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Sunbelt Rentals Revenue Rises 13.4 Percent in Fiscal Second Quarter

Dec. 6, 2023
Rental revenue was $2.585 billion, compared to $2.308 billion in fiscal second quarter of 2022, a 12-percent hike. EDITDA increased from $1.207 billion in the year-ago quarter to $1.354 billion, a 12.2-percent jump.

Sunbelt Rentals and its parent company Ashtead plc posted $2.877 billion in revenue in the fiscal second quarter of 2023 ended Oct. 31, compared to $2.537 billion, a 13.4-percent increase in the second quarter of fiscal 2022. Rental revenue was $2.585 billion, compared to $2.308 billion in fiscal second quarter of 2022, a 12-percent hike. EDITDA increased from $1.207 billion in the year-ago quarter to $1.354 billion, a 12.2-percent jump.

“The group continues to perform strongly with revenue up 16 percent and rental revenue growth of 13 percent, both at constant currency,” said Ashtead chief executive Brendan Horgan. “This strong performance is only possible through the dedication of our team members…. We are executing well against all actionable components of our strategic growth plan, in end markets which remain robust. In the period, we invested $2.5 billion in capital across existing locations and greenfields and $705 million on bolt-on acquisitions, adding a combined 74 locations in North America. This 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 business and advance our clusters. We are achieving all this while maintaining a strong and flexible balance sheet with leverage in the middle of our target range.”

On Nov. 20, Ashtead issued a trading update lowering its revenue growth and earnings guidance for the full year to reflect a lower level of emergency response activity related to natural disasters in North America in late second quarter and into the third quarter, with lower hurricane activity than has become more common in recent years. The longer than anticipated actors’ and screenwriters’ strikes that impacted film and television production within Sunbelt’s Canadian, U.S. and U.K, businesses, had a downward impact on revenues. 

“Notwithstanding these factors, our end markets in North America remain robust with healthy demand, supported in the U.S. by the increasing number of mega projects and recent legislative acts,” Horgan added. “We are in a position of strength, with the operational flexibility and financial capacity to capitalize on the opportunities arising from these market conditions and ongoing structural change. As we prepare our next strategic plan, Sunbelt 4.0, the board looks to the future with confidence.”

For the first six months of the fiscal year, total revenue for the three countries was $5.573 billion, up from $4.796 billion for the first six months of fiscal 2022, a 16.2-percent increase. Rental revenue totaled $4.960 billion in the first six months of fiscal 2023, compared to $4.383 billion for the same period in fiscal 2022, a 13.2-percent uptick. EBITDA stepped up from $2.246 billion in the year-ago period to $2.583, a 15-percent jump. 

For the first half, U.S. revenue totaled $4.792 billion compared to $4.069 billion in the year-ago half, a 17.8-percent surge. Canada’s revenue (in U.S. dollars) was $331.5 million compared to $297.1 million in the previous year’s first six, an 11.6-percent hike. The U.K. rental business, in U.S. dollars), reached $449.8 million compared to $430.1 million the previous year, a 4.6-percent increase.

U.S., Canada and U.K. numbers

In the U.S. business, the numbers demonstrated the benefits of Sunbelt’s strategy of growing its Specialty businesses and broadening its end markets. Organic growth – same-store and greenfields – was 11 percent, while bolt-ons since May 1, 2022 contributed 4 percent of rental-only revene growth. In 2023’s fiscal first half, Sunbelt’s General Tool division grew 14 percent while Specialty leaped 16 percent. Year-over-year growth in Specialty was adversely affected because strong hurricane and wildfire-related revenue in 2022 has not repeated this year. Therefore, utilization, although historically strong, was slightly lower than planned. U.S. total revenue at 18 percent reflected a higher level of new and used equipment, merchandise and consumable sales. Used equipment sales could increase because of improved fleet deliveries and strong second-half markets enabling the company to bring forward some disposals scheduled for later in the year.

Canada’s rental-only revenue increased a healthy 11 percent to C$310 million, with strong volume growth and rate improvement. The Writers Guild of America and Screen Actors Guild strikes, now settled apparently, continued for longer than anticipated and in addition to the performance of the Canadian film rental business being affected, the rest of the Canadian business rents into that space. Rental revenue increased 12 percent to C$382 million compared to $341 million in 2022’s first six fiscal months.

The U.K. business generated rental only revenue of £239 million, an 11-percent increase from £215 million a year ago. Bolt-ons since May 1 contributed 4 percent of the growth. Rental only revenue growth has been driven by rate and volume improvement.

Sunbelt Rentals is based in Fort Mill, S.C., and is No. 2 on the RER 100. Ashtead plc has corporate headquarters in London.