Earnings Call: Q3 2019

Mar 5, 2019

Hello, and welcome to the Ashtead Group Plc Results for the Third Quarter. Just to remind you, this is being recorded. So today, I'm pleased to present Jeff Drabble, CEO Brendan Horgan, COO and CEO Designate and Michael Pratt, CFO. Jeff, please begin. Thanks, Hugh, and good morning, everybody, and welcome to the Ashtead Group Q3 results call. Today's call will follow the usual shorter format, albeit with our new dynamic team. So a review of the financials by Michael will be followed by an operational update from Brendan, and then we'll move on to Q and A. So before I hand over to them, let me just cover a few highlights summarized on Page 3 and generally try and set the scene. It's clearly been yet another strong quarter with rental revenue up 18% year on year. And again, the primary driver of growth remains organic investments, but we've supplemented this with £491,000,000 spent on bolt on acquisitions. Of course, the combination of this fleet investment and larger footprint provides a great platform for further growth as we implement our 2021 plan. And Brendan is going to cover all of this in more detail in just a moment. So we continue to deliver well in a market that is supportive and continues to play out as we anticipated from both a cyclical and a structural perspective. And this strong underlying business continues to be supported by a strong balance sheet, and this has been underpinned by our recent refinancing. So as always, we continue to grow responsibly. And therefore, unsurprisingly, with the clear momentum in the business and the supportive market backdrop, we expect our full year results to be in line with expectations. And importantly, we can continue to look to the medium term with confidence. And so with that, I'll hand over to Michael to detail the financials. Thanks, Jeff, and good morning. The group's results for the 9 months are shown on Slide 5. And as Jeff said, it's been a good quarter 9 months with strong growth in revenue profitability. The group's rental revenue increased 18% on a constant currency basis, and we maintained margins despite percent. As a result, underlying pre tax profit was £888,000,000 up 18% at constant exchange rates. The more significant 34% increase in underlying earnings per share reflects the benefit of the lower U. S. Tax rate, resulting in an overall effective tax rate for the group of 24% this year compared with 31% last year and a lower share count as a result of the share buyback program. Turning now to the businesses. Slide 6 shows Sunbelt's 9 month results in the U. S. Rental and related revenue was up 19% as Sunbelt continued benefit from generally strong end markets and, to a lesser degree, the impact of cleanup efforts following hurricanes Florence and Michael, upon which Brendan will comment further. The operational efficiencies in mature stores offset the drag effect of new stores, resulting in an EBITDA margin of 50%. As a result, operating profit improved 21 percent to $1,200,000,000 at a 32% margin. Turning now to Sunbelt and Canada. Slide 7 illustrates how the scale of our operations in Canada has been transformed by the acquisition of CRS last year and to a lesser extent, Boysen's this year. As a result, year over year comparisons are not particularly meaningful. In absolute terms, Canada contributed $257,000,000 in revenue and $47,000,000 in operating profit to the period. In a period of rapid growth, the key is to strike a balance between growth and profitability. Canada has achieved this, delivering an EBITDA margin of 30 7% and operating profit margin of 18%. Turning now to the U. K. On Slide 8. A Plant's rental related revenue grew 3% in the period. This reflects a 5% increase in pure rental revenue but a lower rate of growth in ancillary revenue. The market in the UK remains relatively flat with a competitive rate environment. Good drop through maintained the EBITDA margin at 37% for the period and the operating profit margin was 15%. Slide 9 sets out the group's cash flows for the 9 months. The strong margins we discussed earlier produced cash flow from operations £1,500,000,000 giving us substantial flexibility as we remain focused on enhancing shareholder value within our capital allocation framework. This free cash flow was more than sufficient to fund both our replacement and growth capital expenditure. Consistent with our capital allocation framework, we invested £1,400,000,000 to grow the fleet in a strong U. S. Market and continue to take market share. We spent £461,000,000 on bolt on M and A as we broaden our specialty capabilities and enhanced a total of £550,000,000 as of today. A total of £550,000,000 as of today. Slide 10 updates our debt and leverage position at the end of January. As expected, net debt increased in the period as we continue to invest in fleet and bolt on acquisitions and continue the share buyback program. This was all achieved while maintaining our leverage ratio in the middle of our target range at 1.8x EBITDA. It's also worth noting the scale of the asset on the other side of the balance sheet supporting our debt. As shown on the bottom right, there's a healthy gap between the secondhand value of our fleet and our net debt. Both our leverage and well invested fleet will continue to provide a high