Sunbelt increases CapEx guidance

Sunbelt Rentals said the strength of mega projects in the US helped to offset “moderating” conditions in its local, non-residential markets.

The company, which is now listed on the New York Stock Exchange, reported a 2.7% increase in its third quarter revenues to 31 January to US$2.63 billion, with EBITDA profits down 3.1% at $1.08 billion.

Its Specialty business in North America again led the way on growth, up 5.2% year-on-year to $897 million, with general rentals just 1.3% higher at $1.53 billion.

Photo: Sunbelt Rentals

The business in the UK and Ireland grew by 3.4% to $214 million in the third quarter, although rental revenues were 2% lower at constant exchange rates.

The company has scaled back its capital expenditure so far this year, with gross spending for the three quarters to 31 January down 29% to $1.72 billion, year-on-year. It said the focus was on fleet replacement rather than growth.

However, in its full year outlook for 2026 it said fleet CapEx would be in the $1.8-1.9 billion range, which is higher than the $1.4-1.7 billion guidance previously given.

The increase will support recent mega project contract wins and fleet replacement needs anticipated in the Spring of this year.

Brendan Horgan, CEO of Sunbelt, said; “Rental revenue in the quarter grew 2.6% over last year, marking a sequential improvement over the 1.2% pace experienced in Q2, and adjusted EBITDA was a healthy $1.1 billion.

“We invested $1.9 billion in rental fleet capex, greenfield expansion, and ten bolt-on acquisitions fiscal year to date and generated a record $1.4 billion free cash flow while returning $1.05 billion to shareholders through share buybacks and another $307 million through dividends.

“The growth and resilience demonstrated in the quarter was achieved in mixed end markets, with ongoing strength in mega projects and large strategic customer share gains as well as the vast non-construction markets.

“Local non-residential construction continues to be in a moderate state, although our internal leading indicators continued to trend positive in the quarter further supported by the Dodge Momentum Index.”

He said a modest increase in its capital expenditure outlook would “fuel continued growth in our specialty segments, recent mega project wins, and advanced fleet replacement to provide maximum optionality to balance replacement investments while taking advantage of strengthening trends.”