Earnings Call: Q2 2019

Dec 11, 2018

Right. Good morning, everybody, and welcome to the Amstrad Group Half Year Results Presentation. We'll be following a very usual format. So as usual, Michael Pratt is here to cover the financials. But also following our recent announcement, Brendan Hogan is also here. It's probably very timely because we can actually hear what's really happening in America markets, but also he's going to cover what we've been doing from a greenfield and a bolt on perspective in terms of furthering our strategic objectives. So with that, let me set the scene with some highlights. Look, it's been a half where we've delivered really impressive revenue growth in markets which are still very, very supportive. We've seen significant progress with our strategic objectives with both greenfields and bolt ons and the group's added 80 locations in the half. And in that period also, we've increased our rental fleet by 15% at constant currency. And this was all achieved whilst maintaining very strong levels of physical utilization, again reflecting the strength of our end markets. A real highlight for me this quarter has just been the strength of our margin. And as Michael is going to detail in a moment, in the Q2, Sunbelt delivered a very impressive 35% EBITA margin. And these margins have been translated into very healthy cash flow. So after significant investments in growth and after spending £425,000,000 on the December 2017 share buyback program, we've still kept net debt to EBITDA well within our target range at 1.8x. So this cash generation gives us the confidence to increase the interim dividend 18 percent to 6.5p and continue our share buyback program. So with our business performing well in support of end markets, we now expect our full year results to be ahead of our previous expectations. And so with that, we'll get into the detail, and I'll hand over to Michael. Thanks, Geoff, and good morning. So if we turn to Slide 5, which shows the first half results, and as Geoff said, it's been both a good quarter and half year with strong growth in revenue and in profitability. The group's rental revenue increased 18% on a constant currency basis and we maintained our margins despite opening 47 Greenfields and completing 12 acquisitions in the period. The EBITDA margin was 49% and the operating profit margin was 31%. As a result, pre tax profit was up to £633,000,000 that's a 19% increase at constant exchange rates. The more significant 42% increase in earnings per share reflects the lower U. S. Tax rate which resulted in an effective rate of 24% for the half year compared with 35% in the same period. And also there's a benefit there from the ongoing share buyback program. So turning now to the businesses and Slide 6 sets out the results from Sunbelt in the U. S. Rental and related revenue increased 18% as Sunbelt continued to benefit from generally strong end markets and to a lesser degree the impact of the cleanup efforts surrounding hurricanes Florence and Michael. Jeff will comment on those in a little bit more detail later. The operational efficiencies of the mature stores enable us to maintain an EBITDA margin of 51%, And as a result, the operating profit increased 21 percent to $847,000,000 at a margin of 34% for the half year. Turning now to Sunbelt in Canada, and the slide shows how the scale of our operations have been transformed by the acquisitions of CRS a year ago and then to a lesser extent Voisins in the earlier part of this year. So as a result of that, year over year comparisons are not particularly meaningful. In absolute terms, Cannogy generated CAD 167,000,000 in revenue and contributed CAD 36,000,000 in operating profit. As we discussed at the start of the year, we're expecting margins in this business for EBITDA of around 40% and an operating profit margin around 20%. Margins in the period were consistent with this with an EBITDA margin of 40% and an operating profit margin of 22%. Turning now to the UK on Slide 8. A Plant's rental and related revenue increased 3% in the period. That was a 5% increase in the pure rental revenue with a slightly slower growth rate in ancillary revenues. The market in the UK remains relatively flat and the rate environment is competitive. Good drop through maintained EBITDA margins at 38% and the operating profit margin was 18%. Slide 9 sets out the group's cash flows for the half year. The strong margins we discussed earlier contributed to £967,000,000 of cash inflow from operations, which gives us substantial flexibility to remain focused on enhancing shareholder value within our capital allocation framework. This free cash flow was more than sufficient to fund our replacement and growth CapEx in what is a seasonally higher period of spend. We invested GBP 959,000,000 in the rental fleet as we look to grow in the U. S. Market, in a strong U. S. Market and continue to take market share. In addition, we spent £335,000,000 on bolt on acquisitions as we both enhanced our specialty capabilities and broadened the footprint, our geographic footprint in the U. S. We also continued the share buyback program spending £210,000,000 in the half year. Slide 10 sets out our debt position at the end of October. As expected, net debt rose in the period as we spent on the rental fleet, we spent on M and A and we continued the share buyback program. As Geoff mentioned, this was all achieved whilst maintaining leverage within the middle of our target range at 1.8 times EBITDA. It's also worth noting just the scale of the asset on the other side of the balance sheet that supports that debt. As you can see in the bottom right hand corner, there is a significant gap between the second hand value of our rental fleet and the debt on our balance sheet. It's both this leverage and well invested fleet