Earnings Call: Q4 2010

Jun 17, 2010

Good morning, and welcome to the ACHTAD Group Full Year Results Presentation. I'm Geoff Drabble, Chief Executive, and with me today is Ian Robson, our Finance Director. The presentation will follow the usual format. And after a short introduction from me, Iain will cover the financial results in more detail, and I will then give an update on operations, focusing on recent trends and our outlook for both the U. S. And U. K. Markets. So moving on to the overview. We are pleased to announce full year profits of £5,000,000 ahead of expectations, aided by a strong 4th quarter. Following a difficult Q3 where weather was a major factor in the U. S, freight on rent and yield improved throughout Q4, which I will cover in more detail later. Encouragingly, this resulted in year on year profits growth in the U. S. In Q4, although we must note that this was assisted in part by a strong performance in our Pump and Power business as demand increased due to some severe flooding. Cash generation from operations of GBP 191,000,000 is clearly an excellent performance and demonstrates the strength of our business model at the bottom of the cycle. This cash generation was based upon sensible fleet planning, strong EBITDA margins and good working capital management. This cash has largely been applied to paying down debt. I think it's worth noting that debt has been reduced by GBP 395,000,000 in the past 2 years, a significant achievement which Ian will cover in more detail in a few moments. As we prepare for the next phase in the cycle, we believe it is appropriate to begin to reinvest in our fleet. And therefore, net CapEx for the coming year is planned to be around GBP 175,000,000 This fleet reinvestment will be funded out of operating cash flow, our intention being to keep debt levels broadly flat. We do, however, retain the flexibility for greater growth capital if markets continue to improve. It is our policy to provide a progressive dividend having regard to both profits and cash generation while seeking to keep levels that are sustainable over the long term as we have done throughout this cycle. Therefore, we are pleased to announce that the dividend for the year has been increased to 2.9p. I will now hand over to Iain, who will cover the financials in more detail. Thank you, Jeff, and good morning to everyone in the room and to those listening on the webcast. My first slide looks at 4th quarter performance and includes last year's results retranslated to this year's exchange rate. On that basis, you can see that group revenues were down 3%, which includes a significant increase this year in revenue from used fleet sales. Within this, rental revenues, which are the key driver of profitability, declined 8%, a significant improvement on the 22% decline we saw in the Q3 and, as Jeff just mentioned, ahead of our expectations. Now we are 12 months on from winter 20 eightnine's REIT rightsizing program, the year on year reduction in our cost base is naturally slowing, but the continued focus we placed on costs all year still delivered a Q4 operating cost base 4% below the prior year. As a result, EBITDA for the quarter was virtually flat year on year at £61,000,000 The smaller average fleet size in Q4 this year explains the lower depreciation charge, whilst net interest rose, reflecting the impact of the higher margin we've been paying on the extended tranche of the ABL facility since last November's refinancing. The Q4 underlying loss before tax was therefore 3,100,000 pounds 20% lower than the or 20% smaller loss than the Q4 2009 at constant rates and well ahead of the £12,000,000 loss in Q3. Moving now to the full year. This chart gives the same comparisons for the year as a whole with the negative impact of the 24% reduction in rental revenues, significantly offset by the 22% reduction in operating costs following the rightsizing program of winter 20,08,009. Critically, these actions, these cost saving actions ensured that at 30.5%, our EBITDA margin was sustained at a very healthy level despite the significantly reduced rental revenues. Looking now at the results from our 2 divisions. This chart shows how rental revenues bridge from 2,009 to 2010. You'll note that the reduction in the volume of fleet on rent was 10% in both Sunbelt and A Plant, whilst the yield decline was 16% at Sunbelt in the U. S. And 12% in the U. K. For the full year. And looking at the impact on divisional profits. This chart bridges 2009 to 2010 EBITDA and then shows the 2010 depreciation expense and operating profit. From the revenue bridge, you can again see how the declines in rental revenues were substantially offset by the operating cost reductions we delivered. And looking at the cost savings in greater detail, this chart compares 2,009-ten actual costs with a cost basis it was in the 12 months ended 31 October 2008, which was the period immediately prior to the recession beginning. The comparison is also