Earnings Call: Q1 2014

Sep 4, 2013

Hello, and welcome to this Achtel Group First Quarter Results Analyst Call. Throughout this call, all participants will be in listen only mode. And afterwards, there will be a question and answer session. Just to remind you, this session is being recorded. I'll now hand you over to Jeff Drabble, Chief Executive. Please begin. Good morning, everybody, and welcome to the Astey Group Plc Q1 results conference call. Susan and myself will, as usual in the shorter Q1 update, present a few slides on the financial and operational performance of the business. We will then swiftly move on to the Q and A and therefore hopefully bring you right up to date with our current performance and what trends we are seeing in the business. So starting with the overview on Page 2, we are obviously very pleased with a very impressive quarter. The momentum established over the last year continued with 26% rental revenue growth in Q1. This growth continues to be highly profitable, resulting in record pretax profits of £99,000,000 and generating 43% group EBITDA margins. We have consistently reinforced our belief that return on investment through the cycle is the key measure in this industry. So to see group ROI at 17%, so early in the cycle is particularly encouraging. Our strategy remains focused on organic growth with gross CapEx of £279,000,000 in the quarter. And I will specifically cover this fleet growth in the operational review. Fleet management is a key part of our medium term cyclical planning as is our debt planning. Therefore, we were pleased as part of this process to extend our ABL facility in August. Suzanne will cover this in more detail in a moment, but in short, we got more for longer and it costs less. Importantly, it again provides us with a very firm capital base from which to continue to invest in the business. So with that very brief overview of the highlights, I will hand you over to Suzanne to cover the financials in a little more detail. Thanks, Jeff, and good morning. I'm pleased to share with you this morning on Slide 3, our first quarter numbers. It's encouraging to see last year's positive trends continue into the new fiscal year. For the quarter just ended, we reported an underlying pre tax profit of £99,000,000 compared to £61,000,000 for the same quarter last year. Rental revenue was again the main driver of profitability. It increased by 26% as compared to the same quarter year. Our performance was further enhanced by our operational leverage and as a result, our EBITDA margin increased from 40% to 43%, and importantly, our operating profit margin rose to 27%. We believe these improving metrics along with Group's return on investment of 17% clearly demonstrate the strength of our largely organic growth strategy as well as improvement in both our U. S. And our U. K. Businesses. Jeff will discuss this in more detail in a moment. Slide 4 shows our debt and leverage position at the end of July. Now as you'd expect given our growth trends, we invested significantly in our fleet and took advantage of market opportunities. And as a result, our debt increased in the Q1. However, from a leverage perspective, the increase was more than offset by higher earnings and therefore our net debt to EBITDA leverage ratio declined from 2.4 times last July to 2.1 times this year or measured at constant currency 2 times. This reduction was in line with our previous comments that improving EBITDA margins would allow us to support further growth while still continuing to delever. We anticipate that leverage will reduce to approximately 1.8 times by the end of the fiscal year and therefore we maintain our medium term a key focus area for us and we further improved it during the quarter. On Slide 5, we summarize the recent changes we made to our senior debt facility, all of which enhance our financial flexibility. We upsized the facility from 1.8 $1,000,000,000 to $2,000,000,000 a change that we believe is prudent given both our growth and the strength of current credit markets for larger well capitalized companies. Had the new facility been in place at July 31, our borrowing availability would have been $657,000,000 We also took the opportunity to extend the facility's term for another 5 years and it's now in place through August 2018. And finally, but equally importantly, our borrowing costs will be reduced under the new agreement. The rate of interest we currently pay has been lowered from LIBOR plus 200 basis points to LIBOR plus 175. So with the new facility in place, our weighted average debt maturity is now 6 years. Our weighted average interest cost is well below 4% and we effectively have no financial monitoring covenants unless our borrowing availability falls below $200,000,000 The ABL structure we have in place is well suited to our cyclical asset intensive business and it's proven itself during the downturn. And at this stage, we believe our overall debt structure combined with our young fleet age positions us well to take advantage of