Sunbelt Rentals Holdings, Inc. · NYSE:SUNB
Sunbelt Rentals — Ashtead Group — Q1 FY2023 Earnings Presentation
36 slides from Sunbelt Rentals's earnings presentation, Sep 6, 2022
Slide 1: Ambition with Purpose: First Quarter Results
AMBITION WITH PURPOSE FIRST QUARTER RESULTS 6 September 2022
Slide 2: Legal Notice
LEGAL NOTICE This presentation has been prepared to inform investors and Some of the factors which may adversely impact some of prospective investors in the secondary markets about the these forward looking statements are discussed in the Group and does not constitute an offer of securities or Princ
Slide 3: Highlights
HIGHLIGHTS ▪ Another quarter of strong results and ongoing momentum in supportive end markets ▪ North American rental revenue 28% ahead of last year ▪ Profit before tax 1 up 29% to $555m (2021: $437m) and EPS 1 up 33% to 94.4ȼ (2021: 71.5ȼ) ▪ $699m invested in capital expenditure ▪ 33 locations adde
Slide 4: 2022/23 Outlook
2022/23 OUTLOOK Previous guidance Current guidance Rental revenue1 - US 13% to 16% 17% to 20% - Canada 15% to 18% 19% to 22% - UK2 -5% to -2% -4% to 0% - Group 12% to 14% 15% to 17% Capital expenditure (gross)3 $3.3 – 3.6bn $3.3 – 3.6bn - of which, rental fleet is: $2.7 – 3.0bn $2.7 – 3.0bn Free cas
Slide 5: Financial Review
FINANCIAL REVIEW MICHAEL PRATT 5 First quarter results ¦ 31 July 2022
Slide 6: Group
GROUP $m 2022 2021 Change1 Revenue 2,259 1,852 25% ‐ of which rental 2,075 1,669 26% Operating costs (1,220) (992) 26% EBITDA 1,039 860 22% Depreciation (417) (362) 17% Operating profit 622 498 26% Net interest (67) (61) 11% Profit before amortisation, exceptional items and tax 555 437 29% Earnings
Slide 7: US
US $m 2022 2021 Change Revenue 1,899 1,465 30% ‐ of which rental 1,768 1,374 29% Operating costs (983) (740) 33% EBITDA 916 725 26% Depreciation (349) (293) 19% Operating profit 567 432 31% Margins ‐ EBITDA 48.2% 49.5% ‐ Operating profit 29.9% 29.5% Return on investment 25.6% 22.0% The results in th
Slide 8: Canada
CANADA C$m 2022 2021 Change Revenue 176 149 19% ‐ of which rental 159 132 20% Operating costs (100) (82) 23% EBITDA 76 67 14% Depreciation (38) (32) 16% Operating profit 38 35 11% Margins ‐ EBITDA 43.1% 45.0% ‐ Operating profit 21.8% 23.3% Return on investment 19.6% 21.4% The results in the table ab
Slide 9: UK
UK £m 2022 2021 Change Revenue 182 190 -4% ‐ of which rental 149 134 11% Operating costs (125) (128) -3% EBITDA 57 62 -8% Depreciation (31) (31) 2% Operating profit 26 31 -18% Margins ‐ EBITDA 31.4% 32.7% ‐ Operating profit 14.2% 16.5% Return on investment 12.4% 13.9% The results in the table above
Slide 10: Net Debt
NET DEBT Leverage (excluding impact of IFRS 16) $m 2022 2021 2.5 2.4 Opening net debt 7,160 5,801 2.1 Change from cash flows 424 (173) 2.0 1.9 1.9 1.8 1.8 Translation impact (12) (9) 1.7 1.7 1.6 1.6 Debt acquired 44 9 1.5 1.3 New lease liabilities 98 75 Deferred debt raising cost amortisation 2 2 At
Slide 11: Robust and Flexible Debt Structure
ROBUST AND FLEXIBLE DEBT STRUCTURE $5,000m Debt maturity prior to financing activities Undrawn ▪ In August, issued $750m 5.50% notes due 2032 $4,000m Drawn Notes $3,000m ▪ Subsequent to notes issue, borrowing facilities committed $2,000m for average of six years at a weighted average cost of 4% $1,0
Slide 12: Operational Review
OPERATIONAL REVIEW BRENDAN HORGAN 12 First quarter results ¦ 31 July 2022
Slide 13: US Trading
US TRADING Rental revenue1 FY22 FY23 ▪ Strong growth and momentum in General Tool, while Specialty delivers another exceptional quarter Q1 Q2 Q3 Q4 FY Q1 General Tool +15% +14% +20% +24% +18% +23% ▪ Strong demand environment coupled with ongoing supply Specialty +22% +23% +34% +34% +28% +39% constra
