-Plant in the United Kingdom, was £1,047.4 million (about U.S. $1.3 billion), compared to £880.1 million a year ago, a 19 percent boost.
Ashtead’s strategy remained unchanged with growth being driven by strong organic growth (same-store and greenfield), supplemented by bolt-on acquisitions.
Organic growth for Sunbelt Rentals jumped 17 percent year over year in the quarter. Rental-only revenue for the quarter was up 19 percent to $872 million. Rental revenue rose 18 percent to $1,084 million.
“The group delivered a strong quarter with rental revenue increasing 19 percent and underlying pre-tax profit increasing 23 percent to £286 million, both at constant exchange rates,” said Ashtead’s chief executive Geoff Drabble. “Our end markets remain strong and are supported by continued structural change as customers rely increasingly on rental while we leverage the benefits of scale. We continue to execute well on our strategy through a combination of organic growth and bolt-on acquisitions in the quarter.
“Our strong margins and lower replacement capital expenditure are delivering good earnings growth and significant free cash flow generation. This provides us with significant operational and financial flexibility, enabling us to invest in the long-term structural growth opportunity and enhance returns to shareholders while maintaining leverage within our target range of 1.5 to 2.0 times net debt to EBITDA.”
Sunbelt added 30 new stores in the U.S. during the quarter, the majority of which were specialty locations.
A-Plant in the U.K. generated rental only revenue of £95 million, a 5-percent jump compared to £91 million a year ago.
In Canada, the acquisitions of CRS and Voisin’s are distortive to year-over-year comparisons as they tripled the size of the Sunbelt Canada business. For western Canada, rental only revenue growth was 26 percent in the quarter, driven by increased fleet on rent.
In Sunbelt U.S., 50 percent of revenue growth dropped through to EBITDA. The strength of the company’s mature stores’ incremental margin is reflected in the fact that this was achieved despite the drag effect of greenfield openings and acquisitions. This resulted in an EBITDA margin of 51 percent and contributed to a 22-percent increase in operating profit to $286 million.
Capital expenditure for the quarter was £465 million gross and £415 million net of disposal proceeds. Reflecting this investment, the group’s rental fleet on July 31 at cost was £7.3 billion, and average fleet age is now 32 months, compared to 29 months a year ago.
Ashtead invested £145 million including acquired debt in five bolt-on acquisitions during the period as the company expands its footprint and diversifies into specialty markets.
Sunbelt Rentals, No. 2 on the RER 100, is based in Fort Mill, S.C. Ashtead plc is headquartered in London.