Ashtead Group plc

joining Michael, Will, and I for the Ashstead Group Q4 and full year results presentation. Today's update is going to detail the strength of our performance in the year, both in terms of record revenues and profits, as well as the demonstrable delivery within each actionable component of our strategic growth plan, which of course you all know, Sunbelt 3.0. The results of which leave us poised to thrive as we enter the final year of 3.0. I'll cover our full year outlook and, of course, a detailed update on the most current views and forecasts for our end markets, which I'm sure most of you are very interested in this morning. However, before doing that, as I usually do, I'd like to first address our teammates of Sunbelt Rentals across all the geographies that we serve. These team members are so engaged in our business, particularly when it relates to embedding our safety culture. This culture embodies an environment of buy-in, adoption, and leadership. developing a delivering a highly functioning world-class safety program a program of this caliber is not only our leading value but it's a prerequisite for a thriving growing and sustainable business the results we'll cover this morning are quite literally the making of an engaged team of professionals that put the safety of themselves their colleagues our customers and indeed the members of the communities that we serve as mission number one. So for this and all their hard work and dedication, I'm extremely grateful. So as I always say to them, and I'm saying it now, please continue to lead safely and positively out there. Now, let's begin with the four-year highlights on slide three. We delivered a strong and record performance in the fourth quarter, contributing to another set of record results for the full year. Demand remained very strong in our end markets, and obvious signs of structural progression within the market and our industry persist. We continue to gain greater clarity from current demand levels present in the business, paired with the needs, backlogs, and future project expectations we are gathering from our customers and the relevant and market-forecasted strength. all of which continues to support our view of ongoing structural gains and a strong end market throughout 2023 and beyond. As I've said consistently for some time now, these conditions are very favorable for our business. For the year, group rental revenues increased 22% while U.S. increased 24%. Profit before tax of $2,273,000,000 was a 26% increase, and earnings per share grew 27%. I'm encouraged to report strong EBITDA fall through in the U.S. business of 50% for the year and 50% for quarter four, demonstrating sequential improvement throughout the year and the real strength of this performance in what was a remarkably inflationary environment, coupled with the significant pace of expansion by Greenfield and Bolton acquisition, which, of course, the two of these have an overall drag effect on fall through. So those are extraordinary figures. Thank you. During the period, we continued to advance our SunVault 3.0 strategic growth plan, doing so by executing on all our capital allocation priorities, beginning with 3.8 billion in CapEx, which fueled our existing location and Greenfield additions with new rental fleet and delivery vehicles. We expanded our North America footprint throughout the year by 165 locations, with 77 through Greenfield openings and a further 88 via Bolton. We invested a total of $1.1 billion on 50 bolt-on acquisitions. And finally, we returned $261 million to shareholders through share buybacks and announced today our intention to pay a final dividend of $0.85, making the full-year dividend $1 per share a 25% increase. Despite these levels of capital investment, acquisition, and returns to shareholders, we remain near the bottom end of our net debt to EBITDA leverage range at 1.6 times. These activities demonstrate our confidence in the ongoing health of our end markets and the fundamental strength in our cash-generating growth model that we will illustrate over more slides throughout the morning. Let's move on to our outlook on slide four. Our initial revenue, capex, and free cash flow outlook set forth herein is derived by taking into account the current and anticipated demand environment, as well as momentum in areas such as pricing, structural growth, and mega project starts. These contributory elements will be covered throughout the operational update this morning, so consistent with our approach in recent years, the slide here frames our current estimate of year-on-year rental revenue growth by business unit, as well as group level capex and free cash flow. Beginning with rental revenue, we anticipate the U.S. to be in the 13% to 16% growth range. Canada to deliver growth of 15% to 20%, and the UK to deliver growth of 10% to 13%. This combines for overall rental revenue growth guidance for the group of 13% to 16%. From a CapEx standpoint, we begin the year with a range of $3.9 to $4.3 billion, of which $3.3 to $3.6 billion is new rental fleet. This is tweaked slightly from the initial guidance in March due to timings of landings, which I will explain when we get to the CAPEX slide. These activities and anticipated business performance lead to expected free cash flow of $300 million in the year. And on that note, I'll hand it over to Michael to give some financial detail.