prevailing market conditions. That concludes my comments, and I'll hand it back over to Jeff. Thanks, Suzanne. So just a couple of quick slides from me on operations before we shoot straight to Q and A. Starting with Sunbelt and really not much to add here from what we said at the year end. Both Freeton rent and yield have continued to perform well in the quarter as you can see from Slide 6. This has resulted in a very pleasing 25% rental revenue growth again, reinforcing our industry leading performance. We have accelerated capital spending in light of the high activity levels and the fleet size is now 18% larger than 1 year ago. As we stated many times, we are fortunate to be able to flex our fleet size readily due to short lead times from suppliers and individual assets being relatively small increments of expenditure. As in previous years, we will continue to be proactive in response to market conditions and invest as required. This investment has allowed us to please only get physical utilization back to more normalized levels, which will allow us the headroom to continue to provide excellent customer service, react to what we see in the marketplace, which is improving demand and therefore continue to gain market share. Importantly, as well as focusing on growth, we continue to ensure that this is profitable and drop through of rental revenue growth to EBITDA remained a very healthy 63%. Moving to A Plant and after all the difficult times, it's really pleasing to report a continuation of recent trends and a very strong performance. A Plant's rental revenue growth was obviously very strong at 35%, but this does include 2 acquisitions made during the quarter. However, stripping those acquisitions out, revenue still grew 12%, which is very good in current markets. And now as in the U. S, we are clearly gaining share. Also as in the U. S, our drop through from this revenue growth was good at 60%. We believe that our strategy of first stabilizing the business as we did some time ago, followed by sensible investment continues to pay dividends and we anticipate further progress as we leverage the group's strength. So that ends this very brief first quarter update. To summarize, it's been another period of good revenue growth, margin progression and basically just more of the same. We continue to think carefully about the cycle and have continued to invest in the fleet and refinance the ABL. Both of these actions have positioned us well for further growth, whatever market conditions may prevail. As a result, the Board anticipates a full year results ahead of its earlier expectations. And with that, we now move on to Q and A where we will follow the usual protocols. So over to you, operator. Thank And our first question comes from the line of Justin Jordan of Jefferies. Please go ahead. Your line is now open. Good morning, Suzanne and Jeff. Well done obviously in Q1, but as always the market is forward looking. It focuses on Q2 and whatever fiscal 2015 thereafter. Can you just talk a little bit about current trading in all this? I'm just curious to know what rental revenue growth was in both Sunbelt and A Plant in August and just what trends you may be seeing? Is there anything changing in either macro environment or the competitive landscape in either geography? Yes. No, you're absolutely right. The great set of Q1 results, but they're already yesterday's news and we like you are focused on the future. Yes, we're very encouraged by our current trading. August revenue growth was 20%. And it's true. We face ever tougher comparators. But the key to this is what we're seeing sequentially. And what we've seen in both Sunbelt and AirPlants is strong sequential growth. So we've seen good growth all through each month as the year has gone by have seen improvements in volume and improvements in yields. And so we sit here today with yet again record levels of fleet on rent in both geographies and improving trends in yields. I know there are some macro concerns out there about tapering of quantitative easing. That has not we have not seen anything like that out in the marketplace. I think you have seen in both of our geographies, there was broadly encouraging macro data on construction only yesterday. And we look at a number of other key non financial metrics, which support the sense that we're very busy out there. Contract count is up, contract length is up. Contract value is up. And the lead time in which people are requesting delivery of equipment is down, which in all world all points to a very busy market. So we invested heavily in fleet growth in Q1 and we have and based on the plans we have for Q2, intend to continue to do so throughout Q2. So we are very encouraged about progression in yields and progression of fleet on rent. Thank you. Thank you. Our next question comes from the line of Mike Murphy of Numis Securities. Please go ahead. Your line is now open. A couple of questions please. First of all, on yield, can you shed a little bit further light on the 6%? Think when