degree of flexibility and security as the cycle progresses. We've taken advantage of good debt markets during the period. In July, we issued $600,000,000 of 5.25 percent bonds during 2026. And in December, we extended our senior credit facility to December 2023, while increasing it to $4,100,000,000 and reducing the effective interest rate. As a result, our debt facilities are committed for an average of 6 years at a weighted average cost of less than 5%. What I like about our debt is its profile. It is a smooth extended profile through to 2027 with no large individual refinancing needs. And with that, I'll hand over to Brendan. Great. Thanks, Mike. Good morning. We will start operational update on Slide 12. You'll see Sunbelt U. S. Delivered another strong quarter with 20% growth. The organic momentum continued contributing 15% revenue growth, while the benefits of our bolt on activity throughout the year contributed an additional 5%. This growth is a result of our continued execution of our 2021 plan as well as strong market dynamics as I'll cover on the slides to come. So as we move to Slide 13, this will demonstrate well the demand behind our growth. Utilization continues to be at strong levels and importantly it is coupled with a good rate environment. We had difficult comps in each of these measures with far more hurricane activity in last year's Q3. So these results demonstrate further the strength in our end markets. As I said, the rate environment is good. Regardless of hurricane comps, rates on an absolute basis are better than a year ago. Further, I should note that February rates are already nearing 2018 midsummer levels, which indicates a very healthy rate environment as we enter the spring season. Moving to Slide 14, mix remained a headwind to yield for the quarter with the monthly component of our business increasing to 75%. This duration mix really reflects length of projects and the core nature of rental today rather than the top up nature of years past. Also worth mentioning is the trend we're recognizing of customers holding on to equipment longer to move to the next job or to the next project. Demand is high as our backlogs and we're seeing customers extend rentals as a result. As in previous quarters, whether yield is up or yield is down, it has no impact on margins. The quarter year to date margins remain at the same strong levels as the same period last year, while ROI has improved to 24%. Slide 15 shows our continued 2021 planned progress with a nice mix of greenfields and bolt ons added in the quarter. What stands out is the momentum behind our specialty growth. We've added 42 specialty greenfields in the year and further complemented this specialty business growth with 2 key bolt ons in the quarter. Specifically, we acquired Apex, which is a 3 location pump business and Underground Safety, an 8 location trench shoring business, both of which closed in November. Since quarter end, the bias was also to the Specialty business, as we've added Temp Air, a 13 location climate control business. I'm sure we'll add some color to these more recent bolt ons in our full year results come June. Slide 16 shows a number of macroeconomic, end market and industry activity forecast. In December, I shared what were broad and positive market indicators. Now, here we are 3 months later and these views hold true and are further solidified. The spring season and indeed 2019 are now in 2019 are now in clear view. Industry forecasts are strong and the latest positive ABI and Dodge Momentum Index only further support this. Our end markets are busy and signaling no change in course. No one market indicator or forecast tells the full story or should you overreacted to. However, what we are seeing today is a broad set of data, internal and external, pointing to ongoing positive times ahead. This level of revenue growth demonstrates the broadening end markets we're reaching as a result of our scale, advancement of our market cluster strategy and specialty business evolution, all positioned to give great service to our customers through availability, reliability and ease. Further, I think it's important to note that in unusually soggy winters, like the one that we've been in, that our performance demonstrates our success penetrating non construction markets. Our addressable market continues to grow as square footage under roof and MRO opportunities continue to compound. Moving on to our Canadian business, which you'll see on Slide We continued our expansion by leveraging our recently built scale, which Michael would have referred to earlier, in a market where we still have comparatively low share. Throughout the year, we've invested in the business with existing location fleet growth, greenfields and bolt ons with the aim of broadening our fleet mix and geographic service capabilities, all leading to our strong pro form a rental revenue growth of 20%. As is the case with the U. S. End markets, we continue to see positive indicators in Canada. Now to the UK on Slide 18, our A Plant business delivered Q3 results, which were virtually identical in revenues and profits as the same quarter a year ago. Considering the market conditions, our watch closely approach, while being focused on operational performance and customer service, I think is a prudent