Sunbelt Rentals raises annual outlook after record first quarter

Sunbelt Rentals Holdings Inc on Wednesday raised its full-year guidance after reporting record first-quarter revenue and higher profit, supported by strong demand across its North American businesses.

The Fort Mill, South Carolina-based equipment rental company said total revenue for the three months ended July 31 rose 11% to USD3.12 billion from USD2.80 billion a year earlier.

Rental revenue increased 13% to USD2.93 billion from USD2.60 billion.

Net income rose 17% to USD438 million from USD373 million, while basic earnings per share increased 23% to USD1.07 from USD0.87.

Adjusted earnings before interest, tax, depreciation and amortisation rose 8.7% to USD1.32 billion from USD1.21 billion, although the margin slipped to 42.2% from 43.2%.

North America General Tool rental revenue increased 7.4% to USD1.65 billion, while North America Speciality rental revenue jumped 25% to USD1.07 billion.

Sunbelt said its acquisition of Reliant Asset Management, operating under the Aries brand, contributed around 100 basis points to group rental revenue growth, while the FIFA World Cup contributed around 250 basis points.

Chief Executive Brendan Horgan said: "I am proud of the team's efforts in driving strong execution across all aspects of the business which delivered record first quarter results."

"Our performance was underpinned by disciplined execution and strong demand across a diverse range of end markets, including mega projects, energy, live events, industrial, and non-construction MRO," he added.

Following the strong first quarter, Sunbelt increased its guidance for financial 2027.

It now expects total revenue growth of 6% to 9%, up from a previous range of 4.5% to 7.5%, while rental revenue growth is forecast at 7% to 10%, compared with 5% to 8% previously.

Adjusted Ebitda is now expected between USD4.92 billion and USD5.12 billion, up from previous guidance of USD4.85 billion to USD5.05 billion.

Sunbelt also raised its net rental equipment capital expenditure forecast to between USD2.40 billion and USD2.80 billion from USD2.05 billion to USD2.45 billion.

Horgan said the increased guidance reflected confidence in the underlying supply and demand environment, structural growth and the company's free cash flow generation.

In the UK, rental revenue fell 1.4% to USD209 million, while adjusted Ebitda declined to USD61 million from USD65 million.

Separately, Sunbelt declared a quarterly cash dividend of USD0.30 per share, payable on October 2 to shareholders on the register on September 18.

The company said the move to quarterly rather than semi-annual distributions reflected confidence in its cash flow generation and aligned its dividend policy more closely with US market practice.

Shares in Sunbelt Rentals Holdings were 3.2% higher at USD71.55 during premarket trading on Wednesday. In London, they were 4.0% higher at 5,270.00 pence.

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