So thanks Brendan and good morning to everyone. The group's results are set out for the year ended April 23 on slide six. Fourth quarter was a strong one, rounding out a year of record performance across the business with good momentum throughout. This momentum drove strong U.S. and Canadian rental revenue growth, while U.K. rental revenue grew despite the Department of Health testing sites closing or being demobilized during the first quarter. As a result, group rental revenue increased 22% on a constant currency basis. The growth was delivered with strong margins, an EBITDA margin of 46% and an operating profit margin of 27%. And as a result, adjusted pre-tax profits increased 26% to $2,273,000,000. Adjusted earnings per share were $0.388, and ROI was close to our peak at 19.2%. Turning now to the businesses, slide 7 shows the performance in the U.S. Rental revenue for the year was 24% higher than last year at $7.5 billion. This has been driven by a combination of volume and rate in what continues to be a favourable demand and supply environment. The strong activity and favourable rate environment have enabled us to pass through the inflation that we've seen in our cost base, both in general as well as the direct costs related to ancillary revenues such as fuel, transportation and erection and dismantling. In addition, we continue to open greenfields, adding 68 in the year, along with complementing our footprint through bolt-on acquisitions, which added a further 67 locations in the US. Inherently, in the early phase of their development, greenfields and bolt-ons are lower margin than our more mature stores. That said, as expected, drop through improved during the year, such that with fourth quarter drop through of 54%, giving us 50% for the year as a whole. This contribution EBITDA margin of 48%, which in further drove 33% increase in operating profit to $2,465,000,000 at a 30% margin with ROI improving to a record 27%. Turning now to Canada on slide eight, rental revenue was 22% higher than a year ago at $696 million. The original Canadian business goes from strength to strength, taking advantage of its increasing scale and breadth of product offering as we expand our specialty businesses and build out our clusters. We've now clustered five of the top 10 markets in Canada and 13 in total. The level of bolt-on activity, particularly in McFarland's and Flagrow, which have a higher proportion of lower margin sales revenue than exists in our business, has been a drag on margins. This impact will reduce in the future as we reduce the level of outside sales in these businesses. 2022-23 proved to be a challenging year for lighting, lens and grip business. Performance was affected earlier in the year by the threat of strike action in Canada, while the latter part of the year was affected by the threat and subsequent occurrence of strike by the Writers Guild of America, which is affecting current trading as well. These factors have resulted in a drag in margins and a degree of uncertainty about 23-24 performance in that business, in that part of the business, which I'll come back to in a moment. As a result, Canada delivered an EBITDA margin of 41% and generated an operating profit of $167 million at a 20% margin, while ROI was 18%. Return to the impact of the strike on the Canadian revenue guidance. Lighting, grip and lens accounted for just less than 25% of Canadian rental revenue last year. Our guidance for this year assumes that lighting, grip and lens revenues are down somewhere between 5% and 20% based on the strike ending at some point during our Q2. Turning now to slide 9. UK rental revenue was 3% higher than a year ago at £559 million. This growth is despite the significant reduction in the work for the Department of Health as we completed the demobilisation of the testing sites during the first quarter. As a result, the Department of Health accounted for about 4% of total revenue this year compared with 30% a year ago. The core business continues to perform well with rental revenue 26% higher than a year ago. However, the inflation environment, combined with the scale of the logistical challenge in not only completing the testing site demobilisation within three months, but then getting that large amount of fleet back out on rent, and the significant increase in demand that we saw over the summer, particularly in the returning events market, contributed to some operational inefficiencies, and this has all impacted margins negatively. The principal driver of the decrease in the operating costs is reduction in the work for the Department of Health, partially offset by the costs that I've just referred to above. These factors contributed to an EBITDA margin of 28% and an operating profit margin of 9%. And as a result, UK operating profit was £65 million and ROI was 9%. Slide 10 sets out the group's cash flows for the year. This slide demonstrates the significant cash generating capacity of this business. Free cash flow of $531 million is higher than 2019 or any year prior to that, despite spending $3.5 billion on CapEx. Slide 11 updates our debt and leverage position at the end of April. Our overall debt level increased in the year as we allocated capital in accordance with our policy, spending $1.1 billion on acquisitions and returning $358 million to shareholders through dividends and $277 million through buybacks. As a result, leverage was at 1.6 times, excluding IFRS 16, was towards the lower end of our target range. Our expectation continues to be that we will operate in our one and a half to two times net debt to EBITDA range, but more likely in the lower half of that range as we continue to deploy capital in accordance with our policy. One of the actionable components of Sunbelt 3.0 is dynamic capital allocation. An integral part of that is a strong balance sheet which gives us the competitive advantage positions as well to take advantage of the structural growth opportunities available in our markets. We accessed the debt markets in August last year and again in January this year in order to strengthen our balance sheet position further and ensure that we got the appropriate financial flexibility to take advantage of these opportunities. We issued two lots of $750 million notes, 10-year investment grade notes, at around 5.5%. And following those notes issues, our debt facilities are committed for an average of six years at a weighted average cost of 5%. And with that, I'll hand back to Brendan.

