Sunbelt Rentals Holdings, Inc. · NYSE:SUNB
Sunbelt Rentals — Ashtead Group — Q1 FY2025 Earnings Presentation
32 slides from Sunbelt Rentals's earnings presentation, Sep 3, 2024
Slide 1: First Quarter Results
FIRST QUARTER RESULTS 3 September 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: Sunbelt 4.0
SUNBELT 4.0 5 ACTIONABLE COMPONENTS UNDERPINNED BY STRONG FOUNDATIONAL ELEMENTS Actionable Components: CUSTOMER GROWTH PERFORMANCE SUSTAINABILITY INVESTMENT 1 2 3 4 5 Elevate our Grow General Tool Operate with Advance our position Disciplined capital obsession with and Specialty through greater effi
Slide 4: Highlights
HIGHLIGHTS ▪ Group rental revenue up 7%¹, revenue up 2%¹ ▪ US rental revenue up 6%, revenue up 1% ▪ 5%¹ increase in EBITDA to $1,288m (2023: $1,229m) ▪ Profit before tax of $573m (2023: $615m) and EPS of 97.4ȼ (2023: 107.5ȼ) ▪ $855m of capital invested in the business (2023: $1,132m) ▪ 33 locations
Slide 5: Financial Review
FINANCIAL REVIEW MICHAEL PRATT 5 First quarter results | 31 July 2024
Slide 6: Group
GROUP $m 2024 2023 Change1 Revenue 2,754 2,696 2% ‐ of which rental 2,541 2,376 7% Operating costs (1,466) (1,467) -% EBITDA 1,288 1,229 5% Depreciation (571) (496) 15% Operating profit 717 733 -2% Net interest (144) (118) 22% Profit before amortisation and tax 573 615 -7% Earnings per share 97.4ȼ 1
Slide 7: US
US $m 2024 2023 Change Revenue 2,335 2,311 1% ‐ of which rental 2,174 2,048 6% Operating costs (1,185) (1,206) -2% EBITDA 1,150 1,105 4% Depreciation (481) (413) 16% Operating profit 669 692 -3% Margins ‐ EBITDA 49.2% 47.8% ‐ Operating profit 28.7% 29.9% Return on investment 21.8% 27.1% The results
Slide 8: Canada
CANADA C$m 2024 2023 Change Revenue 248 213 17% ‐ of which rental 222 183 21% Operating costs (141) (120) 18% EBITDA 107 93 15% Depreciation (61) (53) 15% Operating profit 46 40 16% Margins ‐ EBITDA 43.3% 43.8% ‐ Operating profit 18.7% 18.9% Return on investment 10.7% 16.9% The results in the table
Slide 9: UK
UK £m 2024 2023 Change Revenue 186 178 5% ‐ of which rental 160 150 6% Operating costs (133) (128) 4% EBITDA 53 50 7% Depreciation (35) (34) 5% Operating profit 18 16 12% Margins ‐ EBITDA 28.7% 28.1% ‐ Operating profit 9.5% 8.9% Return on investment 7.2% 7.4% The results in the table above are the U
Slide 10: Net Debt
NET DEBT Leverage (excluding impact of IFRS 16) $m 2024 2023 2.5 2.4 Opening net debt 10,655 8,960 2.1 Change from cash flows (30) 506 2.0 1.9 1.9 1.8 1.8 Translation impact 11 37 1.7 1.7 1.7 1.6 1.6 1.6 Debt acquired 19 78 1.5 New lease liabilities 104 99 1.3 Deferred debt raising cost amortisation
Slide 11: 2024/25 Outlook
2024/25 OUTLOOK Guidance Rental revenue1 - US 4 to 7% - Canada 15 to 19% - UK 3 to 6% - Group 5 to 8% Capital expenditure (gross)2 $3.0 to 3.3bn - of which, rental fleet is: $2.3 to 2.6bn Free cash flow2 c. $1.2bn 1 Represents year-over-year rental revenue growth at constant currency 2 Current guida
Slide 12: Operational Review
OPERATIONAL REVIEW BRENDAN HORGAN 12 First quarter results | 31 July 2024
Slide 13: US Trading
US TRADING Rental revenue1 FY24 FY25 ▪ Strong growth of +7% on top of +15% last year Q1 Q2 Q3 Q4 FY Q1 General tool +14% +13% +8% +7% +11% +3% ▪ General tool growth reflects slower local non-residential construction market offset by ongoing Specialty +17% +14% +8% +15% +14% +17% mega projects Total
Slide 14: US Construction Outlook
US CONSTRUCTION OUTLOOK 2021 2022 2023 2024 2025 2026 2027 2028 Construction put in place ($bn) Dodge construction starts 400 Indexed: 2000=100 Non-residential 542 608 744 783 810 839 876 908 350 Non-building 275 314 363 434 469 487 498 501 300 Construction (excl. resi) 817 922 1,107 1,217 1,279 1,3