that will provide us with both flexibility and security as the cycle progresses. Following the July bond issue, our debt facility is now committed for roundabout 6 years and the average interest cost is just under 5%. What's particularly attractive about the structure is the extended profile of the debt and the fact that there are no significant maturities at any point in time. And so with that, I'll hand back to Geoff. Thanks, Michael. So turning to the detail of Sunbelt's U. S. Rental revenue. Look, we continue to outperform our original expectations with 19% growth in the quarter. And as you can see, the bolt on performance is in line with our expectations. The principal driver of this outperformance and the principal driver of our growth remains our organic investment. So let's turn Page 13 now, just to look at all of this in a little more detail. As you know, last year was a particularly active hurricane season. We had 3 significant events. This year there's been 2, which again unfortunately caused major devastation. But partly due to the timing of the events and partly due to the geographies affected, we've generated $15,000,000 of revenue from hurricanes this quarter as compared to $35,000,000 last year. So if we adjust for this difference, the underlying revenue growth in Q2 was a very impressive 22% And this momentum was carried into November, which is why we are tweaking up our revenue and CapEx guidance today. Now moving to rate and the significant bump last year due to the hurricanes does affect the prior year, as you can see clearly see from the chart. So year on year rates are flat as we lap these tough comps. However, the overall environment is really positive. So if you look at the chart there on the right, rates, as you'd expect, fell as we sequentially went into winter. However, our winter low points this year were the same as what the prior year August high points were pre the hurricanes. And let me tell you on a historical basis that is a very, very strong performance for winter. And since this point we've seen good seasonal rate improvement, which as I said earlier, has encouragingly continued through November also. The noise in the headline rates has also been affected by the scale of the green and bolt ons we've done in the first half, and which Brendan is going to talk about in a moment. Therefore, we've added more detail to the rate chart to show the rate evolution, which is the yellow line there, for just the same store. So if we drag take out the drag effect of greenfields and bolt ons, you can see the strong sequential improvement on same store. So I think this further analysis is just there to confirm that we remain in a very healthy rate environment. Turning to Page 14. And mix remains a yield headwind with the monthly proportion of our business increasing to 70 1% and this together with the tough comps contributed to negative 2% yields. So this yield metric continues to be volatile as it was indeed last year. But I think really important metrics to highlight on this page are that in the second quarter we grew fleet on rent by 21%. We delivered 52% EBITDA margin and a 35% EBITDA margin and a 24% ROI. So clearly, we're seeing significant growth in gaining market share, but also clearly this incremental business is very, very profitable. Moving on to physical utilization. And despite the fleet growth we mentioned earlier, it's remained very, very strong. So I've included up front here the split between general tool and specialty to try and fully explain what's going on in the markets. So as you can see, total and general tool utilization remains at or near record levels, but the real development over the last couple of years has been the year round improvement in specialty as we continue to broaden our markets. Therefore, even though we're clearly in a strong cyclical period for general tools, the specialty business is now up to 24% of our total and we've seen 20% compound annual growth in that area over the last 3 years. So even as we grow and enjoy the benefits of strong construction markets, we continue to successfully diversify the business. This broadening of our specialty offering is a trend we expect to continue. That doesn't mean that we don't also see significant opportunities for our general business. And the first half has seen good activity in both areas. Our overall 2021 plan remains in place, but we have accelerated some greenfields to respond to the significant market consolidation that's been taking place. So in the first half, we've opened 44 Greenfields and expect to complete somewhere in the 70 to 75 range for the full year. And we've also spent $386,000,000 on bolt ons and we continue to have a very good pipeline of opportunities. So to look at what we've been doing in this whole area of greenfields and bolt ons and our strategic development, it's a great time to hand over to Brendan. Thank you, Jeff, and good morning. You will have seen Jeff on this last slide here just point out the progress in our greenfields and bolt ons over the period. But it's clear to see we've had a very active expansion. We've had an active expansion particularly in the period and we've done this because we see the opportunities in the markets, both as a result of some of the recent industry consolidation as well as the overall strong demand that we are feeling and seeing from our customers. Our strategy is unchanged and our activity levels are simply timing as we take advantage of these market opportunities. What this represents is just an acceleration of our 2021 plan. Importantly, it demonstrates the flexibility that we have in these plans to react to the market conditions whatever they may be. As Slide 17 illustrates, our expansion is both geographic and product based, adding a nice mix of general equipment and