Thank you, Michael. We'll now go on to some operational and market detail, beginning with the U.S. on slide 13. As you'll see, U.S. growth remained very strong through the fourth quarter, with General Tool growing 19% and 20% for the full year. Specialty delivered 22% growth in the quarter and 30% for the full year. The strength of this performance, once again, broad, extending through every single geographical region and specialty business line. Consistent with recent updates, the supply and demand equation remains favorable. These trends are driving increased rental penetration for those benefiting most are the larger, more experienced, more capable rental companies who can position themselves to be there for this increasing customer base and therefore realizing a larger share of what is without question a larger and growing market. Importantly, we continue to progress rental rates in the quarter, and it is our intent and actually expectation that there will be ongoing positive rate gains in our business throughout 2023 and 2024. Our rental rate improvement determination seems to coincide with all indications pointing to further and ongoing efforts to advance rental rates within the industry as well at large. Let's take a closer look at our specialty business performance on the next slide. The year-on-year rental revenue movement illustrated herein demonstrates the ongoing and compounding growth across all specialty business lines. U.S. specialty rental revenues increased a remarkable 30% on top of last year's 24% growth. To add context, our specialty business in North America is now double the size it was just three years ago, and it's 70% larger than it was two years ago. This growth continues to tangibly demonstrate the structural shift our customers are making from ownership to rental as we provide a more trusted and a more reliable alternative to ownership. You'll notice the year-on-year impact our temporary structure business has on the specialty growth rate, particularly in the fourth quarter. I'll remind you there was a very large one-off temporary structure project related to the Afghan refugee circumstance underway when we acquired Mahaffey in December of 2021 that generated roughly $75 million in revenue just over a five-month period, therefore explaining the impact that you'll see. Finally, remember our specialty business lines principally service non-construction and markets and therefore act as a good proxy for the strength of this incredibly large market, which makes up almost 60% of our revenue. To take a closer look, we'll move to slide 15. as our specialty and general tool businesses, service a heightened demand in our non-construction markets where there continues to be huge opportunities to drive rental penetration from a low base and increase into what is a very large addressable market. We commonly refer to an incredibly large component of this non-construction and market as MRO, the maintenance, repair, and operations in the geographic markets in which we serve, such as facility maintenance, which is clearly defined as a market in which hundreds of billions of dollars are spent annually running and maintaining facilities. From cleaning, to painting, to decorating, to planting, to temporarily powering, to cooling, to repairing, and I could go on. Of the many, many types of facilities that make up the 100 billion square feet under roof of commercial space in the US alone. The scale and growing revenue opportunities for our business within this space are immense. The rental of our broad range of specialty and general tool products will increase in what is a very much structural growth arena in the very early stages of a long runway for growth. With other non-construction examples being live events, emergency response, and municipal spend, these incredibly large addressable markets make up the majority of our collective specialty business revenues, however, increasingly benefit our general tool business as we continue to advance our prowess of cross-selling throughout the organization. Now that we've touched on specialty and non-construction markets, let's turn to slide 16 and cover the latest construction market trends and forecasts. Despite macroeconomic concerns and the pressures that come with inflationary and interest rate realities, you'll see construction levels have proven to be incredibly resilient. In fact, historically strong in the most recent year, and it's forecasted to continue as such. I'm going to spend a bit of time on the current and next few slides and attempt to put into context the construction landscape, what its drivers are, and how our business is poised to be a material benefactor. Starting on the top left with Dodge Construction Starts, this clearly indicates the strength of recent starts and the forecasted growth all the way through 2027. These starts figures are indexed to the year 2000. So what you won't see, but you'll have to take my word on, is that US construction starts eclipsed $1 trillion for the first time ever in 2022. of which $694 billion was non-res and non-building, which is also another high. These recent construction starts are an early wave of new projects derived from a combination of private investment and legislative project funding and incentives. On the top right of the slide, the starts are translated into a duration of project format known as put in place. This all makes clear that the non-residential cycle has been considerably de-linked from the residential cycle as a result of years of change in construction composition, reshoring, and larger than ever seen before federal government spending acts, all contributing to the rise of an era of megaprojects. Let's dig in a bit further on slide 17. Get it? Dig in. Lively bunch. Anyway, the drivers behind the recent level of unprecedented starts fall into three main categories, with many projects being driven by more than one. I think this is really, of all the slides, one that really frames, if you will, how we view the end market shaping up. And, of course, it says what these drivers are. A combination of geopolitical risk, supply chain challenges, environmental changes, and the experience of the pandemic are all leading to a reversal of globalization, and in particular, a reshoring of manufacturing and production in the United States. This is being seen in many industries, but notably for semiconductors, LNG, automotive, and their tier one component parts suppliers. Secondly, There is an ongoing growth in technology-related construction, contributing in part to a modernization of U.S.-based manufacturing. We experienced significant technology-related construction and indeed benefited from this for many years, of which you'll all be familiar with, with projects such as data centers, warehousing, and distribution. But now there are additional drivers in areas like artificial intelligence, electric vehicles, gigafactories, and utilities. Finally, are the benefits coming from the three legislative acts, which amounts to over $2 trillion of direct or indirect funding of a broad range of projects. So each of the three of these, onshoring, technology and manufacturing modernization, and legislative acts on their own would be significant. But when you combine them, one could well make the claim that we are in the early days of a modern era U.S. Industrial Revolution. Let's look at the progress we're seeing from just one of these, that is the legislative acts on slide 18. This is an update of a slide that we would have first shared with you in December. Beginning with the Infrastructure Investment and Jobs Act, the headline figure of $1.2 trillion may best be understood by compartmentalizing $650 billion as a renewing of the ordinary run rate, federal investment in roads, bridges, rails, utility, etc., The key to this act, however, is not only reassuring the baseline investment, as I've just touched on, but is delivering an incremental 550 billion of new project spending throughout the U.S. We've now seen 32,000 specific projects announced, which will mostly start in 23, 24, and 25. You'll see that on the slide. And for matter of reference, when we first put this out in December, there were only 10,000 identified projects. So you can see in a relatively short period, 22,000 more projects have been named. 80% of these are new funds or 80% of the new funds apply to these five segments that are on the slide, all of which are segments where we have a strong product offering, therefore will benefit from. Secondly, with the Chips and Science Act, which puts in motion a revitalization of domestic semiconductor manufacturing, whereas for decades the U.S. experienced a decline from 40% of the world's semiconductor production to only 12%. Also worth noting, the U.S. consumes 46% of the world's production, but again only produces today 12%. The overall act will invest $250 billion to progress American semiconductor research, development, and manufacturing. The act is designed to support directly or through tax credits nearly $140 billion in new semiconductor manufacturing projects. Four semiconductor plants, or fabs as they call them, have just recently started, worth about $30 billion, with more on the way, as you'll see. And finally, the Inflation Reduction Act. $370 billion of this bill will fund directly, or again by way of tax credits, a broad basket of renewable energy production and manufacturing, ranging from solar field construction, which will triple the current U.S. capacity by 2030, to battery factories, to wind farms, to electric vehicle production. the details of which are illustrated on the slide. So what we have here is a trifecta of government investment equaling nearly $2 trillion, an investment that will indeed create thousands and thousands of projects, which Sunbelt is well poised to be a benefactor of. Let's now look into detail at one of the outputs of all of these drivers I've now mentioned. That is megaprojects on slide 19. Here we attempt to summarize how these drivers are translating into the overall mega project landscape. Just to remind you, we define internally a mega project of one that has a overall cost of 400 million or more. In the fiscal year just ended, 175 new projects broke ground with a total value of $300 billion and an average value per project of $1.7 billion. In the fiscal year we've just begun, we're expecting over 250 megaprojects to break ground worth almost $350 billion. And then in the two years after, a further 180 projects are already identified with planned start dates totaling $350 billion. In anticipation of a question that you may ask looking at this slide, the 180 projects slated for fiscal years 25 and 26 is not an indication of a slowing pace. Rather, that's what has been planned thus far. We would expect this number to grow. They just have to get to it, but as you can appreciate, there is a lot of work going on. On the right of the slide, I've listed just a selection of top projects which broke ground in the fiscal year just ending. You can see these include a very wide range of project type, from semiconductor to energy to healthcare to public transport. Projects of this scale and sophistication. are often ideal for resident on-site solutions, meaning we, Sunbelt, often have dedicated storage and working space on the actual project, housing a large and broad offering of our products and the associated services, ranging from on-site maintenance and repair technicians, telematic-equipped products, producing efficiency-gaining benefits, to our on-site and remote teams, and, of course, to our customers. Coming through for their mandates in areas such as reduced carbon emissions and, of course, living up to our mantra of availability, reliability, and ease. All of these things, it's important to understand, we're realizing more and more every day, we and what we do is absolutely essential for the success of these megaprojects. So the solutions that I've just outlined require a rental company with the scale, experience, technology, expertise, breadth of product, and of course, financial capacity. I hope you understand that this is a material contributor to structural change in our industry, which again, we are certain to be benefactors of. Let's now turn to our business units outside of the U.S., and we'll begin with Sunbelt Canada on slide 20. Our business in Canada continues to expand and perform well as the power of our brand strengthens and customers recognize evermore the growing breadth of products and services that we offer. This growth is coming from existing general tool and specialty businesses, complemented by well-placed additions of greenfield openings and bolt-on acquisitions. These conditions are not dissimilar to the U.S. in terms of activity, demand, and the supply environment, and thus we're experiencing equally strong performance as it relates to time utilization and rental rate improvement. Michael touched on the impact of the Writers Guild of America strike impacting our film and TV business. The strike has been in effect, again, as Michael said, since the 2nd of May, and there is no clear timeline. However, there is some general thought that we could see an end to it in late summer or perhaps early in the fall. Either way, we're pulling the levers that you might expect as it relates to cost. However, let's be clear. We're in the business, this business, for the long term and fully expect a post-COVID style boon shortly after the strike. And we will be the company that is most prepared to benefit past this inevitable and to an unfortunate short-term circumstance. On a very positive note, we very recently, June 1st recently, acquired Lufois, a leading provider of power and HVAC rental solutions with four locations across Canada based in Montreal. This adds to our largest North American specialty business line and is a material step change to our capabilities offering throughout Canada. Further, this gives us critical infrastructure in French-speaking Quebec. requisite for building out that market with our broader product and service offering. Turning now to slide 21 to cover the U.K., The business did a great job this year redeploying the large quantity of fleet from the COVID test sites, which were demobilized at the start of the year and indeed increased rental revenue year over year, which indicates a combination of share gains and a reassuring level of end market activity. There's real momentum in the U.K. business as it relates to increasing progress in markets such as facility maintenance and further develops in specialty offerings in areas like power and the lighting and grip business, all emphasizing the unique cross-selling capabilities in the U.K. throughout our unmatched products and services portfolio, all now, of course, under the brand umbrella of Sunbelt Rentals. You'll see on the top right of the slide, there's a good mix of large projects in the UK as well, which we are, without question, best positioned to serve. As I flagged for several quarters now, and will continue to do so, an ongoing area of focus for the UK business is to advance rental rates and the associated fees that we charge to provide our market-leading services. We bring great value to our customers, and in the inflationary period we've experienced, increasing our rates is a must-do. We did gain some rental rate improvement focus and some material momentum in the back half of the year just reported, and I fully expect that this trend will continue in the business. Turning now to slide 22, you'll see our normal Sunbelt 3.0 scorecard. I've covered the main points within the highlight slide, so I won't dwell on this other than to quantify the early effect of our expansion efforts. In just two years, we've added 288 locations in North America via greenfield openings and bolt-on acquisitions. These locations alone generated nearly $900 million in revenue in the fiscal year just ended. Stand alone, this would be a top 10 North American rental company, which we've created in the last two years. Importantly, we're well established. underway in the development of the next phase to our growth strategy should come as no surprise we'll call it sunbelt 4.0 which we will be launching at a capital markets event in atlanta georgia in 2024. we're particularly excited about this because it will coincide with our internal power of sunbelt event where we will launch 4.0 to thousands of our team members And that will give the capital markets community the opportunity to interact and gain a tangible appreciation for our culture. Something that slides and figures alone don't really do justice for, at least when it comes to Sunbelt. We'll circulate the appropriate invites with further details in the coming weeks. Turning now to slide 23. CapEx for the full year ended up around $100 million above the top end of the guidance range that we gave in March. This was purely down to timing of landings with around $100 million of rental equipment in the U.S. we expected to land in May coming in before the end of April. Consequently, we've reduced our initial guidance for 2023-2024 by the same amount to reflect this early landing. We therefore now anticipate rental fleet capex in the U.S. to be between $2.9 and $3.2 billion. And after our non-rental capex across the group and ongoing rental fleet investment in Canada and the U.K., we guide to a total of $3.9 to $4.3 billion for the group in the full year. This investment will fuel our ongoing ambitious growth plans incumbent in Sunbelt 3.0 and demonstrates our confidence in the current and forecasted demand environment, competitive positioning, the strong relationship we have with our key suppliers, and our business model in general. However, as always, These plans can be flexed as we progress through the year to reflect our latest views on future market conditions. This leads on to capital allocation. On slide 24, Michael or I have covered most every capital allocation element as part of the highlights or financial slides, all incredibly consistent with our long-held policy. Worth noting, however, is our new buyback program of up to $500 million over the new fiscal year, which we would have put in place in May. And as indicated with the launch of that buyback program, we've commenced this at a relatively low level, reflecting the significant opportunities to deploy capital for growth that we've already covered, including what is still an attractive acquisition pipeline. So to conclude, let's turn to 25. This has been another great year of profitable growth, location expansion, and clear momentum in our business. Furthermore, there's improved clarity to the strength of our end markets in 2023, 2024, and beyond, driven by the recent realities of onshoring, technology and manufacturing modernization, and federal legislative acts. These actualities add to what was already a plentiful level of market activity, flush with day-to-day MRO, small to mid-sized projects, and the very present and growing mega project landscape which we've covered this morning. also clears the increased pace of rental penetration and considerable market share gains for select businesses in our industry who possess the scale, experience, equipment purchasing influence, and financial strength. Our business is positioned to win in the near, medium, and long term. This update should demonstrate once again the strength of our financial performance and the execution of our strategy, Sunbelt 3.0. So for these reasons, and coming from a position of ongoing strength and positive outlook, we look to the future with confidence in executing on our well-known and understood strategic growth plan, which will strengthen our business for years to come. So before getting into questions, I'd like to actually thank the Numis team for allowing us to use this really great venue. And with that, when we do open it to questions, it's only fitting that we give the microphone to Steve first, if you have one, Steve. Just here.

