Okay. Good morning, everyone. Thank you for joining Michael, Will, and I for the Ashtead Group Q4 and full year results presentation. Today's update is going to detail the strength of our performance in the year, both in terms of record revenues and profits, as well as the demonstrable delivery within each actionable component of our strategic growth plan, which of course, you all know, Sunbelt 3.0. The results of which leave us poised to thrive as we enter the final year of 3.0. I'll cover our full year outlook and, of course, a detailed update on the most current views and forecasts for our end markets, which I'm sure most of you are very interested in this morning. Before doing that, as I usually do, I'd like to first address our teammates of Sunbelt Rentals across all the geographies that we serve.
These team members are so engaged in our business, particularly when it relates to embedding our safety culture. This culture embodies an environment of buy-in, adoption, and leadership, developing delivering a highly functioning world-class safety program. A program of this caliber is not only our leading value, but it's a prerequisite for a thriving, growing, and sustainable business. The results we'll cover this morning are quite literally the making of an engaged team of professionals that put the safety of themselves, their colleagues, our customers, and indeed, the members of the communities that we serve, as mission number 1. For this and all their hard work and dedication, I'm extremely grateful. As I always say to them, and I'm saying it now, please continue to lead safely and positively out there. Let's begin with the full year highlights on slide 3.
We delivered a strong and record performance in the fourth quarter, contributing to another set of record results for the full year. Demand remained very strong in our end markets. Obvious signs of structural progression within the market and our industry persist. We continue to gain greater clarity from current demand levels present in the business, paired with the needs, backlogs, and future project expectations we are gathering from our customers and the relevant end market forecasted strength. All of which continues to support our view of ongoing structural gains and a strong end market throughout 2023 and beyond. As I've said consistently for some time now, these conditions are very favorable for our business. For the year, group rental revenues increased 22%, while U.S. increased 24%.
Profit before tax of $2.273 billion was a 26% increase. Earnings per share grew 27%. I'm encouraged to report strong EBITDA fall-through in the U.S. business of 50% for the year and 50% for quarter four, demonstrating sequential improvement throughout the year and the real strength of this performance in what was a remarkably inflationary environment, coupled with the significant pace of expansion via greenfield and bolt-on acquisition, which of course, the two of these have an overall drag effect on fall-through. Those are extraordinary figures. During the period, we continued to advance our Sunbelt 3.0 strategic growth plan, doing so by executing on all our capital allocation priorities, beginning with $3.8 billion in CapEx, which fueled our existing location and greenfield additions with new rental fleet and delivery vehicles.
We expanded our North America footprint throughout the year by 165 locations, with 77 through greenfield openings and a further 88 via bolt-on. We invested a total of $1.1 billion on 50 bolt-on acquisitions. Finally, we returned $261 million to shareholders through share buybacks and announced today our intention to pay a final dividend of $0.85, making the full year dividend $1 per share, a 25% increase. Despite these levels of capital investment, acquisition, and returns to shareholders, we remain near the bottom end of our net debt to EBITDA leverage range at 1.6x. These activities demonstrate our confidence in the ongoing health of our end markets and the fundamental strength in our cash-generating growth model that we will illustrate over more slides throughout the morning. Let's move on to our outlook on slide 4.
Our initial revenue, CapEx, and free cash flow outlook set forth herein is derived by taking into account the current and anticipated de-demand environment, as well as momentum in areas such as pricing, structural growth, and mega project starts. These contributory elements will be covered throughout the operational update this morning. Consistent with our approach in recent years, the slide here frames our current estimate of year-on-year rental revenue growth by business unit, as well as group-level CapEx and free cash flow. Beginning with rental revenue, we anticipate the U.S. to be in the 13%-16% growth range, Canada to deliver growth of 15%-20%, and the U.K. to deliver growth of 10%-13%. This combines for overall rental revenue growth guidance for the group of 13%-16%.
From a CapEx standpoint, we begin the year with a range of $3.9 billion-$4.3 billion, of which $3.3 billion-$3.6 billion is new rental fleet. This is tweaked slightly from the initial guidance in March due to timings of landings, which I will explain when we get to the CapEx slide. These activities and anticipated business performance lead to expected free cash flow of $300 million in the year. On that note, I'll hand it over to Michael to give some financial detail.
Thanks, Brendan, and good morning to everyone. The group's results are set out for the year ended April 2023 on slide 6. fourth quarter was a strong one, rounding out a year of record performance across the business with good momentum throughout. This momentum drove strong U.S. and Canadian rental revenue growth, while U.K. revenue, rental revenue grew despite the Department of Health testing sites closing or being demobilized during the first quarter. As a result, group rental revenue increased 22% on a constant currency basis. The growth was delivered with strong margins, an EBITDA margin of 46% and an operating profit margin of 27%. As a result, adjusted pre-tax profits increased 26% to $2.273 billion.
Adjusted earnings per share were $3.88. Our ROI was close to our peak at 19.2%. Turning now to the businesses. Slide 7 shows the performance in the U.S. Rental revenue for the year was 24% higher than last year at seven and a half billion dollars. This has been driven by a combination of volume in rate and rate in what continues to be a favorable demand and supply environment. The strong activity and favorable rate environment have enabled us to pass through the inflation that we've seen in our cost base, both in general as well as the direct costs related to ancillary revenues such as fuel, transportation, and erection and dismantling. In addition, we continue to open greenfields.
We're adding 68 in the year, along with complementing our footprint through bolt-on acquisitions, which added a further 67 locations in the US. Inherently, in the early phase of their development, greenfields and bolt-ons are lower margin than our more mature stores. That said, as expected, drop-through improved during the year, such that with fourth quarter drop-through of 54%, giving us 50% for the year as a whole. This contributed to an EBITDA margin of 48%, which in further drove 33% increase in operating profit to $2.465 billion at a 30% margin, with ROI improving to a record 27%. Turning now to Canada on slide eight, rental revenue was 22% higher than a year ago at CAD 696 million.
The original Canadian business goes from strength to strength, taking advantage of its increasing scale and breadth of product offering as we expand our specialty businesses and build out our clusters. We've now clustered 5 of the top 10 markets in Canada and 13 in total. The level of bolt-on activity, particularly in MacFarlands and Flagro, which have a higher proportion of lower margin sales revenue than exists in our business, has been a drag on margins. This impact will reduce in the future as we reduce the level of outside sales in these businesses. 2022, 2023 proved to be a challenging year for Lighting, Lens and Grip business.