specialty locations through our greenfield and bolt on program. These additions advance our offerings across many geographies from a service proximity and convenience standpoint, as well as adding a broad range of products through our specialty expansion. In this half alone, we've added locations with product solutions specific to our power and HVAC, pumping, flooring, trench shoring, climate control, ground protection and industrial tools. We've done all this to service our ever broader customer base and our end markets. As we continue on the expansions theme here on Slide 18, We'll take a somewhat deeper dive into one of our more recent bolt ons, specifically the acquisition of Interstate, which we would have completed on the 13th August and covered to some degree in our Q1 results. The addition of this business with a real notable presence in the large New York City and Philadelphia markets accelerates our cluster with all the cross selling and margin enhancements benefits that this will bring. Even though we've said this many times, I'll point out again, our bolt on strategy focuses on revenue synergies. And the Interstate deal is a really good example of that. It brings this business with a good presence in the market, but also in areas where Sunbelt has historically been underrepresented. However, if you think about interstate, their product offering would have been purely aerial. So this creates the opportunity for us to cross sell into the interstate customers, our much broader product offering, while at the same time it allows us to better service our existing customers with an overall better aerial offering. As we move to Slide 19, I think this demonstrates really well the revenue synergy impact we've had by introducing this broader customer base and the product range and the overall really leveraging of this Sunbelt platform in these markets. So in the 10 weeks since we've owned this business, we've increased their time utilization as you can see from 60% to 73%, all while improving the time utilization in our incumbent Sunbelt locations in these very same markets. When we look at rate, it should come as no surprise that the interstate rates, they were lower than ours. This slide shows relative rental rates using Interstate's 4 largest product categories as compared to Sunbelt in the same markets. And as you'll see, there's anywhere between a 10% and a 20% difference in that rate. I think this brings us back nicely to Jeff's earlier point when he was referencing the impact of bolt ons in Greenfields specifically to our average rates. These always have some drag on rates, but as rate will inevitably and ultimately follow time utilization, we will begin to see these improve as we leverage the overall platform that I mentioned earlier. On Slide 20, you'll see here from a market view standpoint, look, it's easy for me to stand here and say, on the ground, the markets are very active. Virtually irrespective of the geography in which we operate, the markets are active and they're active from a very broad aspect. We can look at construction and say sure construction is busy and it's busy with a nice mix. But what really stands out to me is the activity across our general equipment and specialty businesses in areas like special events and maintenance and the many rentals taking place in ordinary square footage under roof applications every day across our entire business. So the outlook remains strong whether we look at the latest IHS ARA forecast, which was released in November, increasing industry revenue to 66,000,000,000 in 2022 just for the US and 72,000,000,000 for North America in total. In this, they project greater rental revenue growth in every one of the component years through 2022 than they did just in their previous forecast from 6 months ago. So very recent uptick there. Their forecast of course takes into account more than just construction as they have some understanding of rental penetration and areas like MRO and square footage under roof like we've also pointed out in the slide. Another measure worth mentioning is the most recent America's Builders and Contractor indicator backlog indicator, sorry. So as you'll see here, it is showing improved momentum and it's actually at an all time high. This is an interesting one to me given if you really think about what the makeup of the participating members of ABC would be, It's a very broad range of contractors who work in a very, very varying range of end markets, project size, etcetera. This outlook is further supported by the spend from this year's corporate tax cuts, which will really only begin to translate into projects in 2019 beyond. And we're actually seeing the early signs of this with significant sized projects nearing start. Things like data centers, distribution warehouses and multiple examples of office expansion and renovation. We have to look no further really than the Amazon HQ2 project or better now said HQ2 projects that were just announced last month. So the trends in our business and in the forecast like those I've just covered are easily clouded it seems at the moment. It's been a long recovery and as a result, it's normal for people to ask how much longer will it be? My answer to that question goes back to what I said in the beginning. We see good end markets and on the ground we continue to see growing backlogs. Nonetheless, we watch closely key lead indicators ensure the pace of growth will at some point and inevitably slow. We just don't believe there's evidence of that being anytime soon. Moving on to Canada, like the U. S, the markets are very strong. And I think it's important mentioning that we're uniquely supported by the increasing demand from our customers, both those that are originating in Canada and those where the relationships would have began