Sunbelt Rentals Holdings, Inc. · NYSE:SUNB
Sunbelt Rentals — Ashtead Group — H1 FY2022 Earnings Presentation
37 slides from Sunbelt Rentals's earnings presentation, Dec 7, 2021
Slide 1: Growth and Resilience: Half Year Results
GROWTH AND RESILIENCE HALF YEAR RESULTS 7 December 2021
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 ▪ Record first half performance demonstrating the strength in our model and ongoing momentum across the business ▪ North American rental revenue 19% ahead of last year and 13% ahead of 2019 pre-pandemic levels (Q2: +16%) ▪ Good progress across all Sunbelt 3.0 actionable components ▪ 58 lo
Slide 4: 2021/22 Outlook
2021/22 OUTLOOK Previous guidance Current guidance Rental revenue1 - US 13 – 16% 18 – 20% - Canada 25 – 30% 25 – 30% - UK 9 – 12% 9 – 12% - Group 13 – 16% 17 – 20% Capital expenditure (gross)2 $2.0 – 2.3bn $2.2 – 2.4bn Free cash flow2 $900 – 1,100m $900 – 1,100m 1 Represents year-over-year rental re
Slide 5: Financial Review
FINANCIAL REVIEW MICHAEL PRATT 5 Half year results ¦ 31 October 2021
Slide 6: Group Half Year Results
GROUP HALF YEAR RESULTS $m 2021 2020 Change1 Revenue 3,884 3,258 18% ‐ of which rental 3,545 2,931 20% Operating costs (2,052) (1,713) 18% EBITDA 1,832 1,545 18% Depreciation (737) (721) 1% Operating profit 1,095 824 32% Net interest (116) (137) -16% Profit before amortisation, exceptional items and
Slide 7: US Half Year Results
US HALF YEAR RESULTS $m 2021 2020 Change Revenue 3,124 2,747 14% ‐ of which rental 2,942 2,515 17% Operating costs (1,557) (1,373) 13% EBITDA 1,567 1,374 14% Depreciation (598) (592) 1% Operating profit 969 782 24% Margins ‐ EBITDA 50% 50% ‐ Operating profit 31% 28% Return on investment 23% 18% The
Slide 8: Canada Half Year Results
CANADA HALF YEAR RESULTS C$m 2021 2020 Change Revenue 310 220 41% ‐ of which rental 280 188 49% Operating costs (162) (127) 28% EBITDA 148 93 59% Depreciation (67) (60) 11% Operating profit 81 33 144% Margins ‐ EBITDA 48% 42% ‐ Operating profit 26% 15% Return on investment 23% 7% The results in the
Slide 9: UK Half Year Results
UK HALF YEAR RESULTS £m 2021 2020 Change Revenue 368 273 35% ‐ of which rental 272 216 26% Operating costs (253) (187) 36% EBITDA 115 86 34% Depreciation (61) (66) -7% Operating profit 54 20 169% Margins ‐ EBITDA 31% 32% ‐ Operating profit 15% 7% Return on investment 15% 4% The results in the table
Slide 10: Cash Flow
CASH FLOW HALF YEAR RESULTS Half year LTM October $m 2021 2020 2021 EBITDA before exceptional items 1,832 1,545 3,324 Cash conversion ratio1 84% 98% 92% Cash inflow from operations2 1,542 1,513 3,045 Replacement and non-rental capital expenditure (549) (353) (1,089) Rental equipment and other dispos
Slide 11: Net Debt
NET DEBT Leverage (excluding impact of IFRS 16) $m 2021 2020 3.0 Opening net debt 5,801 6,764 2.5 2.5 Change from cash flows 431 (824) 2.1 Translation impact (7) 48 2.0 1.9 1.9 2.0 1.8 1.8 1.8 Debt acquired 38 - 1.7 1.5 New lease liabilities 151 84 1.5 Deferred debt raising cost amortisation 15 6 At
Slide 12: Robust and Flexible Debt Structure
ROBUST AND FLEXIBLE DEBT STRUCTURE $5,000m ▪ In August, refinanced $600m 4.125% notes and Undrawn $600m 5.25% notes with two investment grade notes: $4,000m Drawn Notes ▪ $550m 1.5% notes due 2026 $3,000m ▪ $750m 2.45% notes due 2031 $2,000m ▪ and closed increased $4.5bn ABL facility and extended ma