drawn at constant 20 nineten exchange rates to eliminate currency effects. On this basis, as you can see, today's GBP 557,000,000 cost base is 26% or GBP 191,000,000 lower than 18 months earlier. And then looking at the components of those cost savings, firstly, we implemented 112 store closures or and mergers, the majority of which were in the U. K. And we saw a 23% reduction in our headcount split broadly pro rata across according to size across the two businesses. Over time and profit share payments were also significantly reduced, while lower sales commissions were payable on the reduced revenues. We also reduced service and delivery truck numbers and saw lower fuel costs as the unit cost at the pump reduced, especially in the United States. Within other external charges, there was a myriad of small savings as we focused on almost every item of cost, and we also had lower cost of merchandise equipment sales, reflecting the reduction in sales revenues. You'll note that depreciation is not included in this analysis. Rather, all of the GBP 191,000,000 reduction we've brought about in the cost base reflects lower cash operating costs. Moving now to cash flow. As you can see from this chart, our performance last year was very strong and well ahead of the £100,000,000 debt reduction target we published a year ago. This was achieved firstly through the GBP 255,000,000 of EBITDA we generated as a result of sustaining our EBITDA margin above 30% a few minutes ago. Concerted efforts across the group on working capital control also meant that for the 2nd year running, cash inflow from operations was a pleasing 104% of EBITDA, well above our through the cycle average conversion rate of around 100%. We also invested cautiously in our fleet, spending only around half the level of depreciation as we took advantage of the fleet's relatively young age and good condition in order to maximize cash flow in tough markets. As a result, we generated GBP 200,000,000 of cash before disposals and exceptionals, up 20% on last year and after dividends paid down £178,000,000 of debt. We'd also or we had always said that our rental business model was capable of substantial cash generation for debt pay down in tough markets. And one positive from recent conditions is that with the debt paydown in the past 2 years totaling GBP 395,000,000 we've clearly delivered on that commitment. My next chart shows the year end debt position. And despite the significantly reduced revenues and earnings, you'll note that our net debt to EBITDA leverage at constant exchange rates was 3.1x, substantially lower than our large U. S. Peers and only just outside our long term 2 to 3 times target range. This next chart shows debt maturities. As you will see, our debt was committed on average for 5 years at 30 April 2010. And this calculation reflects the agreement reached with the extending ABL lenders last autumn that in August 2011, extra borrowings under the extended 2013 tranche of the facility will be used to repay the amount then outstanding on the maturing tranches. And consequently, our first real debt maturity, therefore, is not until November 2013, still more than 3.5 years away, and as I said, 5 years average debt commitment. And just looking at the debt pattern over time, this chart is recast, shows the reported closing net debt on a quarterly basis recast at constant to April 2010 exchange rates. And you can see it's been reduced from a January 2008 peak across the last 2.5 years ago by now a total of £435,000,000 Moving forward, as we stay in the statement, we believe now is the right time for us to begin the cyclical reinvestment in our rental fleets. And reflecting this, we're targeting for net debt to remain broadly flat in the coming year, Whilst with leverage having reached a peak in January 2010, we're also targeting to see a small further leverage reduction by April 2011. And one final chart from me in which I wanted to remind you firstly about the historic size of our EBITDA and the margins we've delivered. A peak in 2,008, the group's EBITDA margin was 38%, and the full year EBITDA restated to the roughly exchange rate which prevails today is GBP 480,000,000 GBP 100,000,000 GBP 100,000,000 GBP 100,000,000 GBP 100,000,000 GBP greater than was reported at the time. I mention this not because I'm predicting that we're about to return to those levels as clearly we're trading in very different markets today, but instead, it's a reminder of just how significantly the turnaround in the dollar from its 2,007,008 low of over 2 to the pound impacts our reported historic performance. As importantly, this chart also shows how over the past 9 years, Ashtead has always generated enough cash to fund not only its replacement or maintenance capital expenditure, but also our investment in organic growth capital. At times, no doubt because our cash generative and capital intensive given our cash generative and capital intensive business, we've always