in the U. S. Not dissimilar to what we would have experienced in the U. S, we find these customers wanting a broader product range coupled with the convenience and coverage of added locations. I'm very happy also with the integration of our recent acquisitions in Ontario, specifically those of CRS and Voisins from which we now have the platform. We have the platform to gain further share in the general equipment and specialty space. Again, similar to the progress we would have demonstrated in the U. S. Over the last several years. In fact, in the quarter alone, we've added a power generation and flooring business, thus the beginning of folding specialty businesses into that platform I referenced earlier in the Ontario market. And in the financials, as you'll see, we have continued progress with pro form a rental revenue growth of 21%. And as Michael would have said earlier, margins becoming in line with our near term expectations. So with that, I will turn it back over to Jeff. Thanks, Brandon. So let's complete the set by turning to Air Plant. And we're very much on plan to deliver what we expected. We're continuing to get sensible volume growth. We're pushing at physical utilization and we're trying to keep a sensible handle on rate, which as Michael pointed out earlier, is allowing us to deliver consistent margins. We're going to continue to control costs and fleet until we get greater clarity on end markets, but we expect to remain on plan for the balance of the year. And what does all this mean for CapEx here on Page 20 3? Well, our strong momentum with Freed on Rent is reflected in our increased guidance for both the U. S. And Canada. As you might expect from what I've just said, the U. K. Remains on its original plan. Therefore, the Group's anticipated net spend has been increased to between £1,250,000,000 £1,400,000,000 as we respond to the needs of the market and our market share opportunities. Turning to capital allocation on Page 24. Look, our priorities remain absolutely unchanged. Obviously, when your cash flow from operations is nearly £1,000,000,000 as Mike pointed out earlier, you've got a few options. But our focus remains on organic growth, as you can see by what we just said on fleet spend. And then we look to bolt on M and A where we spent £362,000,000 We've increased the interim dividend in line with our progressive dividend policy to 6.5 per share. So after all of this and subject to remaining within 1.5 to 2 times leverage targets, we allocate the balance to share buybacks. So we expect to spend £675,000,000 under the December 2017 program and anticipate a minimum spend of £500,000,000 in the financial year 'nineteen-twenty. But given the recent weakness in global stock markets, we of course review the relative returns of M and A versus buybacks. And we believe the deals we've done and hope to conclude in the near term have a very sound strategic logic and represent value enhancing opportunities. And we will continue to look at deals of that nature. However, we do remain flexible. As to the relative capital allocation between these two priorities going forward. And as I said at the beginning, given the scale of our cash flow, we have lots of options. So to summarize, look, it's been a very good quarter where we've seen good revenue, gained share, delivered strong margins and cash generation and it's been an improving trend through the quarter. Our organic growth story continues to deliver responsible growth as we maintain leverage within our conservative range of 1.5 to 2 times EBITDA. In addition, as Brendan just highlighted, we've opened a number of greenfields, completed further bolt on acquisitions as we continue to broaden our geographic and product reach. During this quarter, there's been another very significant milestone and that's been the finalization of our well flagged CEO succession. If I could add a personal note to all of this, I am delighted that it's going to be Brendan leading the business forward to yet further success. And of course, I wish him well mainly as a shareholder. So with that and to wrap it all up, just to remind you all that we continue to perform well in support of end markets and we expect full year results to be ahead of our prior expectations. But most importantly, we continue to see good opportunities well into the medium terms and remain committed to our 2021 plans. So that seems like the appropriate point to move on to Q and A. And you all know the drill. Of course Andy that was pretty quick to get your hand up. Andy Murphy from Bank of America Merrill Lynch. Just on that CapEx slide, quite interested to see that you've increased the replacement CapEx by quite a considerable amount. I was just wondering what your thought process was behind that. I would have thought you would have been pretty much on top of what needed replacing probably years in advance. I mean a lot of it is a reflection for example of the amount of bolt on activity. So when we buy businesses there is always a little bit of extra activity as we reconfigure the fleet and to make sure that we have a consistent offering across our locations. So that's an element of it. There's a bit of an old truth that after a period of heavy hurricane activity some of the stuff comes back pretty beaten up and so there's some timing issues and there is some tidying up. It doesn't signal any great change in our normal activity levels. Thank you. And the second question was just around the direction of rental rates with regard to U. S. Interest rates, which have been heading up. Does that help you in any way? Look, in theory, yes, eventually, of course, because it's going to make a whole host of things are going to make the original cost of equipment likely more expensive, be that tariffs, be that steel inflation, be that interest