Earnings Call: Q2 2017

Dec 6, 2016

Good morning, and welcome to Ashtead's half year's results presentation. I think most of you will have seen the details of the financial performance in the press release this morning. So our objective there this morning is to add a little bit more color to what's driving these very strong results. So we start with an overview, if I can move a clicker. There we go. Look clearly it's been another very strong quarter as we continue to benefit from good end markets. Most importantly, I think we continue to benefit very strongly from the continued structural changes in the shift to rental. If I was to call out a big highlight for the quarter, it would undoubtedly be the continuing improvement in margins. Of course what those improving margins allow us to do is continue to invest in the business, to grow the business and enhance shareholder returns. And you can see that we've clearly followed our capital allocation priorities that we have laid out now for some time. So let's just roll through what we've actually done in the half. We've invested £683,000,000 in capital. We spent a further £142,000,000 on bolt on acquisitions. We've opened 56 new locations in a half. We've increased the interim dividend to 4.75p. And finally, we spent £48,000,000 on share buybacks. Now by any measure, that's clearly a significant level of investment. And again, I just think a reflection of the strength of our balance sheet and the strength of the margins is shown by the fact we've achieved that level of investment while still maintaining within our guidance for leverage between 1.5x2x. So both divisions are continuing to perform at the upper end of our expectations, as I'm sure we'll discuss in a bit more detail in a moment. As a consequence, we've increased our capital guidance. And of course also with the benefit of significantly weaker sterling, that's allowed us to improve our expectations for the year. But more importantly, as we look forward to 2017 and look forward to 2018, we're doing it with increasing confidence. As I said, more of most of that later. But with that, I shall hand over to Suzanne to go through the financials in a lot more detail. Thanks, Jeff, and good morning. Our second quarter results for the group are shown on Slide 5, and we were pleased to report earlier today an underlying pre tax profit of £242,000,000 compared to £182,000,000 last year. This represented an increase of £60,000,000 or 14% at constant rates of exchange. Weaker sterling improved profitability by approximately £36,000,000 in the quarter. Rental revenue increased by 14% year over year and margins continued their positive trend with EBITDA margin for the quarter improving to a record 49% and operating profit margin to 32%. On the next slide, we've shown the group's results for the half year. And as in the second quarter, you can clearly see the market leading growth in revenue and profitability that Jeff mentioned earlier. As reported, our rental revenue increased 28% year over year. At constant rates of exchange, that increase was 13%. You'll note that the constant currency percentage change in our total revenue 8% is less than the 13% change in our rental revenue that I just described. This resulted from fewer used equipment sales reflecting this year's planned reduction in replacement CapEx. And we'll look at those used equipment sales in more detail shortly. Our underlying profit before tax for the half year grew by £83,000,000 to £426,000,000 an increase of 9%. In the 6 months, the results were positively impacted by £53,000,000 related to weaker sterling, but this was partially offset by the previously mentioned effects of lower gains on fleet disposals of £14,000,000 At the group level, our EBITDA margins improved to 49% and profit margin to 31%, reflecting higher revenue, operational efficiencies and a continued focus on drop through and certainly all of those are key to our success. Turning over to Slide 7, you may recall seeing this chart in our Q1 presentation. Here we've provided some additional information on used equipment sales and related gains for the first half of the year. As expected, our fleet disposals were lower in the first half as compared to last year for two reasons. First, this year's planned reduction of replacement CapEx reduced both revenue and gains from the sale of used equipment. And second, in last year's first half, we had particularly high disposals as we adjusted the size of our oil and gas fleet. Both of these factors caused anomalies in our year over year growth percentages for the 6 month period. Excluding the sale of used equipment from both periods, in effect normalizing, our revenue and underlying profitability increased by 13% 14%, respectively, as compared to last year. Now some of you have asked about the implied margin on used equipment sales already this morning, so I'll address that point. In each of the half years, we record a fixed provision for the estimated cost of shrinkage, meaning lost, stolen or scrapped assets. This year's first half had a low level of sales as I've just described and therefore these fixed shrinkage costs had a disproportionate effect on the margin because there was no revenue associated with them. As we're fond of saying sometimes, it's just math, no revenue but some cost. The key takeaway is that the actual margin realized on equipment sales for the 1st 6 months of this year is broadly in line with last year. Turning now to Slide 8. Here, we'll look at the numbers on a divisional basis beginning with Sunbelt. Its rental revenue grew 13% as it continued to benefit from good construction activity and the diversification of its business. And Jeff will review these in more detail in a few minutes. We discussed operational efficiencies many, many times over the last few quarters, effect of greenfield openings and acquisitions, Sunbelt's overall drop through rate was 64% and therefore pushed margins higher. EBITDA margin at Sunbelt in the 6 months was 51% and operating profit margin increased to 33%. This puts us in a strong position for further progress. And as a final point, operating profit increased by 9% year over year as reported, but if we normalize for the effect of reduced fleet disposals by excluding gains on sale from that calculation, then the underlying growth rate was actually 12%. On the next slide, we've shown A Plant's half year results and we continue to be encouraged by its ongoing success in what is a competitive market. Rental revenue grew by 16% in the half, while EBITDA and operating profit margins remained broadly flat as we integrated in the U. K. For acquisitions. Operating profit increased year over year by 9%, but again excluding gains, the underlying operating profit increased by 20% year on year. On Slide 10, we summarize our cash flows for the year. The key points from this chart are that the group generated just over £700,000,000 of cash flow from operations in the 1st 6 months, a 40% increase as compared to last year. The strength of our EBITDA margin has driven this cash generation capability and in turn it's enhanced our flexibility. In the 6 months, we chose to invest heavily in investing £641,000,000 on fleet, we were still broadly breakeven from a free cash flow perspective. And although it's not shown on this chart, I think it's worth mentioning that on a trailing 12 months basis to October 31, our free cash flow generation was a positive £113,000,000 Slide 11 is one you've seen many times because our focus on leverage and balance sheet management is an important underpin to our strategy. Our net debt increased in the first half as we continued to invest in fleet, in small bolt ons and in returns to shareholders in keeping with our capital allocation policy. Also weaker sterling increased our reported debt by £377,000,000 However, despite that, our leverage ratio decreased to 1.8x on a constant currency basis, ending the quarter at the midpoint of our target range of 1.5 to 2 times, which is broadly where we expect to remain for the year. We believe this range provides us with flexibility and security through the cycle, particularly when coupled with our young and well invested fleet. At the end of October, the second hand or orderly liquidation value to use the banking term of our fleet exceeded our net debt by £1,400,000,000 Together with our strong EBITDA margin, our leverage and the well invested fleet puts us in a superior position, we