Slide 15: 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 three locations through greenfields and a bolt-on ▪ Rental
Slide 16: UK Trading
UK TRADING ▪ Rental revenue up 6%, driven by market share gains Sunbelt 4.0 ▪ Market conditions softening but support from infrastructure, industrial and larger projects ▪ Diversify the customer base ▪ Unique range of general and specialty products in the UK ▪ Broaden the total addressable market ma
Slide 17: Summary
SUMMARY ▪ Well positioned in supportive end markets ▪ Onshoring, advancing technology and manufacturing modernisation are drivers of unprecedented levels of construction ▪ Mega project landscape remains robust driven by private and public sector investment ▪ Market dynamics driving structural progre
Slide 18: Appendices
APPENDICIES 18 First quarter results | 31 July 2024
Slide 19: Divisional Performance
DIVISIONAL PERFORMANCE FIRST QUARTER RESULTS Revenue EBITDA Profit 2024 2023 Change1 2024 2023 Change1 2024 2023 Change1 Canada (C$m) 248 213 17% 107 93 15% 46 40 16% UK (£m) 186 178 5% 53 50 7% 18 16 12% 1% US 2,335 2,311 1% 1,150 1,105 4% 669 692 -3% Canada ($m) 182 160 14% 78 70 12% 34 30 13% UK
Slide 20: Divisional Performance: Last Twelve Months
DIVISIONAL PERFORMANCE LAST TWELVE MONTHS Revenue EBITDA Profit 2024 2023 Change1 2024 2023 Change1 2024 2023 Change1 Canada (C$m) 932 864 8% 377 354 6% 144 169 -15% UK (£m) 715 681 5% 202 185 9% 60 55 9% 2,610 US 9,330 8,634 8% 4,450 4,144 7% 2,610 2,589 1% Canada ($m) 686 645 6% 277 264 5% 106 126
Slide 21: Group Fleet Plan
GROUP FLEET PLAN 2023 2024 2025 2025 Actual Actual Guidance1 Q1 Actual US ($m) - rental fleet 2,878 3,170 2,000 – 2,300 591 - non-rental fleet 436 577 550 108 3,314 3,747 2,550 – 2,850 699 Canada (C$m) - rental fleet 254 318 230 – 250 88 - non-rental fleet 56 87 100 19 310 405 330 – 350 107 UK (£m)
Slide 22: 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 22 First quarter result
Slide 23: Cash Flow Funds All Fleet Investment
CASH FLOW FUNDS ALL FLEET INVESTMENT Jul-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 4,951 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 24: Robust and Flexible Debt Structure
ROBUST AND FLEXIBLE DEBT STRUCTURE Debt Maturity $6,000m Undrawn Drawn $5,000m Notes ▪ Borrowing facilities committed for average of six years at $4,000m a weighted average cost of 5% $3,000m $2,000m ▪ No financial monitoring covenants whilst availability $1,000m exceeds $450m (July 2024: $2,757m) $
Slide 25: $2,757m of Availability at 31 July 2024
$2,757M OF AVAILABILITY AT 31 JULY 2024 Book value Borrowing base Senior debt $15,370m (April 24: $14,974m) $1,659m $11,825m Calculation: (April 24: $11,466m) Inventory – 50% of book $1,324m value Receivables – 85% of net eligible receivables $12,560m Fleet and vehicles – lower of 85% of net apprais
Slide 26: Debt and Covenants
DEBT AND COVENANTS Facility Interest rate Maturity $4.5bn first lien revolver SOFR / CORRA / SONIA + 125-150 bps August 2026 $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 notes
Slide 27: 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 $565bn $759bn 442 projects 501 projects FY22-24 FY25-27 • Mega projects typically take ~3 years to complete • FY25-27 value will likely increase
Slide 28: 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 29: 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 30: Our Pathway to Net Zero
OUR PATHWAY TO NET ZERO SCOPE 1 AND 2 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 LIGHT DUT
Slide 31: 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 32: Key Metrics Through the Cycle
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 14 35 35 350 33 34 307 14 13 35 12 30 30 300 12 30 250 227222 10 10 25 219 200