SUNB

• Overall Financial and Operational Results

  • Delivered record Q4 2026 revenue of $2.8 billion (up 8.9% YoY) and full-year 2026 revenue of $11.2 billion (up 3.4% YoY), exceeding the top end of prior guidance.
  • Full-year 2026 adjusted EBITDA was $4.7 billion, with an adjusted EBITDA margin of 41.9% (down 200 basis points YoY), pressured by three factors: volume-led growth costs including fleet repositioning, a higher mix of lower-margin specialty and ancillary revenues, and lapping the prior year's $28 million receivables provision reversal.
  • Full-year 2026 CapEx was $2.2 billion (down 18.5% YoY), focused on fleet replacement and targeted growth, primarily in specialty. 51 new greenfield locations were opened, and 13 bolt-on acquisitions added 24 new locations.
  • Generated record full-year 2026 free cash flow of $2.1 billion (up 22.7% YoY), and returned $1.9 billion to shareholders via $1.4 billion in share repurchases and $464 million in dividends, with a 4% year-over-year increase in the full-year dividend.
  • Ended the period with net debt of $7.6 billion and a net debt-to-EBITDA leverage ratio of 1.6x, well within the target range of 1x to 2x.

• Strategic Highlights

  • Completed the acquisition of Reliant Asset Management (trading as ARIES), which establishes Sunbelt's 13th specialty business line: Sunbelt Rentals Modular Solutions. This entry into the large, attractive modular solutions market is highly complementary to existing site service offerings, aligns with the Sunbelt 4.0 strategy, and creates significant cross-selling and expansion opportunities. ARIES currently operates in only 14 of Sunbelt's top 50 markets, providing substantial long-term runway for growth.
  • Safety remains a foundational cultural priority, with sustained investment in training, technology-enabled safety monitoring, and accountability driving improved measurable safety performance, which also improves operational efficiency and customer confidence.
  • U.S. construction leading indicators (including the Dodge Momentum Index) signal ongoing strength in construction demand, with total U.S. non-residential construction put in place projected to reach ~$1.3 trillion in 2027 and grow through the end of the decade. Local non-residential construction markets remain in equilibrium, with starts balanced against completions, while megaproject demand is very strong.
  • Sunbelt's business growth continues to outpace the overall North American construction market, driven by scale, market diversity, breadth of solutions, and ongoing structural industry progression. The newly expanded 537-location network added under Sunbelt 3.0 and 4.0 continues to mature and contribute to growth, with fleet on rent growth remaining positive through May and June 2026.

• For full fiscal year 2027, management expects total revenue growth of 4.5% to 7.5% and rental revenue growth of 5% to 8%, led by ongoing strong growth in the specialty segment with steady growth from general tool. Local non-residential construction markets are assumed to remain stable, consistent with current positive internal indicators.
• Adjusted EBITDA is expected to be between $4.85 billion and $5.05 billion, with full-year adjusted EBITDA margins expected to be broadly flat year-over-year, driven by the continued higher mix of specialty growth and ancillary revenues, plus the first-year margin impact of the newly acquired Reliant/ARIES business. Management expects margin improvement in the back half of 2027 as operational excellence initiatives gain traction. Upside to margins is possible if dynamic customer pricing initiatives scale faster than expected.
• Net rental equipment CapEx is projected between $2.05 billion and $2.45 billion, with gross rental CapEx between $2.45 billion and $2.85 billion. The increase reflects higher growth investments across both segments and incremental capital required to scale the new modular solutions business. 55 new greenfield locations are planned, 40 of which will be for specialty segments.
• The Reliant acquisition is expected to contribute just under 1% to 2027 total rental revenue growth.