believe, to our peers and also to our past years. These factors will allow us to continue to invest in long term growth while enhancing returns to shareholders. That concludes my comments. And so I'll hand it back over to Jeff. Thanks, Suzanne. We'll start the operational review by looking at Sunbelt. Suzanne, you're way better at this clicker than I am. Oh, there we go. So as you can see from the chart, we continue to have good revenue growth. General tool grew 15% and specialty, excluding the negative impact of oil and gas, grew 13%, which was particularly encouraging given it was a very, very tough comp in the Q2 where last year we had the benefit of avian flu. Yield was negative 2%, reflecting mainly the mix of longer term contracts on major projects, but also some weakening in rates, particularly around Texas. And I think the key with that is we'll get on to later is the impact on margin. In a perfect world, of course, ideally we would have it all. We would have more volume. We'd have longer term rental contracts. We would have lower cost to serve and we would have higher yields. At the end of the day, we have to make some commercial decisions based around the growth and margin evolution of the business. What am I doing wrong with this thing? I do apologize. There we go. Turning to physical utilization, how hard can it be? You should rent 1 not buy it. Turning to physical utilization and again this remains strong and supports our fleet investment decisions at the beginning of the year. It's our ability to keep these high volumes of fleet on rent at high levels of physical utilization that gives us confidence to continue to invest in our growth strategy and plays into our planning for 2017 and beyond. Give me a break. All right. Page 15 gives a detailed breakdown of performance between same stores, greenfields, bolt ons and oil and gas. But I think the detail is self explanatory, but I'll just highlight a couple of points within the charts. Greenfields clearly have potential for further margin progression, but with a 61% drop through in continued growth, they're clearly performing well. But once again, the standout is the 68% drop through from same stores. This demonstrates that the incremental business we are doing is clearly highly profitable even with the negative yields. This is in part due to mix. As I said earlier, we're just involved at larger projects with more fleet on rent for longer, and that brings with it naturally lower transactional costs. I'll cover this point in a little more detail when we get on to talk about the market. However, as well as mix, we are also continuing to see the benefit of the efficiency improvements we detailed at the year end in June. And this is demonstrated with a 7% improvement in Sunbelt's revenue per head, driven largely by the fact that in same stores, we're doing 11 percent more volume with only 2% more heads. And clearly, that is a great contributor to our improved margins. Right. Starting on Page 16, we've got a new one. Fantastic. Thank you very much indeed. They obviously think I've been Egypt because they put a sticker on the one I'm supposed to press. But anyway, starting on Page 16, and over the next few pages, what we want to do is review the market in some detail. What I'd like to do is go through the market information and the way we go through it, so you can get an understanding of how we consider the market and in particular why it allows us to be confident around our end markets. So let's start with going back to the beginning of 20 15. Look, in the first half of twenty fifteen, there were 13 projects of more than $1,000,000,000 including 1 of $9,000,000,000 and 1 of $8,500,000,000 This year, there were only 4 projects which just tipped over $1,000,000,000 So that's why the year on year comps in starts looked so weak in the first half. It was literally down to those handful of products. So as we've lapped these projects, unsurprisingly, the data has just got better. You can also see the impact of these larger projects in the construction backlogs. That's the chart on the bottom left of the slide there. So what does this data tell you? Look, it assumes current activity levels and calculates how long it would take the contractors to complete the work they're currently doing. As you can see, it ranks the size of the contractor by revenue. So again, you can see that the larger contractors who are engaged in the bigger work now have backlogs of well over 12 months. So if nothing else came along, those guys are going to be busy at today's pace of construction for well over 12 months, which again I just think supports the scale of projects which are taking place at the moment. You can also see that if you look at our own contracts data, which is on the right hand side. So this measures the proportion of our rental contracts that are monthly or longer. And over the last 2 years, as these larger projects have taken hold, that's grown just over 5%. So you can see there's just a lot more larger projects around than there was. We've now got an enormous number of projects with over 500 pieces of equipment on rent. Indeed, we've got many with over 1,000 pieces of equipment on rent in a single on single projects. That would have been absolutely unheard of in the not too distant path, which I think is a combination of our now exposure to those larger projects, but also the scale of activity that's taking place in North America. Therefore, after adjusting for the distortion of this like handful of projects, we still believe in a long term moderate growth trajectory. Look, there's going to be some short term deviation, but the overall direction of travel, in my opinion, supports multiple years of moderate growth and is very supportive of the 2021 plans we laid out at the recent Capital Markets Day. So year to date, construction starts are plus 1% and put in place is plus 5%. However, as I said earlier, let's look at it as we do by sector to understand the impact on our demand and how representative that plus 1% actually is. So as you can see the charts on Page 19, if you look at residential, commercial buildings and institutional buildings, which are key markets for us, they've grown much better than that average plus 1%. So not only has this year been strong, but Q3 in particular has seen a really good step up in all of the metrics that we follow. And this is particularly relevant in terms of our CapEx guidance for 2017, which I'll come on to in just a moment. Clearly, the distorting figure between those stronger areas and the overall total is manufacturing buildings. So look, it's in value terms, it's down 32% in 2015 and 29% in 2016. So this one sector has had a significant impact on the overall statistics. But again, care is really needed when you look at this one particular sector. These projects have a very high technical input. Therefore, the amount of construction needed on them relative to the value is very, very low because the fact that there's a crack tower in there or a nuclear catalyst in there really doesn't affect the amount of construction equipment that's needed. So what you really need to do is look at it as we do, which is on the left of the chart and look at the volume of construction in those projects rather than the value of those projects. So as you can see, this year, rather than facing the minus 29%, which has been affecting the value statistics, the volume is only down 10%, I say only, but it's clearly, it's a lot more moderate in terms of its impact on us. And as you can see, there's a 7 percent growth forecast in the volume of that construction for 2017. So what we've been facing in terms of our end markets has been very, very different to some of the headline statistics that I know some of you have been following. So I know that's been a bit of a troll through lots of data points there. What's the summary of it all? Well, if we just adjust for gas and electric plants, then the overall construction starts data for this year has been plus 4%, which far better correlates what we've seen in terms of our end demand, but also correlates if you look at the construction employment data, that's plus 5% too. So all of those sort of data points hang together pretty well. What is particularly encouraging is the Dodge data for 2017 and the Dodge data for 2018, where depending on how you look at it, either plus 5% or plus 8% for 2017, plus 8%, plus 9% for 20 18. Again, we think this points to our