Ashtead Group PLC Q3 2019 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew J. Wilson - JP Morgan Chase & Co, Research Division - Analyst : I just actually wanted to start with a question on Canada, please. It's quite difficult to model, obviously, because it's lots of, I guess, moving parts in terms of seasonality and obviously the shape of business has changed dramatically. I'm kind of really more interested in a broader question of just how you are finding the development of the business there against the kind of initial plans and kind of, as those plans developed, where you thought you'd been in Canada? So I guess, it's a broader question on how you feel about Canada.

Question: Andrew J. Wilson - JP Morgan Chase & Co, Research Division - Analyst : And can I just -- a quick follow-up actually on A-Plant. Just looking at the yield development, it's clearly been quite different across the 3 quarters. So I guess, it's more a question of kind of helping to understand that a little bit.

Question: Rajesh Kumar - HSBC, Research Division - Analyst : Can you give us some color on how the cost pressures in the business are developing in the fourth quarter of the year? And when you are giving your -- when you indicated mid-teens growth for the next year, what sort of cost increases have you budgeted within that?

Question: Rajesh Kumar - HSBC, Research Division - Analyst : And this drop-through guidance you're providing to us, is that excluding the margins you would make on disposals, I'm assuming? Because that may be a bit dilutive given you've got a bit more disposals coming up in the next couple of years.

Question: Rajesh Kumar - HSBC, Research Division - Analyst : Appreciate that. And you will report that because, so far, disposals have been not as big an issue. But for the next 3 years, you will see the disposals grow quite a lot. So I'm assuming you're going to make it amply clear in your release?

Question: Rajesh Kumar - HSBC, Research Division - Analyst : And just one last one, if I may. Can you quantify what sort of drag you've had on your margins from opening of greenfields in the last 3 years? So greenfields don't make the same kind of margins as the mature branches, so have you had any incremental drag? Or is the drag at the same run rate as the last couple of years? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MARCH 05, 2019 / 8:00AM, AHT.L - Q3 2019 Ashtead Group PLC Earnings Call

Question: Rajesh Kumar - HSBC, Research Division - Analyst : And you will present that slide in the future, right?

Question: Andrew Nussey - Peel Hunt LLP, Research Division - Analyst : A couple of questions from me. First of all, in terms of the bolt-on activity, obviously, it's slightly growing significance in terms of the revenue trend. But -- and I fully appreciate it can't be predicted with any certainty. But really, is the pool of opportunity out there still of very high quality? I'm just conscious of the pace of consolidation that there has been out there and the availability of attractive opportunities moving forward. And secondly, just picking up on your comment, Brendan, about customers holding on to fleet between jobs. I've sort of found that interesting, I wonder if you'd give a little bit more color around that, particularly given the ease at which customers can on- and off-hire through various digital platforms.

Question: Andrew Nussey - Peel Hunt LLP, Research Division - Analyst : Can I just jump in? So just to be clear: the value that bolt-on acquisitions can bring is as important as ever? Sort of the quality of the bolt-ons, not just the volume of the bolt-ons?

Question: Andrew Nussey - Peel Hunt LLP, Research Division - Analyst : Yes, okay. I'm sorry, the fleet point?

Question: Andrew Alexander Gibb - RBC Capital Markets, LLC, Research Division - Analyst : Just a couple from me. Just on the rate environment, obviously, on Slide 13, we can see the sort of positive rate environment you're seeing at the moment. But if we were to look at that on a same-store basis, would we be thinking that to be even more pronounced, i.e., the sort of drag effect of bolt-ons and greenfields? And then, secondly, just on the sort of greenfields and bolt-ons, something we haven't talked about a bit for a while in terms of the 2021 strategy is the progress on clustering. Just how that sort of strategy is progressing, please?

Question: Andrew Alexander Gibb - RBC Capital Markets, LLC, Research Division - Analyst : Just in terms of the sort of progress on clusters. I mean, it's something we sort of talked about in the last sort of Capital Market Day in terms of that progress and just really thinking about the sort of greenfields you opened, the bolt-ons and how that's translating into the development of clusters in North America?

Question: Steven John Woolf - Numis Securities Limited, Research Division - Analyst : Just one from me in terms of the infrastructure market exposure, perhaps things coming out of the planning phase now. I just wonder how much of that has impacted your thinking in terms of the CapEx outlook.