Performance was affected earlier in the year by the threat of strike action in Canada, while the latter part of the year was affected by the threat and subsequent occurrence of strike by the Writers Guild of America, which is affecting current trading as well. These factors have resulted in a drag in margins and a degree of uncertainty about 2023-2024 performance in that business, in that part of the business, which I'll come back to in a moment. As a result, Canada delivered an EBITDA margin of 41% and generated an operating profit of $167 million at a 20% margin, while ROI was 18%. Returning to the impact of the strike on the Canadian revenue guidance. Lighting, grip, and lens accounted for just less than 25% of Canadian rental revenue last year.
Our guidance for this year assumes that Lighting, Grip, and Lens revenues are down somewhere between 5%-20% based on the strike ending at some point during our Q2. Turning now to slide nine. U.K. rental revenue was 3% higher than a year ago at GBP 559 million. This growth is despite the significant reduction in the work for the Department of Health as we completed the demobilization of the testing sites during the first quarter. As a result, the Department of Health accounted for about 4% of total revenue this year, compared with 30% a year ago. The core business continues to perform well, with rental revenue 26% higher than a year ago.
The inflation environment, combined with the scale of the logistical challenge in not only completing the testing site demobilization within three months, but then getting that large amount of fleet back out on rent, and the significant increase in demand that we saw over the summer, particularly in the returning events market, contributed to some operational inefficiencies. This has all impacted margins negatively. The principal driver of the decrease in the costs, in the operating costs, is a reduction in the work for the Department of Health, partially offset by the costs that I've just referred to above. These factors contributed to an EBITDA margin of 28% and an operating profit margin of 9%. As a result, U.K. operating profit was GBP 65 million and ROI was 9%. Slide 10 sets out the group's cash flows for the year.
This slide demonstrates a significant cash-generating capacity of this business. Free cash flow of $531 million is higher than 2019 or any year prior to that, despite spending three and a half billion dollars on CapEx. Slide 11 updates our debt and leverage position at the end of April. Our overall debt level increased in the year as we allocated capital in accordance with our policy, spending $1.1 billion on acquisitions and returning $358 million to shareholders through dividends and $277 million through buybacks. As a result, leverage was at 1.6x, excluding IFRS 16, was towards the lower end of our target range.
Our expectation continues to be that we will operate in our 1.5-2x net debt to EBITDA range, but more likely in the lower half of that range as we continue to deploy capital in accordance with our policy. One of the actionable components of Sunbelt 3.0 is dynamic capital allocation. An integral part of that is a strong balance sheet, which gives us the competitive advantage as positions as well, to take advantage of the structural growth opportunities available in our markets. We accessed the debt markets in August last year, and again in January this year, in order to strengthen our balance sheet position further and ensure that we got the appropriate financial flexibility to take advantage of these opportunities.
We issued 2 lots of $750 million notes, the 10-year investment-grade notes at around 5.5%. Following those notes issues, our debt facilities are committed for an average of 6 years at a weighted average cost of 5%. With that, I'll hand back to Brendan.
Thank you, Michael. We'll now go on to some operational and market detail, beginning with the U.S. on slide 13. As you'll see, U.S. growth remained very strong through the fourth quarter, with general tool growing 19% and 20% for the full year. Specialty delivered 22% growth in the quarter and 30% for the full year. The strength of this performance once again broad, extending through every single geographical region and specialty business line. Consistent with recent updates, the supply and demand equation remains favorable. These trends are driving increased rental penetration for those benefiting most are the larger, more experienced, more capable rental companies who can position themselves to be there for this increasing customer base, and therefore realizing a larger share of what is, without question, a larger and growing market.
Importantly, we continued to progress rental rates in the quarter. It is our intent and actually expectation that there will be ongoing positive rate gains in our business throughout 2023 and 2024. Our rental rate improvement determination seems to coincide with all indications pointing to further and ongoing efforts to advance rental rates within the industry as well at large. Let's take a closer look at our specialty business performance on the next slide. The year-on-year rental revenue movement illustrated herein demonstrates the ongoing and compounding growth across all specialty business lines. U.S. specialty rental revenues increased a remarkable 30% on top of last year's 24% growth. To add context, our specialty business in North America is now double the size it was just three years ago, and it's 70% larger than it was two years ago.
This growth continues to tangibly demonstrate the structural shift our customers are making from ownership to rental as we provide a more trusted and a more reliable alternative to ownership. You'll notice the year-on-year impact our temporary structure business has on the specialty growth rate, particularly in the fourth quarter. I'll remind you, there was a very large one-off temporary structure project related to the Afghan refugee circumstance underway when we acquired Mahaffey in December of 2021. That generated roughly $75 million in revenue, just over a 5-month period, therefore explaining the impact that you'll see. Remember, our specialty business lines principally service non-construction and markets, and therefore act as a good proxy for the strength of this incredibly large market, which makes up almost 60% of our revenue. To take a closer look, we'll move to slide 15.
As our specialty and general tool businesses service a heightened demand in our non-construction markets, where there continues to be huge opportunities to drive rental penetration from a low base and increase into what is a very large addressable market. We commonly refer to an incredibly large component of this non-construction end market as MRO. The maintenance, repair, and operations in the geographic markets in which we serve, such as facility maintenance, which is clearly defined as a market in which $ hundreds of billions are spent annually running and maintaining facilities, from cleaning, to painting, to decorating, to planting, to temporarily powering, to cooling, to repairing, and I could go on. Of the many, many types of facilities that make up the 100 billion sq ft under roof of commercial space in the U.S. alone.
The scale and growing revenue opportunities for our business within this space are immense. The rental of our broad range of specialty and General Rental products will increase in what is a very much structural growth arena in the very early stages of a long runway for growth. With other non-construction examples being live events, emergency response, and municipal spend, these incredibly large addressable markets make up the majority of our collective specialty business revenues. However, increasingly benefit our General Rental business as we continue to advance our prowess of cross-selling throughout the organization. Now that we've touched on specialty and non-construction markets, let's turn to slide 16 and cover the latest construction market trends and forecast. Despite macroeconomic concerns and the pressures that come with inflationary and interest rate realities, you'll see construction levels have proven to be incredibly resilient.
In fact, historically strong in the most recent year, it's forecasted to continue as such. I'm gonna spend a bit of time on the current and next few slides in an attempt to put into context the construction landscape, what its drivers are, and how our business is poised to be a material benefactor. Starting on the top left with Dodge Construction Starts, this clearly indicates the strength of recent starts and the forecasted growth all the way through 2027. These starts figures are indexed to the year 2000, what you won't see, but you'll have to take my word on, is that US construction starts eclipsed $1 trillion for the first time ever in 2022, of which $694 billion was non-res and non-building, which is also another high.
These recent construction starts are an early wave of new projects derived from a combination of private investment and legislative project funding and incentives. On the top right of the slide, the starts are translated into a duration of project format known as put-in-place. This all makes clear that the non-residential cycle has been considerably delinked from the residential cycle as a result of years of change in construction composition, reshoring, and larger-than-ever-seen before federal government spending acts, all contributing to the rise of an era of mega projects. Let's dig in a bit further on slide 17. Get it, dig in? Lively bunch. The drivers behind the recent level of unprecedented starts fall into three main categories, with many projects being driven by more than one.