believed it's right to adopt a model which uses more debt than the average U. K. Company. I've heard it reported that we're dependent on debt for growth. This chart demonstrates that this hasn't, in fact, been the case. And it's really only been, as you look back through our record, that at times of large scale M and A activity that Ashdeed's debt has increased. Moving forward, therefore, I think it's important to recognize that just as we've done in the past, we have a substantial opportunity to deliver strong and profitable organic growth whilst keeping net debt at around current levels and continuing to deleverage in ratio terms as we move forward. That concludes my briefing on the financial results, and LF will now hand you back to Jeff to tell you more about our operations and outlook. Thank you, Iain. I'd like now to move on to our more just have a look at our more recent performance in a little more detail. As you can see from the charts on the top of the page, the 4th quarter total revenue for Sunbelt was down 3% and down 4% for Air Plant. This resulted in the operating profit for Sunbelt improving year on year to $24,000,000 Frankly, it's been some time since we've been able to make a comment like that. Looking at total revenue can be misleading as it is impacted by asset sales, which are not necessarily recurring. So in the bottom half of the page, we focus on rental revenue, which gives a far clearer indication of ongoing trends. As you can see, both Sunbelt and A Plant saw year on year rental revenue reductions in Q4 of 8%, which are clearly significantly better than those experienced in the 1st 9 months. In the U. S, this was driven by both fleet on rent and yield being down 5% year on year in the quarter. In the U. K, fleet on rent was actually flat on the previous year as we continue to benefit from the strong market share gains we made over the winter. Yield was down 8%. Whilst these Q4 numbers do show improvement over the 1st 9 months, what I think is perhaps more informative is the trends within the quarter. These charts illustrate the improving trends in the U. S. And the strong fleet on rent in the U. K. What you can see from the charts on the left is the steady improvement in the U. S. Of fleet on rent during the quarter and the improving year on year yield comparisons. Clearly, these trends are very encouraging. However, we must note that they were aided by a recovery from a difficult winter period and a strong performance from our Pump and Power business. In the U. K, it's also clear that our market share gains have kept a strong fleet on rent throughout the quarter, comparable with the prior year. Yield trends are far less predictable and the U. K. Market remains a difficult rate environment. Of course, what allows you to take a more realistic position on rate is the ability to say no, which requires a strong physical utilization. So bringing you right up to date, as you can see from extremely carefully for the black line on the left hand side of the chart, the start to the current financial year has continued to trend of strong physical utilization. Clearly, we carried a little too much fleet in the U. S. During the summer months of 2,009. However, we decided not to deplete significantly, and it is pleasing to see that, that decision was justified. We continue to run at high levels of physical utilization in the U. K. And you can see how our winter program gained significant market share, a position from which we continue to benefit. Therefore, whilst recognizing the markets are still fragile and it will not be easy, our focus has to be on improving the yields where possible. Moving now to the outlook for the coming year and beyond. The U. S. Macroeconomic indicators are generally improving, Although, again, I think it is important to stress they are not uniformly so, and the recovery could be fragile. Looking at GDP projections, I think there is little doubt that the U. S. Will recover first, and steady recovery is predicted by most economists. Whilst the ABI has not yet crossed the magical fifty, there are encouraging trends and more bullish statements from the economists behind the raw statistics. Also, inquiries continue to show a positive trend. As we have stated on many occasions, we believe that the U. S. Construction cycle was at a very different place than was the U. K. K. When the credit crunch hit. We believe that once funding is available, there is need and appetite for a range of construction projects. Therefore, we see the improving trends in commercial and industrial loan credit standards is a very encouraging development. Because I said a moment ago, however, it's not all good news. And I share the view of many commentators that unemployment will be a drag on recovery. The chart in the bottom right demonstrates the scale of unemployment in the construction sector, and we will need to see continued improvement beyond seasonal corrections before we can think of meaningful recoveries in our end markets. Looking now at some more industry specific indicators. They do tend to support the macro data suggesting we have hit bottom and may be on a gently recovering trend in the U. S. Used equipment values have continued their improving trend, indicating a reduction in the excess supply of equipment over demand. 