Sunbelt Rentals, Fort Mill, S.C., opened three new locations in July and is moving forward with plans to open 25 to 30 greenfield locations in fiscal 2021 with a majority focused on specialty businesses including climate control, flooring, power, HVAC, pump and shoring.
“We’re going to amplify our expansion in those businesses for a whole host of reasons, not least of which is just demand. We are realizing that in some of the markets we are in, perhaps one or two wasn’t enough, so we will go from one to two or we will go from two to three in order to further penetrate that market and to drive very importantly here, rental penetration from ownership,” said Brendan Horgan, CEO, Ashtead Group, the parent company of Sunbelt Rentals, in a conference call with analysts on Sept. 8.
“The quarter results, in conjunction with the strength of our business model and balance sheet, put us in a position to look to the medium term with confidence and the remainder of the year as one of ongoing strong cash generation and strengthening our market position,” Horgan said.
On Sept. 8, Sunbelt reported total revenue of $1.28 billion during the fiscal first quarter, down 7 percent compared to last year. Rental revenue for the U.S. division was down 8 percent for the quarter.
Overall, Ashtead reported a fiscal first quarter revenue decrease of 6 percent to $1.6 billion and a decrease in rental revenue of 8 percent to $1.4 billion. Ashtead also is the parent company of Sunbelt Rentals UK and Sunbelt Rentals Canada.
“The performance during this period gives us a glimpse into the increasingly diverse business we have worked to build over the years, demonstrating the strength of our model, not only in good times, but importantly through the more challenging times of the cycle. This work I referenced has been part of our very intentional strategy, born as we exited the great financial crisis,” Horgan said.
“This strategy set course on three key themes: one, diversify our business into broader end markets to be less reliant on construction; two, strengthen the balance sheet to fund and support our growth model and put us in a position of strength to take longer-term decisions, particularly during more difficult times in the cycle like we are in now; and finally, invest in technology and system improvements to make us more nimble,” he said.
While Horgan said rental revenue on a billing per day basis came in 8 percent lower than last year, the specialty business division was up 6 percent.
“In more recent detail, we’ve achieved a nice improvement in August actual rental revenue, with general tool improving to minus 7 percent and specialty contributing a powerful 18 percent year-on-year growth,” he said.
Part of the growth is due to response-related revenue from Hurricane Laura, but Horgan said the specialty segment would have shown a gain of at least 13 percent in year-on-year revenue without the hurricane effect.
Horgan also praised the company’s employees for their response to the coronavirus (COVID-19) pandemic and attention to safety.
“Throughout the quarter and indeed since the beginning of COVID-19’s impact on our professional and personal lives, our team members have adapted in a manner that makes me incredibly proud. As you of course know, we’re in a business that readies, delivers, maintains and services tangible assets. In most cases, these acts cannot be done remotely. And as such, our leading value of safety has taken on a definition perhaps few could have imagined a short time ago,” he said.
“It is in this spirit that I share with you our progress on safeguarding Sunbelt’s own essential service providers, as well as our customers and the members of the communities we serve. Our team members are taking the same principles they’ve learned through our Engage for Life initiative that I’ve previously shared with you and are applying them to minimize COVID exposure, by adopting new work practices like social distancing, equipment disinfecting, curbside service and the proper use of PPE,” he said.
In addition, Horgan praised the company’s COVID-19-related efforts in the UK as Sunbelt UK as of early September had materially participated in standing up 124 testing centers comprised of more than 100,000 individual assets throughout the UK.
“This work was not a deliver and drop-off order; rather a complete solution to include design, project management, logistics, delivery, installation and ongoing service. In total, more than 450 of our team members worked a combined 40,000 hours to pull this off. We do not know of any other rental company capable of this in the market. This work will not go unrecognized internally or externally. I know our team members are very proud to have participated in coming to the aid of the communities they live and work in during a time of real need,” he said.
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