Sunbelt Rentals Holdings, Inc. · NYSE:SUNB

Sunbelt Rentals — Ashtead Group — Q3 FY2016/17 Earnings Presentation

32 slides from Sunbelt Rentals's earnings presentation, Mar 7, 2017

  1. Slide 1: Growth and diversification

    Growth and diversification 7 March 2017

  2. Slide 2: Legal Notice

    LEGAL NOTICE This presentation has been prepared to inform  Some of the factors which may adversely impact investors and prospective investors in the secondary some of these forward looking statements are markets about the Group and does not constitute an discussed in the Principal Risks and Uncert

  3. Slide 3: Summary

    SUMMARY  Once again a strong quarter with market leading growth in revenue and profitability  Continued progress on our growth and capital allocation priorities –£812m invested in capital expenditure –£196m spent on bolt-ons –77 locations opened / added –£48m spent on share buybacks  Leverage mai

  4. Slide 4: Suzanne Wood

    Suzanne Wood 4 Third quarter results ¦ 31 January 2017

  5. Slide 5: Q3 Group Revenue and Profit

    Q3 GROUP REVENUE AND PROFIT Q3 (£m) 2017 2016 Change1 Revenue 805 612 13% - of which rental 729 547 14% Operating costs (438) (335) 13% EBITDA 367 277 13% Depreciation (160) (116) 18% Operating profit 207 161 9% Net interest (28) (22) 10% Profit before amortisation and tax 179 139 8% Earnings per sh

  6. Slide 6: Nine Months Group Revenue and Profit

    NINE MONTHS GROUP REVENUE AND PROFIT Nine months (£m) 2017 2016 Change1 Revenue 2,356 1,880 10% - of which rental 2,174 1,676 13% Operating costs (1,232) (1,011) 7% EBITDA 1,124 869 13% Depreciation (443) (326) 19% Operating profit 681 543 9% Net interest (76) (61) 8% Profit before amortisation and

  7. Slide 7: Lower replacement capex reduces revenue and gains from sale of used equipment

    LOWER REPLACEMENT CAPEX REDUCES REVENUE AND GAINS FROM SALE OF USED EQUIPMENT Nine months (£m) 2017 2016 Change1 Revenue 2,356 1,880 10% Sale of used equipment (91) (136) (41)% Revenue excluding sale of used equipment 2,265 1,744 14% Underlying profit before taxation as reported 605 482 9% Gains on

  8. Slide 8: Nine Months Sunbelt Revenue and Profit

    NINE MONTHS SUNBELT REVENUE AND PROFIT Nine months ($m) 2017 2016 Change Revenue 2,690 2,468 9% - of which rental 2,490 2,205 13% Operating costs (1,348) (1,278) 5% EBITDA 1,342 1,190 13% Depreciation (501) (419) 20% Operating profit 841 771 9% Margins - EBITDA 50% 48% - Operating profit 31% 31% 8 T

  9. Slide 9: Nine Months A-Plant Revenue and Profit

    NINE MONTHS A-PLANT REVENUE AND PROFIT Nine months (£m) 2017 2016 Change Revenue 302 264 14% - of which rental 272 232 17% Operating costs (192) (165) 16% EBITDA 110 99 12% Depreciation (60) (52) 16% Operating profit 50 47 7% Margins - EBITDA 37% 37% - Operating profit 17% 18% 9 Third quarter result

  10. Slide 10: Cash Flow

    CASH FLOW Nine months (£m) 2017 2016 Change EBITDA before exceptional items 1,124 869 29% Cash conversion ratio1 95.1% 87.9% Cash inflow from operations2 1,069 764 40% Replacement and non-rental capital expenditure (396) (467) Rental equipment and other disposal proceeds received 109 124 Interest an

  11. Slide 11: Net Debt and Leverage

    NET DEBT AND LEVERAGE NET DEBT TO EBITDA CONTINUES TO REDUCE AS WE INVEST IN THE FLEET January Leverage (£m) 2017 2016 3.4 3.5 Net debt at 30 April 2,002 1,687 2.9 3.0 Translation impact 304 146 2.6 2.6 2.5 2.3 Opening debt at closing exchange rates 2,306 1,833 2.0 2.0 Target range 1.9 2.0 Change fr