2nd hand values did not reach the levels we had anticipated in our downside scenario planning, which I think reflects the swift action the industry generally took to right size the business to the new economic reality. In Q1, the year on year total construction starts stabilized as demonstrated by the chart on the bottom left. What is also interesting is the relative strength of the different market sectors. Not surprisingly, non residential construction is expected to remain weak and what will lead the recovery is residential. Looking forward, starts are predicted to return to growth during 2010, with this accelerating through 2011 beyond. Given the lag between starts and put in place activity, we believe this reconfirms our long held view of a more robust recovery in 2011. As we've explained before, the geographic and market profile of the major U. S. Players vary significantly, each position having their merits but with different dynamics at different stages in the economic cycle. The chart at the top of the page demonstrates our strong exposure to local and midsize construction contractors, which is driven by our fleet mix, which has a larger proportion of smaller equipment than most of our peers and our cluster market business model. It would be wrong to suggest that housebuilding alone is a strong user of rental equipment. However, a strong residential market leads to easily fundable, small scale, nonresidential construction, such as strip malls and gas stations, and this is where we benefit. The bottom left chart shows how our national account revenues have remained stable during the downturn due to our focus in this area as our traditional markets suffered. This sector will remain important as stimulus projects kick in, and we will continue to benefit from agreements signed in the past year. However, it is also time now to refocus on a recovering residential and remodeling market. The importance of this element of the customer base can be seen from the chart on the bottom right of the page. Unsurprisingly, the large national accounts get a better rate than smaller accounts, and these rates are set for a long term. This dynamic protects average rates as we go into a downturn, but has a negative impact on a rental company's ability to improve rates quickly as we enter a recovery phase. Frankly, this is the situation in A Plant. However, in Sunbelt, we have a far greater ability to improve the rate of our transactional customers. Therefore, as the market has begun to slowly improve in this area, we have had 5 consecutive months of rate improvement, albeit small ones. Therefore, we will focus on keeping a sensible balance of business through the cycle, but we do feel that we are well positioned currently. As I said earlier, large projects will remain important to us. And in the short term, it is where the major activity exists. We are beginning to see the impact of stimulus money on the ground. However, much of the benefit is still to come. While some 80% of budgeted funds have been obligated, only 20% has been spent, which should flow through from the second half of twenty ten and into 2011. The chart on the right demonstrates a small sample of the projects where we have benefited. It also highlights the geographies with further spend to come, which correlate well with our depot footprint. Moving on to the U. K. Current markets appear to be stabilizing due to the committed activity on some major projects. Utilities also remain strong. And with the industry depleting, the short term outlook is for broadly flat markets. However, the public sector now accounts for 40% of construction, and clearly, there are reductions ahead. Potentially, these are much greater than the 8% currently included in the CPA forecast for 2012. Historically, a downturn in public sector is mitigated by an improvement in the private sector. Again, given the general state of the economy, this has to be considered as a potential weakness in the forecasts, and we are therefore more cautious about the midterm U. K. Outlook. Now let me clarify. I am not suggesting the end of the construction market as we know it, as I have seen some commentators suggest. There will be pockets of strong activity, for example, utilities and energy, and the rental industry itself will correct itself by further fleet reductions. However, the market must be viewed sensibly, and we will continue to look for greater certainty before making any significant commitments in the U. K. Market. As we look towards the next phase in the cycle, we consider it appropriate to begin reinvestment in the fleet. We benefited from being an early