I think this is really, of all the slides, one that really frames, if you will, how we view the end market shaping up. As of course, it says what these drivers are. Firstly, a combination of geopolitical risk, supply chain challenges, environmental changes, and the experience of the pandemic are all leading to a reversal of globalization, and in particular, a reshoring of manufacturing and production in the United States. This is being seen in many industries, notably for semiconductors, LNG, automotive, and their tier one component part suppliers. Secondly, there is an ongoing growth in technology-related construction, contributing in part to a modernization of U.S.-based manufacturing. We experienced significant technology-related construction and indeed benefited from this for many years, of which you will all be familiar with projects such as data centers, warehousing, and distribution.
Now there are additional drivers in areas like artificial intelligence, electric vehicles, gigafactories, and utilities. Finally, are the benefits coming from the 3 legislative acts, which amounts to over $2 trillion of direct or indirect funding of a broad range of projects. Each of the 3 of these, onshoring, technology and manufacturing modernization, and legislative acts on their own, would be significant. When you combine them, one could well make the claim that we are in the early days of a modern era, U.S. industrial revolution. Let's look at the progress we're seeing from just one of these. That is the legislative acts on slide 18. This is an update of a slide that we would have first shared with you in December.
Beginning with the Infrastructure Investment and Jobs Act, the headline figure of $1.2 trillion may best be understood by compartmentalizing $650 billion as a renewing of the ordinary run rate, federal investment in roads, bridges, rails, utility, etc. The key to this act, however, is not only reassuring the baseline investment, as I've just touched on, but is delivering an incremental $550 billion of new project spending throughout the U.S. We've now seen 32,000 specific projects announced, which will mostly start in 2023, 2024, and 2025. You'll see that on the slide. For matter of reference, when we first put this out in December, there were only 10,000 identified projects. You can see in a relatively short period, 22,000 more projects have been named.
80% of these are new funds, or 80% of the new funds apply to these 5 segments that are on the slide, all of which are segments where we have a strong product offering, therefore, will benefit from. Secondly, with the CHIPS and Science Act, which puts in motion a revitalization of domestic semiconductor manufacturing, whereas for decades, the U.S. experienced a decline from 40% of the world's semiconductor production to only 12%. Also worth noting, the U.S. consumes 46% of the world's production, but again, only produces today 12%. The overall act will invest $250 billion to progress American semiconductor research, development, and manufacturing. The act is designed to support, directly or through tax credits, nearly $140 billion in new semiconductor manufacturing projects.
Four semiconductor plants or fabs, as they call them, have just recently started, worth about $30 billion, with more on the way, as you'll see. Finally, the Inflation Reduction Act. $370 billion of this bill will fund directly, or again, by way of tax credits, a broad basket of renewable energy production and manufacturing, ranging from solar field construction, which will triple the current U.S. capacity by 2030, to battery factories, to wind farms, to electric vehicle production, the details of which are illustrated on the slide. What we have here is a trifecta of government investment equaling nearly $2 trillion in investment that will indeed create thousands and thousands of projects, which Sunbelt is well-poised to be a benefactor of. Let's now look into detail at one of the outputs of all of these drivers I've now mentioned.
That is mega projects on slide 19. Here we attempt to summarize how these drivers are translating into the overall mega project landscape. Just to remind you, we define internally a mega project of one that has a overall cost of $400 million or more. In the fiscal year just ended, 175 new projects broke ground with a total value of $300 billion and an average value per project of $1.7 billion. In the fiscal year we've just begun, we're expecting over 250 mega projects to break ground, worth almost $350 billion. In the 2 years after, a further 180 projects are already identified with planned start dates totaling $350 billion.
In anticipation of a question that you may ask, looking at this slide, the 180 projects slated for fiscal years 2025 and 2026 is not an indication of a slowing pace. Rather, that's what has been planned thus far. We would expect this number to grow. They just have to get to it. As you can appreciate, there is a lot of work going on. On the right of the slide, I've listed just a selection of top projects which broke ground in the fiscal year just ending. You can see these include a very wide range of project type, from semiconductor to energy, to healthcare, to public transport. Projects of this scale and sophistication are often ideal for resident on-site solutions.
Meaning we, Sunbelt, are often, have dedicated storage and working space on the actual project, housing a large and broad offering of our products and the associated services, ranging from on-site maintenance and repair technicians, telematic-equipped products, producing efficiency, gaining benefits to our on-site and remote teams, and of course, to our customers. Coming through for their mandates in areas such as reduced carbon emissions, and of course, living up to our mantra of availability, reliability, and ease. All of these things, it's important to understand, we're realizing more and more every day, we and what we do is absolutely essential for the success of these mega projects. The solutions that I've just outlined require a rental company with the scale, experience, technology, expertise, breadth of product, and of course, financial capacity.
I hope you understand that this is a material contributor to structural change in our industry, which again, we are certain to be benefactors of. Let's now turn to our business units outside of the US. We'll begin with Sunbelt Canada on slide 20. Our business in Canada continues to expand and perform well as the power of our brand strengthens and customers recognize evermore the growing breadth of products and services that we offer. This growth is coming from existing general tool and specialty businesses, complemented by well-placed additions of greenfield openings and bolt-on acquisitions. These conditions are not dissimilar to the US in terms of activity, demand, and the supply environment. Thus, we're experiencing equally strong performance as it relates to time utilization and rental rate improvement. Michael touched on the impact of the Writers Guild of America strike, impacting our film and TV business.
The strike has been in effect, again, as Michael Foster said, since the second of May, and there is no clear timeline. However, there is some general thought that we could see an end to it in late summer or perhaps early in the fall. Either way, we're pulling the levers that you might expect as it relates to cost. However, let's be clear. We're in the business, this business, for the long term and fully expect a post-COVID style boom shortly after the strike, and we will be the company that is most prepared to benefit past this inevitable end to an unfortunate short-term circumstance. On a very positive note, we very recently, June 1st, acquired Lou-Froid, a leading provider of power and HVAC rental solutions with four locations across Canada, based in Montreal.
This adds to our largest North American specialty business line and is a material step change to our capabilities offering throughout Canada. This gives us critical infrastructure in French-speaking Quebec, requisite for building out that market with our broader product and service offering. Turning now to Slide 21 to cover the U.K. The business did a great job this year redeploying the large quantity of fleet from the COVID test sites, which were demobilized at the start of the year and indeed increased rental revenue year-over-year, which indicates a combination of share gains and a reassuring level of end-market activity. There's real momentum in the U.K. business as it relates to increasing progress in markets such as facility maintenance and further develops its specialty offerings in areas like power and the lighting, grip and lens business.