costs. I am not sure there is as direct a correlation as they may be on your spreadsheet, but the overall rate environment is very strong. I think the way to look I think one of the problems with rates is people expect things to happen very, very quickly and look at the short term impact. If we go back to Page 13 a second, look, people get awfully worried about what's happening in a quarter or in a month and how quickly things translate. The way I would look at it is if we go back to October 'sixteen and go to October 'eighteen, look, over a 2 year period, we will have increased fleet on rent by 42% and improved rates nearly 5%. Now if you'd asked me in October 2016, if I drew a straight line between those two points, would I be happy with that? The answer would be yes. Now what you've got to sort of ignore is the wiggly bit of string between those two points. Do I expect good rate improvement going forward? Yes. Will it always be a completely straight line? No. You can get too much noise. Look, we've got good momentum going into November on rates. Does that mean it's going to be great in the next quarter? Well, it will depend how cold it is and how many heaters we get out on rent. It literally can make that noise can make that level of difference. But the overall rate environment and look at our margins and look at our return on investment remains very positive. Thank you. Hi, Steve Gordon from Deutsche Bank. So just on the point about rates before, I think you said it was minus 2%, but Yields were minus 2%. Rates are positive. Well, rates are flat quarter on quarter. Yield is negative. Okay. Was there a hurricane impact within Yes, because you because the composition of the fleet on rent changes between the relative levels of hurricane activity. So there was the how you sort of delta from flat rates to negative yield is a combination of the fact that we now had 71% of our rental was monthly. So there's a contract duration perspective and there's also an element of the type of fleet you have on rent. So yes, they're the 2. So it's not a reflection of what we're getting for the same from the same customer for the same piece of equipment. I just wanted to ask you about wage inflation in the U. S. As well, particularly as it relates to your drivers and tracking costs in particular are going up significantly in the U. S. Is this something that will affect you? How much of that you expect it to cost? It is something I would go so far as we were the 1st person to start highlighting wage inflation. We started highlighting it when people were arguing with us that it didn't exist and that was a reflection that the U. S. Economy wasn't very good if I go back far enough. Look, we have been suffering as like everybody else in the industry some level of cost inflation for a number of quarters and a number of years now. But as you can see, by the evolution, particularly of our EBITA margin and our ROI, we're just dealing with it. We're dealing with a combination of rate. We're dealing with a combination of efficiency and leveraging our scale. So yes, it is a reality of the current very strong markets which exist in America. You've seen the drop through for the quarter was 53%, up from 50% in the Q1. So we're just dealing with it. I mean it's a reality of business now. There's no point arguing about it or trying to worry about it. You have to adjust your business and pull whatever levers you can pull to make it happen. But remember why it's there. We kind of want it both ways. It's there because there's a shortage of labor because the economy is so strong. Thanks a lot. That's a reportable incident. There goes our health and safety statistics. Rajesh Kumar from HSBC. Just on the U. S. Wage inflation, you very kindly provided us why it's strong and how you're able to counteract that. In terms of market opportunities, do you find any opportunities arising because there are labor shortage in terms of growth, in terms of providing any additional service? Yes. Look, I think we've told absolutely. Look, it is a very tight labor market. There is likely to be inflation not only in operating costs but capital equipment. As the capital equipment becomes more expensive to purchase and both the cost and complexity of taking on operational skills to support that fleet become more difficult, people are more likely to outsource and look for shorter term flexible solutions and rental of course is perfect for that. As Brendan talked has talked about and articulated very well over the years, this whole concept around square footage under roof is driven by the both cost and complexity of ownership. So anything that makes ownership more costly and more complex plays absolutely into our hands and our principle, which is if we focus on availability, reliability and ease, why would you not rent? So yes, I think that absolutely drives people to rental. And the second one is on the U. S. Market. We've seen United Rentals do a lot of acquisitions. Market is consolidating at a really fast pace. How do you think about your strategy in terms of procurement, in terms of competition in the light of what's going on? Look, I hope we've repeated a number of times and I'll hand over to Brendan to answer this too. We think our strategy remains unchanged. And again I've seen people say well they're going to end up with all this purchasing power. Well the reality is because they're acquiring lots of old fleet and they're having to integrate businesses, they're not spending a lot on fleet, they're spending a lot on M and A and actually wait. So they are unlikely to get a purchasing advantage. Again, for a long time I have been a big proponent of consolidation in the market and you remember we've had various slides over the years saying the big will get bigger and that disconnect between the