Sunbelt maintains optimism as indicators point to rental growth

Sunbelt Rentals remains optimistic after rental revenue grew in the first quarter as megaproject activity remained strong and leading indicators signaled more growth. 

Ashtead Group, Sunbelt Rentals’ London-based parent company, faced mixed construction markets in its fiscal first quarter, which ended July 31. Strong mega-project activity, such as data centers, EV/battery centers and infrastructure projects; positive indicators such as quotes, reservations and planning momentum; and steady execution of its Sunbelt 4.0 strategy led to slight year-over-year growth, Ashtead Chief Executive Brendan Horgan said during the company’s earnings call today.  

“Whilst too soon for these leading indicators to form certainty, we’re cautiously optimistic that these trends in our business will continue and are early signs of the local nonresidential portion of our end markets recovering,” he said. “When they do, we’ll experience accelerated momentum and improved results.” 

As a result, Ashtead Group reaffirmed its rental revenue guidance and increased free cash flow expectations as it moves toward a 2026 New York Stock Exchange listing, Horgan said. 

Meanwhile, the slowdown in local nonresidential activity continued, driven by uncertainty related to borrowing costs and pending policy changes, Horgan said. With the Federal Reserve signaling it may lower interest rates and tax legislation instituted in the Big Beautiful Bill, including bonus depreciation, the market is gaining clarity.  

“I think it’s clear out there that we’re in this ease environment, and we’ll see how that progresses,” he said. “Now we have clarity with tax rates extended, both business and personal, and very importantly, the bonus depreciation element.” 

By the numbers 

During Q1, Ashtead Group reported: 

• Global total revenue was $2.8 billion, up 1.7% YoY; 

• North American total revenue grew to $2.6 billion, up 1.7% YoY;  

• Global rental revenue rose to $2.6 billion, up 2.4% YoY; 

• North American rental revenue increased to $2.4 billion, up 2.2% YoY; 

• Global used-equipment sales landed at $102.8 million, down 15.5% YoY; 

• North American used-equipment sales finished at $93.5 million, down 14.8% YoY; 

• North American general tool dollar utilization for the past 12 months fell to 47%, down 300 basis points (bps) YoY; and 

• North American specialty dollar utilization for the past 12 months fell to 74%, down 100 bps YoY. 

Tariff impact minimal 

Sunbelt faces no tariff impact this year due to existing agreements with OEMs, and a fleet consisting of only about 20% imports, making the company more domestically oriented than peers, Chief Financial Officer Alexander Pease said during the earnings call. 

With $17 billion of domestic equipment, Sunbelt’s flexibility can mitigate impacts through remanufacturing, fleet life extensions and other adjustments, Pease said. 

“As tariffs impact [the] market, that pushes more people towards rental because they can’t have the advantages of scale with suppliers the way we do,” he said. “I wouldn’t say we’re happy about the tariff environment, but we’re certainly a net beneficiary relative to others in the market.” 

Despite the decline in performance in Q1, Ashtead Group expects the construction market to remain strong, Horgan said. 

Market Reaction 

Shares of Ashtead Group (OTCMKTS: ASHTY) were up $4.30 or 1.49% from market open to $293.15 as of market close today. Ashtead Group has a market capitalization of $31.01 billion. 

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