Sunbelt Rentals Holdings, Inc. · NYSE:SUNB

Sunbelt Rentals — Ashtead Group — H1 2021 Earnings Presentation

42 slides from Sunbelt Rentals's earnings presentation, Dec 8, 2020

  1. Slide 1: Powering the platform

    Powering the platform 8 December 2020

  2. 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

  3. 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 strength of our model through resilience in general tool and growth within specialty  Record first half free cash flow of £822m (

  4. Slide 4: 2020/21 Outlook

    2020/21 OUTLOOK Previous guidance1 Current guidance1 Rental revenue1 • US -5% to -9% -4% to -7% • Canada Broadly flat +15% to +20% • UK Broadly flat +15% to +20% • Group -5% to -9% -3% to -7% Capital expenditure (gross)2 £485m – £540m £650m – £700m Free cash flow2 Greater than £1.0 billion Greater t

  5. Slide 5: Michael Pratt

    Michael Pratt 5 Half-year results ¦ 31 October 2020 US Navy Amphibious Ship, San Diego

  6. Slide 6: Group

    GROUP Half-year (£m) 2020 2019 Change1 Revenue 2,554 2,681 -3% - of which rental 2,297 2,447 -4% Operating costs (1,343) (1,354) 1% EBITDA 1,211 1,327 -7% Depreciation (565) (526) 9% Operating profit 646 801 -18% Net interest (108) (111) -2% Profit before amortisation and tax 538 690 -21% Earnings p

  7. Slide 7: US half-year results

    US Half-year ($m) 2020 2019 Change Revenue 2,747 2,887 -5% - of which rental 2,515 2,667 -6% Operating costs (1,373) (1,385) -1% EBITDA 1,374 1,502 -9% Depreciation (592) (555) 7% Operating profit 782 947 -17% Margins - EBITDA 50% 52% - Operating profit 28% 33% Return on investment 18% 23% The resul

  8. Slide 8: Canada

    CANADA Half-year 2020 2019 Change (C$m) Legacy WFW As reported Revenue 181 39 220 200 10% - of which rental 153 35 188 167 13% Operating costs (100) (27) (127) (115) 10% EBITDA 81 12 93 85 9% Depreciation (46) (14) (60) (45) 34% Operating profit 35 (2) 33 40 -18% Margins - EBITDA 45% 30% 42% 42% - O

  9. Slide 9: UK

    UK Half-year (£m) 2020 2019 Change Revenue 273 256 7% - of which rental 216 218 -1% Operating costs (187) (170) 10% EBITDA 86 86 -% Depreciation (66) (56) 18% Operating profit 20 30 -33% Margins - EBITDA 32% 34% - Operating profit 7% 12% Return on investment 4% 7% The results in the table above are

  10. Slide 10: Cash Flow

    CASH FLOW Half-year LTM October (£m) 2020 2019 2020 EBITDA before exceptional items 1,211 1,327 2,260 Cash conversion ratio1 98% 93% 106% Cash inflow from operations2 1,186 1,228 2,388 Replacement and non-rental capital expenditure (277) (412) (723) Rental equipment and other disposal proceeds recei

  11. Slide 11: Net Debt and Leverage

    NET DEBT AND LEVERAGE (£m) 2020 2019 Leverage (excluding impact of IFRS 16) Net debt at 30 April 5,363 3,745 Impact of transition to IFRS 16 - 883 3.0 Opening debt including IFRS 16 5,363 4,628 2.5 Translation impact (88) 30 2.5 Opening debt at closing exchange rates 5,275 4,658 2.1 2.0 2.0 1.9 1.9

  12. Slide 12: Brendan Horgan

    Brendan Horgan 12 Half-year results ¦ 31 October 2020 E-commerce distribution centre

  13. Slide 13: US: Current Trading

    US: CURRENT TRADING Rental revenue Sunbelt US: fleet on rent Feb Mar Apr Q1 Q2 H1 Nov General tool +8% +1% -15% -9% -7% -8% -6% Specialty +10% +10% +9% +6% +18% +12% +9% Oil and gas -14% -19% -39% -62% -53% -58% -47% Total +6% +2% -12% -8% -3% -6% -4% Rental only revenue presented on a billing day b

  14. Slide 14: US: Current Trading – Specialty

    US: CURRENT TRADING – SPECIALTY Rental revenue growth1  Specialty business demonstrates growth and resilience Q1 Q2 H1 during unprecedented times Power and HVAC +4% +26% +16% Climate control +18% +25% +22%  Early stages of structural change; long runway Scaffold -11% -12% -11% for growth Flooring

  15. Slide 15: Beyond Construction – Opportunity in Broad End Markets

    BEYOND CONSTRUCTION – OPPORTUNITY IN BROAD END MARKETS Maintenance, repair and Entertainment Emergency response operation of markets US market $340bn $107bn $40bn Facility maintenance* Entertainment market** Emergency response market*** • Ever present need for • Live events and festivals slow; • Hur

  16. Slide 16: Diverse Specialty Markets and Applications | 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

  17. Slide 17: Diverse Specialty Markets and Applications | 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

  18. Slide 18: US Construction Market Outlook

    US CONSTRUCTION MARKET OUTLOOK Dodge construction starts Indexed: 2000=100  Construction starts / put in place largely consistent with 210 prior guidance 190 170 150 130 110  Non-residential put in place forecast to decline 6% in 2021; 90 returning to growth in 2022 70 50 2005 2007 2009 2011 2013

  19. Slide 19: 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 2020 2019 in

  20. Slide 20: Canada – Current Trading

    CANADA – CURRENT TRADING  Performance rebound demonstrates resilience of the Fleet on rent business model  Continued market outperformance  Growth in our specialty businesses  Runway for growth remains strong throughout the markets Feb Mar Apr May Jun Jul Aug Sep Oct Nov  Advancing the Power of

