Sunbelt Rentals Holdings, Inc. · NYSE:SUNB
Sunbelt Rentals — Ashtead Group — Q1 2017/18 Earnings Presentation
32 slides from Sunbelt Rentals's earnings presentation, Sep 12, 2017
Slide 1: Making it happen
Making it happen 12 September 2017
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 Uncertai
Slide 3: Highlights
HIGHLIGHTS A strong quarter with market leading growth in revenue and profitability A wide range of metrics continue to show improvement in an encouraging market environment Good progress in our medium-term strategic objectives with a range of key acquisitions and greenfields Strategic initi
Slide 4: Suzanne Wood
Suzanne Wood 4 First quarter results ¦ 31 July 2017
Slide 5: Q1 Group Revenue and Profit
Q1 GROUP REVENUE AND PROFIT Q1 (£m) 2017 2016 Change1 Revenue 880 707 16% - of which rental 829 661 17% Operating costs (449) (367) 15% EBITDA 431 340 18% Depreciation (165) (133) 15% Operating profit 266 207 20% Net interest (28) (23) 13% Profit before amortisation and tax 238 184 21% Earnings per
Slide 6: Q1 Sunbelt Revenue and Profit
Q1 SUNBELT REVENUE AND PROFIT Q1 ($m) 2017 2016 Change Revenue 983 853 15% - of which rental 932 800 16% Operating costs (480) (424) 13% EBITDA 503 429 17% Depreciation (183) (160) 15% Operating profit 320 269 19% Margins - EBITDA 51% 50% - Operating profit 33% 32% 6 First quarter results ¦ 31 July
Slide 7: Q1 A-Plant Revenue and Profit
Q1 A-PLANT REVENUE AND PROFIT Q1 (£m) 2017 2016 Change Revenue 119 96 23% - of which rental 107 88 22% Operating costs (74) (60) 24% EBITDA 45 36 23% Depreciation (23) (18) 18% Operating profit 22 18 28% Margins - EBITDA 38% 38% - Operating profit 19% 18% 7 First quarter results ¦ 31 July 2017
Slide 8: Cash Flow
CASH FLOW (£m) LTM July LTM July Change3 2017 2016 EBITDA before exceptional items 1,595 1,235 14% Cash conversion ratio1 95% 94% Cash inflow from operations2 1,521 1,160 15% Replacement and non-rental capital expenditure (513) (572) Rental equipment and other disposal proceeds received 173 180 Inte
Slide 9: Net Debt and Leverage
NET DEBT AND LEVERAGE NET DEBT TO EBITDA IN THE MIDDLE OF OUR RANGE July Leverage (£m) 2017 2016 3.5 3.2 Net debt at 30 April 2,528 2,002 3.0 2.9 3.0 Translation impact (40) 197 2.4 2.5 Opening debt at closing exchange rates 2,488 2,199 2.1 1.9 1.9 Target range 2.0 1.7 Change from cash flows 79 140
Slide 10: Robust and Flexible Debt Structure
ROBUST AND FLEXIBLE DEBT STRUCTURE Debt maturity prior to refinancing activities £2,500m £2,000m Extended maturity of $3.1bn ABL facility to July 2022 £1,500m £1,000m In August, refinanced $900m 6.5% notes due 2022 £500m Undrawn Drawn – $600m 4.125% notes due 2025 £m 2017 2018 2019 Oct 2021 Jul
Slide 11: Geoff Drabble
Geoff Drabble 11 First quarter results ¦ 31 July 2017
Slide 12: Good Sunbelt Revenue Growth
GOOD SUNBELT REVENUE GROWTH AT UPPER END OF ORIGINAL PLANS 2017/18 plan 3 months to July 2017 Same-store1 organic growth 4 – 6% 6% Greenfields 3 – 4% 4% Organic growth 7 – 10% 10% Bolt-ons 2 – 3% 5% 2017/18 growth outlook 9 – 13% 15% Presented on a billing day basis 1 Same-stores include those locat