one. Our A Plant leadership team is engaged and plotting the course ahead, taking the market realities in full account as you would expect. Turning now to CapEx on Slide 19. Our guidance for the current year is unchanged from what we gave in December. I would anticipate we will end the year at the higher end of the range, reflecting another 3 months of on the ground market strength and further supported by the earlier mentioned reaffirmed market forecast. Our early outlook for fiscal 2020 is largely more of the same, particularly in Sunbelt U. S. You'll see an increase in replacement as we enter a larger replacement year, reflecting our investment in 20 12, 2013 and similar levels of growth CapEx as market demands remain high. This projected level of CapEx together with our current year fleet growth would anticipate rental revenue and profit growth in the low teens. Moving now to capital allocation on Slide 20. The order of our priorities are unchanged. You'll see we've invested £1,290,000,000 in existing location fleet and greenfield openings and a further 491,000,000 on bolt ons. As we expected, this has been an active bolt on year as there were a number of deals in the pipeline as we entered the year. We've also completed 5 $50,000,000 of our original buyback program, which we expect will be $675,000,000 by the time of our full year results in June. And as previously announced, we expect to spend no less than $500,000,000 in buybacks next fiscal year. In summary, it's been another good quarter of revenue and profit growth with every component of our 2021 plan executing in full stride. Our margins are strong as is our cash generation, which we will continue to allocate in line with our stated priorities within a leverage range of 1.5 to 2 times EBITDA. So based on the guidance we've just given on fleet growth and a reasonable estimate for likely impact of M and A, we anticipate low to mid teen rental revenue and profit growth for the coming year. When combined with the impact of our ongoing share buybacks, we expect our EPS growth to be in the 15% to 20% range, consistent with our 2021 plans. This is obviously a general heading and we will review each element of capital allocation as we progress through the year. Therefore, we expect full year results to be in line with expectations and importantly, the Board continues to look to the medium term with confidence. With that, we'll ask the operator to turn the call over to Q and A. Operator? Thank you. I just actually wanted to start with a question on Canada, please. It's quite difficult to model, obviously, because it's lots of, I guess, moving parts in terms of seasonality. And obviously, the shape of the business has changed dramatically. I'm kind of really more interested in a broader question of just how you're finding the development of the business there against the kind of initial plans and kind of plans developed where you thought you'd be in Canada? So I guess it's a broader question on how you feel about Canada? Yes. Well, I will start with this. No different than what I just said covering the slides. We feel really good about Canadian market in general. And we feel as though similar to what Michael would have covered in his update on Canada that our progress is about where we would have expected it to be. You're right in that it's difficult to model given that last year alone we would have 3x ed the business. So obviously you have some noise in the figures in the short term. But look, Canada is a strong market. We're just getting to the point of being able to fold in our broader products and service offerings as I had mentioned. We're bringing into the business the specialty businesses. We're enjoying a lot of pull from customers frankly. So customers are looking for more alternatives in the markets that we're servicing and you're seeing that in that volume growth. I mentioned the pro form a 20%. When you look at it, obviously, you'll see the EBITDA margins remaining the same year on year and a bit back in EBIT. I think it's worth mentioning that and it's as simple as this. When you do acquisitions like we would have done with CRS back in August of 2017 and then Voizans in the current year, you have follow on CapEx and you follow on CapEx to those businesses in order to do what I had talked about and that is broaden your product and your service range, thus changing the reach in your end markets. And you just have a bit of a absorption to work through with that CapEx. And obviously there's some seasonality issues. But by and large, it's moving in the right direction. Remember a year ago for a full year in 2018, our EBITDA margins would have been 30 and EBIT of 13. So clearly, we're seeing progress and the absolute scale of the business continues to move forward. Thanks. And can I just a quick follow-up actually on Air Plan? Just looking at the yield development, it's clearly been quite different across the 3 quarters. So I guess it's more a question of kind of helping to understand that a little bit. Yes. I mean, first things first, that is going to be a makeup of just some composition in terms of fleet that would be on rent year on year. But I think it makes a broader point when it shows the change in yield whether it be positive or be negative and how it doesn't have a tie to what