  12. Slide 12: Geoff Drabble

    Geoff Drabble 12 Third quarter results ¦ 31 January 2017

  13. Slide 13: Sunbelt – US Revenue Drivers

    SUNBELT – US REVENUE DRIVERS NINE MONTHS General Tool Specialty1 Total % of business 79% 21% 100% Rental revenue growth +15% +8% +13% Fleet on rent +18% +11% +17% Yield -3% -3% -3% Year-on-year physical utilisation -1% +5% - Presented on a billing day basis, excluding Canada 1 Including Oil & Gas ●

  14. Slide 14: Sunbelt – US Revenue Drivers: Physical Utilisation

    SUNBELT – US REVENUE DRIVERS PHYSICAL UTILISATION General Tool Specialty (inc. Oil & Gas) 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2014/15 2015/16 2016/17 2014/15 2015/16 2016/17 14 Third quarter r

  15. Slide 15: Strong Margin Progression

    STRONG MARGIN PROGRESSION NINE MONTHS Same-stores1 Greenfields2 Bolt-ons2 Oil & Gas Total Proportion of revenue 92% 5% 2% 1% 100% Fleet on rent – % change +11% nm nm -10% +17% Net yield -3% nm nm -17% -3% Physical utilisation – actual 72% 63% 61% 68% 72% Dollar utilisation 55% 46% 56% 51% 54% Drop-t

  16. Slide 16: Good Progress on 2021 Plan

    GOOD PROGRESS ON 2021 PLAN Market Consideration Broad General Tool Power and climate control Acquisition I&L Rentals $67m  LoadBanks $6m  Portable Rental Solutions $11m  CanSource Direct C$9m  Tower Tech $13m  Post Falls $4m  Rick’s Action Rental $0.4m  New Mexico / El Paso branches of BlueLi

  17. Slide 17: Execution of 2021 Plan

    EXECUTION OF 2021 PLAN CIRCA DOUBLE-DIGIT VOLUME GROWTH ANTICIPATED Market growth 2017/18 plan Mature stores (up to FY11) 3 – 4% 4 – 6% c.1.5x market growth Recent openings (FY12 – FY16) 3 – 4% 4 – 6% c.1.5x market growth Organic growth – same-store 4 – 6% Greenfields 3 – 4% Organic growth 7 – 10% B

  18. Slide 18: Sunbelt 2017/18 Fleet Plan Consistent with 2021 Plan

    SUNBELT 2017/18 FLEET PLAN CONSISTENT WITH 2021 PLAN Q3 2017 2018 2015 2016 Forecast Outlook Sunbelt ($m) - rental fleet - replacement 395 572 350 300 – 350 - growth 873 871 750 600 – 850 - non-rental fleet 100 133 100 100 1,368 1,576 1,200 1,000 – 1,300 18 Third quarter results ¦ 31 January 2017

  19. Slide 19: A-Plant Revenue Drivers

    A-PLANT REVENUE DRIVERS GROWTH CONTINUES BACKED BY FLEET INVESTMENT Average fleet on rent Physical utilisation 80% +17% +15% +22% 70% 60% 50% 2014-15 40% 2015-16 2016-17 30% May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Q1 Q2 Q3 Year over year change in yield Fleet size and growth +26% +10% +25% +

  20. Slide 20: A-Plant Continues to Grow Profitably

    A-PLANT CONTINUES TO GROW PROFITABLY WITH MUCH MORE UPSIDE AS NEWLY ACQUIRED ASSETS ARE INTEGRATED EBITDA Operating profit RoI £m % £m % 18% 175 40 100 20 38% 37% 18% 18% 34% 149 15% 150 15% 14% 137 14% 29% 13% 28% 30 75 71 15 125 26% 67 12% 109 100 9% 20 50 9% 10 9% 79 46 75 57 6% 6% 49 5% 50 10 25

  21. Slide 21: A-Plant and Group Fleet Plan for 2017/18

    A-PLANT AND GROUP FLEET PLAN FOR 2017/18 ANTICIPATED A-PLANT VOLUME GROWTH DOUBLE-DIGIT TO MID-TEENS Q3 2017 2018 2015 2016 Forecast1 Outlook1 A-Plant (£m) - rental fleet - replacement 46 95 90 50 – 60 - growth 108 47 90 40 – 50 - non-rental fleet 19 22 20 15 173 164 200 105 – 125 Sunbelt ($m) - ren

