Sunbelt Rentals Holdings, Inc. · NYSE:SUNB
Sunbelt Rentals — Ashtead Group — Q3 2015/16 Earnings Presentation
28 slides from Sunbelt Rentals's earnings presentation, Mar 1, 2016
Slide 1: Responsible investment in growth
Responsible investment in growth Third quarter results | 31 January 2016 Issued: 1 March 2016
Slide 2: Legal notice
Legal notice This presentation has been prepared to inform investors Some of the factors which may adversely impact some of and prospective investors in the secondary markets these forward looking statements are discussed in the about the Group and does not constitute an offer of Principal Risks and
Slide 3: Overview
Overview Another strong quarter demonstrating the relative strength of both our model and execution Tough Q3 comps so the results are particularly encouraging ̶ Group rental revenue1 +14% ̶ Record EBITDA margins 45% ̶ Group RoI 19% We continue to invest responsibly recognising the flexibility
Slide 4: Suzanne Wood, Finance director
Suzanne Wood Finance director Page 3 Third quarter results | 31 January 2016
Slide 5: Q3 Group revenue and profit
Q3 Group revenue and profit Q3 (£m) 2016 2015 Change1 Revenue 612 513 15% - of which rental 547 463 14% Operating costs (335) (288) 12% EBITDA 277 225 18% Depreciation (116) (92) 22% Operating profit 161 133 16% Net interest (22) (19) 7% Profit before amortisation and tax 139 114 17% Earnings per sh
Slide 6: Nine months Group revenue and profit
Nine months Group revenue and profit Nine months (£m) 2016 2015 Change1 Revenue 1,880 1,500 19% - of which rental 1,676 1,359 17% Operating costs (1,011) (819) 17% EBITDA 869 681 21% Depreciation (326) (254) 22% Operating profit 543 427 20% Net interest (61) (48) 19% Profit before amortisation and t
Slide 7: Nine months Sunbelt revenue and profit
Nine months Sunbelt revenue and profit Nine months ($m) 2016 2015 Change Revenue 2,468 2,047 21% - of which rental 2,205 1,862 18% Operating costs (1,278) (1,064) 20% EBITDA 1,190 983 21% Depreciation (419) (336) 25% Operating profit 771 647 19% Margins - EBITDA 48% 48% - Operating profit 31% 32% Pa
Slide 8: Nine months A-Plant revenue and profit
Nine months A-Plant revenue and profit Nine months (£m) 2016 2015 Change Revenue 264 242 9% - of which rental 232 215 8% Operating costs (165) (158) 4% EBITDA 99 84 17% Depreciation (52) (46) 12% Operating profit 47 38 24% Margins - EBITDA 37% 35% - Operating profit 18% 16% Page 7 Third quarter resu
Slide 9: Net debt and leverage
Net debt and leverage Net debt to EBITDA continues to reduce despite the fleet investment Leverage* 3.5 3.3 Jan Jan 2.9 (£m) 2016 2015 3.0 2.8 2.6 2.6 Net debt at 30 April 1,687 1,149 2.5 2.2 2.0 Translation impact 146 169 2.0 1.9 2.0 Opening debt at closing exchange rates 1,833 1,318 Target range 1
Slide 10: Geoff Drabble, Chief executive
Geoff Drabble Chief executive Page 9 Third quarter results | 31 January 2016
Slide 11: Capitalising on structural and cyclical factors to drive revenue growth
Capitalising on structural and cyclical factors to drive revenue growth Nine months ended 31 January 2016 Quarter ended 31 January 2016 BOLT-ONS TOTAL RENTAL BOLT-ONS TOTAL RENTAL SAME STORE SAME STORE AND ONLY REVENUE AND ONLY REVENUE GROWTH +12% + GREENFIELDS = GROWTH GROWTH +10% + GREENFIELDS = G
Slide 12: Sunbelt revenue drivers – rental only
Sunbelt revenue drivers – rental only Continuation of strong performance Average fleet on rent Physical utilisation 80% +23% +22% +16% 70% 60% 50% 2013-14 40% 2014-15 2015-16 30% Q1 Q2 Q3 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Volume growth of $594m (2015: $545m) Fleet size and growth +22
Slide 13: Good progress across the business
Good progress across the business Driven by same-store growth H1 Same-stores* Greenfields* Bolt-ons* Oil & Gas Total Proportion of revenue 89% 4% 5% 2% 100% Fleet on rent - % change +14% +704% +295% +5% +22% Net yield +1% +24% +21% -38% 0% Physical utilisation - actual 75% 66% 67% 52% 74% Dollar uti
Slide 14: The market
The market The majority of our markets are very strong with good long-term prospects 200 Construction activity by cycle (T=100 based on constant dollars) Rental revenue forecasts 2016 2017 2018 180 160 Industry rental revenue +7% +6% +6% 140 Source: IHS Global Insight (February 2016) 120 100 1975 -
Slide 15: A-Plant revenue drivers