That's very kind, Brendan. Nice competitive advantage. Thank you. Skill matters sometimes. You've mentioned so much about obviously the strong demand you've got out there and the opportunities. I was wondering whether we could touch on the supply side of the equipment into that. One of your competitors recently mentioned that they expect supply chains to ease a little towards the back end of the year. So I wanted to get your thoughts on that and potential fleet into the market that might be coming. Secondly, equipment disposal levels, which I know most of the industry has held off of until now this year to even think out. So I was wondering if you could touch on disposals, pricing, potential margins that you're seeing out there. And then thirdly, With all the new equipment that's landing, is there a noticeable premium to pricing that you're getting out there on any of this kit, or is it sort of just flooding in as part of the attraction?

I'll start backwards there. So, yeah, you know... New shiny fleet, green in particular, matters. So you've got to make sure that your fleet age positions you to have one of, if not the most modern fleet in the industry. And that certainly helps as we are progressing rental rates. What we don't see is a delineation between our newest fleet and specifically what we charge for it, when compared to our middle or our oldest, which is actually important. In times past, frankly, coming out of the GFC, we would have seen that, which was different. The new fleet got more, and that which was long in the tooth didn't get quite as much more, so to speak. So it's an important characterization. In terms of dispositions, what's the total, Michael, for the fiscal year in disposals? Ballpark, 1.3, 1.4 billion. Yeah. Overall, you know, short answer is this. Pricing remains historically strong. We're a bit off of the of the toppiest levels that we would have experienced. But I think the key to understand there is what has proven the case throughout all of this is is so extraordinarily liquid. So for the business to actually go through the various paths that we do for disposal, it is perfectly liquid. And I think one thing, I think a lot of people are expecting in the capital markets community that we'll see significant degradation in second-hand values. I just don't think that's going to be the case. I mean, really, the biggest underpinning, so to speak, of what second-hand values are is what new equipment costs. And let's face it, the industry, the equipment world in general has experienced great inflation, so that should – act as a booing effect overall. And then to your first question, we actually updated this slide. You'll see 33, which is in the appendix. We used this slide for quite a few times over the last couple of years, just really flagging these three market dynamics were rather unique, not to mention happening at the same time. And the one that you're talking about specifically is supply constraints. Our view would be this. we're in the new normal period for what we think could be one, two, maybe even three years, and that is this. Rest assured, supply constraints are still reality. Those are one of the primary drivers of bringing U.S. manufacturing and the component part manufacturing aspect to the U.S. What's changed is this. OEMs are getting better at meeting their commitments. So if they give us certain commitments over the course of the year, Look, they delivered 100 million early last year between April and May. But what has not demonstrably improved are lead times. So lead times still remain significantly longer than what they were pre-pandemic. And we think that's just the reality, particularly when you have ourselves and one or two others who are ordering larger. They're getting a larger overall share of a production capacity. It's not much more than what it was. And we're all sort of going further out in those orders or build slots. This is something that we think will carry on.