we spoke at the end of last year, Jeff, you were suggesting that the rates of yield improvements that you saw throughout last year were probably not sustainable in the current year. Secondly, and then talk a little bit about the mix of the fleet. Are you seeing growth across the fleet? And if so, that's fair enough. But other areas such as the speciality, which I know you focused on in the past, are they doing better than the average, please? Yes. Look, good questions. Yes, look, I mean, clearly, after such a strong year last year, you can have concerns about the sustainability of that as you go into a new year. I think just because of the high activity levels, Mike, we have been pleasantly surprised with the volume growth that we've had, but also our ability to get yield improvements. And as I said, sequentially, we had a very good July and a very good August. With rates depend on activity levels. As I said, contract count is up and contract duration is up quite a bit, which is interesting. What that means is people are scared to give up their fleet. And value of contract all and people are we often have quoted in the past that 50% of our demand is called in either the day before or wanted for same day delivery. Current stats are we're nearly 70% on that. Now that's just people are busy and are having to react. In that environment, that's a very positive rate environment. We ought to be able to take advantage of that both through pure rate and ancillaries like things like transportation charges and hence a very strong yield. In terms of mix of business, it's been very widespread. Again, all of our geographies are strong, all of our product sectors are strong. If anything, the specialty businesses are facing the tougher comparators. We have a whole range of significant weather events last year all through Q1 and we've had none this quarter. So these numbers are without significant events. You know Q3 is going to be a tougher comparator with Hurricane Sandy. But despite that, the core market around small scale non residential construction is strong for us. You can see areas of the market linked to government expenditure where you see negative impact of sequestration. And whilst non whilst residential and I know there's lots of speculation about this, really is a very small proportion of our business. It is what exposure we have is it's a very good market right now. So all in all, we think market conditions are favorable and I would point to the fact that we've got 18% of fleet than we had 1 year ago. And as I said, and we continue to spend heavily on capital. Okay. And can I just follow on from that? You've obviously pulled forward a little bit of capital expenditure into Q1. You're keeping the same figure for the full year. Can you just explain a little bit more about the your thinking about that? I know I mean, normally Q2 and Q3 were below net additions to the fleet and then Q4 very much depends upon the outlook for the following year. That's the key. The Q2 is going to be strong again. There's no question about that. And therefore, you could look at the expenditure in this quarter and the end of the second quarter and say, the risk is undoubtedly to the upside in terms of our capital expenditure. But you're absolutely right. What will dictate the quantum will be what we do in Q4. And what we do in Q4 will be based around an economic outlook we take around January February time. And all we're trying to signal to people here is people get too obsessed with our capital number. We look at quarter out. I've used the analogy before. This isn't real capital expenditure. It's like asking Sainsbury's how many loaves of bread they're going to have on the shelf. It's stock in trade more than its capital. Our not upping our guidance is in no shape or form any lack of confidence in our business. The fact of the matter is, 8 weeks after the year end, we haven't sat down and done a Q4 forecast yet because we're so busy trying to get in everything we can for Q1 and Q2. And then just following on from that, any change in terms of prices of new kits? I mean presumably you'll buy new kit, other competitors are buying new kit. Can you just say what the situation is at the moment across the piece in terms of Yes. We're seeing very little inflation this year. And I think I'd point out, if you look at the Deutsche report, expenditure on fleet industry wide is down, not up. It's an increase in market share. Look, whatever stats you look at, our biggest competitor, the global insight numbers, the general construction markets point to somewhere around 6% growth. So there's clearly a big delta between that number and what we're delivering. And clearly, that's market share growth. Thanks, Geoff. Okay. Thanks, Mike. Thank you. Our next question comes from the line of Peter Nusi of Peel Hunt. Please go ahead. Your line is now open. Hey, good morning. It's Andrew Nossi. Just a couple of questions around A Plant, which obviously is staging quite a remarkable turnaround. Can you give us a little