Sunbelt Rentals U.S. posted revenue of $1,380.9 million for the firscal first quarter ended July 31, compared to $1,167.5 million for the same period last year, an 18.3-percent year-over-year increase. Sunbelt Canada grew from C$ $76.9 million last year to C$94.8 million this year, a 23.3-percent hike.
A-Plant in the U.K. posted £131.4 million in the quarter compared to £125.6 million a year ago, a 4.6-percent increase.
The whole equipment rental group at Ashtead plc totaled £1,278.2 million (about U.S. $1,579.1 million), compared to £1,047.4 million in the year-ago quarter, a 22-percent leap. EBITDA jumped to £626.6 compared to £503.7 million a year ago, a 24.4-percent hike.
Sunbelt U.S. reported an EBITDA margin of 51.9 percent for the quarter. A-Plant posted a 33.2-percent margin. Sunbelt Canada came in at 39.7 percent. The whole Ashtead group’s EBITDA margin was 49 percent.
“The group delivered a strong quarter with rental revenue increasing 16 percent and underlying pre-tax profit increasing 9 percent, excluding the impact of IFRS 16, both at constant exchange rates,” said Brendan Horgan, Ashtead chief executive. “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. We invested £521 million in capital and a further £196 million on bolt-on acquisitions in the period, which has added 27 locations across the group. This 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 added that the company is focusing on responsible growth. “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 within our target range of 1.9 to 2.4 times net debt to EBITDA. We spent £125 million under our share buyback program in the quarter and expect to spend a minimum of £500 million on share buybacks in 2019/20.
“Our business continues to perform well in supportive end markets. Accordingly, we expect business performance in line with our expectations and the board continues to look to the medium term with confidence.”
Sunbelt U.S.’ revenue growth continues to benefit from cyclical and structural trends. Organic growth, including same-store growth and greenfields was $105 million, a 12-percent hike. Bolt-ons acquired since May 1, 2018, have added $53 million. Rental-only revenue in the first quarter was $1,030 million, and rental revenue was $1,279 million.
Rental only revenue growth was driven by increased fleet on rent year over year. Sunbelt Canada’s rental-only revenue increased 26 percent, including the benefit of recent acquisitions. On an organic basis, Sunbelt Canada’s rental-only revenue increased 13 percent. Sunbelt Canada is in a growth phase as it invests to expand its network and develop the business.
The company expects the Canadian business to generate EBITDA of around 40 percent and operating profit margins of about 20 percent in the near term.
Capital expenditure for the quarter was £521 million gross and £451 million net. The company said it invested £196 million, including acquired debt, in six bolt-on acquisitions during the first quarter.