Investment

Our fifth and final actionable component is investment, by which we mean disciplined capital allocation to drive profitable growth, strong cash generation and enhanced shareholder value.  We will continue to allocate capital within our clearly defined framework:

• organic growth investment in existing locations and greenfield sites;
• bolt-on acquisitions; and
• returns to shareholders – a progressive dividend policy and share buybacks to maintain our leverage within our target range. 

Maintaining financial and operational flexibility enables us to flex our business and operational models through the economic cycle.  This enables us to react quickly to both opportunities in the market and adverse changes.  Having a strong balance sheet is fundamental to our success at all stages in the cycle.   

We have been consistent in our commitment to both low leverage and a well invested fleet, and we benefit from the options this strategy has provided.  The length and gradual nature of the last cycle enabled us to establish a smooth, well distributed fleet age.  Traditionally, rental companies have only generated cash in a downturn when they reduce capital expenditure and age their fleet.  In the upturn, they consume cash as they replace their fleets and then seek to grow.  We have changed this dynamic through the cycle with our scale and strong margins.  During Sunbelt 4.0, strong free cash flow will fund 100% of our organic growth plans, leaving significant capacity for bolt-ons and returns to shareholders.   

Our capital allocation will be underpinned by a revised target leverage range of 1.0 to 2.0 times net debt to EBITDA (excluding IFRS 16).