those margins are as we've said. But yes, really nothing more than just some composition mix year over year. Okay. We are now at Rajesh Kumar at HSBC. Please go ahead. Hi, good morning. Can you give us some color on how the cost pressures in the business are developing in the Q1 of the year? And when you are giving your when you indicated mid teens growth for the next year, what sort of cost increases have you budgeted within that? Well, first, I would just say there's no developments really to speak of. There are really no different than what we've been talking about. And most importantly, I think the headline would be, obviously, there's some inflation in general in markets, whether it be wage or it be general supplies, but you can see the businesses absorbing that well. So we're just managing We're just dealing with it. We have continued the strong margins even on the back of having added 112 locations just through 9 months. And in terms of next year, we would expect that growth range as we've given with fall through levels that we've been talking about in the kind of plus 50 realm. So in general, it is a aspect of the business that we continue to digest and manage and continue to take all of these developments, if you will, to our advantage. And this drop through guidance you're providing to us, that's excluding the margins you would make on disposals, I'm assuming, because that may be a bit dilutive given you've got a bit more disposals coming up in the next couple of years? Yes, look, that's going to ebb and flow based on the mix, based on age of disposals. But yes, ours is based on EBITDA fall through excluding disposals. Yes, right. The way we calculate it gets through both disposals and the sales of past merchandise, etcetera, just because their margins are very different. So when we talk about drop through, we're talking about rental revenues. Appreciate that. And you will report that because so far disposals have been not as big an issue, but for the next 3 years, you will see the disposals grow quite a lot. So I'm assuming you're going to make it amply clear in your release. So yes, we wouldn't change because you're right, the profit on disposal and hence the amount of disposals you make could significantly distort that figure. So we excluded we've always excluded and we'll continue to exclude it from the calculation drop through. And just one last one, if I may. Can you quantify what sort of drag you've had on your margins from opening of greenfields in the last 3 years? So greenfields don't make the same kind of margins as mature branches. So have you had any incremental drag or is the drag at the same run rate at the last couple of years? Well, look, in this set of results, we don't have that particular slide. You would have recalled in previous decks most notably the half year deck in the appendix we would have shown the maturation if you will of margins by cohort and there's nothing different. So the obvious answer is well of course, had we not added 99 locations in fiscal year ending 2018 and the 112 that we've shown today, our margins would be higher. However, we continue to see great progress of our openings progressing as we would expect. Thank you very much. And you will present the slide in the future, right? I think you'll see it again. Thank you very much. Okay. So we're now over to Rory McKenzie at UBS. Please go ahead Rory. Your line is now open. Good morning, all. It's Rory here. Firstly, just on the hurricane comps in the U. S, Brendan. Did they get tougher year over year in Q3? And so did the underlying business accelerate? Is that a fair comment? And then secondly, just on that first look CapEx guidance in 2020. Given the spend this year, you're already going to exit FY 2019 with a high level of kind of fleet growth year over year. But clearly through the budget process, you found even more demand. So can you give us more detail about regions or areas within that? Obviously, in active markets, it's also a bit more uncertain. So kind of what underpins that bottom up budget process that I know you guys go through at this time of year? Sure, Rory. So first thing, the hurricane, you're right to point out. If you remember in Q2, our reported was 19% and we said it was 22% underlying. Absent the hurricanes, we've just reported 20% and it would be more like 24% underlying. So on a year to date basis that's going to be 21%, 22%, so all what you might have expected. From a CapEx standpoint, I'll address first just your question in absolute and then talk about some of the market factors you've talked about in general. But yes, CapEx, that's a program that we go through in terms of looking at the various markets. And I will say not different than the growth we're experiencing, which is in every geographic region we cover and every specialty business that we have, regardless of the vertical, we're seeing good healthy growth. So that good healthy growth from a CapEx guidance standpoint would be allocated accordingly and that's pretty much across the board. In terms of less certainty in the marketplace, I think a bit like in my comments covering the slide. I think there are various times when 3 months may be important or more important or less important than other 3 months. But if you ask me, the 3 months between when we