06.12.2022

Another strong quarter for Ashtead

Ashtead has posted its first half results, with strong growth in both revenues and profits.

Half year
Starting with the six months to the end of October, total revenues increased 23.5 percent over the same period last year to $4.8 billion. Pre-tax profits came in at $1.18 billion, up 33 percent on last year.

The six month revenues are made up as follows:
Sunbelt USA: Revenues at Sunbelt USA improved 30.5% to $4.07 billion, with an operating profit of $1.28 billion - a jump of 33% on the year.
Sunbelt Canada: Canadian revenues for the six months were $297.1 million, a 19% increase on the year, while operating profits increased 7.5% to $70.2 million.
Sunbelt UK: The UK saw dollar revenues dip 16% to $430.1 million, however much of this was due to the strong dollar and weak pound. In Sterling, revenues were £361.4 million down just 2%. Operating profit was $56.9 million, 16% lower than last year but once again in Sterling the decline was not as substantial with a profit of £47.8 million, down 11%. The lower revenues were once again due to the end of the lucrative covid testing contract with the UK Department of Health. Rental revenues increased 7% to £293 million, but in a like for like comparison with non-covid related business, rental revenues improved 21%.

Capital expenditure: for the first half was 44% higher than the year before at $1.69 billion or $1.43 billion net of disposals. The average age of the fleet is now 38 months - down from 40 months this time last year. The company is forecasting a full year expenditure of $3.3 to $3.6 billion. Net debt at the end of October was $8.4 billion compared to $6.43 billion a year ago.

Acquisitions The company spent $609 million on bolt on acquisitions, roughly 41 percent higher than a year ago. The deals also included acquired debt on 27 of the acquisitions and added 72 more locations in North America, taking the total to 1,025. The company has spent a further $243 million on six more acquisitions since the start of November.

Second Quarter results
Moving on to the second quarter, total revenues increased 25 percent to $2.53 billion, with a pre-tax profit of $658 million, up 39 percent on the year.
Sunbelt USA: Second quarter revenues in the USA improved 30.5% to $2.17 billion, with an operating profit of $715 million, up 33% on the year.
Sunbelt Canada: saw revenues for the three months rise 25% to $160 million, while operating profits increased 8.5% to $40.2 million.
Sunbelt UK: was the only operation to see declining revenues, with sales down 15.5% to $207.4 million. Operating profits slipped 16% to $25.4 million.

Full year Forecasts
The company is expecting to come in close to the top of its original forecasts, with the US and Canada growing 20 to 25% while the UK is now expected to be flat, having originally been expected to decline by four percent. The group as a whole is expected to come in at between 18 and 21% above last year, so in the region of $9.4 to $9.6 billion.

Ashtead chief executive, Brendan Horgan said: "The group's strong performance across all geographies continues with rental revenue up 26% at constant currency. This market outperformance 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.”

“Our end markets remain strong and half way through our strategic growth plan, Sunbelt 3.0, we are ahead of plan. In the period, we invested $1.7 billion in capital across existing locations and green fields and $609 million on 27 bolt-on acquisitions, adding a combined 72 locations in North America. This significant investment is enabling us to take advantage of the substantial structural growth opportunities that we see for the business as we deliver our strategic priorities to grow our general tool and specialty businesses and advance our clusters. We are achieving all this while maintaining a strong and flexible balance sheet with leverage near the bottom of our target range.”

“Our business is performing well with clear momentum in robust end markets. We are in a position of strength and, with increased market clarity, have the operational flexibility to capitalise on the opportunities arising from the market and economic environment we face, including supply chain constraints, inflation and labour scarcity, all factors driving ongoing structural change. We now expect full year results ahead of our previous expectations and the board looks to the future with confidence."

Vertikal Comment

Another really strong performance from Ashtead/Sunbelt, the company clearly has mastered the acquisition and subsequent incorporation of small business, extending its coverage both geographically and by speciality market sectors. To some extent it almost seems too good to be true, but Ashtead has been performing at this level for a good many years and while it has a massive debt, the leverage ratios are reasonably modest. The market in North America remains very buoyant which bodes well for the business. In the UK the company has also been making progress, although it may not yet show in the numbers for a couple of reasons.
All in all, the company is ‘cooking on gas’ an its future looks bright.

The 27 acquisitions

The following is a list of the acquisitions the company has made over the past six months.
1. 5th May. Sunbelt UK acquired Movietech Camera Rentals and Movietech Cymru.
2. 13th May. Sunbelt US acquired the power rental division of Filmwerks in North Carolina.
3. 20th May. Sunbelt US acquired Mashburn Equipment in Georgia.
4. 1st June. Sunbelt Canada acquired MacFarlands in Nova Scotia and New Brunswick.
5. 8th June. Sunbelt US acquired Amos Metz Rentals & Sales in California.
6. 29th June. Sunbelt US acquired George's Tool Rental in Pennsylvania.
7. 7th July. Sunbelt UK acquired PKE Lighting Holdings.
8. 13th July. Sunbelt US acquired Milford Rent-All in Maine.
9. 15th July. Sunbelt US acquired R&N Tool Rental in Indiana.
10. 20th July. Sunbelt US acquired Chump Management in Utah.
11. 22nd July. Sunbelt US acquired Harmar Contractors Equipment in Pennsylvania.
12. 28th July. Sunbelt US acquired A-V Equipment Rentals in California.
13. 2nd August. Sunbelt Canada acquired Compact Rentals in Alberta.
14. 3rd August. Sunbelt US acquired Rental Country in New Jersey.
15. 10th August. Sunbelt US acquired R.J. Lalonde in California.
16. 24th August. Sunbelt US acquired Alaska Pacific Rental Alaska.
17. 31st August. Sunbelt UK acquired Optimum Power Services.
18. 1st September. Sunbelt Canada acquired Flagro Industries in Ontario.
19. 1st September. Sunbelt Canada acquired Xtreme Rentals in Alberta.
20. 16th September. Sunbelt US acquired Tel-Power Tool & Equipment Rental in Pennsylvania.
21. 21st September. Sunbelt US acquired Rent Mart in Pennsylvania.
22. 3rd October. Sunbelt UK acquired Media Access Solutions (MAS).
23. 5th October. Sunbelt US acquired Runjesnor in Texas.
24. 11th October. Sunbelt US acquired Comeback Rentals in South Carolina.
25. 12th October. Sunbelt US acquired Presbone Corporation in Florida.
26. 19th October. Sunbelt US acquired Meco Miami in Florida.
27. 26th October. Sunbelt US acquired Heater Rental Services in Minnesota.

Acquisitions since November 1st
1. 1st November. Sunbelt Canada acquired Modu-Loc Fence Rentals across Canada and in Texas.
2. 4th November. Sunbelt US acquired Iron Oak Energy and Spoonbill Logistics in Louisiana.
3. 9th November. Sunbelt US acquired Wagner Rental & Supply in Ohio and Kentucky.
4. 10th November. Sunbelt US acquired QxTwo Equipment Sales in South Carolina.
5. 16th November. Sunbelt US acquired Ohio Rental in Ohio.
6. 2nd December. Sunbelt Canada acquired Studio City Scaffold of Toronto, Vancouver and Los Angeles.