All emphasizing the unique cross-selling capabilities in the U.K. throughout our unmatched products and services portfolio. All now, of course, under the brand umbrella of Sunbelt Rentals. You'll see on the right, top right of the slide, there's a good mix of large projects in the U.K. as well, which we are, without question, best positioned to serve. As I've flagged for several quarters now, and will continue to do so, an ongoing area of focus for the U.K. business is to advance rental rates and the associated fees that we charge to provide our market-leading services. We bring great value to our customers, and in the inflationary period we've experienced, increasing our rates is a must-do. We did gain some rental rate improvement focus.
Some material momentum in the back half of the year just reported, I fully expect that this trend will continue in the business. Turning now to Slide 22, you'll see our normal Sunbelt 3.0 scorecard. I've covered the main points within the highlight slide, so I won't dwell on this other than to quantify the early effect of our expansion efforts. In just 2 years, we've added 288 locations in North America via greenfield openings and bolt-on acquisitions. These locations alone generated nearly $900 million in revenue in the fiscal year just ended. Standalone, this would be a top 10 North American rental company, which we've created in the last 2 years. Importantly, we're well underway in the development of the next phase to our growth strategy.
Should come as no surprise, we'll call it Sunbelt 4.0, which we will be launching at a capital markets event in Atlanta, Georgia, in 2024. We're particularly excited about this because it will coincide with our internal Power of Sunbelt event, where we will launch 4.0 to thousands of our team members, and that will give the capital markets community the opportunity to interact and gain a tangible appreciation for our culture. Something that slides and figures alone don't really do justice for, at least when it comes to Sunbelt. We'll circulate the appropriate invites with further details in the coming weeks. Turning now to Slide 23, CapEx for the full year ended up around $100 million above the top end of the guidance range that we gave in March.
This was purely down to timing of landings, with around $100 million of rental equipment in the U.S. we expected to land in May, coming in before the end of April. Consequently, we've reduced our initial guidance for 2023, 2024 by the same amount to reflect this early landing. We therefore now anticipate rental fleet CapEx in the U.S. to be between $2.9 billion and $3.2 billion. After our non-rental CapEx across the group and ongoing rental fleet investment in Canada and the U.K., we guide to a total of $3.9 billion-$4.3 billion for the group in the full year.
This investment will fuel our ongoing ambitious growth plans, incumbent in Sunbelt 3.0, and demonstrates our confidence in the current and forecasted demand environment, competitive positioning, the strong relationship we have with our key suppliers, and our business model in general. However, as always, these plans can be flexed as we progress through the year to reflect our latest views on future market conditions. This leads on to capital allocation on Slide 24. Michael or I have covered most every capital allocation element as part of the highlights or financial slides, all incredibly consistent with our long-held policy. Worth noting, however, is our new buyback program of up to $500 million over the new fiscal year, which we would have put in place in May.
As indicated with the launch of that buyback program, we've commenced this at a relatively low level, reflecting the significant opportunities to deploy capital for growth that we've already covered, including what is still an attractive acquisition pipeline. To conclude, let's turn to 25. This has been another great year of profitable growth, location expansion, and clear momentum in our business. Furthermore, there's improved clarity to the strength of our end markets in 2023, 2024, and beyond, driven by the recent realities of onshoring, technology and manufacturing modernization, and federal legislative acts. These actualities add to what was already a plentiful level of market activity, flush with day-to-day MRO, small to mid-sized projects, and the very present and growing mega project landscape, which we've covered this morning.
Also clear is the increased pace of rental penetration and considerable market share gains for select businesses in our industry who possess the scale, experience, equipment purchasing influence, and financial strength. Our business is positioned to win in the near, medium, and long term. This update should demonstrate once again the strength of our financial performance and the execution of our strategy, Sunbelt 3.0. For these reasons, and coming from a position of ongoing strength and positive outlook, we look to the future with confidence in executing on our well-known and understood strategic growth plan, which will strengthen our business for years to come. Before getting into questions, I'd like to actually thank the Numis team for allowing us to use this really great venue.
With that, when we do open it to questions, it's only fitting that we give the microphone to Steve first, if you have one, Steve. Just here.
Okay. That's very kind, Brent. Nice competitive advantage. Thank you.
Skill matters sometimes.
You've mentioned so much about obviously the strong demand, you've got out there and the opportunities. I was wondering whether we could touch on the supply side of the equipment into that. One of your competitors recently mentioned that they expect supply chains to ease a little towards the back end of the year. I wanted to get your thoughts on that and potential, you know, fleet into the market that might be coming. Secondly, equipment disposal levels, which I know most of the industry has held off of until sort of, you know, now this year to even think out. I was wondering whether you could sort of touch on, you know, disposals, pricing, potential margins that you're, you know, you're seeing out there.
Thirdly, with all the new equipment that's landing, is there a noticeable premium to pricing that you're getting out there on any of this kit, or is it sort of just flooding in as part of the attraction?
I'll start backwards there. Yeah, you know, new shiny fleet, green in particular, matters. You know, you've got to make sure that your fleet age is of positions you to have, you know, one of, if not the most modern, fleet in the industry. And that certainly helps as we are progressing rental rates. What we don't see is a delineation between our newest fleet and specifically what we charge for it when compared to our middle or our oldest, which is actually important. In times past, frankly, coming out of the GFC, we would have seen that which was different. The new fleet got more, and that, which was long in the tooth, didn't get quite as much more, so to speak. It's important characterization.
In terms of dispositions, what's the total, Michael, for the fiscal year in disposals? Ballpark, $1.3 billion-$1.4 billion. Yeah. Overall, you know, short answer is this: pricing remains historically strong. We're a bit off of the toppiest levels that we would have experienced, but I think the key to understand there is what has proven the case throughout all of this is so extraordinarily liquid. For the business to actually go through the various paths that we do for disposal, it is perfectly liquid. I think one thing, I think a lot of people are expecting in the capital markets community, that we'll see significant degradation in secondhand values. I just don't think that's gonna be the case.
I mean, really, the biggest underpinning, so to speak, of what secondhand values are is what new equipment cost. Let's face it, the industry, the equipment world in general, has experienced great inflation, so that should act as a booming effect overall. To your first question, we actually updated this slide. You'll see 33, which is in the appendix. We used this slide for quite a few times over the last couple of years, just really flagging these three market dynamics were rather unique, not to mention happening at the same time. The one that you're talking about specifically is supply constraints. Our view would be this: we're in the new normal period for what we think could be 1, 2, maybe even 3 years, and that is this.