reported in December and today was an important 3 months. Back in December, we felt as though all of the signs that that markets were giving us were positive. We said as much, perhaps the financial markets thought a bit differently. Well, here we are 3 months later and we feel like we did in December with the only difference now we have even 3 months clearer view. So we do look forward to the fiscal year to come and we don't think that there is a chance that we see anything other than what we're expecting throughout the year. So our CapEx goes to that. And obviously for the understanding of everyone really, by no means does this mean we've cut APO for $1,500,000,000 in CapEx. We have plenty of flexibility. This is just our early guidance as we sit here in March. Yes, of course. All sounds good. And then maybe just one kind of follow-up. It wouldn't be a results if I didn't ask about supply trends in the market and competition. So anything that you talked about changing in behavior of either your competitors or people you've seen in the market, particularly over, as you said, back on a key 3 month period where there was more uncertainty out there? Have you seen any changes in how others have behaved over that time period? Yes. No, I don't think there's anything worth noting. We continue to work very closely with the our manufacturers, suppliers and it's what we focus on and we see no hints of any sort of oversupply coming to the market. Okay, great. Thank you very much. Okay. We now go over to Andrew Nussey, Peel Hunt. Please go ahead, Andrew. Your line is now open. Yes. Good morning, everyone. A couple of questions from me. First of all, in terms of the bolt on activity, obviously, slightly growing significance in terms of the revenue trend. But and I fully appreciate it can't be predicted with any certainty. But really, is the pool of opportunity out there still of very high quality? I'm just conscious of the pace of consolidation that has been out there and the availability of attractive opportunities moving forward. And secondly, just picking up on your comment, Brendan, about customers holding on to fleet between jobs. I've sort of found that interesting. I wonder if you could give a little bit more color around that, particularly given the Sure. Well Sure. Well, 1st in terms of the bolt on pipeline, I've said this many times before, maybe not to this exact audience, but the landscape is very broad and there is a long, long careers worth left of bolt on M and A out there. Our list is long in terms of that which we constantly engage with. I like to call it our ground game. We have people that are out in the business every day talking to and building relationships with owners. So there should be no feel that there is a lack of ongoing bolt ons there to be had. The important thing to note is this, that the pace of bolt ons and the timing by extension, that is one that is very discretionary. So most of the businesses that we acquire, no different than the Temp Air business that I just mentioned, is not a business that's going through a process. These are businesses that we have developed relationships with over the years and we reach a point where we say, let's push a bit now to get this one done in the next quarter or something like that. I do think as I would have said and you would have noted in some of the kind of guidance, our actual engagement of the let's call it plus 100,000,000 variety deals that we're trying to push to the finish line at this very moment compared to where we were a year ago is a bit less. So I wouldn't be too surprised if you saw a year to come that was a bit of an absorption and consolidation period. It does not mean that we won't do any bolt ons. It just means that this very minute, we're not pushing any of those, as I said, of that size kind of toward the finish line. Don't mistake that, however, with any sort of signaling that our expansion is done. Our greenfield program as we have been, that is exercised and up and running and we expect that to continue fully. So I hope that answers that part. Can I just jump in? So just to be clear, the value that bolt on acquisitions can bring is as important as ever, sort of the quality of the bolt ons, not just the volume of the bolt ons? So absolutely. Yes, we have no change in that whatsoever. So the bolt ons that we have just completed in the last quarter or so are just as valuable as the bolt ons that we did 2 years ago. And I'm sure as the bolt ons we will do next year. So there's no change in that. And as an important part, it is the quality of them that you referring to there. So we it's not volume, it is the quality that's important to us. Yes, okay. Okay. And that's a great point. Yes, yes. Moving on to the customers. What I mean by that is and really it's a trend we've been seeing as you would have seen it in that monthly component. Remember a big part of our mix are the kind of small to midsized contractors. And by that I mean contractors of both construction and non construction. And yes, they have tools at their disposal, but by nature of a big backlog and an activity environment like we have today, contractors tend to run behind. So although they have the ease as we talk about with all the tools that we have, they are finding themselves in a position to keep