The head of the Ashtead equipment rental group said a wave of spending on upgrading roads, railways and bridges in the United States is more likely than it has been in a generation and will be a major boon for its industry.
“After the election and with the Biden administration, it seems more likely than I have ever seen it. . . When is it, not if. said Brendan Horgan, managing director of the listed FTSE group, which is also the second largest rental equipment group in the United States. “We’re going to take a bigger chunk of it. . .[spending]if this happens. “
Proposals from Republican Senators This week, $ 568 billion in federal infrastructure spending is well below the $ 2 billion demanded by US President Joe Biden. Still, even with reduced spending, Horgan estimated an additional $ 100 billion to $ 160 billion on top of the $ 475 billion in annual spending on non-residential construction.
However, the company, which operates as Sunbelt Rentals and rents equipment including excavators, tools and generators, said details were still too uncertain to be included in the updated financial targets when of the financial markets day this week.
It aims to take revenue growth from £ 4.9bn per year in the 12 months through January to around £ 6.3bn per year by fiscal 2024.
“I’m looking 25 years from an infrastructure perspective,” Horgan said, adding that spending plans were likely to be less than $ 2 billion because “an unfathomable amount” was spent on stimulus in response. to the pandemic.
William Kirkness, an analyst at Jefferies, said infrastructure spending would boost demand for equipment and tools, pushing up the rates Sunbelt could charge. “It’s going to suck up a lot of material,” he said.
Ashtead has branched out into other rental markets besides construction to make the business less cyclical. The group’s revenues plummeted during the pandemic as much of the construction and event industries shut down last spring, but demand for equipment for hospitals and testing sites cushioned the blow .
Horgan, who rose through the ranks of Sunbelt, hopes to expand its rental market share to 20% in North America over the long term by expanding its product lines, opening new locations and purchasing smaller competitors.