That's great.

Thank you. Great. And Lee's here.

Hi, Annalise Vermeulen from Morgan Stanley. I have a couple as well. Take them one by one on megaprojects, unsurprisingly. So first of all, you've talked in the past about your market share on megaprojects being at least double of your typical market share for the industry. If you'd look at some of these projects that you've outlined and the pipeline that you've identified, can you give any colour on that market share number? appreciate you might not say we've won this this and this but um any any kind of color on on how much you're winning and who you're um i'm guessing there's only a couple of you that can bid on these projects and then equally if you look at some of these really big projects would you typically do a hundred percent of the equipment supply or would you share that with other operators

Sure. I tend to overshare a bit. So, you know, there are projects on this very slide that, you know, we would have been given that preferred vendor status, which means that we're actually resident and on site. I'm actually quite happy to say there are some projects where it's actually more than one of us who are given on-site access to these projects just given the enormity. I mean, some of these projects, I mean, you know, you walk one of these just massive semiconductor sites that, just to put in perspective, a big fab like you see listed there, 13,000 tradespeople. will badge in and out of that project every single day. So when you think about the scale of that and the requirements in order to service it, it just goes back to what I said, sort of big and sophisticated. Our team who is focused on this, you all know John Washburn, but we have someone in particular, her name is Janelle Strawbridge. And Janelle, with her team that is in place throughout the country, if you will, literally tracks every single one of these megaprojects in terms of when it's coming up for bid, who the general contractor might be, where geographically it is, where it fits a bit better, where perhaps it fits a bit less, who the general contractor might be, who we have a bit better relationship, who we have a bit less relationship with. And literally that team has taken all these projects you see and designated them into tranches like we must win this. We'd really like to win this. We'd take this, but we probably don't align the best. And this we're probably just not going to get. That team's mandate, self-imposed, is to win a third of these. And I'll just say our track record is strong. And that, as you suggested in your question, that sort of proportion remains the same. We think we have about double market share. And some of those that we are sold were kind of 90 plus. But I would go so far as to say there's not a single project on this slide, started or otherwise, that we won't have something at some stage of these projects. Also worth noting, again, these projects last, on average, three years. And then you have to think about all the consequences of those after, when the suppliers come in, et cetera. But anyway, does that answer your question?

Absolutely. Thank you. Thank you for sharing. And then secondly, thinking about all the greenfields that you've added and also the bolt-ons, if you look at some of these megaprojects and where they're located, there seems to be a skew towards certain states where you are seeing more of these bigger projects go up. And I think, you know, you have a good footprint in a lot of those states. But if you think about the pipeline of these projects and the length of time and touching to your point about location, is that impacting how you're thinking about where to open greenfields over the next five years?

Location matters probably more just when it comes to the required relationships with whoever may win. One thing that you have to be careful with, you know, when you're in our sort of role and when we're going after these mega projects, There is a whole slew of other projects out there. I know we're spending particular time on these because they're just big headlines grabbing, but I'm actually going to refer to a sheet here and read off to put things in perspective. In the fiscal year just beginning, there are 1,150 projects that are between 100 and 400 million in cost. So the reason why I say that is twofold. A branch that is in an area or a cluster of branches that are in any area their day job, their long-term necessity is to deepen their penetration in that market, not to be distracted by a megaproject, which is why Janelle and her team, along with the operational leadership, are really focused on those. We could really care less whether the project, in most circumstances, is in, you know – Bangor, Maine, or it happens to be just west of Scottsdale, Arizona in general, because we're actually deploying fleet. And in many instances, people in accordance with that project, I think the sort of where tends to be what type of project, you know, we've become incredibly well-versed in certain types of projects and maybe a bit less so in others. So those are the things that really, I think, add to it more than anything else.

Thank you. And then just one last one on the CapEx guide you're talking about. When you think about that sort of fleet that you're adding for the next year, particularly on the growth side, is there an expectation of future wins baked into that? And in terms of that moving up, is it still availability constraints that prevent that, as you say, the lead times and availability of equipment? Or are you actually, no, we've got everything we need to service these projects?

We do have a considerable dollop of the overall fleet growth that is allocated for projects that we have line of sight. And there is a degree of confidence, if you will, that we end up in a good position that will contribute to that. But again, it's important. It doesn't take away from the growth capex for the business we have. our existing branches. In terms of your question, can you flex that much? There's not much up flex. In the past, you win a few projects, you get an extra half a billion in fleet. I know it sounds like easy. Well, it was easy. The hardest part was really just convincing Michael that it was financially prudent. But once we did that bit, it was pretty easy. Today, we couldn't call even our top suppliers and change this guidance we've given by three-quarters or a billion dollars. It's just not going to happen. You just hand it to them.

There you go. It's Alan Wilson-Jeffries. Three from me, please. I'll take them one at a time. Maybe just following on the kind of the megaproject theme anyway. Obviously some very big numbers there. Can you talk a little bit about how you see the revenue shift at Ashton or the U.S. business anyway in terms of less than 45% is obviously construction exposed. How much of that is now over the last 12 months was this kind of megaproject infrastructure theme? And then you look out over this year and next year, Where do you see that shift going to? When does it become uncomfortable? You're overexposed to those markets. Just would like to get a feeling of where you see the next.