Rest assured, supply constraints are still a reality. Those are one of the primary drivers of bringing, you know, U.S. manufacturing and the component part manufacturing aspect to the U.S. What's changed is this: OEMs are getting better at meeting their commitments. If they give us certain commitments over the course of the year, look, they delivered $100 million early, last year, between April and May. What has not demonstrably improved are lead times. Lead times still remain significantly longer than what they were pre-pandemic, and we think that's just the reality, particularly when you have ourselves and, you know, one or two others who are ordering larger. They're getting a larger overall share of a production capacity that's not much more than what it was.
We're all sort of going further out in those orders, rebuild slots. This is something that we think will carry on.
That's great. Thank you.
Great. Annelies.
Thank you. Hi, Annelies Vermeulen from Morgan Stanley. I have a couple as well. I'll take them one by one on megaprojects, unsurprisingly. First of all, you've talked in the past about your market share on megaprojects being at least double of your typical market share for the industry. If you'd look to some of these projects that you've outlined and the pipeline that you've identified, can you give any color on that market share number? I appreciate you might not say we've won this, and this, but any kind of color on how much you're winning and who you're? I'm guessing there's only a couple of you that can bid on these projects.
Equally, if you look at some of these really big projects, would you typically do 100% of the equipment supply, or would you share that with other operators?
Sure. I tend to overshare a bit. You know, there are projects on this very slide that, you know, we would have been given that preferred vendor status, which means that we're actually resident and on-site. I'm actually quite happy to say there are some projects where it's actually more than one of us who are given on-site access to these projects, just given the enormity. I mean, some of these projects, I mean, you know, you walk one of these just massive semiconductor sites that, just to put in perspective, a big fab like you see listed there, 13,000 tradespeople will badge in and out of that project every single day.
When you think about the scale of that and the requirements in order to service it just goes back to what I said, sort of big and sophisticated. Our team, who is focused on this, you all know John Washburn, but we have someone in particular, her name is Janelle Strawbridge. Janelle, with her team that is in place throughout the country, if you will, literally tracks every single one of these mega projects in terms of when it's coming up for bid, who the general contractor might be, where geographically it is, where it fits a bit better, where perhaps it fits a bit less, who the general contractor might be, who we have a bit better relationship, who we have a bit less relationship with.
Literally, that team has taken all these projects you see and designated them into tranches. Like, we must win this. We'd really like to win this. We'd take this, but we probably don't align the best, and this, we're probably just not gonna get. That team's mandate, self-imposed, is to win 1/3 of these, and I'll just say our track record is strong. That, as you suggested in your question, that sort of proportion remains the same. We think we have about 2x market share, and some of those that we are sold were kind of 90+, but I would go so far as to say there's not a single project on this slide, started or otherwise, that we won't have something at some stage over these projects.
Also worth noting again, and, these projects last, on average, 3 years, and then you have to think about all the consequence of those after when the suppliers come in, et cetera. Anyway, does that answer your question?
Absolutely. Thank you.
Yeah.
Thank you for sharing. Then secondly, you know, thinking about all the greenfields that you've added and also the bolt-ons, you know, if you look at these, some of these megaprojects and where they're located, there seems to be a skew towards certain states where you are seeing more of these bigger projects go up. I think, you know, you've have a good footprint in a lot of those states, but if you think about the pipeline of these projects and the length of time, and touching to your point about location, is that impacting how you're thinking about where to open greenfields over the next five years?
Location matters probably more just when it comes to the required relationships with whoever may win. One thing that you have to be careful with, you know, when you're in our sort of role and when we're going after these mega projects, there is a whole slew of other projects out there. I know we're spending particular time on these 'cause they're just big headlines grabbing, but I'm actually gonna refer to a sheet here and read off to put things in perspective. In the fiscal year just beginning, there are 1,150 projects that are between $100 million and $400 million in cost. The reason why I say that is twofold.
A branch that is in an area or a cluster of branches that are in any area, their day job, their long-term necessity, is to deepen their penetration in that market, not to be distracted by a mega project, which is why Janelle and her team, along with the operational leadership, are really focused on those. We could really care less whether the project, in most circumstances, is in, you know, Bangor, Maine, or it happens to be just west of Scottsdale, Arizona. In general, because we're actually deploying fleet and in many instances, people in accordance with that project. I think the sort of where tends to be what type of project, you know, we've become incredibly well-versed in certain types of projects and maybe a bit less so in others. Those are the things that really, I think, add to it more than anything else.
Thank you. Just one last one on the CapEx guide you were talking about. You know, when you think about that sort of fleet that you're adding for the next year, particularly on the growth side, is that? Is there an expectation of future wins baked into that? In terms of that moving up, is it still availability constraints that prevent that, as you say, the lead times and availability of equipment? Or are you actually, "No, we've got everything we need to service these projects?
We do have a considerable dollop of the overall fleet growth that is allocated for projects that we have line of sight, and there is a degree of confidence, if you will, that we end up in a good position that will contribute to that. It again, it's important. It doesn't take away from the growth CapEx for the business we have, you know, our existing branches. In terms of your question, you know, can you flex that much? There's not much up flex. I mean, in the past, you had a few projects, you get an extra half a billion dollars in fleet. I know it sounds like it's Well, it was easy. You know, the hardest part was really just convincing Michael that it was financially prudent.
Once we did that bit, it was pretty easy. Today, you know, we couldn't call even our top suppliers and change this guidance we've given by, you know, three-quarters or $1 billion. It's just not gonna happen. I think you just hand it to, there you go.
It's Allen Wells from Jefferies. Three from me, please. I'll take them one at a time. Just maybe just following on the kind of the mega project theme anyway. Obviously, some very big numbers there. Can you talk a little bit about how you see the revenue shift at Ashtead or the U.S. business anyway, in terms of, you know, less than 4, about 45% is obviously construction exposed. How much of that is now, over the last 12 months, was this kind of mega project infrastructure theme? Then you look out over this year and next year, where do you see that shift going to? When does it become uncomfortable that you're overexposed to those markets? Just would like to get a feeling of where you see the, the mix.
Yeah, well, I mean, again, based on the forecast, which coincidentally, on our slide 16, which shows the put-in-place figures, wouldn't you know, last night, Dodge came out with a brand-new printing. It was a bit too late. Press release was out, et cetera, we left it as is. I'll give you the comfort in the fact that in total, the non-res and non-building actually moderately grew every year from 2023 through 2027. We saw resi go down a bit in 2023 and then grow again from 2024 and beyond. The reason why I say that is, as it stands today, those other projects I mentioned that aren't these mega projects, that's still a robust end market. It's not so much would we all of a sudden find ourselves over-positioned here?