  22. Slide 22: Summary

    SUMMARY  Another strong quarter benefiting from ongoing structural opportunity and good end markets.  Plans reflect current market activity which is little changed since our 2021 plans were unveiled in October.  Our model is flexible enough to react to changing conditions when we have greater cla

  23. Slide 23: Appendices

    Appendices 23 Third quarter results ¦ 31 January 2017

  24. Slide 24: Divisional Performance – Q3

    DIVISIONAL PERFORMANCE – Q3 Revenue EBITDA Profit 2017 2016 Change1 2017 2016 Change1 2017 2016 Change1 Sunbelt ($m) 876 783 12% 418 371 13% 245 223 10% Sunbelt (£m) 702 526 33% 337 249 35% 198 151 31% A-Plant 102 86 20% 34 30 14% 13 12 4% Group central costs - - - (4) (2) 63% (4) (2) 62% 804 612 31

  25. Slide 25: Divisional Performance – LTM

    DIVISIONAL PERFORMANCE – LTM Revenue EBITDA Profit 2017 2016 Change1 2017 2016 Change1 2017 2016 Change1 Sunbelt ($m) 3,499 3,163 11% 1,736 1,500 16% 1,083 957 13% Sunbelt (£m) 2,619 2,073 26% 1,300 985 32% 812 628 29% A-Plant 403 345 17% 149 124 20% 71 56 27% Group central costs - - - (16) (12) 36%

  26. Slide 26: Understanding Rate vs Yield: Rate Evolution

    UNDERSTANDING RATE VS YIELD RATE EVOLUTION Rate index 1.350 1.300  Off 2014 inflated peaks 1.250 1.200  Sequentially largely flat 1.150 1.100  Did not have a 2016 summer lift. Did not have a winter decline. 1.050 1.000 0.950 0.900 Apr 2010 Apr 2011 Apr 2012 Apr 2013 Apr 2014 Apr 2015 Apr 2016 Apr

  27. Slide 27: Understanding Rate vs Yield: Longer Rental Periods

    UNDERSTANDING RATE VS YIELD SHIFT TO LONGER RENTAL PERIODS IMPACTS YIELD NOT RATE Monthly Rate1 Contract mix Revenue2 Change revenue2 ($) ($) FY17 FY16 FY15 FY17 FY16 FY15 17 v 16 16 v 15 Daily 420 10,080 10.0% 10.5% 11.0% 1,008 1,058 1,109 Weekly 1,015 4,060 20.0% 21.0% 21.5% 812 853 873 Monthly 2,

  28. Slide 28: Cash Flow Funds Organic Fleet Growth, Healthy EBITDA Margins

    CASH FLOW FUNDS ORGANIC FLEET GROWTH HEALTHY EBITDA MARGINS ENSURE SIGNIFICANT TOP LINE CASH GENERATION THROUGH THE CYCLE LTM (£m) Jan 17 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 EBITDA before exceptional items 1,433 1,178 908 685 519 381 284 255 359 380 310 225 170 147 EBITD

  29. Slide 29: Robust and Flexible Debt Structure

    ROBUST AND FLEXIBLE DEBT STRUCTURE £2,500m £2,250m £2,000m £1,750m  Debt facilities committed for average of 5 years £1,500m £1,250m  No amortisation £1,000m £750m  No financial monitoring covenants whilst availability exceeds $310m (January 2017: $1,334m) £500m £250m £m 2017 2018 2019 October 20

  30. Slide 30: $1,334m of Availability at 31 January 2017

    $1,334M OF AVAILABILITY AT 31 JANUARY 2017 Book value Borrowing base Senior debt £5,100m (April 16 : £4,086m) Calculation: £585m Inventory – 50% of book value £3,741m (April 16 : £3,089m) Receivables – 85% of net eligible receivables £373m Fleet and vehicles – 85% of net appraised market value of el

  31. Slide 31: Debt and Covenants

    DEBT AND COVENANTS Facility Interest rate Maturity $3.1bn first lien revolver LIBOR + 125-175 bps July 2020 Debt $900m second lien notes 6.5% July 2022 $500m second lien notes 5.625% October 2024 Capital leases ~7% Various S&P Moody’s Ratings Corporate family BB Ba1 Second lien BB+ Ba2 Availability

  32. Slide 32: Third quarter results ¦ 31 January 2017

    32 Third quarter results ¦ 31 January 2017

Ashtead Group — Q3 FY2016/17 Earnings Presentation on 6ix