underlying thesis of long term moderate growth and once again supports 2021. Look, in terms of the 2017 outlook, are we just looking at this in some macro way? No. Again, let's get as granular as we do before we make our commitments in terms of planning. So Dodge at the moment are currently tracking 2,378 projects greater than $10,000,000 which they expect to start in 2017. So we're looking at this starts data by zip code, by project. But this is a high level of activity. That's a lot of projects for them to be tracking at this time of year, if you were to compare it with previous years. Also they assign a probability of those projects actually taking place and the probability now is 70%. Again, a very high probability for this time of year. So what does that tell us? It tells us that there's good activity next year. Look at the average size of the project at only 36,000,000 dollars What we're going to see next year is a much better mix of midsized projects. I think that will be a better mix for us in terms of yields, and I think it will be a better mix in terms of some scary headline data because you aren't going to have 1 or 2 big projects moving around which distorts the overall statistics. So we're looking forward to a very good year in 2017 2018. And ultimately, all of this is included in that Dodge Momentum Index, which looks at all of those forward projects and gives some sort of reference. I know some of you like to quote the Dodge Momentum Index, be careful in terms of short term swings because of 1 or 2 projects, you can see the chart there, it can be an incredibly volatile metric. But as bit like the ABI index in terms of an overall trend line, I think it is a useful line, but only as an overall trend line. And clearly, the data is very, very encouraging, particularly the recent pickups in commercial and institutional building expenditures. So once again, what does all this tell us? It tells us a good period of steady moderate growth. I think it's worth pointing out that all of these charts and all of this analysis was done pre the election. We don't just look at Dodge. Clearly, we want more reference points than just Dodge. So we also what we've typically followed is the global insight information which tracks the rental market and also MAXIMUS. What does it tell you? It pretty much tells you exactly the same as Dodge, which is good step up in growth and good forecasts for both 20172018. So the market looks like it's good. I'd just like to spend a bit of time. We're obviously delighted that the market is good, but I think it's worth remembering that 2 thirds of our growth continues to come from structural change. I was going to very quickly flick through a few slides just to reemphasize what we think is happening currently around those trends of structural change. First of all, as a major player in the industry, we are influencing the shift to rental by ensuring that a very broad range of customers are confident that we've got the quantity and the quality of the assets that they need to be able to rely on rental. So a fleet size of over $6,000,000,000 8,500 classes of equipment provides that reassurance as does the quality with a very young fleet age. Our customers are also increasingly confident to rely on rental because of the scale of the infrastructure that we have to support their diverse needs. And it's the scale of this platform that's the real differentiator and the real barrier to entry. Look, our customers are just not ready to outsource without the confidence that this owned infrastructure has. They are now able to rely on a business that has the scale and infrastructure to deliver 73% of its orders within 24 hours. And that's why they're now happy to rent. They're also happy to rent because they know we've got the national footprint, but more importantly, at a local level, as we discussed at the Capital Markets Day, they're confident that we've got that mix of general tool and specialty locations, which gives them exactly the service they need when they need it. And finally, they're happy to start shifting to rental and I think this is increasingly becoming the greatest driver of that shift to rental and that's technology. Technology is just making the whole rental process far easier. So our customers now have better access to equipment and data than they've ever had. They've got better access in data about the equipment they rent from us than they've got about the equipment that they own. So whether it's the ability via a smartphone to order equipment on the job site, pay a bill, check what equipment you've got and where it is to being able to call for a service charge. It's just making the whole process easier. And I think this is best demonstrated by the fact that we did a big revamp on the whole of our IT capabilities and it being more user friendly about 18 to 24 months ago. Many of you saw it when we first launched it when you were in Miami January of last year. Since then, over the past 18 months, signing up to what we call command center, which is the system where you can log on by either a PC or by your smartphone. We have averaged over 3,000 new users every single month. That is a phenomenal uptake in terms of our technology. We now get 20% of our orders through some form of mobile application or PC based application, which is more than double what it was 18 months ago. So the whole technology is changing. What we're seeing more and more, however, is not only the use of that technology to order the equipment, because I still think people are a little bit nervous about ordering the equipment to make sure they're getting exactly what they want, but the management of the process of rental thereafter, I. E. Extending the rental, calling it off rental, calling for service, paying for bills, that's been the really significant uptick. So as I said, I think we have the equipment to give people what they want and I think we have the technology to make it easier. We laid out our 2021 plans at the Capital Markets Day a short time ago where we said we're going to grow to around 900 locations and somewhere between $5,000,000,000 $5,500,000,000 in rental revenue. Look, we made a good start. We've added a number of locations and we've done a wide range of small bolt on acquisitions too, so very encouraging. So moving on to Air Plans on Page 31. And I think again our strategy is working as we gain market share and we continue to diversify the business. Physical utilization has picked up very, very nicely throughout the year and we still see lots of opportunity ahead. I think the key to the improving performance at Air Plant has been our ability to target a broader range of markets than Air Plant historically serviced. This work has clearly carried on in the first half where we've made a number of bolt on acquisitions across a broad range of markets and what we've typically done is supplemented areas where we had made investments in recent years. So we have consolidated our position as market leader in some key niche markets. But given its relative size, unsurprisingly, the Capital Markets Day was all about Sunbelt and its plans for 2020 one. I think what this slide demonstrates together with the growth and the improvement in margins you've seen in Air Plan 2, we have an excellent pathway for growth in the U. K. Too. And our plan is to share with you their plans in a little more detail in the spring of next year. I think what's important in the U. K. Is that you continue to grow profitably. If you take out the impact of gains on sales, as Suzanne mentioned earlier, the margins were flat year on year at Air Plant. But look at all the acquisitions we've done and all of the disruption and all of the one off costs. I do not believe in exceptionals. Look, your job is to run a business. That's the cost of running the business. But we have incurred a lot of cost around all of those deals in the first half. As we leave those one off costs behind, I am very confident you will see further progressions in margins and ROI at Air Plant as we continue to set new records. So taken all together, what does all this mean for our fleet plans? Well, we've restated our original budget to today's exchange rate to ensure that we are comparing apples with apples. And as you can see, given our run rate and our continued confidence in our mid term outlook, we've adjusted our CapEx guidance upwards in both divisions. So this won't have much impact at all on this year's