Sunbelt Rentals Holdings, Inc.

The equipment rental industry in North America is undergoing a structural change driven by a continuing shift from ownership to rental, fueled by cost inflation for equipment replacement, technical changes to equipment requirements, and health, safety, and environmental issues that make renting more economical and safer than owning. According to a study by S&P Global Market Intelligence published in May 2026, rental industry revenue in the United States is expected to grow 4% in 2026, 4% in 2027, and 4% in 2028, while rental industry revenue in Canada is expected to grow 5% in 2026, 6% in 2027, and 5% in 2028. The U.K. market is more mature, competitive, and fragmented than the North American market. In the construction end market, which now accounts for less than half of total activity, projects are becoming larger and longer, with mega projects (defined internally as projects with a construction value over $400 million) becoming an increasingly important part of the project portfolio. Non-construction end markets, including maintenance, repair and operations, sports and entertainment, emergency response, and state and local government, are becoming increasingly large and resilient.

The equipment rental industry is highly competitive and fragmented. Sunbelt Rentals is the second largest equipment rental business in North America and the largest equipment rental company in the United Kingdom, in each case by rental revenue. The company estimates its market share in North America at 11% and in the United Kingdom at 10%. In North America, the three largest players represent approximately 31% of the market in aggregate, with the remainder made up of small local independent rental shops; over 40% of the U.S. market is represented by rental companies with five or fewer locations. The largest national competitors in North America include United Rentals, Herc Rentals, and EquipmentShare. In the United Kingdom, the largest competitors are Speedy Hire, HSS ProService, and Vp. Competitive advantages include geographic scale and customer diversity, a differentiated product offering, a high quality and standardized rental fleet, significant purchasing power, motivated local management teams, an experienced senior management team, a focus on customer service, a well-established brand, investment in industry-leading technology, and a fundamental commitment to health and safety.

The company generates revenue primarily through the short-term rental of equipment used for a wide variety of applications, along with the provision of services and solutions to a diverse customer base across North America and the United Kingdom. Equipment rental revenues represented 93% of total revenues during the fiscal year ended April 30, 2026, with the remaining 7% coming from sales of used rental equipment (4%) and sales of new equipment, merchandise, and consumables (3%). Customers range from multinational businesses to local contractors and individual do-it-yourselfers, including construction and industrial customers, service and facility management businesses, emergency response organizations, event organizers, and government entities. In the fiscal year ended April 30, 2026, the company served approximately 800,000 customers in the United States, with the top ten customers accounting for less than 10% of total revenue and no single customer accounting for more than 1% of total revenues.

The business is divided into three reportable operational segments: North America – General Tool, North America – Specialty, and United Kingdom. The North America – General Tool segment operates primarily across the United States and Canada, offering a comprehensive portfolio of general construction and industrial equipment including mobile elevating work platforms, skid steers, excavators, lighting equipment, and small general tools. As of April 30, 2026, the original cost of the North America – General Tool fleet was $12,946 million, with an average age of approximately 51 months. This segment's revenues represented 58% of total revenues for the fiscal year ended April 30, 2026 and 59% for the fiscal year ended April 30, 2025. The North America – Specialty segment focuses on products with comparatively low rental penetration in predominantly non-construction markets, including power and HVAC, climate control, scaffolding, film and TV equipment, flooring solutions, pump solutions, industrial tool, trench safety, ground protection, temporary structures, and temporary fencing. As of April 30, 2026, the original cost of the North America – Specialty fleet was $4,828 million, with an average age of approximately 56 months. This segment's revenues represented 33% of total revenues for the fiscal year ended April 30, 2026 and 32% for the fiscal year ended April 30, 2025.

The United Kingdom segment encompasses a full range of equipment rental solutions, offering both General Tool and Specialty equipment through a regionally distributed network of stores. As of April 30, 2026, the original cost of the U.K. fleet was $1,457 million, with an average age of approximately 57 months. This segment's revenues represented 9% of total revenues for both the fiscal years ended April 30, 2026 and April 30, 2025. The company also routinely sells used rental equipment on the secondary market and generates revenue from the sale of new equipment, merchandise, and consumables. During the fiscal year ended April 30, 2026, 93% of total revenue was derived from equipment rentals, 4% from sales of used rental equipment, and 3% from sales of new equipment, merchandise, and consumables.

