Sunbelt Rentals Holdings Inc

Fiscal 2026 total revenue was a record $11.2 billion, up 3.4% year over year, and equipment rental revenue was $10.3 billion, also up 3.4%. Adjusted EBITDA was $4.7 billion, with full-year margin at 41.9%, down 200 basis points year over year. Adjusted EPS was $3.72 for the year, and Q4 adjusted EPS was $0.74, down year over year mainly due to the lapse of an approximately $28 million receivables provision reversal and a higher tax rate. Q4 total revenue grew 8.9% and rental revenue grew 8%. Full-year free cash flow was a record $2.1 billion, up 22.7% year over year, and CapEx was $2.2 billion. For fiscal 2027, management expects total revenue growth of 4.5%-7.5%, rental revenue growth of 5%-8%, adjusted EBITDA of $4.85 billion-$5.05 billion, net rental equipment CapEx of $2.05 billion-$2.45 billion, gross rental CapEx of $2.45 billion-$2.85 billion, and 55 greenfield openings.

Brendan Horgan emphasized Sunbelt’s safety culture, its expanding specialty platform, and the company’s ability to outgrow the broader North American construction market. He framed fiscal 2026 as evidence of structural progression, with strength in mega projects, energy solutions, live events, and strategic accounts, and said the company’s long-term strategy remains centered on Sunbelt 4.0, including customer growth, performance, sustainability, and investment. His tone was confident and constructive, especially around the modular solutions acquisition and the broader pipeline of specialty and M&A opportunities.

Alex Pease focused on the financial drivers behind the year’s results: volume-led growth, stable rates, higher utilization, and mix effects from specialty and ancillary revenue. He cited $4.7 billion of adjusted EBITDA, a 41.9% margin, $2.2 billion of CapEx, $2.1 billion of free cash flow, $7.6 billion of net debt, and 1.6x net debt to EBITDA leverage, while noting the company remained within its 1x-2x target range. For fiscal 2027, he guided to $4.85 billion-$5.05 billion of adjusted EBITDA, flat-ish margins, and higher CapEx tied to growth and the Aries acquisition.

Analysts pressed management on why margins were not improving faster, and management said the main headwinds were mega-project load-ins, specialty mix, and ancillary revenue growth, plus the lapping of the $28 million receivables reversal. They also explained that the Q4 project funnel jumped from around $10 billion to around $25 billion in awarded projects, which they said supports a healthy pipeline but temporarily compresses margins during load-in periods. Questions on rental growth and the new Aries modular acquisition led management to say Aries contributes a little under 1% to 2027 revenue, will drag margins in year one, and has meaningful room to expand from 17 locations and 14 of Sunbelt’s top 50 markets currently served.