trading. Remember what we said back in March of this year, where we clearly got us terribly wrong in explaining what we were trying to do with CapEx. We always knew this was going to be a good year. We always knew we were going to spend a lot in the first half of this year and that's what we've done. We left a range in there because we were trying to get our minds around, what, 2017 2018. So the flex was always going to be what do we land in the Q4. With the momentum we've got in the business, with the outlook for construction starts, then clearly we are far more confident around 2017 2018 and that's why we've increased our capital guidance, which will fall in this year, but the biggest impact will be in 2017 and 2018. As a side note, you'll have seen that we recently spent £29,000,000 on assets for Hudens. There is some very technical debate about the accounting treatment of whether that's an acquisition or whether it's assets. There is nothing for the €29,000,000 of assets regarding dehuydens in these numbers. So that will probably lead to a small upgrade again in the Q3 when the accountants finally realize what the right accounting treatment is, which is we've just bought assets. So again, we will further update our guidance when we get to the Q3. So to summarize, look, it's been a good quarter. Clearly, it's been a good quarter. Markets remain strong. Don't forget structural change. I know everybody wants to talk about cycles and Trump effect. Don't forget structural change. I still think it is the most important driver of our business. Most importantly is the improvement in the margins. As we develop the technology both externally to capture our customers but internally to drive more efficiencies. We've upgraded our capital and we've made really good progress in 2021 if you look at the number of new locations that we've got, and there's a pretty good pipeline of bolt ons ahead as well. Whether they happen or not, who knows, but it does look pretty good. Whatever happens, we will continue to grow responsibly. We will continue to adhere to the capital allocation priorities that we've set out and we will keep leverage between 1.5x2x leverage. And so with that, we'll hand over for Q and A. And if we do the usual of saying your name and who you are for those people who are watching in. Chris Gallagher, JPMorgan. A few questions. The first, I suppose, around the election, if there's a big infrastructure spend in the U. S, would you look at any assets you might want to increase your exposure to? The second, I know if you could talk a little bit about yield and also utilization into November. Yes, sure. Let's start with the election. Look, I think clearly, the President-elect has is pushing a very business orientated agenda. Look, anything which comes with as regards to an infrastructure initiative is not going to help us next year. It's probably going to be year or the year thereafter. So therefore, there's nothing needs to be done. I think there's this terrible, terrible perception that infrastructure means roads. And as a consequence, it means big dirt equipment. The last time I saw a bridge, there was no dirt in the air. Okay? The last time I saw an airport, it needed a very, very broad range of equipment for the terminal, whatever. So the reality is I don't think there will be a significant mix. You will probably see slightly more midsized it because the one area where I do think there will be a big initiative where I expect us to participate quite a lot because it's perfect for our broad range of equipment, we benefit enormously in the UK from this is there's a massive need for utility expenditure be it clean water, wastewater, broadband capabilities. You need, you don't need big massive caterpillar excavators to do that. You need 1.5 to mini excavators, skid steers, backhoes to do. So that midsized dirt around the utility sector, I think you will see probably growing. You aren't going to go and see us buying big huge swears of massive dozers to create lots of land. It's going to be schools. It's going to be hospitals. I think one of the things that was missed which I think was really important was when a big highway well sorry, I'm falling into the same mistake. When there was a $309,000,000,000 initiative announced last year, they didn't call it the Highway Act any longer. They called it the FAST Act. And that change was important because it stands for future American Surface Transportation. And if you dig into the detail of that, an awful lot of it is about trams, high speed rail, metro systems, building more roads and making is not going to make New York, Los Angeles, Chicago any less congested. They have to move people into alternative methods of transportation. So yes, I think there'll be some subtle changes, but I don't think they'll be enormous and you're not going to see them for 18 months. You're not going to see them for 18 months. In terms of yields, but as I said earlier, in a perfect world, you'd have it all. You'd have huge more volume growth, you'd have significantly lower transactional cost and you would have better yields too. Our business is becoming incredibly complicated now. Look, we've got nothing else to do in the world than look at our business and look at our yields and we find it complicated because we've got this three-dimensional shift going on. We've got a shift in customers from smaller customers to bigger customers. That has a yield effect. We've got a much broader product mix. So like I say, last autumn, we did lots of heaters because we had the avian flu outbreak. This year, we had Hurricane Matthew. The fact that we were renting lots more generators than heaters is a negative yield because generators have got a lower cap factor than heaters. Doesn't mean rates have changed at all. It just means our mix. So we've got product mix, which is different. But the biggest swing we've got at the moment is just rental period are getting longer and longer for particular customers and particular projects. We are at the stage in a normal cycle where our customers would have said, hey, the market's great, let's buy, and they would have been doing this high long term volume with their own fleet. And now they're not. And now they're saying, why would I buy? And so what we're doing for the first time is doing that peak length volume and it's changed all of our dynamics. It's been a surprise, I think, to all of us. And yes, look, Brendan had a rate summit in Florida because frankly, and if Doug's listening from Florida, you should still get up your rates. Because we're super, super busy there and we ought to be able to improve rates. Brendan had a rate summit in Florida and everyone said, yes, yes, yes, we've got to get up rates. The very next day, literally the next morning Brendan said, we've had a rate summit, it was great, we've got a problem. There's an airport job where we're going to have equipment on rent for 3 or 4 years. The margins are going to be great, but the rates are going to suck. So whatever they do, whatever they do with every other class of product, it's going to be a drag on yield. And what do you do? Do you take it or do you not take it? And the obvious thing to do is you take it. We are cementing our relationship with a new set of customers. We are cementing our relationship with a new set of customers who probably thought we could take care of their needs when they weren't busy and now they're super busy and we're taking care of their needs better than ever. We are institutionalizing the shift to rental. And so yes, look, I would love our yields to get a bit better. I would just point to the drop through. Look at the margins. This incremental business is clearly incredibly profitable. Good morning. Andrew Nussey from Peel Hunt. Can we just so rewind into the CapEx slide, and I'm just curious, that's obviously a Board decision, that level of CapEx. What was sort of coming up from a bottom up perspective? And what were guys in Sunbelt sort of wanting in terms of CapEx? I'm conscious there's probably less scope to double dip towards the end of this period given the planned disposals. That's a very technical term, double dipping, which goes on a lot in our business in terms of I promise you this is a bottom up. This is about as bottom up as you can get it. I could break that down by PC. So this is very much what they're demanding. If anything, it's a little bit less than they're demanding because I still think they're too obsessed with and the whole senior management team believe that we have to be careful not to chase too high a proportion of our fleet in certain product categories like big booms, like big telehandlers and that we have to encourage a better mix. So if anything, this is slightly lower than what the field is demanding right now. Our view is this is very sensible. We've got another quarter to get through. Let's see what the winter looks like. We're still ordering equipment on incredibly short lead times. But we need to give some guidance to our supply base. So the 2 are very much in sync, Andrew. Justin Jordan, Jefferies. 