That's a choice. You know, our identification of the projects and that must win, et cetera, what aligns with us, we are always taking into account the balancing the combination of squeezing every drop out of the sponge now, but really, in the end, what we're all looking for is a long-term, vibrant, thriving business that will be around for a long, long time, hence, sustainability. Overall, when you look at these projects, I think there's a few things to just consider, because one question like I got, for instance, while we were outside waiting: What's the risk of these not going through these projects, right? I would characterize it this way, and there's 3 very important things to understand about these mega projects. Number one, when they start, they will finish.
The 300 and the 175 that began last year, in conjunction with, you remember, the 200 that were going on in December, those projects will finish. Those of the 256, which have already begun, will indeed finish. Secondly, the calculus, the very decision to invest in these projects, has nothing to do with macroeconomic environment concerns, et cetera, over the next couple of years. The calculus on returns for projects like this are, in some cases, survival, and in some cases, derived over the course of 50 years. The third piece would be, think about what happens to other sort of construction that you're asking about after these are done. Not only the tier one suppliers coming in, but you get everything else.
People work in these plants when they're done or these big projects, and then you have housing and those sort of things. I think there's actually a great phrase here. I'm gonna give Michael all credit to this, 'cause we're always asked the question. There are one or two out there that think that still, as resi goes, non-resi will follow. We think they're unequivocally wrong. Michael's got it right now, which is, as non-res goes, resi follows. That's the future of the U.S. as things go. We think that that is the construction yield curve inverted. Anyway, your second question?
Yeah, maybe just some shorter-term ones. First of all, on that 13%-16% US rental growth guidance for the year, could you maybe just talk a little bit about what your assumptions are on rate and utilization there? You've talked for the last, you know, 6 months around kind of 6%, 7%+ on the rate side. Do you see that moderating a little bit? Obviously, utilization, you've alluded to the fact you'd wanted it to come down a little bit because it was uncomfortable. Maybe what assumptions are around that 13%-16%?
Talk about rate and then give Michael, actually, to talk a bit about volume, et cetera. I'm gonna talk about this year that just ended. 9% rental rate improvement year-over-year. It demonstrates that ongoing momentum, I also mentioned, clearly seems to be the focus in the industry in general 'cause It's necessary. You want to deconstruct, Michael, the.
I think-
forecast?
Yeah, I think the easiest way to look at that is within that range, just take it two-thirds, one-third. About two-thirds of it will be volume, one-third would be rate. Don't get too hung up on utilization. You know, we talk about, yeah, we'd like it to be a little bit lower so we can say yes more often. Utilization is a function of fleet size. Let's just not get hung up on utilization. We'd like to be a little bit lower, and we can then take on more work. Two-thirds, one-third is a good split.
Very final question, just, 18% growth in the fourth quarter in the US. Can you maybe just comment on exit rates like April, May? What growth looked like in the last couple of months?
Yeah, May was 15% on billings per day, so kind of right in the middle of our guidance.
Thank you very much.
Yeah, thank you. Let me just pass along there.
Hi, good morning. Suhasini from Goldman Sachs. Just a few from me, please. I think there was a lot of concern after the regional banking crisis in the U.S., that, maybe some of the activity would slow down in the construction side. Could you maybe comment on what you're seeing from your clients' perspective?
I think, I mean, let's face it's interesting, when we are, in the U.K. speaking to a U.K. audience, you know, regional banking comes up more, believe it or not, than it comes up in the US. I think it's 'cause in the US, everyone's sort of thinking, "Well, that was like, you know, 90 days ago." You know, we're off to greener pastures. In reality, the short answer is, of course, it's going to have some effect. Part of the short answer is, that effect is actually in these forecasts already from overall construction.
The way I boil it down, having talked to many customers about this and those actually in the lending business, these regional banks included, one in particular told me, "Remember, as a regional bank, we must lend." It all comes down to really reducing the risk in lending, so it comes down to that, the company or business, et cetera, that they will be investing in or to, and the type of construction they will be building. You can already see the consequences of that happening. Now, some of them are structural, and they're just accelerated through this, and others are just the obvious, you know. If you think about the overall construction landscape, let me put in perspective when I say structural, but also amplified because of regional banking.
If you look at an area like retail or stores, as it's sort of in Dodge, to put in perspective, between the year 2000 and 2007, expressed in millions of sq ft, retail was 300 million sq ft of construction consistently for turn of the century through, leading up to the GFC. Today, it's about 60 million sq ft It was a bit higher than that, then you have the banking crisis, 'cause, I mean, are you gonna lend as a bank to a restaurant right now? You know, probably not. You know, office space is another one that you can definitely see. If you look at offices, again, it's a bit odd, you have to really understand all these pieces, which of course we study.
If you look at offices, there's four buckets for offices, and we all would agree, in this environment where we're not quite sure when or if or how many people will actually come back to a proper office, I would not want to be in the office REIT business right now. Personally, I like rental. If you think about it, you've got four pieces of office. You have office, which is spec, office which is built to suit, office which is remodel, and then you have data centers that are in office. Office that is spec, I would just go ahead and say it's dead. Like, I wouldn't expect a office to be built in spec that has not already started, I don't know for how long, but let's just say five years.
I'd say most all that's in the numbers, but probably not all of that. Oddly enough, when you look at purpose built or build to suit, it's actually quite strong. You still have some tech companies building some offices. You have a bank or two that's building, you know, one and a half billions, beautiful buildings in downtown Manhattan, and as they start, they will finish. Remodeling is actually reasonably healthy, but data centers, and this might surprise some of you, so I'm glad you asked this question. Data centers will have their largest ever in the history, starts here in 2023. In the U.S., there will be $17 billion worth of data centers that are started.
These are seeming like small projects compared to the stuff I've just covered, 'cause a data center building is about $450 million, $425 million, nonetheless, $17 billion worth that will start. From a forecast standpoint, between 2023 and 2027, it averages $13.6 billion, quite robust. Here's what may surprise you more than anything. The average pre-GFC from 2014 to 2019, 6.5. These are all... When I mentioned on the slide, those three big drivers of these unprecedented levels of starts, that's advancing technology. Everyone talks about AI. What does AI need? You know, it's all a matter of, you know, servers, speed, data. You need data centers for that.
you know, the regional bank, we keep an eye on, but we think the at-risk piece, it's not a single one of these.
Thank you. I think.
Right behind you.
Thank you.
Well, thanks very much.
Hi, Charlie Campbell at Liberum. I've got a couple. Just to go into the sort of U.S. outlook, and just to ask the question around rates, really. I suppose big number, half of the business, non-resident, non-construction rather. There are clearly kind of risks out there of recession, slowdown in that part, also bits of office, you know, whatever you wanna call it, bits of residential. Is there a risk that there's too much capacity in those markets, and the people who own that fleet in those parts are depressing rates against the rest of the industry? Just wondering what happens on rates on that side. Then secondly, a bit more of a detailed question, just on bad debts and how you manage bad debts in 2023 and 2024.
