Strategic review

Ambition with Purpose 

We are delighted to report another year of excellent results in 2022/23, continued growth and ongoing momentum. Our markets are strong and full of opportunity. We have benefitted from additional clarity around the strength of our end markets, which makes us ever more confident of our ability to generate excellent results in the short and medium term. ESG (Environmental, Social and Governance) is being embedded more and more into the business and we continue to improve our health and safety record across all our territories. Ambition with purpose remains the cornerstone of what we do.

In 2022/23, we continued to advance our Sunbelt 3.0 strategic growth plan and are ahead of schedule. We did this by executing on all our capital allocation priorities, which fuelled our existing locations and greenfield additions with new rental fleet and delivery vehicles. We added 165 locations in North America during the year, 77 by way of greenfield openings complemented by 88 locations from bolt-on acquisitions. Our additional locations combined to provide a good mix of Specialty and General Tool locations, further advancing our clustered market progress. We achieved cluster status in an additional eight of the top 100 US markets giving us 47 of our Sunbelt 3.0 target of 49. We are now in all US states except Wyoming and we operate in eight Canadian provinces. This is great progress, particularly when we look to the future, as these new locations will mature into larger contributors in terms of revenue and profits, creating more outlets to deliver the excellent service to our customers, for which we are so well known.

What we call a “trifecta” of market dynamics – supply constraints, inflation, and skilled trade scarcity – is increasing our competitive advantage rather than limiting us. These ongoing issues come with operational challenges but those are outweighed by the corresponding benefits to our business, and they favour the larger rental players such as Sunbelt. We are seeing an increased rental penetration and are taking considerable market share because we possess the scale, experience, equipment purchasing influence and financial strength needed to prosper in this market environment. Those companies benefitting from the continued structural change are the very few, larger, more experienced, more capable rental companies who can position themselves to be there for this increasing customer demand, thereby realising a larger share of what is without question a larger and growing market. Our business is positioned to win in this environment.

We are also benefitting from the significant increase in US federal spending as a result of the three legislative Acts passed recently. We look at these in more detail in our markets section. The greater visibility we have over our end markets comes in part from this recent legislation. Some c. $2bn has been committed to investment as a result of this legislation. The opportunities inherent in these Acts add to what is already a strong level of end market activity. The growing mega project landscape, together with the small to mid-sized projects and the maintenance, repair and operations of the geographical markets we serve, present ever greater opportunities.

What we refer to as mega projects are an increasingly important aspect of our business. These are large-scale, over $400 million, multiyear projects that give us greater long-term visibility over income streams. They are increasingly an important part of our strategy enabling us to plan and forecast long into the future. These projects are of 3+ years duration.