2 or 3 quick questions. You talked about the monthly contracts. I think it's up 5% over 2 years. Can you just show us what proportion of group revenue is now on monthly or longer contracts roughly? Never given that because it gets very, very detailed. It's somewhere less it's somewhere in the 40s. Okay. Thank you. But obviously, going forward, we should probably continue to expect that sort of longer term monthly or greater contracts would increase at a higher rate, shall we say? I think a lot depends on where you are in the cycle is the truth of the matter. Look, we are growing our small and midsized business very, very strongly. We're growing faster than the market. The guy showed you this whole concept of Tool Flex, which we consider to be a very important initiative. As I said, I think the difference now is we are in this different world where at somewhere around a good point in the cycle, precisely where the cycle is, I still think we've got long term moderate growth ahead. Traditionally, I think we're doing work that would have been done by owned assets, which is why I am very enthusiastic and I could get all very righteous and say, don't take those projects because your yields will go down, but look at our drop through. I'm also very conscious of the fact that we are institutionalizing the shift to rental. I mean, if you look at some of I mean, look at even at a plant where rental penetration is really high. There's the ShepherdWaste deal and the Galliford Tri Deal. We're buying fleet of our customers because they're just going, I don't I just don't want to rent. I just don't own equipment. Like you buy it cheaper. I don't have to store it. I don't have to maintain it. I don't have to transport it. And actually with your technology, I know more what I'm spending on the site. It's it. And actually with your technology, I know more what I'm spending on a site at any point in time than I've ever, ever known with my own fleet. So I think a lot of it to do is with So I think a lot of it to do is with the structure. I suspect there will be a range of monthly, but I think structurally, we've gone to generally longer term rental periods. And we'll have to go through a cycle to see how that fully plays out. And as you kind of continue to do that, should we continue to think about, broadly speaking, 60% rental sorry, incremental rental revenue falling through to the EBITDA line or? How many years you've been following this? When has it not been 60%? Yes. For the full year, guide to 60% and we'll see where we come in. And just one follow-up just on M and A. You've been very busy, shall we say, with the checkbook, 11 deals in the first half. And you talked about having a good pipeline in the second half. What do you mean by that? Are you signaling a step up in potential M and A or Well, again, we don't know. Look, we've always said we will do deals that make sense as and when they're available. I think I also said about a year ago, we've kind of stopped here in town and you're not buying, then valuations come back kind of what's happened this year. We always have the option of greenfield. There is nothing that we buy, in my opinion, that we couldn't do in time by doing a greenfield. Now what bolt ons do for us is buy us time in terms of getting into a new geography or getting into new specialty sector quicker. But I always have the option of look, it's just fleet. It's fleet in the location, whatever the there'll be some expertise there. So we'd like the right mix. If we can do the right deals at the right price, we have the balance sheet to do it. And I think we've demonstrated a capacity to be able to integrate acquisitions quite well. We're not looking to suddenly do some great big transformational deal here. But what we are doing is looking to sensibly leverage the balance sheet. As our old growth has ticked down to that sort of double digit mid teens, We're in this really wonderful phase that we have we were growing so quickly before there was a limit to the cash generation if we can take within our leverage. At that 10 to 15, we are in this like sweet spot where we've got great profit growth and we've got tons of cash. And we need to that's why we laid out those capital allocation priorities so carefully because now we need they become more relevant with the amount of cash we're now throwing off. Hi, good morning. It's Joe O'Dea of Vertical Research. Just a couple of questions. I think first is on used equipment and what you've seen in the market for used equipment prices. It looks like from the margins, some stabilization there, maybe how long for how long you've seen stabilization? And if you could talk about the percentage of equipment that you're flowing to retail channel versus auction channel? Yes. You're right. Look, we whittles throughout this cycle. And again, I know that it runs somewhat contrary to some of the broader statistics, but again, that was due to specific asset categories and specific geographies. So we've been generating, Susanne, what, 39%, 40% of OEC pretty close? Actually, 42% in the first half of this year. 42% is the ratio of proceeds to original cost of equipment sold. It's a very important measure that we look at internally to gauge exactly what you're talking about, Joe. And that 42% this year would compare to 40% at the same time last year. So good values for what we're selling. We are doing virtually nothing through auctions. Look, you use auctions, when you've either got some junk to shift or you've got massive quantities to shift in a very short period of time, which is why I've always advocated care at looking at auction values as a standalone metric for what is happening in secondhand equipment margin. So right now, we are predominantly using other channels, be that to our customers. We're doing some trade ins with manufacturers. But we are using I think it's less than 20% of all of our disposals are currently going through auctions. And then a follow-up just in terms of kind of the cycle and your comments around as conditions strengthen over the course of a cycle, you would sometimes see customers buy instead of rent. Could you talk about over the course of time, what percentage impact that's been? How much has gone? And is there a risk that as things maybe get a little bit better and confidence improves, we could see some of that? It's a fair question. But if you roll back 5, 6 years, I used to stand here and say rental penetration is going to be great. It will naturally moderate towards getting to the top of the cycle because people will be more confident to purchase. Therefore, whilst we used to have debates then whether rental penetration would go backwards or not. And I said, well, I can't see that, but I bought into the principle that the pace of rental revenue growth would slow. And I can genuinely tell you we have seen none of that thus far. If anything, I think that people who've just got so comfortable with rental. I think what's different in this cycle than other cycles is I think we and some of our other larger competitors have transformed our game in terms of the range of equipment we have, the scale of equipment we have and the technology with which they can access that equipment. But I also think the length of the cycle has changed all that too. Look, you may well have been forced to rental initially out of financial necessity in 2,009 2010. But that's a life cycle of a piece of equipment to go. So you have anything you had which we owned then has long since gone past its useful economic life. You've sold it and you're renting. So I think the length of this cycle has materially changed people's perception of rental. And I think the important thing has been and that's why our organic fleet growth has been so important. The key was to not be great when they didn't need much, but to be great