mover with our fleet disposals, and we believe there is advantage in being an early mover in reinvestment. Therefore, gross CapEx is currently planned to increase to around GBP 225,000,000 And as you can see from the chart, we also plan to sell off some of our older fleet, resulting in a net CapEx of GBP 175,000,000 The major activity levels will be in the U. S, which is clearly consistent with our market outlook. Whilst our expenditure is currently focused on replacement, the flexibility remains for a greater focus on growth if markets are better than anticipated. What this increase in expenditure means from a fleet planning perspective is that fleet age will remain broadly at current levels. As you can see from the chart, on the left, our increased expenditure whilst a large increase on the prior year is not excessive in historical terms. Our fleet size will remain largely flat, which is which it has done since the major reductions in 2,009. We have certainly benefited from relative stability in our business in the past year and believe we are well placed to continue to do so. Our focus for growth will be improved rates, not increased fleet size. So to summarize. Clearly, the industry has faced an unprecedented downturn. And I would like to take this opportunity to thank all of our staff who have shown great resolve and maturity throughout the painful but necessary restructuring as our performance demonstrates they truly do make a difference. Against this backdrop, we have clearly gained market share, maintained very strong margins and generated a lot of cash. In short, we have consistently done what we said we would do. There are encouraging signs in the Q4. And through our refinancing, we have the financial strength and flexibility to develop the business aggressively as markets recover. However, it is appropriate that I end on a small note of caution. Markets remain fragile, and we must not get ahead of ourselves. Having got into this strong position by prudent financial stewardship, we do not want to overcommit now. Therefore, flexibility will remain central to all of our planning for the coming year. Thank you. That ends the formal presentation, and I will now chair the Q and A session. And if we can just a normal protocol of giving your name and organization for the benefit of those listening on the web. Geoff, that was quick. Thank you. It's Geoff Hallum from Arden. Just want to ask you a bit about your spending on the fleet. If you're saying that I don't know if I got that right, but if you're not saying if you're not going to reduce the age of the fleet and you're not increasing the size of the fleet, then are you just going to be switching kit around for the areas that are most saleable at the moment? Is that the plan? Or did I misunderstand that? No. What we're doing is spending the quantum which is required to keep the fleet at At its current. At broadly its current level and to keep it at its current age and current size. So if you look at the chart, the fleet planning chart, Jeff, we're at or around depreciation. If you remember, you need to spend depreciation to keep your fleet broadly at constant state. Okay. But I know 1 or 2 of your competitors are looking at increasing the size of fleet, but the sound of RSC, I think, are saying that. I mean, if you've been gaining market share and the market is looking like it's going to pick up a bit, might you be tempted to start increasing the fleet size sometime later in the year? I'm not well, we can debate what RSA have said and done. And if you look at their fleet size, they have reduced their fleet size significantly more than we have reduced ours and seem to be continuing to do so. However, that's RSC's decision. Look, we retain the flexibility to do both. Clearly, the opportunity exists to dispose of less. Therefore, growth therefore, what is currently planned to be replacement CapEx becomes growth CapEx. Can I I think right now, we believe it's important to drive an improvement in returns via rate improvement? And therefore, making sure we maintain the fleet at its current age is important. And Sprinkling it with the fleet with new fleet is important to our customers and important to our staff. So we think it's about right. We seem to have got it right thus far, but we retain the flexibility to do both. Can I just ask you, I don't know if you know sort of roughly how much you've increased your market share by, but if you do, I'd be interested? And do you know whether you've been taking it from the big boys or is it lots of the little guys disappearing? Yes. I mean, the problem is, Jeff, there are awful statistics in terms of market share in this industry. We are confident in our state that we've gained market share by comparing what's happened to the quantum of our fleet on rent to those that are announced by our major peers and looking at our relative revenue performance. And therefore, we think we can confidently say that. It appears that