bit more feel around the volume dynamics there? Pretty conscious utilization continues to improve. But on the yield side, again, the improvement in yield, that's the first improvement in yield we've seen for a number of quarters and whether that's rate rise or mix impact. Just a little bit more flavor on that turnaround that you've seen in the Q1. Look, let's be clear. Remember, in terms of the volume growth, we've been seeing that for 2 or 3 quarters now. And so we have been starting to see share gain for a while now. So the revenue growth is up 9%. You're right in pointing out the big chunk of that's physical utilization. So I think the fleet size is only up about 3% and the rest of it is utilization. So the market conditions aren't still great in the UK. So not surprisingly, unlike the US where frankly, I wouldn't be against the utilization coming down a little bit further to give me some headroom to gain market share. We're not in that position in the UK with the returns on investment. We're still at the sweating the assets phase. So fleet on rent is going well across a very broad base. Yields, be careful. Remember, all through last year, we were saying, I know it's saying minus 1% or minus 2%, but it's not as bad as it looks because there's one contract distorting the numbers. The same is true with the plus-three percent. It's not quite as good as it looks. It's not like there's been this significant leap in performance between Q4 and Q1. We told you all through last year that the underlying numbers were 1%, maybe 2% growth. And so it's just the comparator sorting themselves out. Nothing spectacular has happened in the baby steps, not big, big changes. And of small baby steps, not big, big, big changes. But it is mildly positive and the volume is good. And like I said, we've got 12% growth again in August, 36% or 37% including the acquisitions. So it's nice to see a business that's had a difficult time really benefit from some very sensible management decisions and taking a longer term view. So and if we get any help whatsoever from the economy, which I think is still up for grabs whether that's going to be the case or not, then clearly, we're incredibly well positioned. Continuing to look out for any sort of potential small bolt ons as you along the lines that you've done in the last 12 months? Yes. Look, in both geographies, we think that there is a very good pipeline of predominantly specialty small bolt on acquisitions, both in so that's both in the U. S. And the UK. But again, our primary focus will be organic growth. We still got in both markets relatively low market share. I think we find ourselves in a very strong competitive position. A number of customers and a number of our competitors remain poorly invested in our balance sheet, both in terms of its fleet and our capital availability is very strong. And we want to leverage that. I mean, the key to this is look at our return on investments. In Sunbelt, there's a group at 17%. In Sunbelt, it's 25%. It's tough to find M and A, which is going to give me anything like the sort of returns I'm getting from organic growth. And we don't see any short or even medium term concerns about our ability to keep very healthy organic growth. So it's been a very dull story for a while now, Andrew. If there's any summary for this Q1, it's just more of the same. Okay. No, that's very clear. Thanks, Jeff. Thank you. Our next question comes from the line of Alex Magni at HSBC. Please go ahead. Your line is now open. Just a question on the rate of headcount growth at Sunbelt. That's started to sort of pick up certainly ahead of depot growth. Is that the normal so we had 12% year on year growth in headcount in Q1. Is that the normal rate of headcount do you think we're at? Is there that much tension in the depot network? What we said, Alex, for some time is that we have used up a lot of the spare capacity, which you see in the 60% drop through guidance that we've given spare capacity in terms of having extra employees, extra trucks, etcetera. That's sort of been used up. So as our volume continues to grow, yes, we will add headcount. Specifically to your question though, don't forget when you're looking at it year over year that we have opened a number of greenfield stores. We've made a number of small bolt on acquisitions. So if you strip those out, it's probably around fifty-fifty or so of the headcount growth that you're looking at, about 50% of it relating to acquisitions. Okay. Got it. Thank you. I'm sorry, sorry to interrupt. It's not going to be linear. Suzanne is absolutely right. And the point you're alluding to is right, which is you get some free growth early on when you're using spare capacity, we're beyond that point. However, that doesn't mean 10% volume growth equals 10% headcount growth. We're not at that stage by any stretch of the imagination. And of course, as Suzanne says, there is a lot more capacity available in the headcount we've put into the greenfield sites. Understood. Okay. And then just following