In April 2024, the company launched its current five-year strategic growth plan, Sunbelt 4.0 – Runway for Success, designed to deliver further growth, resilience, and performance guided by five actionable components: Customer, Growth, Performance, Sustainability, and Investment. Under Sunbelt 4.0, the company aims to add 300 to 400 greenfield locations in North America, of which 99 had been added as of April 30, 2026. In the fiscal year ended April 30, 2026, the company added 75 locations, of which 51 were greenfield openings and 24 were added through bolt-on acquisitions. In the fiscal year ended April 30, 2025, the company added 61 locations, of which 48 were greenfield openings and 13 were added through bolt-on acquisitions. The company completed a redomiciliation and U.S. listing on March 2, 2026, with Sunbelt Rentals common stock beginning trading on the New York Stock Exchange and the London Stock Exchange. Capital expenditure on rental equipment was $2,023 million for the fiscal year ended April 30, 2026 and $1,960 million for the fiscal year ended April 30, 2025. Maintenance and repair costs amounted to $644 million in the fiscal year ended April 30, 2026 and $571 million in the fiscal year ended April 30, 2025. Staff costs amounted to $2,616 million in the fiscal year ended April 30, 2026 and $2,417 million in the fiscal year ended April 30, 2025.

For the fiscal year ended April 30, 2026, the company generated revenue of $11,154 million, operating income of $2,181 million, and adjusted operating profit of $2,500 million. For the fiscal year ended April 30, 2025, the company generated revenue of $10,791 million, operating income of $2,499 million, and adjusted operating profit of $2,615 million. The original cost of the rental equipment fleet as of April 30, 2026 was $19,231 million and as of April 30, 2025 was $18,567 million. The average age of serialized rental equipment was approximately 53 months as of April 30, 2026 and 49 months as of April 30, 2025, weighted on an original cost basis.

A primary growth vector is the expansion of the General Tool and Specialty businesses through the ongoing structural progression of the industry, particularly the shift from ownership to rental. The company is evolving its clustered market approach to increase fleet density, aiming to add 300 to 400 greenfield locations in North America during Sunbelt 4.0, of which 99 had been added as of April 30, 2026. The company believes there is a clear opportunity to increase fleet density in existing markets by accessing latent capacity in locations added during the previous strategic growth plan, Sunbelt 3.0, and supplementing those through further greenfield locations. The total pipeline of mega projects starts is projected to grow from approximately $765 billion in 2023 through 2025 to more than $1.5 trillion in 2026 through 2028, based on projects currently in planning, which represents a significant opportunity given the company's scale and differentiated product offering.

Another major growth vector is the expansion of the Specialty business, which focuses on products with comparatively low rental penetration in predominantly non-construction markets. The company believes that its focus on Specialty markets, which are typically characterized by low rental penetration and small local players, contributes to its growth as rental penetration increases. The company is also focused on growing its customer base, having added approximately 126,000 new credit account customers in the first two years of Sunbelt 4.0 since May 1, 2024, following approximately 118,000 new credit account customers added under the previous Sunbelt 3.0 plan. Cross-selling between General Tool and Specialty offerings is an important part of the customer experience and supports business fundamentals. In the United Kingdom, the company sees significant opportunities in both construction and non-construction markets, with a consistent area of focus being advancing rental rates by adding value to customers and improving operational efficiency.

The company's third actionable component under Sunbelt 4.0 is performance, which aims to unlock capacity to operate more efficiently through process, technology, and scale, with the aim of achieving margin progression with growing revenues. Three areas of opportunity are identified: leveraging central and field sales and support services using investments made during Sunbelt 3.0 as a platform for future growth without the same levels of incremental cost; extracting full potential from the existing footprint and leveraging scale from the 401 locations added in North America during Sunbelt 3.0 and an additional 136 locations added in the first two years of Sunbelt 4.0; and achieving further performance advantage through operational excellence and the next-generation technology platform, Sunbelt Edge. The Market Shared Services model, including Market Logistics Operations (MLO) and Market Service Operations (MSO), is designed to centralize logistics and service decisions at the market level to optimize efficiency.

The company is investing in its next-generation technology platform, Sunbelt Edge, which builds on more than 25 years of RentalIQ data and is designed to drive superior customer service, asset productivity, and operational efficiency at scale. Key technology tools include the Command Center platform with embedded telematics, the Vehicle Delivery Optimization System 4.0 (VDOS 4.0), a machine learning-powered logistics platform that was live in 30 of the top 50 North American markets as of April 30, 2026, and the Service 360 platform launched in fiscal year 2026 for managing shop operations and technician workflows. The company also utilizes a Customer 360 CRM, a customer website SBR.com, and Connected Worksite for megaprojects. As of April 30, 2026, over 97% of the vehicle fleet in North America was equipped with telematics and approximately 95% was equipped with cameras. The company's workforce as of April 30, 2026 consisted of 25,751 full-time and 265 part-time employees, with 21,826 located in North America and 4,190 located in the United Kingdom.

