Sunbelt Rentals Holdings, Inc. · NYSE:SUNB
Sunbelt Rentals — Ashtead Group — H1 FY2025 Earnings Presentation
37 slides from Sunbelt Rentals's earnings presentation, Dec 10, 2024
Slide 1: Half Year Results
HALF YEAR RESULTS 10 December 2024
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 these prospective investors in the secondary markets about the Group forward-looking statements are discussed in the Principal Risks and does not constitute an offer of sec
Slide 3: Proposed US Primary Listing
PROPOSED US PRIMARY LISTING We believe the US market is the natural long-term listing venue for the Group. In arriving at this conclusion, the Board has considered several factors and potential benefits, including: alignment of the primary listing location with the majority of the Group’s business
Slide 4: Highlights
HIGHLIGHTS Group rental revenue up 6%, revenue up 2%; US rental revenue up 5%, revenue up 1% 4% increase in EBITDA to $2,698m (2023: $2,583m) with strong fall-through Lower used equipment sales resulted in gains of $35m (2023: $113m) Profit before tax¹ of $1,255m (2023: $1,312m) and EPS¹ of
Slide 5: Financial Review
FINANCIAL REVIEW MICHAEL PRATT 5 Half year results | 31 October 2024
Slide 6: Group
GROUP $m 2024 2023 Change1 Revenue 5,695 5,573 2% ‐ of which rental 5,265 4,960 6% Operating costs (2,997) (2,990) -% EBITDA 2,698 2,583 4% Depreciation (1,156) (1,020) 13% Operating profit 1,542 1,563 -1% Net interest (287) (251) 14% Profit before amortisation and tax 1,255 1,312 -4% Earnings per s
Slide 7: US
US $m 2024 2023 Change Revenue 4,844 4,792 1% ‐ of which rental 4,518 4,299 5% Operating costs (2,442) (2,461) -1% EBITDA 2,402 2,331 3% Depreciation (970) (850) 14% Operating profit 1,432 1,481 -3% Margins ‐ EBITDA 49.6% 48.7% ‐ Operating profit 29.6% 30.9% Return on investment 20.9% 26.1% The resu
Slide 8: Canada
CANADA C$m 2024 2023 Change Revenue 508 446 14% ‐ of which rental 459 382 20% Operating costs (273) (256) 7% EBITDA 235 190 24% Depreciation (124) (110) 13% Operating profit 111 80 38% Margins ‐ EBITDA 46.3% 42.7% ‐ Operating profit 21.9% 18.0% Return on investment 12.0% 14.3% The results in the tab
Slide 9: UK
UK £m 2024 2023 Change Revenue 371 359 3% ‐ of which rental 319 301 6% Operating costs (262) (257) 2% EBITDA 109 102 7% Depreciation (73) (69) 5% Operating profit 36 33 12% Margins ‐ EBITDA 29.5% 28.5% ‐ Operating profit 9.8% 9.1% Return on investment 7.3% 6.5% The results in the table above are the
Slide 10: Cash Flow
CASH FLOW Half year LTM October $m 2024 2023 2024 EBITDA before exceptional items 2,698 2,583 5,007 Cash conversion ratio1 94% 86% 97% Cash inflow from operations2 2,543 2,228 4,857 Replacement and non-rental capital expenditure (1,236) (1,458) (2,585) Rental equipment and other disposal proceeds re
Slide 11: Net Debt
NET DEBT Leverage (excluding impact of IFRS 16) $m 2024 2023 3.0 Opening net debt 10,655 8,960 2.5 2.5 Change from cash flows 111 1,476 2.1 Translation impact 2 (44) 2.0 1.9 2.0 1.9 1.8 1.8 1.8 Debt acquired 19 97 1.8 1.7 1.7 1.6 1.5 New lease liabilities 154 152 1.5 Deferred debt raising cost amort
Slide 12: Robust and Flexible Debt Structure
ROBUST AND FLEXIBLE DEBT STRUCTURE Debt maturity prior to refinancing activities $6,000m Undrawn $5,000m Drawn $4,000m Notes Closed increased $4.75bn ABL facility and extended $3,000m maturity to November 2029 $2,000m $1,000m $m FY25 FY26 Aug 2026 Aug 2027 May 2028 Nov 2029 FY31 Aug 2031 Aug 2032
Slide 13: 2024/25 Outlook
2024/25 OUTLOOK Previous guidance Current guidance Rental revenue1 - US 4 to 7% 2 to 4% - Canada 15 to 19% 15 to 19% - UK 3 to 6% 3 to 6% - Group 5 to 8% 3 to 5% Capital expenditure (gross)2 $3.0 to 3.3bn $2.5 to 2.7bn - of which, rental fleet is: $2.3 to 2.6bn $1.9 to 2.1bn Free cash flow2 c. $1.2b