up on the question on yield. Just rough numbers, but do you have a sense of how much of the yield growth was driven by identifiable non pricing things, so design revenues in some of the specialty businesses or fuel pass through revenues? Yes. No, it's a relatively small proportion of the 2. So out of the 6, it's probably 2, yes, about 2. But you're right, it's an important element. And I know we've talked about this before. Go back to what I was saying about that activity level and the shorter term nature of people's ordering cycle, all of that helps you improve things like your transportation revenues. And certainly things like transportation revenues, revenue protection plans, all those ancillary revenues have improved during the quarter, which is encouraging. And again, it's a reflection of better activity out in the marketplace. Sure. Okay. And then just last one for me, sort of minor balance sheet question. The provisions, are those mostly captive insurance provisions and sort of why there seem to be a fairly sharp pop in Q1? Yes. The provisions consist principally of self insurance provision and then there are a number of other things in the States, for example, you might have provisions for sales tax liabilities and things like that. But some of it is just timing in nature. Okay. Nothing significant. Understood. Thank you. Thank you. Our next question comes from the line of Mark Helson of Oriel Securities. Please go ahead. Your line is now open. Good morning. Just a quick question on the staff costs. I think following up a bit on Alex's question, was the staff cost revenues in the quarter, I appreciate, is a quarter, so 25% of total revenues is quite low. Is there some sort of catch up effect as we go as these more people come in as it were to the next period? And so I mean, is the staff numbers, do they kind of arrive towards the end of the period and that's going to have an effect going forward? No. I mean, it really in the case of greenfields, for example, it just really relates to when the store is opened or when acquisitions come on. So it's I mean, it's really more driven by that than anything else. I wouldn't say that it's weighted more toward the beginning or end of a quarter. And do you have any view with regards to sustainability of that type of ratio? It was quite low. Yes. Look, at the end of the day, the labor cost is relatively in the grand scheme of things, a relatively small portion of our total revenue, especially as we get yield improvement. So you wouldn't expect an improvement in the ratio. No, that's right. I mean, that's just part of the operational gearing that we talk about. If you're getting 63% drop through, then clearly the cost base per se is reducing as a percentage of the revenue. Exactly. Okay. Thank you. Thank you. Our next question comes from the line of George Gregory of UBS. Please go ahead. Your line is now open. Good morning, Jeff. Good morning, Suzanne. Three questions from me, if I may. Firstly, just in terms of the competitor backdrop and in particular United Rentals, what do you think the catalyst will be for URI to start catching up on growth? I mean clearly no one expects them to lag the very modest slowing in the Sunbelt growth rate over the quarter? What do you read from that, if anything? And thirdly, in terms of the operational efficiency drive in the U. S. And your efforts to reduce fleet downtime, How long should we expect that to take before it perhaps starts to show up in the numbers? Thanks very much. Yes. Okay. Look, at the end of the day, Mike Nieland is far better positioned to talk about his revenue growth than I am. Look, United clearly have not unsurprisingly to either us or I suspect them had a lot of integration issues and one would anticipate that their revenue growth would trend towards ours sometime soon, either a year through the acquisition. And I saw heard some comments in their last call saying that they anticipated their rental revenue to trend upwards in the 3rd Q4. And of course, they don't have the same headwind we had from Hurricane Sandy because you'll recall they made great note of the fact that they didn't have a big impact from Hurricane Sandy. So yes, you would expect the revenue growth to trend upwards. However, as I've said this many, many times, our great opportunity in benefiting from structural change is not from United Rentals. This is our 3rd year of very good growth and it happened way before any United RSC sort of integration problems. And United are a very, very strong company in a very good industry, which in which all of the large players, in my opinion, will continue to gain share. So yes, I would fully anticipate the rate of revenue growth to improve over time, And I expect them to continue to benefit as we will from overall market share gains in a recovering market. So that's the first one. In terms of so called moderation of growth, well, I'm somewhat surprised to that. Look, we have upped our guidance on the back of upping our expectations from revenue. And