Sunbelt Rentals, the equipment rental business of Ashtead Group (LON:AHT), reported fiscal third-quarter 2026 results ended January 31, 2026, marking the company’s first earnings call under the Sunbelt Rentals name and its first since moving its primary listing to the New York Stock Exchange on March 2.
Management said results were “solid” and in line with expectations, while highlighting record year-to-date free cash flow and a modestly more constructive outlook that led the company to narrow and lift the midpoint of its full-year rental revenue growth guidance.
Quarterly performance and hurricane comparison
CFO Alex Pease said total revenue and rental revenue were both up 3% in the quarter, and reiterated that adjusting for hurricane impacts, rental revenue growth was around 4%. Sunbelt reported third-quarter adjusted EBITDA of $1.1 billion with an adjusted EBITDA margin of 41%, while adjusted operating margin was 20%.
Pease also emphasized that the quarter’s results were presented under U.S. GAAP for the first time, which he said affects items such as EBITDA due to lease accounting differences versus IFRS. Under U.S. GAAP, most lease costs are recorded in operating expenses, with offsetting reductions in non-rental depreciation and interest expense lower on the income statement.
Segment trends: General Tool, Specialty, and the UK
In North America, management described mixed construction end markets but pointed to positive signs in the company’s internal pipeline and external indicators. Horgan said the company believes the local non-residential market is “now in equilibrium” with completions no longer outpacing starts, while mega-project activity remains strong in areas including data centers, healthcare, infrastructure, energy, and manufacturing.
By business line:
- North America General Tool: Horgan said rental revenue on a billings-per-day basis grew 2%, supported by positive volume momentum and “resilient rates.” Pease reported General Tool rental revenue of $1.4 billion, adjusted EBITDA of $767 million (margin 50.3%), and adjusted operating profit of $414 million (margin 27%).
- North America Specialty: Horgan said Specialty grew 5% in the quarter, calling the performance broad-based across lines including flooring, temporary fencing, structures and walls, trench safety, and power and HVAC. Pease reported Specialty rental revenue of $851 million, up 4%, and said underlying growth adjusting for hurricanes was around 7%. Specialty adjusted EBITDA was $407 million (margin 45.4%) and adjusted operating profit was $271 million (margin 30%).
- UK: Horgan said UK rental revenue was down 2% on a constant currency basis, citing ongoing market challenges and progress on restructuring actions announced in December. Pease reported UK rental revenue of $182 million, up 2% year over year due to favorable FX. UK adjusted EBITDA was $49 million (margin 23%) and operating profit was $7 million (margin 3%).
Margins, mix, and cost factors discussed on the call
Management attributed margin dynamics primarily to business mix and certain cost pressures. Pease said growth has been “driven disproportionately” by Specialty, which carries a lower EBITDA margin but higher return on invested capital (ROIC). He also cited higher internal repair costs as more of the fleet comes out of warranty and higher delivery costs tied to planned fleet repositioning to improve utilization and capture pockets of demand.
In the Q&A, Pease also pointed to growth in ancillaries—providing examples such as event-related installation work and third-party re-rentals (including step-up/step-down transformers used in data center projects). He said re-rent was up about 42% year over year, and described re-rent as profitable and a pathway to potentially expand owned “green” fleet over time.
On gains from used equipment sales, Pease said used asset pricing has been softer than post-COVID levels and near a low point relative to history, but noted the quarter included a gain on sale of about $2 million, which he characterized as small.
Capital allocation: record free cash flow, buybacks, and leverage
Sunbelt reported record free cash flow of $1.4 billion year to date, which Horgan said was an 83% improvement from last year. Pease said the company is on track to deliver record full-year free cash flow generation.
Year to date, the company invested $1.8 billion in CapEx (Horgan’s figure) and returned nearly $1.4 billion to shareholders through dividends and share buybacks. The company completed a prior $1.5 billion repurchase program at the end of February and began a new program of up to $1.5 billion in early March, timed with the NYSE relisting.
Pease said net borrowings declined by more than $200 million over the last year to $7.6 billion. Leverage was 1.6x net debt-to-EBITDA, within the company’s stated range of 1–2x. He also noted year-to-date activity included $162 million spent on 10 bolt-on acquisitions and the opening of 30 greenfields in North America (14 General Tool and 16 Specialty). Management said its M&A pipeline remains robust and it will pursue deals opportunistically when accretive and aligned with return and margin expectations.
Guidance raised at the midpoint; CapEx increased; pricing initiatives
Based on performance and “strengthening trends,” Sunbelt narrowed and increased the midpoint of its full-year fiscal 2026 rental revenue growth guidance to 2%–3%. The company also modestly increased gross CapEx guidance to $2.2 billion–$2.3 billion, which Pease said reflects funding for Specialty growth, recent major project wins, and replacement timing between the fourth quarter and the first quarter of fiscal 2027.
Because of these planned investments, management now expects free cash flow of approximately $2 billion, and emphasized that the outlook is provided under U.S. GAAP rather than IFRS.
During the Q&A, Horgan described the CapEx increase as “50/50” split between Specialty/mega-project growth and “advanced replacement” timing, citing opportunities to take delivery of available new equipment from OEMs. He also said the company’s “intelligent customer pricing” pilot—an added layer within its dynamic pricing system—was progressing well in three test markets with corresponding control markets, aiming to improve rates without degrading time utilization.
Management said it plans to provide a more detailed update on its Sunbelt 4.0 strategy and related operational initiatives at its March 26 Investor Day in New York City.
About Ashtead Group (LON:AHT)
Ashtead Group plc, together with its subsidiaries, engages in the construction, industrial, and general equipment rental business in the United States, the United Kingdom, and Canada. It provides pumps, power generation, heating, cooling, scaffolding, traffic management, temporary flooring, trench shoring, and lifting services. The company offers its products and services for facilities maintenance and municipalities, such as office complexes, apartment complexes, government, hospitals, data centers, parks and recreation departments, schools and universities, shopping centers, pavement/kerb repairs, and golf course maintenance; construction of airports, highways and bridges, office buildings, data centers, schools and universities, shopping centers, residential, remodeling, manufacturing plants, and green energy plants; emergency response for fire, hurricanes, flooding, tornadoes, winter, storms, residential and health emergencies, alternative care facilities, points of distribution, and mobile testing facilities; and entertainment and special events, including national events, concerts, sporting events, film and telvision production, theme parks, festivals farmers' markets, local 5k runs, and cycle races.
