Sunbelt Rentals Holdings, Inc. · NYSE:SUNB
Sunbelt Rentals — Ashtead Group — Q3 2020/21 Earnings Presentation
36 slides from Sunbelt Rentals's earnings presentation, Mar 2, 2021
Slide 1: Powering the platform
Powering the platform 2 March 2021
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 Continue to deliver for all our stakeholders: our people; our customers; our investors; and our communities A market leading performance demonstrating the benefits of the successful execution of our long-term strategy Encouraging sequential momentum in general tool and ongoing growt
Slide 4: 2020/21 Outlook
2020/21 OUTLOOK Previous guidance1 Current guidance1 Rental revenue1 • US -4% to -7% c. -4% • Canada +15% to +20% +15% to +20% • UK +15% to +20% +15% to +20% • Group -3% to -7% c. -4% Capital expenditure (gross)2 £650m – £700m c. £700m Free cash flow2 Greater than £1.2 billion c. £1.2 billion 1 Repr
Slide 5: Michael Pratt
Michael Pratt 5 Nine month results ¦ 31 January 2021 US Navy Amphibious Ship, San Diego
Slide 6: Group
GROUP Nine months (£m) 2021 2020 Change1 Revenue 3,760 3,928 -2% - of which rental 3,375 3,568 -3% Operating costs (2,010) (2,017) 2% EBITDA 1,750 1,911 -6% Depreciation (832) (797) 6% Operating profit 918 1,114 -16% Net interest (155) (167) -5% Profit before amortisation and tax 763 947 -18% Earnin
Slide 7: US nine months
US Nine months ($m) 2021 2020 Change Revenue 4,034 4,280 -6% - of which rental 3,703 3,920 -6% Operating costs (2,043) (2,091) -2% EBITDA 1,991 2,189 -9% Depreciation (886) (850) 4% Operating profit 1,105 1,339 -17% Margins - EBITDA 49% 51% - Operating profit 27% 31% Return on investment 18% 23% The
Slide 8: Canada
CANADA Nine months 2021 2020 Change (C$m) Legacy WFW As reported Revenue 277 80 357 321 11% - of which rental 236 74 310 273 13% Operating costs (156) (47) (203) (190) 7% EBITDA 121 33 154 131 17% Depreciation (69) (21) (90) (73) 22% Operating profit 52 12 64 58 11% Margins - EBITDA 44% 41% 43% 41%
Slide 9: UK nine months
UK Nine months (£m) 2021 2020 Change Revenue 444 365 22% - of which rental 341 316 8% Operating costs (308) (244) 27% EBITDA 136 121 12% Depreciation (97) (83) 16% Operating profit 39 38 3% Margins - EBITDA 31% 33% - Operating profit 9% 10% Return on investment 6% 7% The results in the table above a
Slide 10: Cash Flow
CASH FLOW Nine months LTM January (£m) 2021 2020 2021 EBITDA before exceptional items 1,750 1,911 2,214 Cash conversion ratio1 99% 96% 106% Cash inflow from operations2 1,736 1,829 2,338 Replacement and non-rental capital expenditure (516) (676) (698) Rental equipment and other disposal proceeds rec
Slide 11: Net Debt and Leverage
NET DEBT AND LEVERAGE (£m) 2021 2020 Net debt at 30 April 5,363 3,745 Leverage (excluding impact of IFRS 16) Impact of transition to IFRS 16 - 883 3.0 Opening debt including IFRS 16 5,363 4,628 2.6 Translation impact (324) (64) 2.5 Opening debt at closing exchange rates 5,039 4,564 2.2 2.0 Change fr
Slide 12: Brendan Horgan
Brendan Horgan 12 Nine month results ¦ 31 January 2021 E-commerce distribution centre
Slide 13: US Current Trading
US CURRENT TRADING Rental revenue Sunbelt US: fleet on rent Nine Q1 Q2 Q3 months General tool -9% -7% -4% -7% Specialty +6% +18% +6% +10% Oil and gas -62% -53% -40% -51% Total -8% -3% -3% -5% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Rental only revenue presented on a billing day basis 201
Slide 14: US Construction Market Outlook