Slide 14: Specialty Trading
SPECIALTY TRADING Rental revenue1 FY22 FY23 ▪ Unique portfolio of Specialty businesses takes advantage of ongoing growth opportunities in lowly Q1 Q2 Q3 Q4 FY Q1 penetrated markets Power and HVAC +24% +22% +30% +35% +27% +34% Climate Control and Air Quality +25% +31% +17% +6% +20% +36% ▪ Early stage
Slide 15: US Construction Outlook
US CONSTRUCTION OUTLOOK Dodge construction starts 2020 2021 2022 2023 2024 2025 2026 300 Indexed: 2000=100 Construction put in place ($bn) 250 Non-residential 540 515 595 660 702 733 764 200 Non-building 293 291 289 313 342 364 370 150 Construction (excl. resi) 833 806 884 973 1,044 1,097 1,134 Resi
Slide 16: Canada Trading
CANADA TRADING Fleet on rent (excluding Lighting, Grip and Lens) ▪ Sunbelt 3.0 plan progressing well, with cluster development and increasing business maturity now delivering record margins and returns ▪ Growth driven by General Tool business, aided by developing Specialty businesses and increased s
Slide 17: UK Trading
UK TRADING Fleet on rent ▪ Strong underlying performance with rental only revenue, excluding the DoH work, up 19% ▪ Accelerated DoH testing site demobilisation completed in the quarter ▪ End market strength in infrastructure, private housing and repair, maintenance and improvements. Industrial perfo
Slide 18: Sunbelt 3.0: Strategic Growth Plan
SUNBELT 3.0: STRATEGIC GROWTH PLAN ROLLED OUT ACROSS THE BUSINESS AND PROGRESSING WELL Actionable Progress component 1 GROW GENERAL TOOL & ADVANCE OUR CLUSTERS ▪ Opened 20 greenfield locations in North America in the year, of which 16 were Specialty ▪ 10 bolt-on acquisitions completed in North Am
Slide 19: Group Fleet Plan
GROUP FLEET PLAN 2021 2022 2023 2022 Actual Actual Current guidance1 Q1 Actual US ($m) - rental fleet 576 1,625 2,400 – 2,600 502 - non-rental fleet 102 321 500 100 678 1,946 2,900 – 3,100 602 Canada (C$m) - rental fleet 79 201 200 – 230 40 - non-rental fleet 17 39 80 16 96 240 280 – 310 56 UK (£m)
Slide 20: Capital Allocation
CAPITAL ALLOCATION CONSISTENTLY APPLIED POLICY CONTINUES CLEAR PRIORITIES APPLICATION Organic fleet growth ▪ Same-store ▪ $699m invested in the business ▪ Greenfields ▪ 20 greenfields opened in North America ▪ $337m spent on bolt-ons, with 16 locations added Bolt-on acquisitions ▪ Good pipeline with
Slide 21: Summary
SUMMARY ▪ Clear momentum, with strong positions in supportive end markets ▪ The recent CHIPS Act and Inflation Reduction Act enhance an already strong construction market, flush with mega projects ▪ Supply constraints, inflation and skilled trade scarcity are agents of structural change and favour t
Slide 22: Appendices
APPENDICES 22 First quarter results ¦ 31 July 2022
Slide 23: Divisional Performance: First Quarter Results
DIVISIONAL PERFORMANCE FIRST QUARTER RESULTS Revenue EBITDA Profit 2022 2021 Change1 2022 2021 Change1 2022 2021 Change1 UK (£m) 182 190 -4% 57 62 -8% 26 31 -18% Canada (C$m) 176 149 19% 76 67 14% 38 35 11% US 1,899 1,465 30% 916 725 26% 567 432 31% UK ($m) 223 266 -16% 70 87 -19% 32 44 -28% Canada
Slide 24: Divisional Performance: Last Twelve Months
DIVISIONAL PERFORMANCE LAST TWELVE MONTHS Revenue EBITDA Profit 2022 2021 Change1 2022 2021 Change1 2022 2021 Change1 UK (£m) 717 702 2% 210 219 -4% 81 84 -4% Canada (C$m) 654 559 17% 291 256 13% 147 132 11% US 6,911 5,599 23% 3,312 2,739 21% 1,987 1,553 28% UK ($m) 943 949 -1% 275 296 -7% 106 114 -
Slide 25: Delivered a Strong Year Despite Uniquely Challenging Dynamics
DELIVERED A STRONG YEAR DESPITE UNIQUELY CHALLENGING DYNAMICS RENTAL IS POSITIONED WELL TO BENEFIT Dynamic Anticipated duration Our advantage SUPPLY CHAIN ▪ Partnership and trust with OEMs CONSTRAINTS 12 – 18 months ▪ Sunbelt 3.0 fleet plans THESE DYNAMICS ARE ALL ▪ Financial strength TAILWINDS TO R
