Sunbelt results point to strong growth

Ashstead Group - which owns Sunbelt Rentals in North America and the UK - has released results for the nine months ended 31 January 2022, showing overall revenue up 19% to $5.8bn, with rental revenues of $5.4bn, up 21% on the previous nine month period. 

Sunbelt Rentals UK. (Photo: Sunbelt Rentals).

The group indicated in a statement that the result reflects its strategy, of growing its general tool and specialty rental business, as well as expanding through greenfield sites and bolt-on acquisitions.

In the US, rental only revenue of $3.5bn for the nine months was 19% higher than the prior period, representing “continued market outperformance” and demonstrating the benefits of growing the specialty businesses.” 

Specialty businesses grew by 27% during the period. 

Rental revenue growth had been driven by volume, with a larger fleet and improved utilisation, but had also “benefitted from improved rates in what is a better rate environment than we have seen for a number of years.”

The UK business generated rental only revenue of £301m, up 14% on the prior year, driven by work for the Department of Health in its Covid-19 response efforts, as well as operational improvements in the business.

Canada’s rental only revenue increased 32% to C$340m (2021: C$258m) reflecting the depressed figures of the previous year, due to Covid-19 restrictions. 

Ashtead chief executive, Brendan Horgan, said the group’s ‘Sunbelt 3.0’ strategic growth plan was “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.

A Sunbelt Rentals Solar Tower. (Photo: Sunbelt Rentals).

“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 - 3.4bn, as we look to take advantage of strong market conditions, particularly in the US.”

Horgan added that the business was “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.”

Ashstead Group now expects full year results “to be slightly ahead of our previous expectations.”