the major guys have gained an increased market share generally. So I think all of the majors, when the statistics settle down, will have taken more market share. I think we have taken market share from 1 or 2 of our major competitors in both the U. K. And the U. S. Okay. Thank you. Hector Forsyth, Oriel Securities. Just one quick follow-up from that CapEx. Are you going to change the shape of the fleet by geography and mix in terms of the type of kit that you're seeing in there through this CapEx program? Not materially, Hector. Look, we continue certainly in America, there are big geographical variations in the state of the market at the moment. And we continued to right size our fleet accordingly, moving fleet out of areas with less demand to areas with higher demand, and we will continue to do that. In terms of our product mix, no, I think we've got it about right. I think there will be perhaps a little more on the sort of lighter tool end than has been historically. We have spent a reasonable amount on aerial equipment recently, but that's because we have had proportionately a much smaller percentage of our fleet in aerial than some of our peers. But in broad terms, we have consistently tried to keep a blend of fleet and a blend of customers to cover all sectors because they tend to be in slightly different cycles and it helps you to manage throughout the cycle. So nothing significant, Hector. Thanks, Ian. So it's a question for sorry, it's Phil Sparks from Evolution. A question for Ian. Just on the comments on the first slide here about the flexibility for greater growth capital. I see you've got some debt that's up renewal in August 2011. Is that comment on flexibility, an indication you might be looking to actually increase the size of those facilities when they come up for renegotiation? And what sort of time line should we expect on use of any refinancing of those? Sorry, is this mine going on? Yes. Okay. Just to confirm on that. Effectively, Phil, no, there is no refinancing need in August 2011. What we did last year with the bank debt was introduce the extra November 2013 to the tranche to the ABL. And that is sufficient to meet all of our needs going forward. So that all that will happen in 2011 is the remaining commitment from those lenders who chose not to extend will drop away, and all of the debt will just all of the bank debt will just be drawn under the 2013 facility. So, there is no refinancing need. And the debt that we put in place last November is sufficient for our needs. Morning. It's Alex Magni from HSBC. Ian, a couple for you. On Slide 8, and as the business starts to get into recovery phase, can you help us understand how these costs would be reintroduced into the business? I'm thinking particularly headcount, what the hiring plans there might be, when we'd start to expect to see people coming in the business, when bonuses would start to come back in, distribution fees, etcetera? Well, I should probably answer that one. I guess, probably more an operational question than a financial question. Look, we have taken a lot of cost out of the business. Our view is that we can flex more volume and more value as rates increase with a fixed cost base that we have got. Now clearly, cost will start to come in. We'll be delighted if we're in a position where we're starting to pay bonuses bonuses again in the coming year. So clearly, there is a variable element to the cost. However, I think we've said in previous presentations that a very high percentage of any incremental revenue ought to drop down to the bottom line. In fact, I think we gave the guidance that something like a 10% increase in revenue, the sort of drop through to bottom line would be of the order of 75%, 70% to 75%. And we I think we would still stand by those predictions. Okay. And another one. In terms of your experience of the industry, not so much from what rental companies have done, but how construction companies have treated their equipment fleets over the past 18 months and how you see that changing in the next 12? Yes. Well, what we have seen is we have seen a number of our customers continue to dispose of fleet. We continue to have discussions both sides of the Atlantic with major customers who question whether they should continue owning fleet or not or what size of fleet. My view would be, which it has been throughout this downturn, is that the net result as we come out of this recession will be there will be greater rental penetration, particularly in North America. And just it's probably, Alex, to say a slightly uncertain position probably only reinforces that uncertainty amongst the customer base about whether they need to reinvest or they don't. The rental market will be there for them. Okay. And just a final one on this CapEx point. What's the argument against having run CapEx at below depreciation for another 6, maybe 12 months? The argument against it is that your fleet continues to age. All you're doing is