Sunbelt U.S. posted fiscal first half revenue of $2,877.5 million compared to $2,500.2 million in the fiscal first half of 2018, a 15.5-percent leap. EBITDA grew to $1,502 million in the fiscal first half, compared to $1,278.1 million a year ago, a 17.5-percent increase. Profit was $947 million compared to $847.1 million a year ago, an 11.8-percent hike.
Sunbelt Canada also realized good results with CDN $200.3 million in revenue for the half compared to CDN $167.4 million in the year-ago half, a 19.7-percent hike. EBITDA jumped from CDN $66.6 million to CDN $85 million, a 27.6-percent climb.
U.K.-based A-Plant reported £255.9 million compared to £250.5 million a year ago, a more modest 2.2-percent increase. Its EBITDA decreased from £95.2 million in the year-ago half to £85.8 million in the just-concluded period.
Total Ashtead group revenue for the fiscal first half was £2,681.3 million (about U.S. $3.5 billion) compared to £2,250.4 million in the fiscal first half of 2018, a 19.1-percent hike.
Group rental revenue in the fiscal second quarter totaled £1,282 million compared to £1,113 million a year ago, a 15.2-percent rise. For the first half, rental revenue was £2,447 million compared to £2,074 million a year ago, an 18-percent increase.
Sunbelt U.S. and Sunbelt Canada delivered 15 percent and 21 percent rental only revenue growth respectively, while A-Plant's rental only revenue decreased 2 percent, reflecting the more competitive landscape within a more uncertain U.K. market. The growth in Sunbelt Canada continues to reflect the impact of recent acquisitions. Sunbelt’s 2019 rental-only revenue was $2,146 million compared to $1,860 million a year ago, a 15.5-percent hike.
“The group continues to trade well with strong rental revenue growth,” said Ashtead chief executive Brendan Horgan. “Rental revenue increased 13 percent in the half year and underlying earnings per share increased 11 percent, excluding the impact of IFRS 16, both at constant exchange rates.
“Our North American end markets remain strong and we continue to execute well on our strategy of organic growth supplemented by targeted bolt-on acquisitions. In contrast, the U.K. market remains challenging and we are therefore refocusing A-Plant on leveraging its platform to deliver long-term sustainable results, while generating strong cash flow.”
Horgan said the company invested £1 billion in capital and an additional £231 million on bolt-on acquisitions during the half-year period, adding 50 locations across the group.
“The investment reflects the structural growth opportunity that we continue to see in the business as we broaden our product offering, geographic reach and end markets, thus increasing market share and diversifying our business,” Horgan said.
Sunbelt U.S.’ revenue growth demonstrates the successful execution of the company’s long-term structural growth strategy. It continues to capitalize on a combination of organic growth (same-store growth and greenfields) and bolt-ons as it expands its geographic footprint and specialty businesses. Sunbelt added 44 new stores in the United States in the first half, more than half of which were specialty locations.
The company said the rental revenue growth in the U.S. was driven by increased fleet on rent, after the past two years were impacted favorably by significant hurricane activity, which was quieter in 2019.
In Canada, on an organic basis rental-only revenue increased 11 percent, compared to 21 percent overall, which included the benefit of recent acquisitions.
The group’s rental fleet on Oct. 31, 2019 at cost was £9 billion, with an average fleet age of 33 months. The company expects total capital expenditure to be towards the lower end of its range of £1.4 billion to £1.6 billion.
“We remain focused on responsible growth,” added Horgan. “Our increasing scale and strong margins are delivering good earnings growth and significant free cash flow generation. This provides significant operational and financial flexibility, enabling us to invest in the long-term structural growth opportunity and enhance returns to shareholders, while maintaining leverage with our target range of 1.5 to 2 times net debt to EBITDA excluding IFRS 16.
“Our business continues to perform well in supportive North American end markets, while we have taken decisive strategic actions to refocus our U.K. business in the challenging market conditions. Thus, except for the U.K. and a currency headwind, we expect results to be in line with our expectations and the board continues to look to the medium term with confidence.”