when they needed a lot. And that's why I'm obsessed with I don't think our physical utilization is as good as it should be in the long term. I think our fleet age is a bit younger than it actually needs to be in the long term. Right here, right now, whilst we institutionalize this change, I really don't care about a percent here or there in physical utilization and I really don't care about 2 or 3 months average fee date. One day in the cycle to improve our returns, I will care about those numbers, but I don't care about them now. So I think there's been a structural shift. Of course, there are certain types of contractor where let's say around big earthmoving equipment for highways if the Trump infrastructure plant when it comes to fruition, Yes, some of them will buy more now because they'll have good longevity of sight and they use a narrow range of equipment that isn't readily available for rental. But in terms of the assets we buy, could it slow down? We're seeing the opposite of anything. Look at that, I mean, over 3,000 users per month are signing up to command center. That is a seismic shift. Hi. It's Emily Roberts from Deutsche Bank. A few from me, please. Firstly, could you please remind us of the Sunbelt cost base split in terms of currency? Is there anything other than U. S. Dollar and Canadian dollar in there? It's all it's just U. S. Dollars. Yes. It's absolutely that. If you adjust the numbers for currency, you begin to depending on which line you're looking at, the growth rates adjusted for currency are anywhere between 5%, 6%. So most of what you're seeing is currency. And then on the margins in Sunbelt, was there any impact from the reversal of billing days from Q1 into Q2? Yes. It actually moderated them. We've got I think we've got mine. In the slides we you'll see there's a bit of disconnect between the press release and 1 or 2 of the slides. So in the slides, we adjust for constant billing days. The numbers are slightly different in the press release. We had 0.7% fewer billing days in the first half of this year than we had last year. You might not think that's a very big number. You try being me trying to reconcile the numbers I have and the numbers that Susanne and Mike have and it is the cause of constant angst. So the reason why I know this number because every time I ask a question, the answer is, it's because of 0.7% billing days. So yes, you will see this. So we had 0.7% fewer billing days this half than last year. Which tends to always round in a certain way. Yes, it was against me. And Quangro, could you give us an update on what you're seeing in terms of wage inflation? Yes, that's a really good question. About what we've been seeing for a while, which is we're probably going to average out at 2% to 3% with a significantly greater emphasis on blue collar jobs. So like our highest staff turnover is around drivers in mechanics. They are key areas to us and therefore we need to address it. So we're going to do a couple of actually important things. So look, we are seeing probably 4 to 5, maybe even a bit more than 5 in certain key areas. But we need to get ahead of the curve and I still feel as if we're chasing behind it. So actually, we'll announce all this better at the time. So starting from May of next year, we're going to adopt the living wage well before the 2021 guideline across air plant and we're going to reset a minimum wage as yet to be firmly identified, but way ahead of the government based minimum wages in North America too. Because I think for a whole host of reasons, I think it's the right thing to do, particularly in the current political and economic climate. But more importantly, we need to keep our good staff. I'm a bit worried that we're becoming a training ground for the rest of the industry. So yes, sort of I think it'll average out probably closer I'd like it to be 2, I think it'll be 3, but I think there'll be a spread of 1 to 5. Thank you very much. It's George Gregory from Exane BNP Paribas. 3, if I may. Firstly, Jeff, just going back to the infrastructure question. Just to clarify what you think might happen. Are you saying that you think there will be a sort of skew towards buildings, hospitals, transportation as opposed to highways and that should benefit you? How does that play out? I believe so. Look, we need to see the data because I would look at what is needed. And I think there's been some good lead indicators from recent bond issuance at a county or a state. Remember, during the general during the presidential election, Americans vote on thousands of things, including is the passing of certain bonds to do infrastructure work in that county or in that state. So let's look at some of the highlights of what got passed in November of 'sixteen. So California raised a 9,000,000,000 passed a $9,000,000,000 bond to build schools. Los Angeles County, it was called something M. Measure M. Measure M. Sorry, Measure M. I keep getting mixed up with bone here. Anyway, so Measure M got passed. Measure M was an initiative going all the way out to 2,039 where the County of Los Angeles has increased their sales tax by initially 0.5% but then going up to 1% to release about $800,000,000 per annum through to 2,039 to improve transportation in Los Angeles. Now is all of that highways? No, very, very little of its highways. What they're doing is rail network out to LAX. They're doing a subway system. They're even doing bike lanes in Los Angeles, which I find amazing. Somebody used to get them to come to try and drive around London. So it is transportation, but it's not highways. Houston raised $1,500,000,000 for schools. Dallas raised $1,500,000,000 for schools. So I think the need is the transportation issue is more more highways in Los Angeles will not get you around Los Angeles any quicker. You have to move people on to public transport, but there needs to be a decent public transport system. So I do believe that the mix, but there will be lots of highways because you can spend a lot of money very, very. But also remember, a lot of this is to create jobs. There is a skill shortage in America, okay? There is a specific issue with jobs in very specific territories where old industries like steel or coal predominated. Building more roads there is going to make no difference whatsoever. So bearing in mind, I think it's going to be very geographically targeted if it's going to have any impact of trying to save a coal industry where the cost dynamics of a gas fired power station is so much better than there's only so much you do. So you have to create other infrastructure for other jobs. Therefore, I think it's wrong when people just think about highways. You referenced yields in Texas. Was there any particular reason why you pulled that out? Because it's the only place really where you're seeing any significant reductions. Bear in mind, with the reductions we've seen in Texas, they're still the best rates we've got in the country. So what you had with Texas, it's a bit like that whole if you look at any of the charts, what oil and gas created was this really messy kink in so many metrics for a short period of time, be it in construction starts, secondhand values and all yields looked as if they were going up better than they were actually across the national average. So our rates became higher than the national norm in Texas and we're now seeing our rates heading back towards the national norm and which is just that heat in that sizzle which did exist through oil and gas. Just on your sort of message around institutionalizing rental and this sort of shift to longer duration contracts, That I think to many would be perceived as being sort of ultimately quite sort of deflationary in terms of return because sort of the longer duration of the contract and certainly you look at institutionalized rental markets, they tend to generate lower returns than fragmented rental markets. How do you Yes. I think it's a fair question. Look, our average rental period is still relatively short. Even with this growth in monthlies, it's about 14 days or something, our average rental period. So we're still relatively short rental periods on average. And I think the key is as we laid out in the Capital Markets Day, which is it's not a case of one size fits all any longer. The cost base, the depot size, the depot infrastructure, what you store in certain depots to meet those big demand. I think where people have got it wrong, I mean, if