Slide 13: Strong Revenue Growth and Improving Margins
STRONG REVENUE GROWTH AND IMPROVING MARGINS ENCOURAGING TRENDS ON RATE, PHYSICAL UTILISATION AND MARGINS Improving rate trend Mix impact still a factor year on year 1.100 Q1-2018 Q1-2017 1.050 Day 10% 10% Rate index 1.000 Week 20% 21% 0.950 0.900 Month 70% 69% Nov-16 Jun-16 Jun-17 Dec-16 Jul-16 Oct-
Slide 14: Good Contribution from Greenfields and Bolt Ons
GOOD CONTRIBUTION FROM GREENFIELDS AND BOLT ONS BUT SAME-STORE PERFORMANCE REMAINS STRONG AND THE KEY DRIVER Q1 Same-stores1,2 Greenfields3 Bolt-ons Total3 Proportion of revenue 92% 4% 4% 100% Fleet on rent – % change +10% nm nm +19% Net yield -3% nm nm -3% Physical utilisation – actual 73% 64% 72%
Slide 15: Good Progress on 2021 Plan
GOOD PROGRESS ON 2021 PLAN ACQUISITIONS AND GREENFIELDS Consideration Q4-2016/17 Arsenal $39m Pride $277m Van’s Equipment $25m Q1-2017/18 Noble $34m RGR $58m MSP $23m Green Acres $5m Q2-2017/18 CRS C$287m 15 greenfield locations added in addition to the 5 bolt-on locations in the quarter Of the
Slide 16: Rental Revenue
RENTAL REVENUE GROWTH FROM MATURE STORES, GREENFIELDS AND ACQUISITIONS FROM FY11 Source of total rental Total rental revenue1 (2011-2017) revenue growth 100% 90% 16% 80% 70% 24% 60% 50% 40% 30% 60% 20% 10% 0% FY11-17 Presented excluding Canada Bolt-ons Greenfields 1 Total rental revenue presented at
Slide 17: Greenfields and Acquisitions Have a Good Track Record of Improvement
GREENFIELDS AND ACQUISITIONS HAVE A GOOD TRACK RECORD OF IMPROVEMENT Return on Investment1,2 EBITA margin1 40% 50% 40% 30% 30% 20% 20% 10% 10% 0% 0% Sunbelt US Mature stores 2012 additions 2013 additions 2014 additions 2015 additions 2016 additions Sunbelt US Mature stores 2012 additions 2013 additi
Slide 18: Greenfields and Acquisitions Also Have a Halo Effect
GREENFIELDS AND ACQUISITIONS ALSO HAVE A “HALO EFFECT” ON OTHER LOCATIONS IN A DISTRICT AS WE BUILD OUT CLUSTERS 30% Total rental revenue1 CAGR (2011-2017) 25% 20% A Districts where no greenfield or bolt-on additions have been made B Districts where only greenfield additions have been made 15% C Dis
Slide 19: Market Outlook – Encouraging Medium Term Forecasts
MARKET OUTLOOK – ENCOURAGING MEDIUM TERM FORECASTS DODGE MOMENTUM INDEX VOLATILE AS ALWAYS BUT 7% HIGHER THAN LAST YEAR Dodge Starts vs. Census Spending Put in Place Indexed: 2000=100 Rental revenue forecasts 220 200 180 2017 2018 2019 2020 2021 160 Industry rental 140 +4% +5% +6% +4% +4% revenue 12
Slide 20: Sunbelt Canada
SUNBELT CANADA Total market size ($bn) US UK Canada Market size 49.3 7.5 5.1 Source: IHS Markit / ARA (July 2017) and IHS Markit / European Rental Association (2016) Existing western Canada locations New locations acquired with CRS Canada excluding CRS (C$m) OEC Locations (C$m) Q1-2018 Q1-2017 % gro
Slide 21: A-Plant Revenue Drivers
A-PLANT REVENUE DRIVERS GROWTH CONTINUES BACKED BY FLEET INVESTMENT Average fleet on rent Physical utilisation +24% 80% 70% 60% 50% 40% 2016-17 2017-18 30% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Q1 Year over year change in yield Margin improvement Q1-2018 Q1-2017 EBITDA 38% 38% EBITA 19
Slide 22: Summary