create you are going to have to make that purchase at some point in time. Your ongoing fleet planning becomes very lumpy because you tend to buy it all and sell it all in great big lumps. I think there is the risk that there are going to be long lead times. As manufacturers have cut capacity, then lead times could be very long. And if demand gets switched on too quickly, there is also the danger of significant commodity inflation. And therefore, you will be facing long lead times. Reasons why reasons why we think it's appropriate to go now. I think there are some demands characteristics too, which would say that the confidence which it instills in our own workforce, our sales force, in particular, in our customers in terms of our ability to be one of the first to begin to reinvest and sprinkle new fleet into our offering is likely to assist us in driving upgrades. At the end of the day, we are making very short term short lead time commitments. And as we review how the markets actually pan out, then we can it's not like we're betting the farm, and it's not like we're betting on long lead times. Just again on the CapEx sorry, it's Alex here at UBS. On the CapEx point, the if you look at the split between the U. S. And the U. K, that does suggest, doesn't it, that you're going to bring down the average age of the fleet in the U. S, probably offset by an increase in the average age of the fleet in the U. K? It's by tiny amounts Alex, given the relative sizes of the fleet. Okay. But then following on from Alex's point about holding it for longer, can we take that as a sign of confidence then? Because you are going ahead of your competition. We are going ahead of your competition. And you're going earlier than you would have done last cycle. What Jeff said, we believe we're going ahead of our confidence. Look, we've had an encouraging quarter for which has continued into May June. We are this presentation is entitled on firm foundations. The previous ones have been on managing the cycle. Our view is we have to manage the cycle. We believe that we are on a gentle recovery now. We think there is 1st mover advantage in spending early. So clearly, we feel as if we are past the worst. And that's certainly the case. Now we're not it's cautious optimism. We think the markets are still fragile. But we do think it's appropriate now to start spending a little more. Okay. And then in May June, can you talk a little bit from the utilization charts, you presumably had some year on year volume growth and the sequential pricing improvements has continued, is it? No, we've not had year on year volume growth. We are in the U. K, we have remained flat on prior years as we did throughout quarter 4. And we've carried on the trend as we exited Q4, which is for the core fleet, we are marginally down on prior years. Okay. Smaller fleet and slightly higher utilization, Alex. Okay. So you have to look at fleet on ramps. So the physical utilization is high, which is a smaller fleet. Okay. Then just the last question. Your peers would be suggesting, I think Q2 or and some of them saying well, sorry, H2 and some of them saying Q2 of this calendar year is when they'll start going to year on year growth in terms of reported numbers. What do you make of that? I think I can understand how they've got to those calculations. I've obviously got no access to their models there, Alex. But it seems a really it seems a reasonable prediction and not unlike the sort of comments we are making. Okay. Okay. Thanks. Mark Castle from RBS. Can you just give us a feel for sort of in the U. S, in particular, sort of month on month improvement or otherwise in rates? I know you really want to talk to us about yield, but if you could just give us a bit more feel for that. Yes. Well, again, you need to split rates between in overall terms, rate has been broadly flat because as you said, we have entered into contracts during the year with national accounts where the averaging impact of that carries on for the length of those contracts. However, what we do do is we distinguish between those who have set contracts and those who are just transactional customers where the rate changes almost with every rental. For the last 5 months, for the transactional element, we have had rate improvements. Now let's be clear, they're very small. They are less than 1% per month. However, they started in the winter months where seasonally rates go down. It was a particularly difficult winter. And after 24 months of them going backwards at a rate of nuts, it's an encouraging trend. But it's a good trend, still quite small. However, it has identified the opportunity to be able to continue to do that. And therefore, it is encouraging, but currently quite small. No further questions? Well, if there are no further questions, I'd just like to thank everybody for joining us today. We'll see you in the room and those listening on the web. Thank you very much. We'll see you in a quarter. Bye bye.