Slide 26: Our Business and Industry Has Changed Fundamentally
OUR BUSINESS AND INDUSTRY HAS CHANGED FUNDAMENTALLY STRUCTURAL CHANGE HAS PROGRESSED 30.0% 20.0% 10.0% 0.0% Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 Apr-22 -10.0% GFC: 30% rental Ten years of growth -20.0% revenue decline CAGR: 18% peak to tro
Slide 27: US Fleet Profile
US FLEET PROFILE ▪ Smooth fleet profile ▪ Benefits of prolonged cycle and our growth strategy ▪ Strong position providing optionality through the cycle ▪ Flexibility to turn replacement into growth and vice versa ▪ Strengthens partnership with suppliers through predictability 27 First quarter result
Slide 28: Cash Flow Funds All Fleet Investment
CASH FLOW FUNDS ALL FLEET INVESTMENT LTM- ($m) 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Jul 22 EBITDA before exceptionals 3,788 3,609 3,037 3,008 2,748 2,319 1,947 1,769 1,452 1,098 817 607 444 409 597 730 593 399 316 EBITDA margin 45% 45% 46% 47% 47%
Slide 29: $2,064m of Availability at 31 July 2022
$2,064M OF AVAILABILITY AT 31 JULY 2022 Book value Borrowing base Senior debt $10,768m (April 22: $10,238m) $1,360m $8,105m Calculation: (April 22: $7,755m) Inventory – 50% of book $1,125m value Receivables – 85% of net eligible receivables $8,700m Fleet and vehicles – 85% of net appraised market va
Slide 30: Debt and Covenants
DEBT AND COVENANTS Facility Interest rate Maturity $4.5bn first lien revolver LIBOR + 125-150 bps August 2026 $550m senior notes 1.500% August 2026 $600m senior notes 4.375% August 2027 Debt $600m senior notes 4.000% May 2028 $600m senior notes 4.250% November 2029 $750m senior notes 2.450% August 2
Slide 31: Location Growth During 3.0
LOCATION GROWTH DURING 3.0 CLEARLY DEFINED April 2021* 936 Sunbelt 3.0 +298 April 2024 1,234 April 2021 Sunbelt 3.0 – May 2021 – April 2024 * Excludes two Sunbelt 3.0 locations opened in April 2021 31 First quarter results ¦ 31 July 2022
Slide 32: Benefits of Clustered Markets Are Demonstrable
BENEFITS OF CLUSTERED MARKETS ARE DEMONSTRABLE THE STRATEGY REVENUE COMPOSITION CLUSTER VS. NON-CLUSTER Comparison to similar sized Metric / KPI non-clustered markets1 30% Active customer count 2.2x customers 70% Revenue 15% more revenue per customer Broaden customer base Clustered DMAs Time utiliza
Slide 33: Specialty Market Sizing, Rental Penetration & Share
SPECIALTY MARKET SIZING, RENTAL PENETRATION & SHARE REVENUE WILL GROW BY $1BN IN 3.0 WITH AMPLE OPPORTUNITY BEYOND CURRENT, PROJECTED AND ILLUSTRATIVE RENTAL BY BUSINESS LINE, $M FY21 total rental 10% RENTAL MARKET Incremental projected FY24 total rental via existing locations and greenfields PENETR
Slide 34: Environmental Roadmap
ENVIRONMENTAL ROADMAP INITIATIVES ON THE PATH TO 35X30 NEAR TERM: 3.0 PERIOD MEDIUM LONG TERM TARGET: 15% BY 2024 TERM GOAL: 35% BY 2030 Retrofit of heating and hot Migration to alternative 1 water infrastructure energy for HGVs/tractors 2 Step change in 3 service/sales vehicle All new vehicles use
Slide 35: US Market Share
US MARKET SHARE 2010 2022 Future 5% 4% 3% 16% 20%+ 3% 6% 44% 12% All others 13% 4% One or two 66% others 7% 17% United Rentals Sunbelt RSC Herc Rentals Top 4-10 Top 11-100 Other Two or three have 50%+ of the market 35 First quarter results ¦ 31 July 2022
Slide 36: Important to Not Lose Sight of Through the Cycle Key Metrics
IMPORTANT TO NOT LOSE SIGHT OF THROUGH THE CYCLE KEY METRICS Group RoI Group EBITDA margin Group adjusted EPS % % ȼ 19 19 20 19 50 46 47 47 47 47 46 350 18 45 45 18 17 18 18 45 42 307 16 300 15 15 38 38 16 15 40 14 35 35 33 34 14 13 35 250 227 222 219 12 30 30 12 30 200 171 10 10 25 8 7 20 150 128 1