Slide 13: Operational Review
OPERATIONAL REVIEW BRENDAN HORGAN 13 Half year results ¦ 31 October 2021
Slide 14: US Trading
US TRADING Rental revenue1 ▪ Strong growth in General Tool, while Specialty delivers FY21 FY22 another exceptional quarter Q1 Q2 Q3 Q4 FY Q1 Q2 YTD ▪ Very strong demand environment coupled with ongoing General tool -9% -7% -4% +7% -4% +14% +13% +13% supply constraints contributing to high utilisatio
Slide 15: Specialty Trading
SPECIALTY TRADING Rental revenue growth1 ▪ Unique portfolio of Specialty businesses take advantage of ongoing growth opportunities in lowly penetrated markets – Q1 Q2 H1 34 locations added in the half year Power and HVAC +24% +22% +22% Climate Control and Air Quality +25% +31% +29% ▪ Early stages of
Slide 16: US Construction Market Outlook
US CONSTRUCTION MARKET OUTLOOK Dodge construction starts 2019 2020 2021 2022 2023 2024 2025 300 Indexed: 2000=100 Construction put in place ($bn) 250 Non-residential 529 519 475 499 545 587 611 200 Non-building 285 295 290 301 328 359 381 150 Construction (excl. resi) 814 814 765 800 873 946 992 Res
Slide 17: Canada Trading
CANADA TRADING Fleet on rent (excluding William F. White) ▪ Growth driven by General Tool business, aided by developing Specialty businesses ▪ Strong demand and supply constraints contributing to record utilisation and favourable rate environment ▪ Sunbelt 3.0 plan progressing well leading to cross
Slide 18: UK Trading
UK TRADING Fleet on rent ▪ Strong first half driven by: ▪ COVID-19 response efforts ▪ Share gains in broad end markets ▪ Op-X programme and ROC model ▪ c.500 DoH testing sites being supported – expect significant reduction in sites from Spring 2022 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr ▪ E
Slide 19: Sunbelt 3.0: Strategic Growth Plan
SUNBELT 3.0: STRATEGIC GROWTH PLAN ROLLED OUT ACROSS THE BUSINESS AND PROGRESSING WELL 1 Actionable GROW GENERAL TOOL Progress component & ADVANCE OUR CLUSTERS ▪ Opened 43 greenfield locations in North America in the first half, 31 of which were Specialty 2 SPECIALTY AMPLIFY ▪ 10 bolt-on acquisit
Slide 20: The 'E' in ESG
THE ‘E’ IN ESG 1 GROW GENERAL TOOL & ADVANCE OUR CLUSTERS Innovation ▪ Augmenting or pairing combustion engine Areas of market demand ▪ Data centers products with battery or solar alternatives 2 SPECIALTY AMPLIFY and worksite charging ▪ Distribution and fulfilment ▪ Partnering with existing manufact
Slide 21: Group Fleet Plan
GROUP FLEET PLAN 2020 2021 2022 2021 Actual Actual Current guidance1 Q2 Actual US ($m) - rental fleet 1,452 576 1,400 – 1,600 821 - non-rental fleet 234 102 350 115 1,686 678 1,750 – 1,950 936 Canada (C$m) - rental fleet 116 79 200 – 230 118 - non-rental fleet 12 17 50 18 128 96 250 – 280 136 UK (£m
Slide 22: Capital Allocation
CAPITAL ALLOCATION CONSISTENTLY APPLIED POLICY CONTINUES CLEAR PRIORITIES APPLICATION Organic fleet growth ▪ Same-store ▪ $1.2bn invested in the business ▪ Greenfields ▪ 43 greenfields opened in North America ▪ $428m spent on bolt-ons, with 15 locations added Bolt-on acquisitions ▪ Good pipeline wit
Slide 23: Summary
