Release Date: September 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rental revenue in the US grew by 6% over last year, driven by volume and rate improvements.
- Canadian business saw a 16% increase in rental revenue, benefiting from volume and rate improvements.
- UK rental revenue increased by 6%, aligning with the company's strategy for operational efficiency and long-term returns.
- EBITDA margin in the US was 49%, reflecting strong operational performance.
- The company reaffirmed its guidance for revenue, capital expenditure, and free cash flow, indicating confidence in future performance.
Negative Points
- Interest expense increased significantly, impacting adjusted earnings per share.
- Total revenue growth was only 1%, reflecting lower levels of used equipment sales.
- Operating profit was affected by a high depreciation charge on a larger fleet.
- The film and TV business in Canada has not yet recovered to pre-strike levels.
- The UK business needs further progress on rental rates to achieve desired financial outcomes.
Q & A Highlights
Q: Could you give an update on the scaffolding project and its resolution timing?
A: Brendan Horgan (CEO): The project had a contract dispute, but a settlement was reached between the customer and project owner. We expect significantly less rent from this project over the year, but our teams are engaging well with contractors for when the project ramps back up.
Q: How are you managing the fleet in Canada given the new normal for the film and TV business?
A: Brendan Horgan (CEO): We are moderating CapEx related to investments in Canada. The fleet used for film and TV can be redeployed to other areas, and we are focusing on maintaining infrastructure that matches current activity levels.
Q: Can you discuss the impact of local construction trends on your full-year results?
A: Brendan Horgan (CEO): Local construction is seeing less activity, but we are maintaining rate discipline. We are also moderating CapEx to match fleet availability with demand, particularly for mega projects.
Q: How are you balancing CapEx to improve utilization rates?
A: Brendan Horgan (CEO): We are matching fleet availability with demand and maintaining agility to direct CapEx towards mega projects. We expect to see better time utilization as we progress through the year.
Q: Can you provide more color on the average rental rates and their progression?
A: Brendan Horgan (CEO): Rates are progressing across the board, with no significant regional differences. We are focusing on maintaining rate discipline and adjusting pricing based on inflation and other cost inputs.
Q: What is the outlook for used equipment sales and their impact on financials?
A: Brendan Horgan (CEO): Used equipment sales have normalized, and gains were lower year-on-year. We expect this trend to continue and will provide updated guidance at the half-year mark.
Q: How are you managing headcount and cost savings?
A: Brendan Horgan (CEO): We are leveraging market density to synergize and reduce headcount where possible. This includes optimizing field service technicians and other roles to improve operational efficiency.
Q: Can you discuss the impact of the new CFO, Alex Pease, on the organization?
A: Brendan Horgan (CEO): Alex Pease brings significant experience and will ensure a smooth transition. His US-based position does not indicate any major organizational changes.
Q: How are you approaching bolt-on acquisitions in the current market?
A: Brendan Horgan (CEO): We are being disciplined buyers, pushing back on high valuations. There is no shortage of M&A opportunities, and we are focusing on strategic acquisitions that align with our growth plans.
Q: What is your strategy for the film and TV business in Canada given the new normal?
A: Brendan Horgan (CEO): We are running the business as usual, adjusting to market conditions without changing our overall strategy. We continue to focus on maintaining infrastructure and fleet levels that match current activity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