A-Plant revenue drivers Growth continues backed by fleet investment Average fleet on rent 80% Physical utilisation +10% +7% +11% 70% 60% 50% 2013-14 40% 2014-15 2015-16 30% Q1 Q2 Q3 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Year over year change in yield Fleet size and growth +15% +25% +21% +4
Slide 16: A-Plant continues to gain market share profitably
A-Plant continues to gain market share profitably Margins and returns continue to improve EBITDA Operating profit RoI £m % £m % 150 40 100 25 15% 36% 13% 13% 34% 125 124 29% 20 12% 109 28% 30 75 26% 16% 9% 100 14% 9% 55 15 79 75 20 50 46 57 9% 10 6% 5% 49 50 6% 25 3% 10 25 4% 5 3% 25 12 7 0 0 0 0 0%
Slide 17: Group capital expenditure across the cycle
Group capital expenditure across the cycle (£m) 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Rental fleet spend - replacement 303 231 263 229 202 55 207 169 182 137 93 64 - growth 676 426 258 197 - - - 126 74 65 27 - 979 657 521 426 202 55 207 295 256 202 120 64 Non-rental fleet 84 84
Slide 18: Strong fleet growth planned for 2016/17
Strong fleet growth planned for 2016/17 Reasonable caution around Q4 pull-forward until markets become clearer and hence the range Q3 2016 2017 Anticipated volume 2014 2015 forecast outlook growth (%) Sunbelt ($m) rental fleet - replacement 308 395 540 175 - 250 - growth 655 873 860 600 - 900 Double
Slide 19: Summary
Summary Strategy focused on organic growth and bolt-on acquisitions remains unchanged Investment has created a platform allowing us to capitalize on; ̶ Recovering markets ̶ Structural growth Anticipate multiple years of mid-cycle opportunity generating further earnings growth and strong cash g
Slide 20: Appendices
Appendices Page 19 Third quarter results | 31 January 2016
Slide 21: Divisional performance – Q3
Divisional performance – Q3 Revenue EBITDA Profit 2016 2015 Change1 2016 2015 Change1 2016 2015 Change1 Sunbelt ($m) 783 680 +15% 371 317 +17% 223 198 +13% Sunbelt (£m) 526 436 +21% 249 204 +23% 151 128 +18% A-Plant 86 77 +11% 30 24 +24% 12 8 +47% Group central costs - - - (2) (3) -18% (2) (3) -17%
Slide 22: Divisional performance – LTM
Divisional performance – LTM Revenue EBITDA Profit 2016 2015 Change1 2016 2015 Change1 2016 2015 Change1 Sunbelt ($m) 3,163 2,578 +23% 1,500 1,216 +23% 957 784 +22% Sunbelt (£m) 2,073 1,576 +32% 985 743 +32% 628 479 +31% A-Plant 345 309 +11% 124 102 +22% 56 42 +34% Group central costs - - - (12) (11
Slide 23: Margins continue to improve
Margins continue to improve US margins have exceeded the previous peak with substantial opportunity for future earnings growth and margin expansion $m Revenue $m EBITDA % Sunbelt 3,500 47 47 50 3,163 45 41 1,500 1,500 3,000 2,742 38 36 37 36 1,293 40 34 35 32 1,250 2,500 31 31 32 2,189 28 988 30 1,8
Slide 24: Robust debt structure with substantial capacity to fund further growth
Robust debt structure with substantial capacity to fund further growth £2,000m £1,750m £1,500m ● 6 year average remaining commitment £1,250m ● No amortisation £1,000m ● No financial monitoring covenants £750m ̶ whilst availability exceeds $260m (January 2016 : $984m) £500m £250m £m 2016 2018 Jul Jul
Slide 25: Cash flow across the cycle
Cash flow across the cycle Jan (£m) LTM 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 EBITDA before exceptional items 1,097 908 685 519 381 284 255 359 380 310 225 170 147 150 EBITDA margin 45% 45% 42% 38% 34% 30% 30% 33% 38% 35% 35% 32% 29% 28% Cash inflow from operations before
Slide 26: Cyclical cash generation
Cyclical cash generation Cash positive once growth moderates – highly generative during downturn High growth Moderate to flat growth Declining market 2011 2012 2013 2014 2015 Ongoing Moderate / flat growth Cyclical downturn Cash flow from Decreasing but remains 280 365 501 646 841 Growing Growing op
Slide 27: $984m of availability at 31 January 2016
$984m of availability at 31 January 2016 Book value Borrowing base Senior debt £3,994m (April 15 : £3,213m) Calculation Other PPE £104m Inventory £37m 50% of book value Receivables £458m 85% of net eligible receivables £3,059m (April 15 : £2,434m) £291m Availability of 85% of net appraised £694m ($9
Slide 28: Debt and covenants
Debt and covenants Facility Interest rate Maturity $2.6bn first lien revolver LIBOR +125-175bp 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 Ba2 Second lien BB Ba3 Availability ■ Co