Obviously, a lot of the contractors have got the wrong side of inflation, haven't they, taking up fixed price contracts and stuff, so how do you manage that?
Well, I'm sure Mike will take the second, but as it relates to rental rates, we just have to be really clear here. Despite the scenario that you just mapped out, our rental rates will not go down. Us lowering rental rates creates no demand, and all of a sudden, building the next data center. We're not gonna go to TSMC and say, "Tell you what, 15% off rental for the next two years on your $10 billion project." They're not gonna build one as a result of doing that. We have all learned our lesson as it relates to that.
The difference between those that are capable, for the projects that in the scenario you described will remain, the standard has just changed, whether that be, whether that be ESG related, it be health and safety, it be telematically equipped equipment, it's just all different. The delta between those who have and those who don't is. It is not a moat, you know, it is an ocean. When you really think about the makeup of the overall industry, frankly, it's the smallest rental players who really have to progress rate. They've experienced inflation like no one else has, and they're just now getting around to replacing their fleet. I mean, there are. This may surprise some of you. You look at the pie chart in terms of how fragmented the industry is.
There are 3,274 independently owned and operated single branch rental companies in the United States alone. They're not gonna all get together and say, "Tell you what, let's pick a fight with Sunbelt in terms of pricing." It just won't benefit them. That is the reality of where we are today.
Yeah. Thanks very much. That's really clear. Thank you.
Michael, bad debts.
Bad debts. All we've seen so far is a little bit of a slowing of payments, so we've just seen no significant increase in bad debts at all. What I mean by a slowing of payment, I'm talking about sort of like 30 to 60 days. If you actually take our most aged categories, they're not dissimilar to what they were pre-pandemic. We've not seen any of that yet. You know, what you have to remember is, none of our debtors are significant. You know, no customer is 1% of revenue. All the receivables individually are very, very small. You have to keep track of it, and there's a lot of work chasing it all, et cetera, but it's not a significant problem.
It's also coming off of our best ever receivables.
Right.
Right. So it's not like degradation to historic norms. It's better, it's just-
I was gonna say, if you go back pre-pandemic-
Right
the age piece is not dissimilar...
Yeah
it's probably slightly better.
Yeah.
Thanks very much. Thank you.
Others? Yeah.
Thank you. I appreciate it. Arnaud Lehmann, Bank of America. I have three brief ones. Firstly, just to follow up on rental rates. You say one third of the 13-16, so mid-single digit. What is the rollover effect from last year increase, and what could be the incremental rates you expect to implement this year?
Probably about half of it is rollover.
Thank you.
Yeah.
Secondly, on the free cash flow guidance, maybe another one for you. Your top line is gonna increase and hopefully your profits as well. Your CapEx is only slightly up, why is your free cash flow guidance, let's say, stable or similar to last year, when maybe it should be increasing a bit more? Are there any other factors to consider?
No, it's all, you know. One of the challenges you have in terms, certainly with free cash flow guidance, if you go back, if you see where we were at Q3, we said $300, and we delivered $531. When you're landing $300 million, $400 million of fleet every month, it doesn't take much of a slippage one way or the other to change your free cash flow guidance. One of the reasons why we're better than we guided to at Q3 is the fact that actually everything that landed, we hadn't quite paid for it all, so some of that knocks on into next year. Yeah, it's sort of, you know, around about the same. We're spending more on CapEx, et cetera, across the piece, so there's nothing unusual in there.
Thank you. The last one is a follow-up to all of Brendan comments on mega project, et cetera. If we build, let's say, fewer offices and more factories and maybe more roads, how does that impact the, let's say, the rental intensity? I would have thought, you know, for a warehouse or factory, maybe there's less construction for the structure and more stuff inside, compared to an office. Is the rental intensity similar, and do you have the right equipment for these mega projects compared to... You know, can you just move all of the fleet from an office building to a factory building?
Yeah, our fleet is very fungible from project to project. I mean, you pick offices, frankly, aren't the best. If you think about rental flow-through, there are some projects on the high end that might be 5-6% of their overall construction costs would flow through to rental. There are some projects that might be more, in the mega project universe, might be more like one or one and a bit. When you look at megas across the board, I think a healthy number is about one and three quarter of the cost of construction, depending on, again, the makeup. Data centers can be a bit higher, and then, when you get into a semiconductor... Frankly, we thought 0.75 at first.
I think we've learned pretty quickly it's more that one and a bit, one and a quarter for a semiconductor. It just depends on the type. Offices, the more vertical you go, the less rental flow-through there is. 'Cause, you know, obviously, when it comes to some of the Aerial Work Platform, yeah, you have little scissor lifts on each floor, perhaps, but the more vertical that you go, the less favorable. The more broad and wide, so to speak, the project is, the better. In the end, we are fleeted well, both from an infrastructure standpoint and the other drivers of these mega projects.
Thank you so much.
Thank you. We got all the way back left. Oops!
Hi, Mícheál O'Sullivan from Diameter Capital. Good to see you again, gentlemen.
Mark.
Just a couple of questions, just background stuff. Most of the questions I wanted to know have all been asked. Just where are we with regards to U.S. rental penetration, if, and particularly if you include that repair and maintenance section? If you could throw that in, where we are on that. Secondly, can you just remind us again, where the, where the market share is of the mom-and-pops, relative to the majors these days?
Yep. If you, I'll take the first there last and just put this. I haven't remembered, memorized all the appendix slides just yet. This is the last one. There you go. There you go. When you look at those, in the center there, the under 2023, that other, that's gonna be all of those outside of this RER 100, so it's gonna be that 3,274 plus another 700 or 800 or so that make up, what is that? 37% share. That's updated to indicate our most recent views on market share overall. As it relates to rental penetration, it's a very hard one to actually do the math on as you're progressing through a period, which we believe we are today, of a step change in penetration.
The reason why I say that is if you look at areas which, I know you're all versed on this, but when you look at Aerial Work Platform, which is almost fully rental penetrated as it relates to today, and has been going into this period. We are seeing what we believe to be anecdotally, tangible gains, whether it be in products like skid steer loaders, some other ground-engaging product, even the larger end, hydraulic excavating, et cetera, which still is actually low, more in the 25%-35% range when we do any sort of precision with the OEMs. Of course, when it comes to those specialty product lineups. I mean, if we look at our Flooring Solutions business, which has grown fantastically since we've brought that on, we're still in low single digits.
Maybe we're scratching 4% rental penetration or something like that with Flooring. That capital market stay that I mentioned earlier in April, you're gonna get an update on a broader view of rental penetration.
