Sep. 19, 2021
At the current pace of adding 29 locations in its fiscal first quarter 2022, Sunbelt Rentals, Fort Mill, S.C., will eclipse the goals of the company’s Sunbelt 3.0 strategic growth plan to reach 1,234 locations by April 2024.
The quarter’s growth included 22 greenfield openings and seven locations gained through “relatively small” bolt-on acquisitions
“Twenty-nine locations is a heck of a quarterly pace out of the gates,” Brendan Horgan, CEO, Ashtead Group, the parent of Sunbelt Rentals, told analysts in a Sept. 16 conference call. “We have significant investment going in the business, not least of which would be our expansion. The team has a great road map, good momentum, and the results in the quarter are not a flash in the pan.”
Sunbelt Rentals US last week also reported total revenue of $1.47 billion for the fiscal first quarter of 2022, up 14 percent vs. last year and also 7 percent greater than the same time period in 2019. Rental revenue was up 16 percent at $1.37 billion.
“The strength in this performance is geographically broad and throughout all of our specialty business lines. The current supply and demand equation is as tight as I’ve experienced it in my 25-year career. This dynamic, coupled with our market share gains, has led to current record levels of utilization across the vast majority of our operating regions and specialty business lines,” Horgan said.
In addition, Horgan said the supply and demand circumstances for equipment, inflation realities and more have resulted in rental rate increases and the company now anticipates the average rate improvement for the year to be 3 percent.
The company also nearly doubled its guidance for U.S. total revenue growth from 6 to 9 percent to 13 to 16 percent for the year.
In the UK, Sunbelt Rentals reported $265.7 million in total revenue, up 54 percent compared to $154.3 million the year before. Rental revenue was up 24 percent for the quarter. Guidance for the year now calls for a 9 to 12 percent improvement in revenue in the UK.
In Canada, total revenue for Sunbelt Rentals was $121 million, compared to $66.1 million in 2020. Rental revenue was up 81 percent for the quarter. The growth reflects the depressed comparatives to last year when William F. White, the company’s lighting, grip and studio business, contributed virtually no revenue in the first quarter, but has returned to record activity levels. Guidance for the year now calls for revenue growth of 25 to 30 percent in Canada.
Overall, Ashtead Group reported revenue for the fiscal first quarter increased 21 percent to $1.85 billion compared to $1.50 billion in 2020. Rental revenue was $1.67 billion, up 22 percent compared to $1.35 billion in the 2020 first quarter.
The level of rental demand also led the company to increase its expected gross capital expenditures to between $2 billion and $2.3 billion for the year. Proceeds from used equipment sales are expected to be about $400 million but could be less if disposals are delayed due to the lack of availability of new equipment.
“This is an inflection period. These supply constraints are present today and we think they will be for quite some time to come. It’s also worth noting that we are working with our original equipment manufacturer partners very diligently to secure build slots. In times like this, he or she who has fleet wins,” Horgan said.
“When you have the fleet of our size and the flexibility between the disposals, the landings and geographically where our fleet is positioned, you’re going to win share and that’s exactly what we’re doing,” he said.
While Sunbelt’s average fleet age may get a bit older this year, Horgan said the company will continue to sell fleet that isn’t in a condition to live up to the company’s standards while retaining some fleet in good condition that otherwise might have been sold if additional replacement equipment were available.
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