Yeah, well, I mean, again, based on the forecast, which coincidentally on our slide 16, which shows the put in place figures, wouldn't you know, last night Dodge came out with a brand new printing. So it was a bit too late. Press release was out, et cetera. So we left it as is. I'll give you the comfort in the fact that in total, the non-res and non-building actually moderately grew every year from 2023 through 2027. We saw res go down a bit in 2023 and then grow again from 2024 and beyond. The reason why I say that is as it stands today, those other projects I mentioned that aren't these mega projects, that's still a robust end market. So it's not so much would we all of a sudden find ourselves over-positioned here, because that's a choice. Our identification of projects and that must win, et cetera, what aligns with us, we are always taking into account balancing the combination of squeezing every drop out of the sponge now, but really in the end, what we're all looking for is a long-term transition vibrant, thriving business that will be around for a long, long time, hence sustainability. But overall, when you look at these projects, I think there's a few things to just consider. Because one question like I got, for instance, while we were outside waiting, what's the risk of these not going through, these projects, right? And I would characterize it this way, and there's three very important things to understand about these megaprojects. Number one, when they start, they will finish. So the 175 that began last year, in conjunction with, you'll remember, the 200 that were going on in December, those projects will finish. Those of the 256 which have already begun will indeed finish. Secondly, the calculus, the very decision to invest in these projects, has nothing to do with macroeconomic environment, concerns, et cetera, over the next couple of years. The calculus on returns for projects like this are, in some cases, survival, in some cases, derived over the course of 50 years. And then the third piece would be think about what happens next. to other sort of construction that you're asking about after these are done. Not only the tier one suppliers coming in, but you get everything else. People work in these plants when they're done or these big projects, and then you have housing and those sort of things. I think there's actually a great phrase here. I'm going to give Michael all credit to this because we're always asked the question. There are one or two out there that think that still. As resi goes, non-resi will follow. We think they're unequivocally wrong. Michael's got it right now, which is as non-res goes, resi follows. That's the future of the U.S. as things go. So we think that that is the construction yield curve inverted. Anyway, your second question.

Yeah. And maybe just some shorter term ones. First of all, on that 13 to 16 percent U.S. rental growth guidance for the year, could you maybe just talk a little bit about what your assumptions are on rate and utilization there? You've talked for the last six months around kind of six, seven plus percent on the rate side. Do you see that moderating a little bit? And obviously utilization, you've alluded to the fact you'd wanted it to come down a little bit because it was uncomfortable. Maybe what assumptions are around that 13 to 16%?

I'm going to touch on rate and then give Michael actually to talk a bit about volume, et cetera. I'm going to talk about this year that just ended, 9%. rental rate improvement year on year. So it demonstrates that ongoing momentum. And I also mentioned clearly seems to be the focus in the industry in general because it's necessary. But you want to deconstruct, Michael, the forecast?

Yeah, I think the easiest way to look at it is within that range, just take it two-thirds, one-third. So about two-thirds of it will be volume, one-third will be rate. Don't get too hung up on utilization. We talk about, yeah, we'd like it to be a little bit lower so that we can say yes more often, but utilization is a function of the fleet size. So let's just not get hung up on utilization. We'd like it to be a little bit lower, and we can then take on more work, but two-thirds, one-thirds is a good split.

And then a very final question, just 18% growth in the fourth quarter in the U.S. Can you maybe just comment on exit rates, like April, May, what growth looked like in the last couple of months?

May was 15% on billings per day, so kind of right in the middle of our guidance. Thank you very much. Yeah, thank you. Can we just pass along there?

Hi, good morning. Suhasini from Goldman Sachs. Just a few from me, please. I think there was a lot of concern after the regional banking crisis in the U.S. that maybe some of the activity would slow down in the construction side. Could you maybe comment on what you're seeing from your client's perspective?

when we are in the UK speaking to a UK audience, you know, regional banking comes up more, believe it or not, than it comes up in the US. And I think it's because in the US, everyone's sort of thinking, well, that was like, you know, 90 days ago. And, you know, we're off to greener pastures. But in reality, the short answer is, of course, it's going to have some effect. Also, part of the short answer is that effect is actually in these forecasts already from overall construction. But the way I boil it down, having talked to many customers about this and those actually in the lending business, these regional banks included, one in particular told me, remember, As a regional bank, we must lend. So it all comes down to really reducing the risk in lending. So it comes down to that, the company or business, et cetera, that they will be investing in or to, and the type of construction they will be building. and you can already see the consequences of that happening. Now, some of them are structural, and they're just accelerated through this, and others are just the obvious. And if you think about the overall construction landscape, let me put it in perspective when I say structural, but also amplified because of regional banking. If you look at an area like retail or stores, as it's sort of in Dodge, to put it in perspective, between the year 2000 and 2007, expressed in millions of square feet, Retail was 300 million square feet of construction consistently for the turn of the century through leading up to the GFC. Today, it's about 60 million. It was a bit higher than that. And then you have the banking crisis because, I mean, are you going to lend as a bank to a restaurant right now? You know, probably not. So, you know, office space is another one that you can definitely see. If you look at offices, and again, it's a bit odd. You have to really understand all these pieces, which, of course, we study. But if you look at offices, there's four buckets for offices. And we all would agree in this environment where we're not quite sure when or if or how many people actually come back to a proper office, I would not want to be in the office REIT business right now. Personally, I like rental. But if you think about it, you've got four pieces of office. You have office which is spec, office which is build-to-suit, office which is remodel, and then you have data centers that are in office. So office that is spec, I would just go ahead and say it's dead. I wouldn't expect an office to be built in spec that has not already started, I don't know for how long, but let's just say five years. I'd say most all that's in the numbers, but probably not all that. Oddly enough, when you look at purpose built or build to suit, it's actually quite strong. You still have some tech companies building some offices. You have a bank or two that's building one and a half billion beautiful buildings in downtown Manhattan. And as they start, they will finish. Remodeling is actually reasonably healthy, but data centers, and this might surprise some of you, so I'm glad you asked this question. Data centers will have their largest ever in the history starts here in 2023. In the U.S., there will be $17 billion worth of data centers that are started. Now, these are seemingly like small projects compared to the stuff I've just covered because the data center building is about $450 million, $425 million, but nonetheless, $17 billion worth that will start. And from a forecast standpoint, between 2023 and 2027, it averages $13.6 billion. So quite robust. But here's what might surprise you more than anything. The average pre-GFC from 14 to 19, 6.5. So these are all – when I mention on the slide those three big drivers of these unprecedented levels of starts, that's advancing technology. Everyone talks about AI. What does AI need? You know, it's all a matter of, you know, servers, speed, data. You need data centers for that. So, you know, the regional bank, we keep an eye on, but we think the at-risk piece, it's not a single one of these.

Thank you. Right behind you.

Thank you.