you look at some of our PSA here in the U. I think they kind of got into a terrible mess when they were very good and had an infrastructure that was very good at small tools to small contractors suddenly thinking they could put huge volumes through to national accounts through the same infrastructure. I think both can potentially be very, very profitable as long as you have the structure in the cost base which is linked to each one. I think and that's why when you look at it, remember, when we went through all detail of the in the Capital Markets Day of our cluster, we will have locations with 35, 40, I think ultimately even more fleet and you'll have 1 or 2 of those in the district and they will ship vast quantities to big sites. You then need your metro downtown stores too. And I think the real danger is when you try and treat them the same and think you have to look at sectors more than you have to look at products. And it's rental period in sectors that you need to configure your cost base to and not assume all products are the same. I agree with you it's a risk. And where we potentially got it wrong in the past and probably didn't understand the opportunity from some of the big accounts was looking at what it did to the cost base of a small store versus what it does to the cost base of a very differently configured store. Hector Forsytham, Stifel. You've moved your CapEx guidance up to the top of the range. You haven't made any comment about the share buyback program. Within that share buyback program, is there a sense that maybe you could alter that to maybe a special dividend? And what are your thoughts as we move into next year? It's a good question. I mean clearly we're well off the pace of spending anything like GBP 200,000,000 in the year. We said it was an up to number, but we also fairly clearly laid out that it was at the bottom of our capital allocation priorities too. And so in a period where we have seen good organic fleet growth, which we've invested in, where we've seen a number of good bolt on acquisitions at attractive multiples relative to buying our own shares, then we have invested in the long term returns of the business. The key is to keep an open mind and be flexible around it throughout. And that's we're not going to spend £200,000,000 for the sake of tournament. And part of our problem has been quite frankly has been a quality problem and that whenever we set a target price, the price goes up above that for about 2 weeks afterwards and we're kind of chasing our tail. So we've had somewhat of a quality problem in the first half of the year in terms of not spending as much as we perhaps would have liked to do. But the other thing is that we will continue to spend on an appropriate amount. Special dividends versus share buybacks, look, you tell me, look, you are never going to get a consensus on that, ever, ever, ever. Well, basically you will because Americans hate dividends and love share buybacks and the British love dividends and hate share buybacks. And we've got about a pretty much fifty-fifty split in our share register at the moment. So we're damned if we do and we're damned if we don't. But the key is we are generating lots of cash. We will stick to that hierarchy of capital allocation priorities and continue to think about shareholders as much as the growth in the business. Do you see leverage moving towards the upper end of the range? If we suddenly got a rush of all the deals that we could theoretically do all came to pass in a short period of time, then you might just get to 2 or thereabouts for an incredibly short period of time. But other than that, if you look at the cash generation and the margins we've got, more naturally, we ought to be going in the opposite direction. So if we ever did head up towards that level, it will be because we have some great growth opportunities and we would very, very swiftly come back down in the other way. We are not going to suddenly reset the range. Andy Murphy from Bank of America Merrill Lynch. I had three questions. First of all, just on I was interested in your comments about structural shift from ownership to rental. I was wondering to what extent you thought that technology was actually accelerating that shift and whether you thought perhaps either in the U. K. Or the U. S. Or both that sort of 70%, 75% has been talked about in the past could actually end up being higher? Look, I think it is. I mean, look, we're seeing it now. I mean, if you look at A Plant over the last 3 or 4 years, what we bought back assets from Balfour Beatty, from Keya, from Galliford Tri. So even with the high levels of rental penetration, those assets that were still owned, people want to divest. I mean, people truly don't want people owned equipment because they thought it was the cheapest way they could reliably perform the tasks that they wanted to do. Nobody just wants to own it because they want to go and look at it. It's because it's the cheapest way to reliably before. We, in my opinion, have changed the game by with the range of fleet we've got, the quantum and quality of fleet we've got, people now knew we had it. So we overcome the first hurdle I think over the last 2 or 3 years which was okay, if I want it, Ashtead's got it. The next question was okay, but I still got to order it, I still got to manage it and it's easier to deal internally than it is to deal externally. What I think technology is doing is actually making it easier to transact with us than it is to transact with your own internal fleet department. If you're sat on a job site or in, I don't know, the Bloomberg building down Cheapside there and you want to interact with your fleet department, you probably have to go down to the site office and you probably have to make a phone call. If you want to interact with us, you don't move, you get your iPhone out. That's different. When you look at your iPhone, it where they are. You can on hire them, off hire them. You can pay your bill. You can't do that with your internal fleet department. And so I think we are making it's all about it's not about us competing necessarily with even with other rental companies, although I think the larger players who do have this technology have an unbelievable competitive advantage now over the smaller guys. It's competing with the cost in the ease of ownership. And I think it's we probably buy all equipment at least 20% less than any contract. I think we buy it on average about 15% less than any other rental companies, but about 20% because small contract because contractors don't spend much in the grand scheme of things. So I'm buying it cheaper. So it all comes back to this yield thing. If I don't gouge you on rates and if I make it easier and simpler to own, you've got health and safety issues to consider, you've got logistics issues, transportation. You've got none of that to worry about. So I think, yes, I think technology is the final piece of the jigsaw. Remember Brendan talked about availability, reliability and ease. I think we cracked availability and reliability with our fleet ease part. Thank you. The other question was really a 2 parter and it relates to CapEx. Just interested on the slide you got on the screen there that your replacement CapEx for this year in both businesses have risen. I was interested in thinking why that's gone up. There's a couple of reasons for that. The first reason is probably it's the bit that we pay the least amount of time to. We spend all of our time worrying about growth CapEx. Some of it I think is just tweaking the forecast. But also remember we've done a bunch of bolt ons in Greenfields. In particular, well not Greenfields, with bolt ons we typically sell their fleet and buy new fleet. So as we do bolt ons, you will see replacement CapEx tick up just as we reconfigure the fleet that we've purchased. There's also a little bit of tweaking of the fleet mix too where we're trying to get the guys to invest in the Tool Flex program, so there's a little bit more replacement around some of that small tool stuff. Relative to this year, how should we think about CapEx for next year perhaps? Give me a break. I've only just saw the end of this year. Look, I'm only halfway through this year. Look, we will do as what we've always do in the next quarter. We'll start looking a bit further forward into 2017. Look, you saw how granular we go into this stuff. Look, it's not like we're picking some big macro forecast here. We