08.03.2022

Ashtead growth continues

Ashtead, owner of Sunbelt Rentals in the UK, USA and Canada has published its third quarter results which show ongoing strong growth.
Nine month results
Total revenues for the nine months were $5.88 billion, up 19 percent on the prior year, rental revenues improved at a more rapid rate, growing 21 percent to $5.36 million. Pre-tax profits for the period were $1.28 billion a 38 percent improvement on last year.

Regional nine month results:
UK: revenues £547.1 million +24% - Operating profit £71.6 million + 84%
Canada: revenues c$463 + 30% - Operating profit c$110.4 +73%
USA: revenues $4.76 billion +17% - Operating profit $1.41 billion +28%

Third Quarter
Looking at the third quarter total revenues increased 23 percent to $2 billion, while rental income jumped 25 percent to $1.81 billion. Pre tax profit for the quarter was $393 million up 38 percent on the year.

Capital Expenditures
During the year the company made 19 bolt on acquisitions and invested $311 million in its share buy back programme. Capital expenditure for the nine months was $1.7 billion, 2.5 times last year’s levels of $672 million. The company is forecasting full year expenditure of around $2.5 billion. Next year it expects this to rise to $3.2 to $3.4 billion.
Net debt at the end of the period was $6.9 billion, up 17 percent on last year, but with a large portion refinanced at better rates and for longer secured terms.

Chief executive Brendan Horgan said: "The Group continues to perform strongly across its geographies with rental revenue up 21% in the nine months over the Covid affected prior year and 17% when compared with 2019/20, both at constant currency. This market outperformance across the business is only possible through the dedication of our team members who deliver for all our stakeholders every day, while ensuring our leading value of safety remains at the forefront of all we do.”

“Sunbelt 3.0 is embedded in the business, and we are making good progress across all actionable components. In the nine months, we invested $1.7bn in capital across existing locations and greenfields and $938m on 19 bolt-on acquisitions, adding a combined total of 81 locations in North America. This significant investment takes advantage of the ongoing structural growth opportunity that we continue to see in the business as we seek to deliver on our strategic priorities to grow general tool and amplify specialty, all achieved while remaining at the lower end of our target leverage range.”

“We expect capital expenditure for the full year to be slightly ahead of our previous guidance at c.$2.5bn. Looking forward to 2022/23, our initial plans are for gross capital expenditure of $3.2 to 3.4bn, as we look to take advantage of strong market conditions, particularly in the US. This should enable low to mid-teens rental revenue growth in the US.”

“Our business continues to perform strongly and is well positioned to manage and benefit from the unique market circumstances we face, including supply chain constraints, inflation and labour scarcity, which we believe to be drivers of ongoing structural change. We now expect full year results to be slightly ahead of our previous expectations and the Board looks to the future with confidence."

Vertikal Comment

Our comments on Ashtead’s results have so much sameness about them these past few years that it almost seems pointless to repeat them. The company goes from strength to strength maintaining substantial percentage growth, regardless of how big it becomes, all from organic growth and small acquisitions. It is set this year to reach revenues in the region of $7.5 billion or more confirming its position as the second largest equipment company in the world.

On top of this profitability is growing at an even more rapid pace, and with its plans to spend up to $3.4 billion on new equipment next year it looks as though it will continue to gain on market leader United Rentals.

The company is most certainly ‘on a roll’