SUMMARY ▪ Clear momentum, with strong positions in each of our markets ▪ Known and forecast levels of demand coupled with supply constraints indicate strong markets for the years to come ▪ Sunbelt 3.0 initiatives progressing well, with 58 locations added in the period and 3 additional markets cluste
Slide 24: Appendices
APPENDICES 24 Half year results ¦ 31 October 2021
Slide 25: Divisional Performance: Second Quarter Results
DIVISIONAL PERFORMANCE SECOND QUARTER RESULTS Revenue EBITDA Profit 2021 2020 Change1 2021 2020 Change1 2021 2020 Change1 UK (£m) 178 149 19% 53 50 7% 22 12 91% Canada (C$m) 161 130 24% 81 63 27% 46 33 40% US 1,659 1,463 13% 842 753 12% 537 457 17% UK ($m) 245 193 26% 73 64 13% 31 15 102% Canada ($m
Slide 26: Divisional Performance: Last Twelve Months
DIVISIONAL PERFORMANCE LAST TWELVE MONTHS Revenue EBITDA Profit 2021 2020 Change1 2021 2020 Change1 2021 2020 Change1 UK (£m) 731 486 50% 222 149 49% 95 26 259% Canada (C$m) 591 441 34% 274 165 66% 146 47 208% US 5,795 5,349 8% 2,828 2,593 9% 1,632 1,395 17% UK ($m) 1,000 621 61% 304 190 60% 129 34
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 ▪ Strengthens partnership with suppliers through predictability 27 Half year results ¦ 31 October 2021
Slide 28: US Industry Fleet
US INDUSTRY FLEET Industry fleet (OEC) Industry fleet Industry fleet 3% smaller 9% larger year-over-year year-over-year Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Source: Rouse Analytics (May 2021) 2019/20 2020/21 28 Half year results ¦ 31 October 2021
Slide 29: Cash Flow Funds All Fleet Investment
CASH FLOW FUNDS ALL FLEET INVESTMENT LTM ($m) 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Oct-21 EBITDA before exceptional items 3,324 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 46% 46% 47% 47% 47% 47% 46
Slide 30: $3,033m of Availability at 31 October 2021
$3,033M OF AVAILABILITY AT 31 OCTOBER 2021 Book value Borrowing base Senior debt $9,734m (April 21: $8,809m) $1,232m $7,410m Calculation: (April 21: $6,359m) Inventory – 50% of book $961m value Receivables – 85% of net eligible receivables $7,943m Fleet and vehicles – 85% of net appraised market val
Slide 31: 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 Debt $600m senior notes 4.375% August 2027 $600m senior notes 4.000% May 2028 $600m senior notes 4.250% November 2029 $750m senior notes 2.450% August 2
Slide 32: 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 32 Half year results ¦ 31 October 2021
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: Case Study of Partnering in Innovation
CASE STUDY OF PARTNERING IN INNOVATION OUR SCALE, RESOURCE AND INTELLECTUAL CAPITAL IS A CAPABLE AND NECESSARY CONTRIBUTOR ▪ Partnership with Bobcat Company in the production and launch of the world’s first fully electric compact track loader ▪ Extensive collaboration in concept, testing, customer a
Slide 36: US Market Share
US MARKET SHARE 2010 2021 Future 5% 4% 14% 20%+ 3% 3% 6% 11% 45% All others 3% 13% 7% One or two 66% others 20% United Rentals Sunbelt RSC Herc Rentals Top 4-10 Top 11-100 Other Two or three have 50%+ of the market 36 Half year results ¦ 31 October 2021
Slide 37: 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 46 250 18 18 45 227 222 17 219 18 45 42 16 38 38 16 15 15 15 40 200 14 35 35 33 34 171 14 13 35 12 30 30 12 30 150 135 128 10 10 25 100 8 7 20 100 75 6 5