Record revenue for Sunbelt Rentals as specialty expands

Sunbelt Rentals has reported record first quarter results and raised its guidance for the full year, following continued demand in non-residential construction markets, including mega projects.

Total revenue for the group increased 11.2% to a record $3,115 million, with rental revenue making further gains of 12.5% to $2,927 million.

Photo: Sunbelt Rentals

The company’s acquisition of Reliant Asset Management (operating under the Aries brand), in its specialty segment, which closed on 1 May, contributed to rental revenue growth in the quarter, as did work on the FIFA World Cup, which took place during the summer.

Specialty rental again outperformed the company’s other segments. The 7.4% increase in the general tool segment saw revenue for the period reach $1,648 million, while the specialty segment’s rental revenue increased 25.3% to $1,070 million.

Brendan Horgan, CEO, said, “Our obsession with the success of our customers, strong value proposition, differentiated technology platform and leading scale drove strong growth in the quarter, as reflected in a 25% increase in rental revenues within our North America Specialty segment and 7% growth within our North America General Tool segment.”

In the UK, rental revenue decreased 1.4% to $209 million compared to the same period last year, while dollar utilization in the quarter increased to 54%, compared to 53% in the prior-year period.

Diverse range of end markest 

Group operating income increased 15.9% to $691 million, while adjusted operating profit increased 13.8% to $759 million, and adjusted operating profit margin expanded to 24.4%, compared to 23.8% in the prior-year period. The margin expansion in the quarter was primarily due to a reduction in depreciation expense as a percentage of revenue, the company said.

EBITDA also increased 8.7% to $1,315 million, reflecting higher relative growth of ancillary revenues, partially offset by rate improvement.

“Our performance was underpinned by disciplined execution and strong demand across a diverse range of end markets, including mega projects, energy, live events, industrial, and non-construction MRO, complemented by another quarter of stability and demand in our local non-residential construction markets,” said Horgan.

“Growth in the quarter was geographically broad, spanning our General Tool segment as well as our Specialty business lines. Notably, rental revenue growth was present throughout our small and medium-sized customer base, with outsized growth from our large and strategic customers demonstrating the strength of our leading position, and breadth of expertise and solutions.”

As a result, Sunbelt has upped its guidance for the year. Across the group, revenue growth is now expected to reach 6% to 9%, compared with previous guidance of 4.5% to 7.5%, while rental revenue growth is forecast at 7% to 10%, compared with previous guidance of 5% to 8%.

Horgan added, “The upward revision to our guidance signals our confidence in the underlying supply and demand landscape, the durability of our structural growth, and the strength of our through-the-cycle free cash flow platform. We believe Sunbelt is well positioned for a year of strong performance.”