Thank you. One left. Neil Tyler, Redburn. Back to supply. In the past, Brendan, you mentioned the physical OEM capacity not being any greater than it was, I think, in 2018, was the-
That's right.
If you could give us an update on your sort of thoughts there and outlook. Several of those OEMs have pointed to very strong order backlogs, for some time. I've also heard opinions that some of those order backlogs might be duplicate. If you've got a view on that, I'd be interested in it. Within that, in terms of pricing of ticket prices for equipment 2024 versus 2023, if you could help us with your thoughts there.
Yeah, I mean, what you're talking about, what we've shared specifically was for the manufacturers who sell into North America, and in many cases manufacture there for aerial work platform and telehandler specifically, which is about 50% or a bit more of the overall industry's fleet. Those three product categories, scissors, booms, and telehandlers, are just now in 2023. In 2022, scissors would have gotten higher than where they were in 2018. Booms and telehandlers still at or below pre-pandemic levels, they're just getting to the point of getting back to what their peak capacity was. The key is they've not added much production at all. Of course, that takes time, and you weren't going to necessarily do that coming right out of the pandemic.
That would be a pretty gutsy call overall. On some of the other suppliers, we are seeing their capabilities are improving, whether it be utilizing different manufacturing facilities to produce more in-demand products, et cetera. I do think, and it's important for us from a long-term standpoint, you know, we will get bigger and bigger, and therefore, our needs, from a product standpoint, will be larger and larger. We're seeing some, actually, we're seeing some de-globalization in the manufacturing industry in and of itself, with plans in the U.S., but also in Mexico and Canada, so overall, kind of in North America. I'd say more than anything, it's a bit of, it's a bit of status quo. In terms of inflation, I'm answering it this way because it's the number I know offhand.
If we look at the life cycle inflation for the assets we will replace in the new fiscal year we've just begun, it's about 20%. You're talking, you know, 2%-3% per year, depending on the product itself.
Thank you.
Thanks.
Hi, there. It's James Rose from Barclays. 2 on margin, please. What are your drop-through expectations for FY 2024? Linking in meta project, mega projects as well, what margin would you expect on those? Could they be accretive to the group?
Mega projects, we would just say, I think we're best just saying parity. When it all comes out of the wash, it's kind of about the same. There is a sort of, you know, peak part of a project that might be a bit better than the rest, but you have to take into account the build-up and then the ramp down, so to speak. In terms of expectations for fall through this year, I'd say it this way: I'm telling the business 55%. Michael's saying at least 50. We would say 50. He's right. I'm just trying to set a goal rather than a budget.
You know, when we look at the degree in which we are adding greenfields, which are planned for 120 this year, much better line of sight than what we had last year. Last year, we had some very specific bolt-ons that replaced what were planned greenfields. Of course, you know, that's gonna vary based on how much bolt-on M&A that we do indeed do. I think we should just stick with low fifties. Would you concur?
I'll let you have that.
Andrew Nussey from Peel Hunt. I'm curious, what are the specifiers saying at the moment in terms of environmentally friendly fleet that they want? Are you able to get all that you want? Through the life of that asset, would you still expect to get the same returns on an environmentally green piece of fleet as you would as opposed to a dirty version?
Yeah, our expectations, as it stands today, is dollar utilization parity. If we do achieve dollar utilization parity, we should achieve a overall better margin because we anticipate the cost of maintaining and repairing those assets will be a bit less. I would literally just be guessing if I told you what the value of an 8-year-old hydrogen-powered, electric-powered, or whatever else may come, you know, what that will be 8 years down the line, because we just don't know yet. I think there's some key things to. You've got to take the It's hard to argue this view on. Rental penetration will steepen in those products. The life expectation of those products will be longer. I mean, if you look at just electric, think about a motor versus an engine.
You know, engines throw rods and break and need oil, et cetera. A motor is what's in your ceiling fan. When's the last time one of those broke? You know, so you're gonna get a longer life out of those sort of assets that you, that you would have. I may have missed a question or two there. I'm sorry.
It was more just what the specifiers are saying. Are you seeing-?
You mean the customer asking?
Yeah.
Well, I'd say, but I think the element of that is That fleet's got to exist yet. You know, until you actually get some of these battery-powered things where it's hydrogen, you know, it just doesn't yet exist. There are certain ways you can mitigate it and certain things, you know, if you're thinking about power, et cetera, then we can combine a generator with battery storage, et cetera, to reduce emissions, et cetera. Until the fleet exists and you get that, which is why we're working with a number of, you know, our suppliers to actually advance that process, but until it hits the market, then it's difficult for people to specify it.
Okay, thanks.
Right here as well.
Can you just talk about staff turnover? Are people leaving United Rentals to come to you and et cetera, in the sort of top two or three players?
That's not what happens. it's impossible to say that someone didn't join the organization today from United Rentals or some Sunbelt Rentals person didn't join United Rentals from Sunbelt Rentals, just given the, you know, the number of, you know, you're talking 22,000 people and 26,000 people, order of magnitude, it does happen. What we're finding is, certainly when you think about this very slide, you know, those that are skilled trade, fill in the blank, commercially trained and licensed professional drivers, certified diesel mechanics, hydraulic mechanics, et cetera, you know, they're looking for a career, less so than the job, and we're seeing that. Also, you know, this skilled trade scarcity is not a thing of the past. I think this, that will be...
frankly, I think it'll be the case for my entire career remaining, and I think I've got a long one. Hope I have a long one. You know, the reality is, I do think we're attracting them from some, you know, other tangential industries. It's a bit different, you know, when you, when you bring a driver into our business who's used to, you know, backing up a truck to a loading dock and someone else unloading it, and then you're unloading a 22,000-pound asset on four wheels that lifts you 60 ft in the air. You know, you've got to try it on for size. We're trying to significantly more, you know, promote that in the way in which the actual real-life job is that we do.
That safety culture is paramount in doing so. In terms of retention, I would put it this way: You know, we're the 12th or 13th largest commercial trucking company in North America. Most trucking companies would kill to have the level of retention that we have in our drivers when it comes to those that are not on the skilled trades side, managers, OSR, sales force, senior leadership, our turnover is anemic.
Just on the mega-project front, obviously, you're going to be heavily involved in the build-out of these things. What do you anticipate sort of being on-site post the build with all the specialty stuff?
It's a great question. That's facility maintenance, you know, so that 100 billion sq ft under roof is gonna grow at a pretty significant clip. You know, the more industrial and manufacturing that is, the more intense the MRO is. So, you know, we do it today. Of course, it's a meaningful part of our business, and it will be a growing part of our business that really requires virtually all of our specialty business lines and, of course, GenRents.
Thank you.
Thank you. Any others? I think that's it. Well, good. Well, thank you for joining us this morning. We look forward to seeing you in about 90 days' time. Have a great day.