Sunbelt Rentals Posts Record First-Quarter Revenue and Raises Fiscal 2027 Guidance

Sunbelt Rentals Holdings raised its full-year fiscal 2027 outlook after posting record first-quarter revenue, with growth led by its North America Specialty business and additional demand tied to large projects and live events. The equipment-rental company said total revenue for the three months ended July 31 rose 11.2% from a year earlier to $3.115 billion, while rental revenue increased 12.5% to a record $2.927 billion.

Profit grew faster than revenue. Net income increased 17.4% to $438 million, and earnings per share rose 23.0% to $1.07. Operating income climbed 15.9% to $691 million, lifting the operating margin to 22.2% from 21.3% a year earlier. Adjusted operating profit rose 13.8% to $759 million, with its margin expanding 60 basis points to 24.4%.

In its first-quarter earnings release, Sunbelt estimated that the FIFA World Cup contributed about 250 basis points to rental-revenue growth during the quarter. Reliant Asset Management, which operates under the Aries brand and was acquired on May 1, contributed about 100 basis points to companywide rental-revenue growth. Sunbelt also reported year-over-year gains across its two North American rental segments, though growth rates differed sharply between them.

Specialty rentals outpace General Tool as demand broadens

North America Specialty was the fastest-growing major segment. Rental revenue there jumped 25.3% to $1.070 billion, and dollar utilization increased to 77% from 74%. Sunbelt said the Aries acquisition accounted for roughly 300 basis points of Specialty rental-revenue growth. Adjusted operating profit in Specialty rose 24.3% to $373 million, while the adjusted operating profit margin held at 33.0%.

General Tool, Sunbelt’s larger North American segment, posted rental-revenue growth of 7.4% to $1.648 billion. Dollar utilization remained at 47%. Adjusted operating profit increased to $539 million, although its margin eased to 30.9% from 31.5%. Sunbelt said higher fuel costs weighed on General Tool’s adjusted EBITDA margin, partly offset by better rental rates.

The United Kingdom remained the weaker part of the portfolio. UK rental revenue declined 1.4% to $209 million, even as dollar utilization improved to 54% from 53%. Adjusted operating profit margin edged up 10 basis points to 8.3%, but adjusted EBITDA fell to $61 million from $65 million and its margin declined to 25.4% from 26.7%.

Management attributed the broader North American growth to demand across mega projects, energy, live events, industrial work and non-construction maintenance, repair and operations, alongside stable demand in local non-residential construction. Sunbelt also said growth was visible among small and midsize customers, with stronger gains from large and strategic accounts. The company’s rental fleet had an original equipment cost of $20.102 billion at July 31, up 6.0% on average from the prior year, while average fleet age increased to 52 months from 50 months.

Not every profitability measure moved in the same direction. Adjusted EBITDA, a non-GAAP measure, increased 8.7% to $1.315 billion, but its margin fell to 42.2% from 43.2%. Sunbelt said the change mainly reflected faster growth in ancillary revenue, partly offset by rental-rate improvement. That contrasts with the higher operating and adjusted operating margins, where lower depreciation expense as a share of revenue helped profitability.

Fiscal 2027 guidance rises after the strong start

Sunbelt increased all three of its main full-year operating outlook ranges. It now expects total revenue to grow 6% to 9% in fiscal 2027, up from its previous 4.5% to 7.5% range. Rental-revenue growth is forecast at 7% to 10%, compared with 5% to 8% previously. Adjusted EBITDA is now expected to be between $4.92 billion and $5.12 billion, versus the earlier $4.85 billion to $5.05 billion range.

The previous outlook was introduced with Sunbelt’s fiscal 2026 results in June, when the company reported record annual revenue of $11.154 billion and rental-revenue growth of 3.4%. The first-quarter update therefore represents an early upward revision, which management tied to the quarter’s performance and continued momentum across the business. The guidance remains forward-looking and is subject to demand, pricing, economic conditions and other risks identified by the company.

A larger equipment-investment plan accompanies the higher outlook. Sunbelt now expects net rental equipment capital expenditures of $2.4 billion to $2.8 billion for the year, up from $2.05 billion to $2.45 billion. Gross rental capital expenditures are forecast at $2.75 billion to $3.15 billion, compared with the prior $2.45 billion to $2.85 billion range.

The spending increase was already visible in the first quarter. Gross rental capital expenditures were $759 million, and net rental capital expenditures after disposal proceeds were $682 million. Cash from operations totaled $840 million. After capital expenditures, Sunbelt reported free cash flow of $70 million, down from $468 million in the comparable period, when purchases of rental equipment were substantially lower.

Expansion spending continues alongside dividends and buybacks

Sunbelt continued to add locations and businesses while keeping leverage within its stated target range. During the quarter it opened 13 greenfield locations and invested $669 million, including acquired borrowings, on two bolt-on acquisitions, one of which was Aries. The company ended July with 1,638 rental stores, up from 1,569 a year earlier, including 816 General Tool locations, 638 Specialty locations and 184 UK locations.

Net debt stood at $8.524 billion at July 31, and net leverage was 1.8 times adjusted EBITDA, up from 1.6 times a year earlier but still within Sunbelt’s stated 1 to 2 times range. The company also completed $1.2 billion of senior-note offerings during the quarter, consisting of $450 million of 4.950% notes due in 2030 and $750 million of 5.650% notes due in 2036. Sunbelt said the proceeds are intended for general corporate purposes that may include refinancing debt, capital expenditures and working capital.

Capital returns continued as well. Sunbelt repurchased $56 million of common stock and paid $307 million in dividends during the quarter. Its board declared a quarterly cash dividend of $0.30 per share, payable Oct. 2 to stockholders of record on Sept. 18. The company said the quarterly payment replaces its previous UK distribution framework and is intended to provide a regular cash return consistent with U.S. market practice.

The revised guidance now assumes stronger revenue and rental growth than Sunbelt projected in June, while its higher capital-spending ranges point to more fleet investment over the balance of fiscal 2027. The first quarter also showed the cash-flow effect of that spending, with free cash flow below the prior-year period despite higher earnings. The next scheduled shareholder milestone is Sept. 18, the record date for the newly declared quarterly dividend.