The company's fifth actionable component under Sunbelt 4.0 is investment, which entails disciplined capital allocation focused on organic growth investment in existing locations and greenfield sites, bolt-on acquisitions, and returns to shareholders through a progressive dividend policy and share repurchases to maintain leverage within the target range. Capital expenditure on rental equipment was $2,023 million for the fiscal year ended April 30, 2026 and $1,960 million for the fiscal year ended April 30, 2025. The company intends to continue utilizing free cash flow to fund organic growth plans, bolt-on acquisitions, and returns to shareholders. The company has a sustainability target of a 50% reduction in Scope 1 and 2 greenhouse gas intensity by 2034 (using 2024 as the base year) on the journey to become Net Zero by 2050, and a community investment target of 1% of post-tax profit going to community investment by 2028/29.

A structural headwind identified by management is the weaker local commercial construction market, as the prolonged higher interest rate environment has weighed on local and regional developers, predominantly impacting small-, mid-, and regional-sized projects which are an important segment of the customer base. However, increased activity in mega projects and broader non-construction markets helped offset the weaker local non-construction activity in the fiscal year ended April 30, 2026. In the United Kingdom, overall market conditions remain subdued. The company also faces risks from changes in U.S. foreign trade policies, including the imposition of additional tariffs and other trade barriers, which could increase costs and adversely impact business and operations. In early 2025, the U.S. government began broadly increasing tariff rates, and the duration and extent of such tariffs continue to evolve, with other countries announcing retaliatory actions.

The company faces constraints from the cyclical nature of the commercial construction and industrial sectors, which are directly affected by the level of economic activity. A worsening of economic conditions could cause weakness in end markets and adversely affect revenues and operating results. The company is also exposed to currency and interest rate fluctuations, with 15% of revenue for the fiscal year ended April 30, 2026 derived from companies that have non-U.S. dollar currencies, primarily British pounds and Canadian dollars. The company has a significant amount of debt, with total debt of $7,583 million as of April 30, 2026, and its substantial debt could require a large portion of cash flows to fund debt payments, increase vulnerability to adverse economic conditions, and limit flexibility. The ABL Facility bears interest at variable rates linked to changing market interest rates, exposing the company to interest rate risk.

The equipment rental industry is highly competitive, and the company faces significant competition from large national competitors such as United Rentals, Herc Rentals, and EquipmentShare in North America, and Speedy Hire, HSS ProService, and Vp in the United Kingdom, which could lead to decreased market share or pricing pressure. The company's substantial debt of $7,583 million ¹ as of April 30, 2026, including $6,162 million ² in Senior Notes and $1,421 million ³ under the ABL Facility, could require a large portion of cash flows to service debt, increase vulnerability to economic downturns, and limit operational flexibility. The company is dependent on a small group of key suppliers, with approximately 39% of rental equipment purchased from the five largest suppliers in fiscal 2026, and any disruption in these relationships could materially affect the business. The company's operations are subject to extensive environmental and safety regulations, and non-compliance could result in significant fines, penalties, and reputational damage. Changes in U.S. foreign trade policies, including the imposition of additional tariffs in early 2025, could increase costs and adversely impact business and operations.

Management's tone is forward-looking and confident in the company's strategic direction, emphasizing the structural change in the industry and the company's proven strategy of building diversification throughout the business. The key themes of management's message center on the Sunbelt 4.0 strategic growth plan, which was launched in April 2024 and is designed to deliver further growth, resilience, and performance. The three strategic priorities emphasized for the period ahead are: first, elevating the focus on customer service and experience to a truly differentiating level; second, growing the General Tool and Specialty businesses through the ongoing structural progression of the industry and evolving the clustered market approach to increase fleet density, with a target of adding 300 to 400 greenfield locations in North America during Sunbelt 4.0; and third, driving performance by unlocking capacity to operate more efficiently through process, technology, and scale, with the aim of achieving margin progression with growing revenues. Management also emphasizes disciplined capital allocation within a clearly defined framework focused on organic growth, bolt-on acquisitions, and returns to shareholders through a progressive dividend policy and share repurchases.