US CONSTRUCTION MARKET OUTLOOK Dodge construction starts Indexed: 2000=100 Construction starts / put in place forecasts largely 210 190 consistent with prior guidance; 2020 supported by 170 better than expected residential 150 130 110 90 70 Non-residential put in place forecast to decline 7% 50
Slide 15: Disciplined Industry Supply Management
DISCIPLINED INDUSTRY SUPPLY MANAGEMENT Industry fleet (OEC) Clear indication of industry discipline managing supply Industry fleet 5% smaller Industry fleet year-over-year 9% larger year-over-year Contributing to ongoing resilience in rental rates Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Slide 16: Canada Current Trading
CANADA CURRENT TRADING Continued market outperformance Fleet on rent (excluding William F. White) Recent activity levels affected by latest Ontario lockdown Growth in our specialty businesses Lighting, grip and studio experiencing increase in demand Runway for growth remains strong through
Slide 17: UK Current Trading
UK CURRENT TRADING Strong revenue recovery with rental revenue at prior year Fleet on rent levels excluding DoH activity Significant market outperformance driven by: – Project Unify deliverables – COVID-19 response efforts – Share gains in construction rental space Important long-term customer
Slide 18: Initial Group Fleet Plan for 2021/22
INITIAL GROUP FLEET PLAN FOR 2021/22 2021 2021 2022 2020 Nine months Full year Full year Actual Revised plan1 Initial guidance2 US ($m) - rental fleet 1,452 425 525 – 575 1,100 – 1,300 - non-rental fleet 234 69 95 300 1,686 494 620 – 670 1,400 – 1,600 Canada (C$m) - rental fleet 116 57 70 – 75 230 –
Slide 19: Capital Allocation
CAPITAL ALLOCATION 1. Organic growth Fleet investment supporting growth opportunities and COVID-19 response Greenfield openings resumed in the first quarter with 17 in North America year-to-date 25-30 greenfields planned in North America for 2020/21 Full-year capital expenditure expected to
Slide 20: Summary
SUMMARY A market leading performance delivering for all our stakeholders Strength of the model and breadth of markets demonstrated with growth in specialty and resiliency in general tool Sunbelt UK’s Project Unify progressing as planned, setting course for an improved, sustainable business W
Slide 21: Appendices
Appendices 21 Nine month results ¦ 31 January 2021 Pine cone harvesting, Georgia
Slide 22: Divisional Performance – Q3
DIVISIONAL PERFORMANCE – Q3 Revenue EBITDA Profit 2021 2020 Change1 2021 2020 Change1 2021 2020 Change1 US ($m) 1,287 1,392 -8% 618 687 -10% 324 392 -17% Canada (C$m) 136 120 13% 61 46 32% 31 17 79% US (£m) 955 1,067 -10% 458 526 -13% 239 299 -20% UK 172 109 57% 50 35 40% 19 8 142% Canada (£m) 79 71
Slide 23: Divisional Performance – LTM
DIVISIONAL PERFORMANCE – LTM Revenue EBITDA Profit 2021 2020 Change1 2021 2020 Change1 2021 2020 Change1 US ($m) 5,244 5,510 -5% 2,523 2,766 -9% 1,326 1,674 -21% Canada (C$m) 456 408 12% 180 160 13% 61 65 -7% US (£m) 4,072 4,313 -6% 1,959 2,166 -10% 1,029 1,311 -22% UK 548 480 14% 163 158 3% 37 45 -
Slide 24: US Fleet Profile
US FLEET PROFILE Sunbelt US rental fleet 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 24 Nine month
Slide 25: Robust and Flexible Debt Structure
ROBUST AND FLEXIBLE DEBT STRUCTURE Debt maturity £4,000m £3,000m Facilities committed for average of 5 years at a weighted average cost of less than 4% £2,000m Fixed / floating external borrowings ratio: 68% / 32% £1,000m No financial monitoring covenants whilst availability exceeds £m $460m (
Slide 26: Cash Flow Funds All Fleet Investment