are by district looking at starts data and looking at market share data. So we've got a pretty good plan of where we'd like to go. Our 2021 plan set over the next 5 years, we think we're very, very comfortable somewhere around double digit compound annual growth. Now some years are going to be a bit more and some years are going to be a bit. So it's going to be in that sort of range and it will be the CapEx necessary to get that level of growth. Now we'll have to look at what physical utilization is. We'll have to look at whether we've got inflation or deflation within the cost of equipment then too. Remember, this is these aren't inflation adjusted numbers, but we're going to be in that range. We're feeling better about 2017 than we did 9 months ago. Morning. It's Rory McKenzie from UBS. On the complex outlook for yield, the comp on product mix gets a bit easier in H2. Will that be offset by more of this rental period getting longer again in Texas? How would you weigh up those? How cool is it going to be? If it's cold, the yields will be better. If it's not cold, it won't. So the more like heating has got this unbelievable high cap factor. Like we could totally and utterly distort the yield statistics if it's cold. So this is a problem. Some of it is just mix and events. Is it going to be it ought not to be massively Q2 really. But seriously, if it got look, we look, I can show you my iPhone. I have certain key points in America where I measure the temperature. Brendan has a heat map of the whole of America where we try and predict physical utilization of heating. Physical utilization of heating up until last week was rubbish. It was slightly better than last year, but it was rubbish. I think we were like in the mid teens percent. And it's got really cold this week and we are so, so happy. Will it be cold for the next 8 weeks? I have no idea. And then it's clear you see strength in confidence in markets. On the structural argument, putting the penetration to one side, what does a long period of steady market growth do to your competitors and how they feel about investment decisions? That's a really good question. I would guess it means everybody becomes a little bit more confident in investing in fleet. I mean I'm surprised and I think people thought we were taking a fairly bullish view in our CapEx in spring of this year, but if you look at our physical utilization, that in my opinion proved to be a very, very good decision. If I look at the capital guidance coming out of some of our larger peers, it's still fairly low relative to their market share. But I think generally, if people let's get Trump in power, let's see what the infrastructure will be and clearly be it customers or be it competitors with a better long term outlook for the economy, the probability is people spend a little bit more. Andrew Fonnell from Morgan Stanley. Would you be able to talk about the bit that you've got on Slide 16, the small and large contractors? Just I know that you might say that it's too difficult to say, but the yield difference between them, just if you would so if we have this move towards sized as you're talking about in 2017? Yes. No, the yield difference The yield benefit on that. But bear in mind, we charge very, very different rates to the same contractor whether they rent for a month or whether they rent for a week. So that yield difference exists within customers. It doesn't have to be and a lot of it's sector related as well as customer. But yes, look, if you are going to rent 500 pieces of equipment or 1,000 pieces of equipment for 12 months straight, you're probably going to pay a significantly lower yield than if somebody wants to rent 2 pieces of equipment for a day. What's the range? I don't know because there are so many different variables to say it's 20% more or 30% more. I think it's a fairly meaning is genuinely meaningless number. But yes, of course, small guys renting few pieces of equipment for a short period of time pay a lot more, and it is a lot more than somebody renting lots of pieces of equipment. Now remember, for an awful lot of those big long term rentals now, a growing development is the number of on sites that we have. We love on sites. They cost us nothing. We have a very, very low cost base and we service lots of pieces of equipment. Now if you look at the rates on any of our on sites, they are by some distance the worst rates in the country. If you look at the profits, but we create them as a profit center. When you look at the profit center contribution, they're our best profit businesses also. Look, why do we buy when we bought the Hugin assets in the UK, we didn't take on any of their mainline depots, but we took on their industrial on sites. We took on the industrial on sites because the cost base to serve is incredibly good. So it's a very, very I just can't give you a straight answer. But you'd say that yields are probably going to improve, so it's negative 2% for Sunbelt, you'd see that they'd improve from that level going into 'seventeen? I don't know. I think it depends what the mix is. I mean, it's too early to say. I think I feel we're feeling good about the business. Being precise about the mix is more difficult. I think the key there too is what we do try to manage is the EBITDA and the EBITDA margins. And we do think about that. And so when we are thinking about what the customer mix might be, for example, or whether or not we take the airport job in Florida that Jeff referenced, we think about it in terms of that margin perspective. Yes, we think about yield. Yes, we think about physical utilization and all those metrics. But they are individual metrics that we consider in the round when we think about what is going to drive the margin forward and what's going to cement a relationship with the customer. And there's been some improvement early stage admittedly in oil and gas markets. Would you is that something where you might allocate more fleet to in the future? Or given the experience over the last couple of years, would you want to avoid that? We've stayed in oil and gas. We've took down our infrastructure. We are mildly up, but I mean like it's rounding differences. I've as I did right at the very start where we got involved in oil and gas, I fundamentally believe in the benefit of to the U. S. Economy of being self sufficient in energy. And as a consequence, I think it's a long term structural play. But I think we're some way off it having any significant impact on our metrics. Okay. Thank you. Hi. Good morning. David Phillips from Redburn. Your points about wage inflation well made and obviously the entire construction industry seeing that. I just wondered about your use of technology, use of telematics and your ability to offset some of that quite meaningfully through your own efficiencies? And is that something you can see it running at sort of 3% to 5% deflation per annum? Yes. Again, I can't say I've put a number on it. Perhaps we should try and put a number on it. I think you can see it in the statistics we've just gone through this morning. In same stores, because our greenfields and bolt ons are a bit of a distortion to our labor metrics in both the U. K. And the U. S, In same store, as you compare, unlike fact, we're doing 11% more volume with only 2% more heads. I mean, that is a significant delta in improvement in our margins. Now again, if you go back to the June presentation, we took you through what had happened over a period of time. That's been a trend which has been going on for some time. So I do believe there continues to be significant self help in our margins, which ought to mitigate to a large degree the wage inflation that we've got. And could you put a number on what the average fleet on rent per day progress has been so far in Q3? We've been tracking kind of whatever it is, 13, 14, whatever it is through the first half and it's exactly the same. We've been like we are unbelievably consistent, like scarily consistent on a day to day basis in terms of the fleet on rent. We now have so many pieces of equipment on so many projects. You get projects start and finish which play around on the edges, but we're unbelievably we're very, very conscious. Like I said, only now is for it to be cold, and it will be a great quarter. With that, and I think if there's no further questions, once again, many thanks for your interest in NASH Ted, and we'll talk to you again at the Q3. Thank you very much.