that unit or units and move them straight to the next job or project. So I wouldn't read into it too much other than simply just giving some color around what we talked about around mix. Okay, great. Thanks very much. Well, to you, is that the end of the questions in the pipeline? Okay. We actually have another question, and that is over the line of Steve Goulton at Deutsche Bank. And Steve, over to you. Thanks a lot. I just wanted to dig into the CapEx. So you were saying before about replacement CapEx picking up from the 'twelve, 'thirteen vintage. Can you give us any feel for, as you replace that CapEx, what kind of premium how should we think about that? Should we think what kind of premium should we be And how should we think And how should we think about CapEx into a potential slowdown? So obviously, if you can't keep going at mid teens top line, so if we have a slowdown or a mild contraction, how should we think about CapEx in terms of both growth, I. E. Would that grind to a complete halt? And also, how much flexibility do you have in what will probably be a rising replacement requirement? And also what kind of impact does the M and A have? What's the average age of the kit that you've been acquiring through brownfield? And then final question. Just if you could clarify a little bit on the pricing environment before. I think Brendan was saying that pricing for February was coming up to around summer levels. So if you could just me a bit clarity, because I think I read earlier on the pricing was roughly flattish year on year. Okay. Well, if I miss any of those, just let me know as I work my way through them. So look, in terms of the CapEx, particularly the replacement piece, it's really more of the same. So remember, we've gone through replacement. We've gone through replacement for quite some time. In terms of what we I think I understand your question there in terms of what's that replacement cost look like as it relates to what that would have cost say 7 or 8 years ago when we would have acquired it. And that's going to be that kind of 15% range over the period of time. But that's what we've been experiencing. In terms of the age of what we're getting at bolt ons, the answer is it's a range. You have some that have a older fleet, you have some that have a newer fleet. Given the overall size of that as we fold into it, it just goes into our overall program that we go through from a replacement standpoint. So in general, that's the fleet part that you've asked. In terms of pricing, like we said, no, I wouldn't say that it's just flat. Earlier in the year, we would have been certainly higher for the quarter. For Q3, we are in that all in like for like 1%. Underlying would be the 2% to 3% that we have been talking about and you would have heard our peers that are publicly listed in the U. S. Talk about, and a bit higher than that because Q1 and Q2 would have been more in the 1% to 2% range. Okay. And sorry, just to close-up on the CapEx point. Just on growth CapEx, what how should we think about growth CapEx given that your 2021 plan, if you do come into a slower market, do you very much put the brakes on that and bring that down to near 0 or keep going ahead because you see an opportunity to it? Yes. Key because there are lots of different types of recessions. The key will be this. In general, you will spend the maintenance, but in some ways maintenance can be used as growth. By that I mean, let's just say we have a slowdown that has certain heavier consequences in certain geographies where we may have a higher level of penetration. And we have fleet that is aging in that area that we would look to replace. We'll replace that asset, but we may deliver that asset into another market where we have lower penetration. So in general, from a modeling, if you will, a downturn standpoint, you would say you kind of spend depreciation and look at it that way with a lot of flexibility, both from an additional growth if you felt as though the market was tolerant of it. Great. Thank you very much. Okay. We are now over to the line of Andrew Gibb at RBC. Please go ahead, Andrew. Your line is now open. Yes. Good morning, guys. Just a couple from me. Just on the rate environment. Obviously, on Slide 13, we can see the sort of positive rate environment you're seeing at the moment. But if we were to look at that on a same store basis, would we be thinking that to be even more pronounced, I. E, the sort of drag effect on bolt ons and greenfields? And then secondly, just on the sort of greenfields and bolt ons, something we haven't talked about a bit for a while in terms of the 2021 strategy is the progress on clustering. Just how that sort of strategy is progressing, please? Yes. Well, Steve, first with the from a rate standpoint, yes, of course, if we showed same store, same store would be better. We showed that at the Q2. It's not something that we will plan on always putting in there. And if you think about that rate, one thing I think it's worth mentioning is, again, let's look at this over a period of time. So there we're showing you 2 years and a quarter and over that period of time, we would have added about 45% in total volume and we would have had a rate improvement of 5% over that period. So in general, very strong. And obviously, there is some