Sunbelt Jumps 20.5 Percent in First Nine Months of Fiscal 2016
Sunbelt Rentals posted $2.468 billion in rental revenue for the first nine months of fiscal 2016, compared to $2.047 billion for the first nine months of fiscal 2015, a 20.5-percent increase. Group revenue increased 25 percent to £1.880 billion (U.S. $2.672 billion) in the nine months compared to fiscal 2015’s total of £1.500 billion, with strong growth in Sunbelt Rentals and A-Plant in the United Kingdom. This revenue growth, combined with ongoing operational efficiency, generated underlying profit before tax of £482 million (2015: £379 million).
Strategy for parent company Ashtead plc remains unchanged with growth being driven by strong same-store growth supplemented by greenfield openings and bolt-on acquisitions. The principal driver of this performance is Sunbelt where rental revenue growth continues to benefit from cyclical and structural trends. Same-store revenue growth for Sunbelt Rentals was 12 percent, with an additional 8 percent added by bolt-ons and greenfield start-ups. Rental-only revenue in 2016 so far is $1.745 billion, a 20-percent year-over-year leap.
Rental revenue grew 14 percent for the group in the third quarter, from £462.9 in the third quarter of fiscal 2015 to £546.9 million this year.
“The group delivered another strong quarter resulting in underlying pre-tax profits of £482m for the nine months, up 20 percent at constant exchange rates on the prior year,” said Geoff Drabble, chief executive of Ashtead plc. “We continue to grow responsibly, generating strong returns and maintaining leverage within our stated objectives. Group ROI was a healthy 19 percent and our leverage reduced to 1.9 times EBITDA. Our continued success demonstrates both the strength of our strategy and the overall health of the markets we serve.
“Looking forward, while we are watchful of the broader economic environment, we continue to see encouraging growth opportunities and expect double digit fleet growth in the U.S. in 2016/17. As our fleet replacement expenditure naturally moderates, we enter a phase of the cycle where we anticipate both good earnings growth and significant cash generation. As a consequence our leverage will trend towards the lower end of our range of 1.5 to 2.0 times net debt to EBITDA which provides the Group with a high degree of flexibility and security. With both divisions performing well, strong end markets and our strategy clearly working, we expect full year results to be in line with our expectations and the Board looks forward to the medium term with confidence.”
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.