Slide 14: Operational Review
OPERATIONAL REVIEW BRENDAN HORGAN 14 Half year results | 31 October 2024
Slide 15: US Trading
US TRADING Rental revenue1 FY24 FY25 Growth of +4% in Q2 on top of +13% last year Q1 Q2 Q3 Q4 FY Q1 Q2 YTD General tool +14% +13% +8% +7% +11% +3% +1% +2% General tool growth reflects slower local non-residential construction market offset by ongoing Specialty +17% +14% +8% +15% +14% +17% +14% +
Slide 16: US Construction Outlook
US CONSTRUCTION OUTLOOK 2022 2023 2024 2025 2026 2027 2028 2029 Construction put in place ($bn) Dodge construction starts 400 Indexed: 2000=100 Non-residential 608 744 772 817 844 877 925 978 350 Non-building 314 363 415 477 508 522 526 519 300 Construction (excl. resi) 922 1,107 1,187 1,294 1,352 1
Slide 17: Mega Projects Endure
MEGA PROJECTS ENDURE A KEY FEATURE OF THE CONSTRUCTION LANDSCAPE ONGOING AND PLANNED PROJECTS FROM MAY 2022 THROUGH APRIL 20271 PLANNED MEGA PROJECT VALUE $974bn $509bn 689 projects 414 projects FY22-24 FY25-27 • Mega projects typically take ~3 years to complete • FY25-27 project count and values co
Slide 18: Major Non-Construction End Markets
MAJOR NON-CONSTRUCTION END MARKETS INCREASINGLY LARGE AND RESILIENT WITH VAST OPPORTUNITY FOR GROWTH MAINTENANCE, ENTERTAINMENT EMERGENCY STATE & LOCAL AGRICULTURE REPAIR & SPECIAL EVENTS RESPONSE GOVERNMENT Annual operating budget for crop and & OPERATIONS & RESTORATION livestock production Highly
Slide 19: Canada Trading
CANADA TRADING Fleet on rent (excluding Film & TV) Canada has a strong foundation, with 5 of the top 10 markets clustered (13 in total), to deliver strong margins and returns during Sunbelt 4.0, as the business continues to mature Added five locations through greenfields and a bolt-on Rental r
Slide 20: UK Trading
UK TRADING Rental revenue up 6%, driven by market share gains Sunbelt 4.0 Market conditions remain subdued Diversify the customer base Unique range of general and specialty products in the UK market resulting in significant customer wins across diverse Broaden the total addressable market
Slide 21: Capital Allocation
CAPITAL ALLOCATION CONSISTENTLY APPLIED POLICY CONTINUES CLEAR PRIORITIES APPLICATION Organic fleet growth Same-store $1.7bn invested in the business Greenfields 36 greenfields opened in North America $53m spent on two bolt-on acquisitions, which added 11 locations Bolt-on acquisitions G
Slide 22: Sunbelt 4.0
SUNBELT 4.0 5 ACTIONABLE COMPONENTS UNDERPINNED BY STRONG FOUNDATIONAL ELEMENTS CUSTOMER Progress Actionable component 1 $1.7bn of capital invested in the business of which $1.4bn invested in rental assets GROWTH Opened 36 greenfields in North America $53m spend on two bolt-on acquisitio
Slide 23: Summary
SUMMARY Well positioned in supportive end markets Robust mega project landscape mitigating weaker local commercial construction markets Sunbelt 4.0 initiatives progressing well Proposed US primary listing Demonstrating the benefits of structural progression and our business model: - discip
Slide 24: Appendices
APPENDICIES 24 Half year results | 31 October 2024
Slide 25: Divisional Performance: Second Quarter Results
DIVISIONAL PERFORMANCE SECOND QUARTER RESULTS Revenue EBITDA Profit 2024 2023 Change1 2024 2023 Change1 2024 2023 Change1 Canada (C$m) 260 233 11% 128 97 31% 65 40 61% UK (£m) 185 181 2% 56 52 7% 19 17 11% US 2,509 2,480 1% 1,253 1,227 2% 762 789 -3% Canada ($m) 190 172 11% 93 71 31% 47 29 60% UK ($
Slide 26: Divisional Performance: Last Twelve Months