drag on that overall rate given our level of greenfields and bolt ons. And Andy, your second question was around Just in terms of the sort of progress on clusters, I mean, it's something we sort of talked about in the last sort of Capital Markets Day in terms of that progress. And just really thinking about the sort of greenfields you opened, the bolt ons, how that's translating into the development of clusters in North America? Sure. Well, I think you'll find that we are ahead of pace in terms of the actual physical elements of building out the business. As we would have said at the first half, we had chosen to accelerate that given a number of things from an end market condition standpoint and some of the consolidation that was out there. And you would have also noticed on the map, a very large portion of those ads are not in new geographies we've never served, rather they are in areas where we already have coverage thus adding to the cluster. Certainly, in the quarters to come, we'll give an update in terms of that market layout, which again you would have seen in the appendix of the first half, that we would have updated through the end of last year showing that progress to the markets and we'll continue to do so, but certainly moving ahead of plan. Great. Thanks for that. We are now over to Charlie Cowell at Leveren. Just two quick questions from me, really. Firstly, on the U. S. I just I think I know the answer to this from what you've said, but just to be clear. There's no difference, presumably, in the outlook for construction and non construction end markets. You be positive on both just to sort of make sure that we've understood that correctly. And then second question on the U. K. So fairly large plant high company just went into administration recently. Does that create sort of threats or opportunities for a plant? Well, first on the U. K, you're right. We are positive both on the non res construction end market in U. S, sorry. Yes, that's right. And certainly in the non construction piece as well. As we've talked about for quite some time when it comes to square footage under roof and MRO, I mean, given where that is in terms of its maturity, we see that positive for some time to come. In terms of the UK, Jeff? Yes, I mean, look, you're right, a fairly large business did go into receivership. I mean, it was a very specific business. Is there any direct impact to a plant? Perhaps a little. I think it's a demonstration. I mean, you can run through a list of our peers and those without very rich brothers over in America have relatively low margins and pretty strained balance sheet. I don't think it's necessarily going to be a big help in the short term, but if we are going to go through more difficult times, having a well invested fleet and a very conservative balance sheet clearly will provide opportunities, which is why we are taking a long term but pragmatic view of the U. K. Market. So nothing specific, but yes, you're right to identify the relative strength of A Plant relative to most of its peers in the U. K. Market. We are now over to the line of Steve Wolf from Numis. Please go ahead. Your line is now open. Good morning, guys. Just one for me. In terms of the infrastructure market exposure, perhaps things coming out of the planning phase now, I just wonder how much of that has impacted your thinking in terms of the CapEx outlook? Yes. I mean, infrastructure in general, you're talking about in general. Obviously, there are pieces of it that have been going along. It depends on what type of infrastructure you're talking about in general. Obviously, there are components like airports that have been going on that we have been participating in. So it's not there is no set aside for or carve out in that CapEx that anticipates any change in infrastructure or any sort of new wave of infrastructure. Certainly, if there were a grander infrastructure plan to come, I think we would certainly be benefactors of that and would look into it. But in today's CapEx, Steve, there's no real tie to that. Perfect. That's great. Thank you. Yes. Okay. The current final question in the queue is from the line of Will Kirkness at Jefferies. Please go ahead. Thanks very much. Just had a quick question on the utilization. So the dollar utilization has been very consistent over the last few quarters, just a slight nudge down in the physical utilization. Is there anything to read into that? Is that just sort of mix and timing or things like that? No, Will. Look, I mean, anything in that pipe as I call it, if you look at the utilization over the last 3 years, it is strong. So there's nothing to read into it in terms of any indication of what's to come other than we continue to have strong time utilization. Okay. Thanks very much. As there are no further questions in the queue, may I please pass it back to you for any closing comments at this stage? Okay, guys. Well, if that's the end of the questions, I mean, clearly, it's been another strong quarter in the business, has very obvious momentum through to the end of this year and well beyond. So with that, I'm sure the guys will look forward to seeing you at their full year results presentation. Okay. So this now concludes the call. Thank you all very much for attending, and you can now disconnect your lines.