therefore, with the strong sequential growth we have seen through the quarter, our expectation for annual revenue growth has increased, not decreased. Under no circumstances did we believe with such a strong second half to that we would maintain 26% growth throughout the year. And I don't think anybody with any numbers out there expected that to be the case at all. The key to me is not on year on year comparators, but look at the sequential improvement in our activity levels. And as I said, we are having what by any previous sort of benchmark is a very good season. August showed a lot of fleet growth over July and September, whilst it's very early days, early indications are that that's going to show good growth overall. So the key is our activity levels and the key is that sequential improvement in volume and yield and they all remain positive. And then for the 3rd question, yes, you're absolutely right. We have started a number of initiatives. And to some degree, you're seeing some of those initiatives starting to play in now. I think most people would anticipate with the long period of growth that we would have that the drop through would have fallen way below 60% right now. I know we have had previous calls in the past where people expressed some concern with our ability to maintain a broadly 60% level that we said we would be able to achieve. And there you can see we're seeing it at 63% still despite the greenfield starts. In terms of the bigger savings that we've discussed in the past, they're starting to bear fruit and starting to see them in sort of non financial metrics. But in reality, these things take 12 to 24 months to substantially come through in individual line items. But lots of little improvements is what is allowing us to maintain a very healthy 63% drop through. So you're seeing some of it now and you will continue to do so, which is why we are very comfortable reinforcing our guidance that even though we've used up some spare capacity, even though we're doing a number of greenfield sites, that are very, very strong 60% drop through is a very achievable long term target in this business. Okay. Very clear. Thanks very much. Thank you. Our next question comes from the line of Justin Jordan of Jefferies. Please go ahead. Your line is now open. Thanks guys. I've just got a follow-up question. I'm sorry for being a bit blip here, but I'm kind of looking at physical utilization and dollar utilization. And in the statement, you mentioned about 73% physical utilization in Q1. Now I guess the glib comment for me is, of course, will anyone can achieve that? You just cut your prices. But the follow-up question, I guess, is more on dollar utilization because you've improved that over many, many quarters and over several years now to 61% over the last 12 months, I'm just kind of thinking over the next, I guess, 2, 3, 4 or 5 years, where do you think you could take that within Sunbelt? And it's already at a level that's 15% to 18% better than major U. S. Peers at this point. I'm just kind of wondering where we could get to in this cycle and what would be the determining factors of achieving something better in terms of dollar utilization? Look, Justin, you're right. So that's the problem with physical utilization, which you've highlighted in the past. Dropping the prices is a fairly drastic way to improve your physical utilization, much easier ways just sell some fleet. So yes, physical utilization is one part of the bigger equation. The key equation so people will talk about various metrics. The catch all is dollar utilization. It covers the efficiency, which you're using your feet, your fleet and the pricing. And you're right, we're delighted in a period where you're coming off very strong performance year that we yet again improved dollar utilization of 61%, which if you remember our model just demonstrates why we're getting 25% return on investment. And our view is this, which is we peaked historically in the mid-60s and we think we can get there again. Our rates now are back to where they were at the previous peak. In some areas, it's much better. But the reason why our dollar utilization isn't there is because we have not kept they have to be better just to keep pace with the inflation we've seen over the cycle in fleet. So Brendan and the guys do fantastic reporting in fantastic ways of really driving home to the sales force that previous peaks in rates are not relevant because the cost of equipment is higher. And therefore, looking at that relationship, we given how early we are in the cycle to be at 61%, we're pretty confident that we will get back to that mid-60s level again. And to do that, we may have to have lower physical utilization, but bigger pricing increases because we're able to service a customer better. And to just look at physical utilization only looks at half of the equation in my opinion. Well, 1 third because the other part is the original cost of your assets. Okay. Thank you. Just a quick follow-up, but just on, I guess, the expansion plans