DIVISIONAL PERFORMANCE LAST TWELVE MONTHS Revenue EBITDA Profit 2024 2023 Change1 2024 2023 Change1 2024 2023 Change1 Canada (C$m) 959 885 8% 408 358 14% 169 156 8% UK (£m) 718 682 5% 206 184 12% 62 50 24% US 9,359 8,945 5% 4,476 4,288 4% 2,584 2,663 -3% Canada ($m) 704 656 7% 299 266 13% 123 116 7%
Slide 27: Group Fleet Plan
GROUP FLEET PLAN 2023 2024 2025 2025 Actual Actual Previous guidance Current guidance1 US ($m) - rental fleet 2,878 3,170 2,000 – 2,300 1,600 – 1,800 - non-rental fleet 436 577 550 450 3,314 3,747 2,550 – 2,850 2,050 – 2,250 Canada (C$m) - rental fleet 254 318 230 – 250 230 – 250 - non-rental fleet
Slide 28: 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 28 Half year results |
Slide 29: Cash Flow Funds All Fleet Investment
CASH FLOW FUNDS ALL FLEET INVESTMENT Oct-24 ($m) 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 LTM EBITDA before exceptionals 5,007 4,893 4,412 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 margi
Slide 30: $2,571m of Availability at 31 October 2024
$2,571M OF AVAILABILITY AT 31 OCTOBER 2024 Book value Borrowing base Senior debt $15,572m (April 24: $14,974m) $1,710m $11,632m Calculation: (April 24: $11,466m) Inventory – 50% of book $1,362m value Receivables – 85% of net eligible receivables $12,708m Fleet and vehicles – lower of 85% of net appr
Slide 31: Debt and Covenants
DEBT AND COVENANTS Facility Interest rate Maturity $4.75bn first lien revolver SOFR / CORRA / SONIA + 125-137.5 bps November 2029 $550m senior notes 1.500% August 2026 $600m senior notes 4.375% August 2027 $600m senior notes 4.000% May 2028 Debt $600m senior notes 4.250% November 2029 $750m senior n
Slide 32: Realisation of Structural Progression
REALISATION OF STRUCTURAL PROGRESSION STRUCTURAL CHANGE OUTPUTS Shift from ownership to rental • Rental has become core rather than top up • Big getting bigger in a growing market Rental increasingly essential for • Larger and more diversified addressable market customer success • Pricing discipline
Slide 33: Benefit of Structural Progression
BENEFIT OF STRUCTURAL PROGRESSION RENTAL RATE DISCIPLINE AND PROGRESSION Major events 2008–09 2014–16 2020–21 2022–23 GREAT FINANCIAL OIL & GAS CRISIS COVID-19 PANDEMIC LAST 6 QUARTERS CRISIS Structural progression • Top 3 rental companies • Industry consolidation and big getting bigger • Top 3 rent
Slide 34: Specialty Market Sizing, Rental Penetration & Share
SPECIALTY MARKET SIZING, RENTAL PENETRATION & SHARE REVENUE IS EXPECTED TO GROW BY ~$2 BILLION IN 4.0 WITH AMPLE OPPORTUNITY BEYOND CURRENT, PROJECTED AND ILLUSTRATIVE RENTAL REVENUE BY BUSINESS LINE ($M) LTM 31 January 2024 Line of business 4.0 growth Incremental illustrative Sunbelt potential tota
Slide 35: Our Pathway to Net Zero
OUR PATHWAY TO NET ZERO SCOPE 1 AND 2 50 34 2050 2024 Increasing use of HVO across 2030> West Coast Only EV purchased MEDIUM & HEAVY DUTY LIGHT DUTY NEARLY ALL ON-ROAD 2022 2026–2027 2035 FLEET IS EMISSION FREE EV trials – ~10% 2nd Near 100% EV 1st gen gen in fleet in fleet LIGHT DUTY LIGHT DUTY LIG
Slide 36: The Rental Industry Landscape
THE RENTAL INDUSTRY LANDSCAPE THE BIG GETTING BIGGER IN A GROWING MARKET NA RENTAL MARKET SIZE1 ($BN) MARKET SHARE BREAKDOWN1,2 94 2023 Future 93.5 11% 77 20%+ 77.0 15% 56.5 42% Two or 57 All three have others 50%+ of the 4% market 4% One 8% or two 8% others 21% 20% 2018 2023 2027 Sunbelt URI Herc T
Slide 37: 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 19 19 20 19 50 46 47 47 47 47 46 450 19 18 45 45 46 45 18 17 18 18 45 42 388 387 16 16 400 15 15 38 38 16 15 40 350 14 35 35 33 34 307 14 13 35 12 30 30 300 12 30 250 227222 10 10 25 219 200