Hi, Charlie Campbell at Librem. I've got a couple. Just to go into the sort of US outlook and just to ask the question around rates, really. So I suppose big number, half of the business, non-resident, non-construction rather. There are clearly kind of risks out there of recession, slowdown in that part. also bits of office, whatever you want to call it, bits of residential. Is there a risk that there's too much capacity in those markets and the people who own that fleet and those parts are depressing rates against the rest of the industry? Just wondering what happens. on rates on that side. And then secondly, a bit more of a detailed question, just on bad debts and how you manage bad debts in 23 and 24. Obviously, a lot of contractors have got the wrong side of inflation, haven't they, taking up fixed-rust contracts and stuff. So how do you manage that?

Yeah, so I'm sure Michael will take this second. But as it relates to rental rates, we just have to be really clear here. So despite the scenario that you just mapped out, our rental rates will not go down. So us lowering rental rates creates no demand in all of a sudden building the next data center. So we're not going to go to TSMC and say, tell you what, 15% off rental for the next two years on your $10 billion project. They're not going to build one as a result of doing that. We have all learned our lesson as it relates to that. The difference between those that are capable for the projects that in the scenario you described will remain is The standard has just changed, whether that be ESG related, it be health and safety, it be telematically equipped equipment. It's just all different. And the delta between those who have and those who don't is huge. It is not a moat. You know, it is an ocean. And when you really think about the makeup of the overall industry, frankly, it's the smallest rental players who really have to progress rate. So they've experienced inflation like no one else has. And they're just now getting around to replacing their fleet. I mean, there are. This may surprise some of you. You look at the pie chart in terms of how fragmented the industry is. There are 3,274 independently owned and operated single-branch rental companies in the United States alone. They're not going to all get together and say, tell you what, let's pick a fight with Sunbelt in terms of pricing. It just won't benefit them. So that is the reality of where we are today.

Thanks for that.

That's really clear. Thank you. Michael, bad debts. Bad debts.

All we've seen so far is a little bit of a slowing of payments. So we've seen no significant increase in bad debts at all. And what I mean by slowing of payment, I'm talking about sort of like 30 to 60 days. If you actually take our most aged categories, they're not dissimilar to what they were pre-pandemic. So we've not seen any of that yet. And what you have to remember is none of our debtors are significant. No customer is 1% of revenue. So all the receivables individually are very, very small. So you have to keep track of it, and there's a lot of work chasing it all, et cetera, but it's not a significant problem.

It's also coming off of our best ever receivables. Right. Right. So it's not like degradation to historic norms. It's better.

I was going to say, if you go back pre-pandemic, then the age piece is not dissimilar. It's probably slightly better.

Yeah.

Thanks very much.

Thank you. Others? No? No?

Thank you. I appreciate it. Arno Lehmann, Bank of America. I have three brief ones. Firstly, just to follow up on rental rates, you say one-third of the 13 to 16, so mid-single digit. What is the rollover effect from last year increase, and what could be the incremental rates you expect to implement this year?

Probably about half of it is rollover.

Secondly, on the free cash flow guidance, so maybe another one for you. Your top line is going to increase and hopefully your profits as well. Your capex is only slightly up. So why is your free cash flow guidance, let's say, stable or similar to last year when maybe it should be increasing a bit more? Are there any other factors to consider?

No, it's all... One of the challenges you have, and certainly with free cash flow guidance, if you go back, if you see where we were at Q3, we said 300 and we delivered 531. When you're landing 300, 400 million dollars a fleet every month, it doesn't take much of a slippage one way or the other to change your free cash flow guidance. So one of the reasons why we better than we guided to at Q3 is the fact that actually everything that landed, we hadn't quite paid for it all. So some of that knocks on into next year. So, yeah, it's sort of around about the same. We're spending more on capex, et cetera, across the piece. So there's nothing unusual in there.

Thank you. And the last one is a follow-up to all of Brendan's comments on megaprojects, etc. If we build, let's say, fewer offices and more factories and maybe more roads, how does that impact the, let's say, the rental intensity? I would have thought, you know, for a warehouse or factory, maybe there's less construction for the structure and more stuff inside compared to an office. So is the rental intensity similar? And do you have the right equipment for these mega projects compared to, you know, can you just move all of the freight from an office building to a factory building?

Yeah, our fleet is very fungible from project to project. I mean, you pick offices. Offices, frankly, aren't the best. If you think about rental flow-through, there are some projects on the high end that might be 5% to 6% of their overall construction costs would flow through to rental. There are some projects that might be more, in the mega project universe, might be more like one or one and a bit. When you look at megas across the board, I think a healthy number is about one and three quarter of the cost of construction, depending on, again, the makeup. Data centers can be a bit higher. And when you get into a semiconductor, frankly, we thought 0.75 at first. I think we've learned pretty quickly it's more that one and a bit, one and a quarter for a semiconductor. It just depends on the type. Offices, the more vertical you go, the less rental flow through there is. Because, you know, obviously when it comes to some of the AeroWorks platform, yeah, you have little scissor lifts on each floor perhaps, but the more vertical that you go, the less favorable. The more broad, wide, so to speak, the project is, the better. But in the end, we are fleeted well, both from an infrastructure standpoint and the other drivers of these megaprojects.

Thank you so much.

Thank you. We've got all the way back left. Oops.

Hi, Mark Housen from Dalgate Capital. Good to see you again, gentlemen. Mark. Just a couple of questions, just background stuff. Most of the questions I wanted to know would have been asked. Just where are we with regards to U.S. rental penetration, and particularly if you include that repair and maintenance section, if you could throw that in where we are on that. And secondly, can you just remind us again where the market share is of the mom and pups relative to the majors these days?

Yep. I'll take the first there last and just put this – I haven't memorized all the appendix slides just yet. This is the last one. There you go. There you go. So when you look at those in the center there, the under 2023, that other, that's going to be all of those outside of this RER 100. So it's going to be that 3,274 plus another 700 or 800 or so that make up what is that 37% share. But that's updated to indicate our most recent views on market share overall. As it relates to rental penetration, it's a very hard one to actually... Do the math on, as you're progressing through a period, which we believe we are today, of a step change in penetration. And the reason why I say that is if you look at areas, which I know you're all versed on this, but when you look at aerial work platform, which is almost fully rental penetrated as it relates to today and has been going into this period, but we are seeing what we believe to be anecdotally tangible gains, whether it be in products like skid steer loaders, some other ground engaging product, even the larger end, hydraulic excavating, et cetera, which still is actually low, more in the 25 to 35 range when we do any sort of precision with the OEMs. And of course, when it comes to those specialty product lineups, I mean, if we look at our flooring business, which has grown fantastically since we've brought that on, we're still in low single digit. Maybe we're scratching 4% rental penetration or something like that with Thorne. That capital market stay that I mentioned earlier in April, you're going to get an update on a broader view of rental penetration.