SUMMARY An encouraging start to the year: – Strong volume growth – Improving rate environment – Improving margins – Strong cash generation Encouraging markets also support our medium-term plans Continued progress on our 2021 plans with a number of strategic acquisitions and greenfields A suc
Slide 23: Appendices
Appendices 23 First quarter results ¦ 31 July 2017
Slide 24: Divisional Performance – Q1
DIVISIONAL PERFORMANCE – Q1 Revenue EBITDA Profit 2017 2016 Change1 2017 2016 Change1 2017 2016 Change1 Sunbelt ($m) 983 853 15% 503 429 17% 320 269 19% Sunbelt (£m) 761 611 25% 390 307 27% 248 192 29% A-Plant 119 96 23% 45 36 23% 22 18 28% Group central costs - - - (4) (3) 4% (4) (3) 4% 880 707 24%
Slide 25: Divisional Performance – LTM
DIVISIONAL PERFORMANCE – LTM Revenue EBITDA Profit 2017 2016 Change1 2017 2016 Change1 2017 2016 Change1 Sunbelt ($m) 3,713 3,309 12% 1,843 1,622 14% 1,139 1,024 11% Sunbelt (£m) 2,919 2,263 29% 1,449 1,110 31% 896 701 28% A-Plant 441 371 19% 161 139 16% 76 68 13% Group central costs - - - (15) (14)
Slide 26: Sunbelt – US Revenue Drivers
SUNBELT – US REVENUE DRIVERS Q1 General Tool Specialty Total % of business 80% 20% 100% Rental revenue growth +15% +13% +15% Fleet on rent +20% +15% +19% Yield -4% -1% -3% Year-on-year physical utilisation +1% +6% +1% Presented on a billing day basis, excluding Canada 26 First quarter results ¦ 31 J
Slide 27: Sunbelt Physical Utilisation
SUNBELT 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 2016/17 2017/18 2016/17 2017/18 27 First quarter results ¦ 31 July 2017
Slide 28: Group Fleet Plan for 2017/18
GROUP FLEET PLAN FOR 2017/18 2018 2017 Q1 2018 Outlook1 Sunbelt ($m) - rental fleet - replacement 403 300 – 350 56 - growth 657 600 – 850 324 - non-rental fleet 111 100 35 1,171 1,000 – 1,300 415 A-Plant (£m) - rental fleet - replacement 74 50 – 60 9 - growth 90 40 – 50 44 - non-rental fleet 16 15 9
Slide 29: 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 July (£m) 2017 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 EBITDA before exceptional items 1,595 1,504 1,178 908 685 519 381 284 255 356 364 310 225 170
Slide 30: $1,198m of Availability at 31 July 2017
$1,198M OF AVAILABILITY AT 31 JULY 2017 Book value Borrowing base Senior debt £5,348m (April 17 : £5,133m) Calculation: £606m Inventory – 50% of book value £3,894m Receivables – 85% of (April 17 : £3,726m) net eligible receivables £419m Fleet and vehicles – 85% of net appraised market value of eligi
Slide 31: Debt and Covenants
DEBT AND COVENANTS Facility Interest rate Maturity $3.1bn first lien revolver LIBOR + 125-175 bps July 2022 $500m second lien notes 5.625% October 2024 Debt $600m second lien notes 4.125% August 2025 $600m second lien notes 4.375% August 2027 Capital leases ~7% Various S&P Moody’s Ratings Corporate
Slide 32: Cyclical Cash Generation
CYCLICAL CASH GENERATION CASH POSITIVE AS GROWTH MODERATES – HIGHLY GENERATIVE DURING DOWNTURN High growth Moderate to flat growth Declining market 2011 2012 2013 2014 2015 2016 2017 Moderate growth Cyclical downturn Cash flow from 280 365 501 646 841 1,071 1,444 Growing Decreasing but remains posit