Ashtead Group (LON:AHT), the parent of Sunbelt Rentals, reported record first-quarter fiscal 2027 results and raised its full-year outlook, citing broad demand across specialty rentals, mega projects, energy, live events and stable local non-residential construction activity.
For the quarter ended July 31, 2026, total revenue increased 11.2% to $3.1 billion, while rental revenue rose 12.5% to $2.9 billion. Chief Executive Officer Brendan Horgan said the company posted first-quarter records in revenue, adjusted EBITDA, adjusted operating profit and adjusted earnings per share.
Profit growth and margin factors
Adjusted operating profit rose 13.8% to $759 million, with the adjusted operating margin expanding 60 basis points to 24.4%. Adjusted EBITDA increased 8.7% to $1.3 billion, though the adjusted EBITDA margin declined to 42.2% from 43.2% a year earlier. Adjusted EPS climbed 20.4% to $1.18.
Chief Financial Officer Alex Pease said the EBITDA-margin comparison primarily reflected faster growth in ancillary revenues, including services associated with complex solutions, and a higher contribution from Specialty operations. He said roughly three-quarters of the year-over-year EBITDA margin change was attributable to ancillary revenue growth, partly offset by improved rental rates.
Management said the sales mix shift toward Specialty can affect reported EBITDA margins but generates structurally higher returns on investment than General Tool. The company also reported a 350-basis-point sequential improvement in EBITDA margin from the fourth quarter, driven by improved recovery of fuel and delivery costs and pricing momentum.
Horgan said Sunbelt’s rate progress was supported by industry supply-and-demand conditions, higher fleet on rent and strong utilization, rather than being principally attributable to its newer dynamic-pricing pilot. He said customers increasingly value equipment availability, specialized expertise and integrated solutions.
Specialty growth leads performance
North America General Tool revenue increased 5.7% to $1.7 billion, while rental revenue grew 7.4%. Dollar utilization remained at 47%, and adjusted EBITDA rose 3.2% to a 51.5% margin, compared with 52.8% in the previous year.
North America Specialty revenue rose 24.5% to $1.1 billion, with rental revenue up 25.3%. Dollar utilization improved 300 basis points to 77%. Growth was led by power and HVAC and included contributions from recent acquisitions and activities related to the 2026 FIFA World Cup.
The company estimated that its May acquisition of Aries, now operating within Sunbelt Modular Solutions, added about 300 basis points to Specialty rental revenue growth. Aries contributed approximately 100 basis points to total company rental revenue growth. Sunbelt completed systems integration of Aries in early August.
Horgan said the modular-solutions business has generated 669 cross-selling leads worth $24 million during its first quarter as part of Sunbelt. More than $2.5 million of those opportunities had been secured, with 14 leads in formal request-for-proposal processes, according to management.
Sunbelt said World Cup-related work added an estimated 250 basis points to rental revenue growth in the quarter. Horgan said roughly 75% to 80% of World Cup revenue was generated in Specialty, with the remainder in General Tool, and that the activity was incremental to adjusted operating-profit margins.
Higher investment targets demand opportunities
Gross rental capital expenditures nearly doubled to $759 million during the quarter, while net rental capital expenditures increased 78% to $682 million. Management said the spending is directed toward committed customer demand, including mega projects, strategic accounts, Specialty opportunities and greenfield locations, rather than speculative fleet additions.
Sunbelt opened 13 greenfield locations during the quarter and remains on track to open about 55 during fiscal 2027. It also completed two acquisitions that added a combined 17 Specialty locations, including Aries.
Horgan said the company does not see evidence of excessive industry fleet investment. He noted that General Tool same-store fleet rose only about 1% year over year, even as that segment delivered 7.4% rental revenue growth. Management also cited capacity discipline among equipment manufacturers, particularly for certain high-demand equipment categories.
Sunbelt’s trailing 12-month return on investment improved to 14.6%. First-quarter free cash flow was $70 million, reflecting increased capital expenditures and the timing of equipment-related cash payments. Net leverage stood at 1.8 times at the end of July, within the company’s long-term target range of 1 to 2 times, while liquidity totaled about $3.8 billion.
Fiscal 2027 outlook raised
The company increased its fiscal 2027 targets, now projecting:
- Total revenue growth of 6% to 9%.
- Rental revenue growth of 7% to 10%.
- Adjusted EBITDA of $4.92 billion to $5.12 billion.
- Gross capital expenditures of $2.75 billion to $3.15 billion.
- Net rental capital expenditures of $2.4 billion to $2.8 billion.
Management continues to expect full-year adjusted EBITDA margins to be broadly consistent with the prior year. Pease said the outlook assumes Specialty revenue will continue to outpace General Tool revenue and that ancillary revenues will remain elevated because of mega-project and live-event activity. The company has not assumed significant further acceleration in rental rates, which Pease said could provide upside if current momentum continues.
Horgan said mega-project activity remains diversified, with data centers representing 13% of the company’s mega-project universe and semiconductor projects representing 3%. He cited opportunities spanning energy, infrastructure, transportation, entertainment venues, hospitals and other project types. The company said 80% of projects in its mega-project funnel are upcoming, ramping or active, while 20% are winding down.
Sunbelt returned $363 million to shareholders through share repurchases and dividends during the quarter. The company is transitioning to quarterly dividends as a U.S.-listed company, with its first quarterly dividend of $0.30 scheduled for payment on Oct. 2.
About Ashtead Group (LON:AHT)
Ashtead Group plc, together with its subsidiaries, engages in the construction, industrial, and general equipment rental business in the United States, the United Kingdom, and Canada. It provides pumps, power generation, heating, cooling, scaffolding, traffic management, temporary flooring, trench shoring, and lifting services. The company offers its products and services for facilities maintenance and municipalities, such as office complexes, apartment complexes, government, hospitals, data centers, parks and recreation departments, schools and universities, shopping centers, pavement/kerb repairs, and golf course maintenance; construction of airports, highways and bridges, office buildings, data centers, schools and universities, shopping centers, residential, remodeling, manufacturing plants, and green energy plants; emergency response for fire, hurricanes, flooding, tornadoes, winter, storms, residential and health emergencies, alternative care facilities, points of distribution, and mobile testing facilities; and entertainment and special events, including national events, concerts, sporting events, film and telvision production, theme parks, festivals farmers' markets, local 5k runs, and cycle races.