top 2 and the rest will be positive for the market. So I think their strategy makes all the sense in the world. Clearly, when you're doing that scale of consolidation in a short period of time and your primary focus is cost synergies, That in the short term undoubtedly provides us with opportunities and hence the acceleration in our greenfields and some of our bolt ons to make sure we have both the geographies and the products to take advantage of that disruption. So if you look at the scale of our organic growth and our market share gains, it's cost us a lot less to get to that revenue growth than some of this. I'll let Brendan comment on how he sees the whole consolidation. Yes, I mean I think you've got the majority over there, Jeff, but I think it comes back to that key point of the difference between our expansion plan and it's been pretty consistent from out of the gates for us both the plan of growth that we had pre our 2021 plan which we rolled out in 20 16 and also our 2021 plan that we've had ever since and all along it was a complement of Greenfields and Boltons being folded in where it made sense to fold them in. There is just I can't I don't think you can underestimate the impact between viewing it as a revenue synergy add on versus a cost synergy. Look in our business, when you look at M and A and you look at the cost savings, cost synergy opportunities you have, sure, we'll have little cost savings here and there when we integrate a business because there'll be a CFO in a business and we don't need to. So simple things like that will be, but when you get to the point of closing addresses and you get to the point of reducing overall heads because in the end, in our business cost savings are people, they are fleet and they are facilities. And in a market where we have 8%, 9% market share, we have all the opportunity to be looking for all these cross selling synergies like in the instance that we gave with Interstate. And look, we are not worried at all in the current climate about us losing any of our advantages from a strength of purchasing standpoint. We buy bigger than our own shoes so to speak. So our spend would have been even more so than what our share was within the industry. So rest assured manufacturers and suppliers into the rental space, they pay very, very close attention us. I mean, being the kind of guy that I am, obviously, we give Brendan all the best slides for his first time up here. Here. But I mean this slide here is just huge. I mean think about it. Think of all the disruption and the potential loss of revenue as you go for cost synergies. If you move your physical utilization from 60% to 73%, all of that revenue growth kind of comes for free. You've already got the locations. You've already got the fleet. If you can then sort of start making progress in that delta in the rates And that's before you get into all the cross selling opportunities that those 7,500 customers that they had who have never rented heaters from them before, never rented sort of air conditioning units before. So if you start looking at those revenue synergies, it's why we like buying the smaller businesses which are strong in the product or strong in a product category and developing the revenue synergies. Now that doesn't mean to say the cost synergy doesn't work. The evidence would be that it does. It's that's our model and we're very happy with it. Stifel from Numis. Just sticking with that M and A point, how have you found then on the bolt on M and As with the way that the market's gone more recently? How have you found the multiples then of those? Have they not changed? Again, we've got to be very, very careful. What I said about capital allocation is true, it's run for 20 or 30 years, it doesn't change the price because our stock price has fallen by whatever it's fallen over the last 2 or 3 months. So we've not seen any significant changes in multiples. Look, back on planet Earth, it doesn't affect what an average guy thinks his business is worth. And again, the primary multiple relationship remains how much fleet are we buying from them. And secondhand prices haven't really changed. It's Will Catton from Jefferies. Just a couple, please. Can I just clarify your comment on growth in November? Was it 22% rental revenue growth? Yes. And then Yes. I mean, look, I haven't seen the actual final cuts around that number. It was a really good November. Okay. Great. And then secondly, any color on the type of kit for the extra CapEx? Is there anything in particular that stands out? Well, I think Jeff mentioned earlier, keep in mind part of our CapEx as it will change over time depends upon the bolt ons we would have done late last year and earlier this year. A significant portion of it would be going into the specialty business. You don't get growth the way that we have that Jeff would have demonstrated if you don't do that. But keep in mind, our ability part of our success over the years has been our ability to react to the market. So react to market to be able to bring in the gear when the gear is in demand. So we work very closely with the manufacturers that I mentioned earlier and we'll be working with them on backlogs. We don't hesitate for 1 minute if an asset was planned to go to replacement in Chicago and we have opportunity in Philadelphia, we will divert that asset from where it would have gone in Chicago as a replacement unit, make it growth in Philadelphia and then we will put another asset in the build for that later replacement Chicago. But no, broadly though our fleet mix hasn't changed. We've continued to see really good growth in market share in our general tool operations and you can see that from our greenfields and that. But we continue to remain committed to developing our specialty business. As I was revising last