1. North America General Tool: Full-year total revenue was $6.5 billion, up 1.7% year-over-year, with full-year rental revenue growth of 2.1%. Q4 2026 rental revenue growth accelerated to 4.4%. Full-year dollar utilization was 47%. This segment contributed 58% of total company full-year revenue. Adjusted EBITDA margins were pressured by volume-led fleet repositioning costs and a higher mix of lower-margin ancillary revenues. 2. North America Specialty: Full-year total revenue was $3.7 billion, up 6.5% year-over-year, with full-year rental revenue growth of 5.8%. Q4 2026 rental revenue growth accelerated to 15.1%, led by nearly 30% growth in the power and HVAC business line. This segment contributed 33% of total company full-year revenue. Adjusted EBITDA margin was 45% for the full year; after adjusting for the prior year's $28 million receivables provision reversal, adjusted EBITDA margins increased 20 basis points year-over-year. Dollar utilization improved to 75% from 73% in the prior year. 3. UK: Full-year total revenue was $932 million, up 2.8% year-over-year, with rental revenue growth of 3.1%. This segment contributed 8.3% of total company full-year revenue. The segment focused on restructuring actions during the year to improve operational efficiency, unlock value, and drive stronger free cash flow.

• Higher-for-longer interest rates could delay an inflection in local non-residential construction starts, which would pressure general tool segment growth and margins. The current 2027 guidance assumes local non-residential construction will remain stable (not return to growth), consistent with the current high interest rate environment.
• Ongoing higher mix of lower-margin specialty and ancillary revenues could create continued pressure on consolidated adjusted EBITDA margins, even as these segments deliver higher return on investment.
• Early-stage load-in for a large number of newly won megaprojects creates near-term margin compression, though this is expected to improve as projects mature. Uncertainty around project timing could delay this margin recovery.
• Fuel price volatility increases ancillary revenue mix and puts pressure on margins, even as fuel costs are largely passed through to customers with narrower margins on the pass-through.

Q: What is the primary factor holding back margin growth, and do megaprojects create margin drag? / A: Near-term margin compression reflects temporary early-stage load-in costs for the large volume of newly won megaprojects, which will improve in the back half of 2027 as projects mature. Additional pressure comes from mix effects: fast-growing specialty has a lower pure rental margin than general tool (but higher ROI), and ancillary revenues (E&D, fuel, re-rent) grew 32% in Q4, far faster than pure rental growth, creating aggregate margin compression even as these are high-ROI revenue streams. Management noted that the value of won megaprojects in the pipeline jumped from ~$10 billion to ~$25 billion quarter-over-quarter, confirming strong underlying demand despite near-term margin pressure.

Q: How much of the 5-8% 2027 rental revenue growth guidance comes from the new Reliant acquisition, and what is the outlook for rate growth in 2027? / A: Reliant contributes just under 1% of the guided 2027 rental revenue growth, with the vast majority coming from organic growth. Rates were stable in 2026, with positive momentum building in Q4 relative to earlier in the year. Dynamic customer pricing initiatives are now being scaled across 15 markets, but upside from this program is not embedded in the current guidance, creating potential upside if deployment progresses faster than expected. First-year margin for the Reliant acquisition will be pressured due to its current high mix of lower-margin sales revenue, which will shift over time to higher-margin rental revenue.

Q: What is the outlook for general tool margins specifically, and when will we see margin inflection? / A: Management expects general tool margins to inflect higher and end 2027 flat to up year-over-year, meaning the industry is through the margin trough for the segment. Ongoing operational excellence initiatives focused on market logistics and service processes are expected to unlock incremental high-margin revenue: a 1% improvement in operational efficiency delivers $100 million in incremental high-margin revenue. As large megaprojects mature and fleet repositioning costs decline, general tool margins will improve through the year.

Q: What is the outlook for Reliant/modular solutions scaling, and what other M&A targets is Sunbelt pursuing? / A: Reliant currently has only 17 locations, mostly on the U.S. eastern seaboard, so there is massive room for expansion across Sunbelt's existing top 50 markets. Management expects to double the business in just a few years via greenfield expansion and small tuck-in acquisitions, leveraging Sunbelt's existing customer base for significant cross-selling opportunities. For broader M&A, management continues to target bolt-on acquisitions that add density to existing specialty lines or add new complementary specialty verticals, with a robust active pipeline of opportunities that fit the company's capital allocation framework.