CASH FLOW FUNDS ALL FLEET INVESTMENT LTM (£m) Jan-21 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 EBITDA before exceptional items 2,214 2,376 2,107 1,733 1,504 1,178 908 685 519 381 284 255 356 364 310 225 170 EBITDA margin 45% 47% 47% 47% 47% 46% 45% 42% 38% 34% 3
Slide 27: $3,342m of Availability at January 2021
$3,342M OF AVAILABILITY AT 31 JANUARY 2021 Book value Borrowing base Senior debt £6,475m (April 20: £7,360m) £665m £4,698 m Calculation: (April 20: £5,532m) Inventory – 50% of book £544m value Receivables – 85% of net eligible receivables £5,453m Fleet and vehicles – 85% of net appraised market Avai
Slide 28: Debt and Covenants
DEBT AND COVENANTS Facility Interest rate Maturity $4.6bn first lien revolver* LIBOR + 125-175 bps December 2023 $600m senior notes 4.125% August 2025 Debt $600m senior notes 5.250% August 2026 $600m senior notes 4.375% August 2027 $600m senior notes 4.000% May 2028 $600m senior notes 4.250% Novembe
Slide 29: Increased Footprint and Market Share
INCREASED FOOTPRINT AND MARKET SHARE April 2012 April 2020 0% 10% 15% April 2012 Location growth May 2012 to April 2020 Source: IHS Markit / ARA: State of the Equipment Rental Industry, April 2020 and management estimates 29 Nine month results ¦ 31 January 2021
Slide 30: Diverse Specialty Markets | Power & HVAC
DIVERSE SPECIALTY MARKETS AND APPLICATIONS | POWER & HVAC /// Markets Utility power Telecom Hospitals Zoos and wildlife venues Hotels & resorts Farms and livestock Community events Forestry Data centres Wind farms Concerts & festivals Communications Schools & universities Motion pictures & film Faci
Slide 31: Diverse Specialty Markets | Scaffold
DIVERSE SPECIALTY MARKETS AND APPLICATIONS | SCAFFOLD /// Markets Disaster recovery – tornado Shipyards Hospitals Zoos and wildlife venues Hotels & resorts Farms and livestock Community events Forestry Data centres Wind farms Concerts & festivals Communications Schools & universities Motion pictures
Slide 32: Diverse Specialty Markets | Flooring
DIVERSE SPECIALTY MARKETS AND APPLICATIONS | FLOORING /// Markets Retail Janitorial Hospitals Zoos and wildlife venues Hotels & resorts Farms and livestock Community events Forestry Data centres Wind farms Concerts & festivals Communications Schools & universities Motion pictures & film Facilities m
Slide 33: Diverse Specialty Markets | Climate Control
DIVERSE SPECIALTY MARKETS AND APPLICATIONS | CLIMATE CONTROL /// Markets Hospitals Schools & universities /// Hospitals Zoos and wildlife venues Hotels & resorts Farms and livestock Community events Forestry Data centres Wind farms Concerts & festivals Communications /// Schools & Motion pictures &
Slide 34: Continuing Opportunity to Build Out Further Clusters
CONTINUING OPPORTUNITY TO BUILD OUT FURTHER CLUSTERS USA Canada Rental markets Top 25 26-50 51-100 100-210 Top 10 11-25 26-76 Rental market % 59% 18% 15% 8% 65% 21% 14% Cluster definition >15 >10 >4 >1 >10 >4 >1 Clusters 13 markets 8 markets 9 markets 14 markets 2 markets 0 2 markets Only 30 of th
Slide 35: US Market Share
US MARKET SHARE 2010 2020 5% 4% 14% 3% 3% 6% 10% 47% 3% 13% 7% 66% 19% Expect the large to get larger with the top 100 sharing 60-70% of the market 35 Nine month results ¦ 31 January 2021
Slide 36: Through the Cycle Key Metrics
IMPORTANT TO NOT LOSE SIGHT OF THROUGH THE CYCLE KEY METRICS Group RoI Group EBITDA margin Group underlying EPS % % p 19 19 20 19 50 46 47 47 47 47 200 18 18 45 18 17 45 42 180 174 175 16 15 15 38 38 16 40 160 14 35 35 33 34 14 13 35 140 128 12 30 30 12 30 120 104 10 10 25 100 85 8 7 20 80 63 6 5 15