night and reading through the press release again, it struck me when you if you get a chance to look at the press release, look at what we've done since the quarter end in M and A and it's really quite impressive because in the UK there's 2 really cute little specialty businesses, there's a survey business and a hoist business which are those sort of like lifts you see on the outside of toll skyscrapers going around here. And then in America, we've bought another trend shoring business to add on to maybe as we develop our trend shoring offering. And quite frankly, following on from United's acquisition of Baker Tanks, we bought a really cool pump business. So even since the quarter end, there's 4 very, very specific specialty businesses which was in their own right or not massive and aren't going to move the dial in the short term in terms of our financial numbers. But as a platform for further development, it really shows you the scope that we have to develop our specialty business. I'm holding the mic. Andrew Nussey from Peel Hunt. Again, another couple of questions. In terms of the greenfields, you've obviously accelerated your plans. Does that make it harder to bring the next wave of greenfields through, whether it's an issue with zoning, cannibalization? I certainly can. I'm now just your like post 1. Yes. How things change? Are you available in June? Look, anyway, it won't come as much of a surprise. Keep in mind 2021, one of the fundamental changes from what our previous expansion plan would have been is building out our platform for clusters, right. So, obviously, you will have seen a lot of these ads in areas that we would have otherwise served, but we're just under clustered. It's not coincidence that it happens to be relatively East Coast biased. I did mention some of the recent industry consolidation and I think you'll find that's where quite a bit of it has been. Look, in terms of us finding land, is it harder to find land than it was to find land in 2012? Well, of course it is. Is it harder to find businesses that you can just upfit that are just sitting ready made, well of course it is. But we have a very strong ground game so to speak of a team that's constantly out there looking for facilities and properties. Obviously, sometimes we will complement that with bolt ons as well. But just look west of the Rockies. So look in terms of where that opportunity continues. We could talk about a population put in place construction, etcetera. An example I'll give you, if you look at the State of Florida, we have about just over $1,100,000,000 in fleet invested in the State of Florida. There's about 20,000,000 people population wise in the State of Florida. California, we have about 600,000,000 invested, there's 37,000,000 people. So just think about that comes out to about like for like it would be 2,100,000,000 in fleet we would need to have the same level of penetration in California as we have in the State of Florida. So plenty of tail left on this for sure from an expansion standpoint. Just following Sorry, I'm doing it. Going back to the interstate slide and the utilization improvement, is that a sort of like for like or is there some sort of seasonal influence on the utilization? No, look, I mean, utilization in aerial is very, very there may be a tiny bit, but by the time you're in May through to November, you're a full steam ahead. The 13th August to October 31, right? I mean, the business literally said, let's get to plus 70 by Halloween. And there you have it. Eventually, George. I've tried. Good morning. It's George Gregory from Exane. Just one please. Geoff, when or Michael or Brendan for that matter, when you think about when you do your scenario analysis for the various potential outcomes over the next few years, how do you actually settle on a level of potential yield compression in any of your businesses? What metrics do you look at, if any? Well, look, the hard bit with yields, can we talk about rates rather than yields? The yield bit's hard because it's hard to be precise on the mix in terms of the precise mix of rental contract length where we're now in great markets and as Brendan said there's a number of major projects either just started or about to start where we're going to have super length contracts. We talk about our mix between daily, weekly and monthly contracts And in those days monthly contracts were monthly contracts, I. E. They typically were out for about a month. The problem with monthly contracts now, a monthly contract really means it's out for a year or 2. So the whole dynamic of the business has changed. So the mix bit's difficult. So we look at it more from a rate and a volume perspective and we look at all of the lead metrics that Brendan has. We consider inflation because ultimately inflation will over time play into it all. So we model a rate environment and we guess what impact that will be in terms of yields and we model volume growth. So we sit down and look at all of the lead indicators Brendan saw there. We try and put in an analysis of how much market share we think we can gain and we do that by district like what is our upside potential market share by district and we add on a bit of a line for bolt on acquisitions. So we look at all the lead indicators. We focus more on rates, sorry, and yields. It's a bit of a finger in the air to be perfectly honest. Do you I suppose that your returns are obviously far higher than they were at this point of the prior cycle, but industry returns presumably are higher than they were at this point of the prior cycle. In the mean, look, remember, we are not Michael, no, this is it. I would say, look, we are at low 50s EBITDA margin in the state. We're typically buying businesses at around mid-30s and yes, they're a bit higher, but they're not as much higher