going forward. You talked earlier about equipment prices being broadly flat or equipment inflation being pretty muted year on year. Can you just expand a little bit just on lead times? I'm just wondering whether if things are recovering, whether they're pushing out and whether that might impact on growth plans going forward? Yes. No, as you saw in Q4, when we pulled forward $100,000,000 of capital, we are able to access fleet readily available for two reasons. I mean, lead times as of themselves are not terribly onerous. And whilst we don't make firm commitments to our suppliers, we do give them good sort of long term indicators. And oftentimes, our manufacturers, because we've been a very, very steady and consistent customer over the years, we'll build ahead of our delivery schedules and therefore we're able to pull forward equipment they've built perhaps for the next quarter, we're able to pull that forward. So whilst it's true there are 1 or 2 asset categories where lead times are a little bit longer in the main, we have the ability to flex our fleet readily. I think 2 things to note, we've talked a lot about the uptick in gross CapEx in the quarter. Another way where we flex our fleet, remember, is look disposals are down year on year in the quarter to again, just demonstrating the level of demand. It's hard to take the fleet off people at the moment. So we have two ways of flexing our fleet size, additions and reduction of disposables. And that's one of the great big benefits of having a young fleet. Okay. But I'm just sort of thinking this through if you've upsized your financial headwind by $200,000,000 Your lead times have materially changed, fleet CapEx or fleet costs haven't materially changed. So you've got kind of increased headroom, a little bit flexibility on kind of what you bring in and the pace at which you bring it in. And I'm just thinking in terms of your back in June, you were talking about 30 to 40 branch openings in fiscal 'thirteen sorry, fiscal 'fourteen and 100 over the next 2 to 3 years. Is that still the kind of the central case plan as it were? Yes, absolutely. Well, let's be clear. We've refinanced as part of our long term cyclical planning. We haven't refinanced as part of some short term desire to spend that there's some imminent spending spree. We were more than capable because of our high margins of investing heavily in the fleet with organic cash flow. Please don't read the refinancing is preparing to spend anything. Look, we're very fortunate that we're not facing undue inflation at the moment. That's great. That will undoubtedly help dollar utilization. Lead times are relatively short and therefore we are able to flex the fleet without taking long term capital. Now I personally am not terribly worried about tapering of quantitative easing, but there is no point making a big call on Q4 before I have to. You might as well be armed with all of the information you possibly can before you make that call. Very clear. Thank you. Thank you. Our next question comes from the line of Steve Wolf at Numis Securities. Please go ahead. Your line is now open. Good morning. Just to follow-up on CapEx, just to sort of any flash you can give on what areas of kit you're adding at the moment and particularly in the CapEx that was brought forward slightly? Or is it fairly broad and going into greenfield more than existing at this point? No, no. It's I mean, yes, some of it clearly is growing, going into greenfield. I mean, what we own about 8 locations in the quarter, so we probably put about $40,000,000 into greenfields. So the vast majority, as you can see, went into existing locations to satisfy increased demand. So it is a very, very broad base. We've talked about this before. We are very careful in our investments in fleet that certain products categories do not become too large a percentage of the total. And we've talked about this before. Our view is things like big area are commodity products and we shy away from having too big a proportion of our fleet. So we do cap certain investments in certain product categories. And as a result, we ensure that we maintain the strength of our business or what we think is the strength of our business, which is the very broad range of equipment that we offer, which appeals to a very broad range of customers. And that's an important consideration that we don't just chase the hot the current hot market, but we keep our strategic differentiation. That's great. Thank you. Okay. Thank Operator, if there aren't any questions operator, I think what Suzanne and I would like to do is just thank everybody for their participation. The Q1 conference call is always a somewhat shorter update, but we're delighted to say, as I said earlier, I'm very pleased with the fact that it is business as usual and we continue to see good sequential improvements in our performance. With that, thank you very much for dialing in today. Thank you. This now concludes our call. Thank you for attending. Participants, you may disconnect your