  21. Slide 21: Case Study: Vancouver, British Columbia

    CASE STUDY: VANCOUVER, BRITISH COLUMBIA Advancing the Power of Sunbelt Locations General tool & equipment 7 Power & HVAC 1 Climate control 1 Flooring solutions 1 Film, lighting and grip 2 12 Benefitting from our scale  Serving a broad customer base across multiple sectors  Opportunity to attract a

  22. Slide 22: Lighting, Grip and Studio – Adding to the Offering

    LIGHTING, GRIP AND STUDIO – ADDING TO THE OFFERING  Experienced seasonal peak revenues pre-COVID, to near WFW: revenue zero through first several months of pandemic  Swift rebound to record revenue in October, resulting from: – decisions taken early in COVID-19 period to retain workforce – engagem

  23. Slide 23: UK: Current Trading

    UK: CURRENT TRADING  Strong revenue recovery with October rental revenue at prior Fleet on rent year levels excluding revenue arising from DoH activity; despite live events business near zero  Significant market outperformance driven by: – Project Unify deliverables – COVID-19 response efforts – S

  24. Slide 24: Supporting the COVID-19 Response in the UK

    SUPPORTING THE COVID-19 RESPONSE IN THE UK COVID-19 testing centres  Supporting DoH testing centres across the UK – Decision to remain open and retain our team members through the crisis facilitated our response, without recourse to the government’s Coronavirus Job Retention Scheme – >230,000 asset

  25. Slide 25: Capital Allocation

    CAPITAL ALLOCATION 1. Organic growth  Fleet investment supporting growth opportunities and COVID-19 response  Greenfield openings resumed in the first quarter with 12 in North America year-to-date  25-30 greenfields planned in North America for 2020/21  Accordingly, full-year capital expenditure

  26. Slide 26: 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

  27. Slide 27: Appendices

    Appendices 27 Half-year results ¦ 31 October 2020 Pine cone harvesting, Georgia

  28. Slide 28: Divisional Performance – Q2

    DIVISIONAL PERFORMANCE – Q2 Revenue EBITDA Profit 2020 2019 Change1 2020 2019 Change1 2020 2019 Change1 Sunbelt US ($m) 1,463 1,507 -3% 753 786 -4% 458 500 -9% Sunbelt Canada (C$m) 130 106 23% 63 47 34% 33 24 36% Sunbelt US (£m) 1,126 1,214 -7% 580 633 -8% 354 402 -12% Sunbelt UK 149 125 20% 50 42 6

  29. Slide 29: Divisional Performance – LTM

    DIVISIONAL PERFORMANCE – LTM Revenue EBITDA Profit 2020 2019 Change1 2020 2019 Change1 2020 2019 Change1 Sunbelt US ($m) 5,349 5,376 -1% 2,593 2,677 -3% 1,395 1,645 -15% Sunbelt Canada (C$m) 441 377 17% 165 142 16% 47 59 -20% Sunbelt US (£m) 4,184 4,227 -1% 2,027 2,108 -4% 1,089 1,296 -16% Sunbelt U

  30. Slide 30: Group Fleet Plan for 2020/21

    GROUP FLEET PLAN FOR 2020/21 2021 2021 2021 2020 Full year Full year Half year Original plan1 Revised plan1 Actual US ($m) - rental fleet 1,452 425 – 475 525 – 575 305 - non-rental fleet 234 95 95 38 1,686 520 – 570 620 – 670 343 Canada (C$m) - rental fleet 116 30 – 35 70 – 75 24 - non-rental fleet

  31. Slide 31: 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 31 Half-year r

  32. Slide 32: 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: 64% / 36% £1,000m  No financial monitoring covenants whilst availability exceeds £m $460m (

  33. Slide 33: Cash Flow Funds All Fleet Investment

    CASH FLOW FUNDS ALL FLEET INVESTMENT LTM (£m) Oct-20 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 EBITDA before exceptional items 2,260 2,376 2,107 1,733 1,504 1,178 908 685 519 381 284 255 356 364 310 225 170 EBITDA margin 46% 47% 47% 47% 47% 46% 45% 42% 38% 34% 3

  34. Slide 34: $3,089m of Availability at 31 October 2020

    $3,089M OF AVAILABILITY AT 31 OCTOBER 2020 Book value Borrowing base Senior debt £6,990m (April 20: £7,360m) £745m £5,086m Calculation: (April 20: £5,532m) Inventory – 50% of book £644m value Receivables – 85% of net eligible receivables £5,873m Fleet and vehicles – 85% of net appraised market Avail

  35. Slide 35: 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

  36. Slide 36: 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 36 Half-year results ¦ 31 October 2020

  37. Slide 37: Diverse Specialty Markets and Applications | 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

  38. Slide 38: Diverse Specialty Markets and Applications | 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 &

  39. Slide 39: Construction Landscape – A Closer Look at Starts

    CONSTRUCTION LANDSCAPE – A CLOSER LOOK AT STARTS YoY Gaining Momentum  2021 construction starts forecasted to be in line with 2016 levels Non-building $11.3bn  Promising pockets remain with some puts and takes YoY Gap – Housing tailwinds in place for multiple years $14.8bn Residential – Warehouse

  40. Slide 40: 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 11 markets 8 markets 10 markets 14 markets 2 markets 0 2 markets  Only 28 of t

  41. Slide 41: 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 41 Half-year results ¦ 31 October 2020

  42. Slide 42: 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 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

Ashtead Group — H1 2021 Earnings Presentation on 6ix