Ashtead

Strategic review

We again broke records this financial year at Ashtead. Our markets remain strong and we continue to expand the operating platform which allows us to grow. The growth of our footprint, the ever-increasing diversity of the equipment we rent and our excellent customer service all make doing business with us easy and stress-free. We consistently deliver availability, reliability and ease for our customers and this is the backbone of our success.

We were helped by favourable economic conditions in all our markets, but the majority of our growth is still generated by structural changes. Customers now assume we can help them with rental equipment, whatever and wherever that might be. For example, when Hurricane Maria hit Puerto Rico in September 2017, even though we had no presence in Puerto Rico, many just assumed we would be able to help. In fact, we were able to help more effectively and faster than any other rental company, and we were quickly on the ground helping to clean up the destruction and bring much needed power back to the island.

Hurricanes added an estimated $100m in rental revenue this year, but we believe what is most important about their impact is how it demonstrates the effectiveness of our model and the platform we have in place to be able to deliver on a grand scale. For example, we are now seen as a significant provider of a much broader range of equipment. In the past we would have supplied forklift trucks, chainsaws and other general tools to a hurricane clean-up operation. Now half of the equipment we supply is generators, dryers and dehumidifiers. The market is changing and we are changing with it.

Our platform is multi-faceted. Not only is it our physical locations and rental fleet but our distribution capability, our people and the technology which facilitates our business and enables customers to transact with us. Increasingly what we put through the platform in terms of product is less and less relevant. Whatever customers need, we have the scale to buy it, the depots to store it, the distribution capability to deliver it and the technology to facilitate an easy and efficient rental experience. Our reputation for excellent customer service and reliability means we are increasingly the company customers turn to in a time of greatest need.

Our excellent results demonstrate further the continued effectiveness of our strategy which remains broadly the same and is focused on organic growth (same-store supplemented by greenfields) and bolt-on acquisitions. This past year we have started to deliver greater traction and growth in Canada and we see a lot of opportunities there. This is particularly the case as the Sunbelt name and green fleet become more widely recognised, and customers get used to renting rather than buying, and renting more different types of equipment, as has been the case in the US. Our acquisition of CRS in Ontario added a significant presence in Eastern Canada to the network we already have around Vancouver. 

Group rental revenue was up 18% (21% on a constant currency basis). Sunbelt US rental revenue grew by 20% as we continued to benefit from generally strong markets, and of course, to a lesser degree, the hurricanes mentioned above. This compares to overall US rental market growth of around 4%. Organic growth increased to 15% over the year, with bolt-on growth at 5%. All elements of our 2021 strategy continue to deliver as we gain market share.

In Canada we achieved rental revenue growth of 175% mainly due to the acquisition of CRS. However, growth in both Western Canada, our legacy business, and pro-forma growth in Ontario was also very strong, at 20% and 25% respectively. In late January, Sunbelt held a massive conference in Washington DC where we brought together 2,500 colleagues from both the US and Canada. The scale and quality of the newly combined Canadian team, whose meeting kicked off the whole event, has reinforced our confidence in the potential for Canada and we will continue to invest accordingly.

A-Plant’s rental revenue increased by 11% compared to last year. Margins were slightly lower but still represented a good performance in a competitive market. A-Plant made a number of acquisitions and continues to see good year-on-year growth, but the outlook in the UK is likely to be a slower pace of growth than we have been enjoying of late.  

Overall, our end markets remain good and we continue to execute effectively on our 2021 plans. This means we continue to expect a number of years of double-digit compound growth and strong cash generation. We expect to open another c.60 new locations next year and are excited by the opportunities that lie ahead.

 

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