The Ashtead Group, owner of Sunbelt Rentals, posted $2.427 billion in revenue in its fiscal 2023 third quarter, compared to an even $2 billion in the third quarter of fiscal 2022, a 23-percent hike, calculated at constant exchange rates. Rental revenue in the quarter was $2.189 billion compared to $1.815 billion in fiscal Q322, a 22-percent jump. EBITDA was $1.092 compared to $877 in the year-ago quarter, a 26-percent increase.
For the first nine months of fiscal 2023, Sunbelt Rentals in the United States, Canada and the United Kingdom, reported $7.224 billion in revenue compared to $5.884 billion in the first nine months of fiscal 2022, a 22.8-percent hike (25 percent calculated at constant exchange rates). Rental revenue for the nine months was $6.572 billion compared to $5.350 the previous year, also calculated at constant exchange rates.
EBITDA increased 25 percent in the nine-month period from $2.709 billion to $3.338 billion.
“The Group delivered another strong quarter across all geographies, contributing to rental revenue growth of 25 percent for the nine months at constant currency,” said chief executive Brandon Horgan. “In the period, we invested $2.6 billion in capital across existing locations and greenfields and $970 million on 38 bold-on acquisitions, adding a combined 120 locations in North America. This significant investment is enabling us to take advantage of the substantial structural growth opportunities that we see for the business as we deliver our strategic priorities to grow our general tool and specialty businesses and advance our clusters. We are achieving all this while maintaining a strong and flexible balance sheet with leverage near the bottom of our target range. We expect capital expenditures for the full year to be slightly ahead of our previous guidance at $3.5 to $3.7 billion. Looking forward to 2023-24, our initial plans are for gross capital expenditures of $4.0 to $4.4 billion, of which U.S. rental capital expenditure is $3.0 to $3.3 billion. This should enable mid-teens rental revenue growth in the U.S.
“Our business is performing well with clear momentum in strong end markets, which are enhanced by the increasing number of mega projects and recent U.S. legislative acts. We are in a position of strength, with operational flexibility to capitalize on the opportunities arising from these strong markets and the ongoing drivers of structural change, including supply chain constraints, inflation and labor scarcity. We now expect full year results ahead of our previous expectations.”
For the nine-month period, the U.S. posted total revenue of $6,139.3 million, compared to $4,763.6 million in the first nine months of fiscal 2022, a 28.9-percent increase. Sunbelt Canada posted CDN $608.9 million in the nine-month period compared to $463.1 million the in the first nine months of fiscal 2022, a 31.5-percent leap. Only the U.K. business declined, from £547.1 million to £521.7 million, a 4.6-percent increase.
U.S. rental only revenue jumps 25 percent
In the U.S., rental-only revenue of $4,441 million compared to $3,549 million a year ago, a 25-percent jump, demonstrating the benefits of Sunbelt’s strategy of growing its specialty businesses and broadening end markets. Organic growth was 19 percent, while bolt-on acquisitions since May 1, 2021, contributed 6 percent of rental-only revenue growth. The general tool business grew 22 percent, while specialty business grew 33 percent. Rental-only revenue growth has been driven by volume and rate improvement.
In the U.K., rental only revenue hiked 7 percent year over year. Following the ending of free mass COVID testing in April 2022, revenue from the Department of Health ended during the fiscal first quarter and in the nine months declined from the previous year. Excluding the impact of the work for the Department of Health, rental-only revenue increased 22 percent.
Canada’s rental only revenue increased 23 percent to C$417 million from $340 million a year ago. Markets are robust and the major part of the Canadian business is growing in a similar manner to the U.S. with strong volume growth and rate improvement, in a good rate environment.
Headquartered in Fort Mill, S.C., Sunbelt Rentals is No. 2 on the RER 100. Ashtead is headquartered in London.