Thank you. One left, Neil Tyler, Redburn. Back to supply. In the past, Brendan, you mentioned the physical OEM capacity not being any greater than it was, I think, in 2018. That's right. If you could give us an update on your sort of thoughts there and outlook. Several of those OEMs have pointed to very strong order backlogs for some time, but I've also heard opinions that some of those order backlogs might be duplicates. So if you've got a view on that, I'd be interested in it. And within that, in terms of pricing of ticket prices for equipment, 24 versus 23, if you could help us with your thoughts there.

Yeah, I mean, what you're talking about, what we've shared specifically was for the manufacturers who sell into North America, and in many cases manufacture there, for aerial work platform and telehandlers specifically, which is about 50% or a bit more of the overall industry's fleet. And those three product categories, scissors, booms, and telehandlers are just now in 2023. In 2022, scissors would have gotten higher than where they were in 2018. Booms and telehandlers still at or below pre-pandemic levels. So they're just getting to the point of getting back to what their peak capacity was. The key is... They've not added much production at all. And, of course, that takes time. And you weren't going to necessarily do that coming right out of the pandemic. That would be a pretty gutsy call overall. Now, on some of the other suppliers we are seeing, their capabilities are improving, whether it be utilizing different manufacturing facilities to produce more in-demand products, et cetera. But I do think, and it's important for us from a long-term standpoint, you know, we will get bigger and bigger. And therefore our needs from a product standpoint will be larger and larger. And we're seeing some, actually we're seeing some de-globalization in the manufacturing industry in and of itself with plans in the US, but also in Mexico and Canada. So overall kind of in North America. But I'd say more than anything, it's a bit of status quo. In terms of inflation, I'm answering it this way because it's the number I know offhand. If we look at the life cycle inflation for the assets we will replace in the new fiscal year we've just begun, it's about 20%. So you're talking 2% to 3% per year depending on the product itself. Thank you. Thanks.

Hi, that's James from Barclays. Two on margin, please. What are your drop-through expectations for FY24 and then linking in mega projects as well? What margin would you expect on those? Could there be accretive to the group?

Mega projects, we would just say, I think we're best just saying parity. When it all comes out of the wash, it's kind of about the same. There is a sort of peak part of a project that might be a bit better than the rest, but you have to take into account the buildup and then the ramp down, so to speak. In terms of expectations for fall through this year, I'd say it this way. I'm telling the business 55%. Michael's saying at least 50%. So we would say 50. He's right. I'm just trying to set a goal rather than a budget. But when we look at the degree in which we are adding greenfields, which are planned for 120 this year, much better line of sight than what we had last year. And last year, we had some very specific bulletins that replaced what were planned greenfields. And, of course, that's going to vary based on how much bolt-on M&A that we do indeed do. But I think we should just stick with low 50s. Would you concur?

I'll let you have that.

Andrew Nussie from Peel Hunt. I'm curious, what are the specifiers saying at the moment in terms of environmentally friendly fleet that they want? Are you able to get all that you want? And through the life of that asset, would you still expect to get the same returns on an environmentally green piece of fleet as you would as opposed to a dirty version?

Our expectations as it stands today is dollar utilization parity. And if we do achieve dollar utilization parity, we should achieve an overall better margin because we anticipate the cost of maintaining and repairing those assets will be a bit less. I would literally just be guessing if I told you what the value of an eight-year-old hydrogen powered, electric powered, or whatever else may come, you know, what that will be eight years down the line, because we just don't know yet. But I think there's some key things to, you've got to take the, it's hard to argue this view on. Rental penetration will steepen in those products. The life expectation of those products will be longer. I mean, if you look at just electric, think about a motor versus an engine. You know, engines throw rods and break and need oil, et cetera. A motor is what's in your ceiling fan. When's the last time one of those broke? You know, so you're going to get a longer life out of those sort of assets that you would have. I may have missed a question or two there. I'm sorry.

more just what the specifiers are saying. Are you seeing... You mean customer asking?

Yeah. The element of that, you've got that fleet's got to exist yet. So, you know, until you actually get some of these battery-powered things where it's hydrogen, you know, it just doesn't yet exist. So... There are certain ways you can mitigate it and certain things. If you're thinking about power, et cetera, then we can combine a generator with battery storage, et cetera, to reduce emissions, et cetera. But until the fleet exists and you get that, which is why we're working with a number of our suppliers to actually advance that process, but until it hits the market, then it's difficult for people to specify it.

Okay. Thanks. Right here we've got. Michael Foster, Ocean Equity. Can you just talk about staff turnover? And are people leaving United Rentals to come to you and et cetera in the sort of top two or three players?

That's not what happens. It's impossible to say that someone didn't join the organization today from United or some Sunbelt person didn't join United from Sunbelt just given the number of, you're talking 22,000 people and 26,000 people, order of magnitude. It does happen. What we're finding is Certainly, when you think about this very slide, you know, those that are skilled trade, fill in the blank, commercially trained and licensed professional drivers, certified diesel mechanics, hydraulic mechanics, et cetera, you know, they're looking for, A career less so than the job. And we're seeing that. But also, you know, this this skilled trade scarcity is not a thing of the past. I think this that will be frankly, I think it would be the case for my entire career remaining. And I think I've got a long one. Hope I have a long one. So the reality is I do think we're attracting them from some other tangential industries, but it's a bit different. When you bring a driver into our business who's used to backing up a truck to a loading dock and someone else unloading it, and then you're unloading a 22,000 pound asset on four wheels that lifts you 60 feet in the air, you know, you've got to try it on for size. So we're trying to significantly more, you know, promote that in the way in which the actual real life job is that we do. That safety culture is paramount in doing so. But in terms of retention, I'll put it this way. You know, we're the 12th or 13th largest commercial trucking company in North America. And most trucking companies would kill to have the level of retention that we have in our drivers. When it comes to those that are not on the skilled trade side, managers, OSR, Salesforce, senior leadership, our turnover is anemic.

And just on the mega project front, obviously, you're going to be heavily involved in the build out of these things. What do you anticipate sort of being on site post the build? with all the speciality stuff?

It's a great question. That's facility maintenance. So that 100 billion square feet under roof is going to grow at a pretty significant clip. And the more industrial and manufacturing that is, the more intense the MRO is. So, you know, We do it today. Of course, it's a meaningful part of our business, and it will be a growing part of our business that really requires virtually all of our specialty business lines and, of course, GenRents. Thank you. Thank you. Any others? I think that's it. Well, good. Well, thank you for joining us this morning, and we look forward to seeing you in about 90 days' time. Have a great day.