than they were in the previous than you as you might think. Because what we've been remember, our we've got it in the appendices all the way through the cycle. When we the problem is when people look at where we are now and where we were in previous cycles, you're not comparing apples with apples. Remember, in the past, we saw in those charts where we see existing stores how much bigger they've got, how we've leveraged the scale. So we were in a relatively unique position that we had a relatively immature portfolio of locations and therefore got a lot of free growth within those stores. And I'm not sure a lot of the smaller players had that same scalable opportunity that we had. Is it in there anyway? Maybe it's not. Yes. No, you're just going past it. Have I gone past it? Yes. All right. I'm sorry, the ROI. The ROI. It's right at back. You see, I got straight to his slide. So I mean the issue is and I understand people are going well oh my goodness it was like 30 group EBITDA margins and now with 47 is 30 what happens again. But you're just not comparing apples with apples. If you look at the fleet which was in the same stores and the margin, we can dig it out again or I'm sure Michael can share it with you. We showed you many times what's happened to those most mature locations in terms of stores then we've just we're just a completely different business in terms of scale and how we leverage the fixed cost base. It's Andy Wilson from JPMorgan. Just a couple of quick ones, I hope. Just in terms of thinking about the CapEx planning and I guess fleet planning more generally, has anything changed in terms of kind of where you see the optimal fleet age? No, not at all. I mean, again, mathematically affected by the proportion of growth you have relative to so our fleet age came down very, very quickly, not because we were doing anything different, just we had so much growth. When I would describe it's a slide for Brendan to share at a Capital Markets Day sometime in the future. There's 2 things that make me very, very confident about the future. One is the chart Michael shows which says look how long our debt maturity is and look how steady it is. So there's not like this critical event that you have to get over. That's very different to where we've been in previous cycles. But if you were to look at the fleet age too, what we typically used to have was like dollops of fleet age and then nothing happening, which meant there was always this event that you had to get over, which was that $1 per fleet. So our fleet age wasn't very representative because whereas now we've been spending not dissimilar sums for a number of years and therefore the distribution of our fleet age is spot on. But no, in terms of how we are managing it other than the mathematics and a little bit of tweak because of the fleet mix, no, we're dealing with it exactly the same. And you've seen any change in terms of how the industry is looking at fleet age? No. If you were to look at all of our customers, so our competitors and our customers, like they woke up in the end of July and thought life was great and they're working at the end of November thinking life is great. Someone else in some of the markets has decided something else is going on, but no one else in the real world has seen any of that in terms of either their current and you're acquiring what typically is a very old fleet and you're acquiring what is probably a disconnect fleet in terms of loads of different brands, you've got some management to do. You've got some serious fleet management to do to get that good distribution of fleet age and get a consistent brand identity into your fleet. But anyone who is just ticking along is normal. Everyone is pretty careful. I think it's worth adding though. If you look at slide 34 that you'll have there, just the delineation in terms of fleet age on that pie chart, look, I mean the likes of us and a few others generally are going to have a more modern fleet, a bit newer. Jeff's right about various expansion strategies that won't quite give you as precise a balanced fleet is what we find ourselves with today. But make no mistake, when you drop into those smaller independents, you will have an older fleet age. And maybe just on Canada, I mean I can't remember exactly, but it feels like a year or so since you've been giving us some of the numbers. And obviously that strategy feels like it's really been ramping. Can you just give us a sense of kind of where you are versus where you thought you were and kind of where you are in terms of how you assess that opportunity before you kind of, I guess, jumped in on that opportunity? Yes, I mean, well, I'll tell you, I use the example before of California, just so happens to be California has the same population as Canada. So it's kind of about the same size market. Look, it's a big market. We have considerably less market share than what we have in the U. S. But underneath it all we find the very similar characteristics. So those customers in particular as I said before are looking forward to someone that has a broader platform bringing in those specialties. Is it bigger than maybe we thought it would be? Well, it took a CRS to come our way in order to really materialize that. But what we have now is we have a nice platform for further growth on the Westside in British Columbia and Alberta. And then we have this nice platform in that overall Ontario market. So no, we are very positive about Canada and see a lot of the similarities between the two and expect to ultimately see our results continuing to grow. It's just we have miles and miles of runway. Thank you. That seems to be it. So on that note, thank you very, very much indeed. We shall well, Brendan, we'll look forward to seeing you at the year end. Thank you very much indeed.