Sunbelt Rentals Holdings, Inc.: Form 10-Q for the period ended Jul 31, 2026

We historically conducted our business through Ashtead Group plc, and therefore, our condensed consolidated financial statements included in this Form 10-Q for the comparative period present the consolidated results of operations of Ashtead Group plc and its subsidiaries. Sunbelt Rentals Holdings, Inc. (the “Registrant”) was incorporated on February 12, 2025 and became the parent holding company of the Group upon completion of the Scheme on February 27, 2026. Prior to the Scheme, the Registrant was a company with no assets, liabilities, contingencies or commitments, and it conducted no operations prior to the date of the Scheme.

Overview

We believe we are one of the largest international equipment rental companies by rental revenue, with a network of 1,638 stores across North America and the United Kingdom as of July 31, 2026. We conduct our equipment rental operations under the name “Sunbelt Rentals.” We believe that Sunbelt Rentals is the second largest equipment rental business in North America and the largest equipment rental company in the United Kingdom, in each case, by rental revenue. In the three months ended July 31, 2026, we generated revenue of $3,115 million, operating income of $691 million and adjusted operating profit of $759 million. See Part I, Item 2 “Key Financial Metrics—Non-GAAP Financial Measures” below for a definition and reconciliation of adjusted operating profit to the most directly comparable U.S. GAAP measure.

Our rental equipment fleet comprises an extensive range of construction, industrial and general equipment designed to meet broad, general-purpose job site needs, such as mobile elevating work platforms, skid steers, forklifts, excavators, lighting equipment and small general tools. This core equipment range is complemented by Specialty business lines, including power and HVAC, climate control, scaffold services, flooring solutions, pump solutions, trench safety, industrial tool, film and television, temporary structures, ground protection, temporary fencing, and temporary walls.

Our customers range in size and scale from multinational businesses to well-established local contractors and individual do-it-yourselfers, and include construction and industrial customers, service, repair and facility management businesses, emergency response organizations, event organizers, as well as government entities, such as municipalities and specialist contractors.

We organize and manage our operations based on both geography and the nature of our products and services. We operate in two primary geographic regions, consisting of our North American activities and assets and our U.K. activities and assets. Within North America, we further manage our business through two operational groupings, General Tool and Specialty, which reflect differences in product and service offerings, as well as our internal management structure. Accordingly, we report our results through three operational segments:

• North America – General Tool, which encompasses a broad selection of general construction and industrial equipment available to customers primarily in the United States and Canada. In addition, unless specified herein or otherwise clear from the context, references to this segment also include our limited operations in the Bahamas;
• North America – Specialty, which includes our product groups with comparatively low rental penetration in predominantly non-construction markets, available to customers in the United States and Canada; and
• United Kingdom, which delivers a comprehensive range of General Tool and Specialty products and services to customers primarily located across the United Kingdom. In addition, unless specified herein or otherwise clear from the context, references to this segment also include our limited operations in Ireland, Germany and the Netherlands.

In the three months ended July 31, 2026, 56% of our revenue was attributable to the North America – General Tool segment, 36% of our revenue was attributable to the North America – Specialty segment and 8% of our revenue was attributable to the United Kingdom segment.

Redomiciliation and U.S. Listing

On June 10, 2025, the shareholders of Ashtead Group plc (the "Ashtead Shareholders") voted in favor of a reorganization to be implemented by means of a U.K. court-sanctioned scheme of arrangement under the U.K. Companies Act 2006 (the "Scheme") pursuant to which Sunbelt Rentals Holdings, Inc. ("Sunbelt Rentals") would become the new parent holding company of Ashtead and Sunbelt Rentals common stock would be admitted to trading on the New York Stock Exchange (the "NYSE") (the "U.S. Listing"), with a secondary listing on the London Stock Exchange (the "LSE"), which is the historical trading venue for Ashtead shares. The Scheme completed on February 27, 2026. As a result of the Scheme, Ashtead Shareholders had their Ashtead shares exchanged for Sunbelt Rentals common stock. Each Ashtead Shareholder received the same number of Sunbelt Rentals common stock as the number of Ashtead Shares held at the time at which the record of the register of the Ashtead Shareholders was taken. The Redomiciliation and the U.S. Listing did not result in any changes in the day-to-day operations of our business, our strategy or our total issued share capital. Sunbelt Rentals common stock began trading on the NYSE on March 2, 2026.

Key Factors Affecting Our Result of Operations

The results of our operations have been, and will continue to be, affected by many factors, some of which are beyond our control. This section sets out certain key factors we believe have affected our results of operations in the period under review and could affect our results of operations in the future.

Seasonality and Cyclicality

Our revenue and operating results remain significantly dependent on activity in the commercial construction industry in the United States, Canada and the United Kingdom. Commercial construction activity tends to increase in the summer and during extended periods of mild weather and to decrease in the winter. This results in changes in demand for our rental equipment. In addition, the commercial construction industries in the United States, Canada and the United Kingdom are cyclical industries with activity levels that tend to increase in line with GDP growth and decline during an economic downturn. We may also experience increased demand for certain equipment categories in connection with storm response and recovery efforts following natural disasters (such as hurricanes), which can affect period-to-period results. The seasonality and cyclicality of the equipment rental industry results in variable demand for our products and therefore, our revenue and operating results may fluctuate from period to period.

Fleet Rotation and Depreciation

Due to the nature of our business, our cash flows are countercyclical. This means that in times of improving markets, we invest more in our rental fleet (both to replace existing fleet and to grow the overall fleet size), typically resulting in improved earnings but lower cash flow generation from operations in times of rapid growth. As we increase our fleet size, this also results in higher depreciation costs. On the contrary, in less robust or declining markets, we invest less in our rental fleet and, as a result, typically generate stronger cash flow from operations as the cycle matures and the growth slows. To maintain a balanced fleet, we may also adjust the sale of used equipment as a result of end market conditions, thus enhancing or negatively affecting revenue from such disposals.

Currency Translation Exposure

Currency risk is predominantly translation risk, as there are no significant transactions in the ordinary course of business that take place between foreign affiliates. Although our reporting currency is the U.S. dollar, we derived 15% of our revenue for the three months ended July 31, 2026 from companies that have non-U.S. dollar currencies, primarily British pounds and Canadian dollars. Consequently, any change in exchange rates between the U.S. dollar and the British pound or the Canadian dollar exposes us to translation risk and may significantly affect our consolidated results of operations and balance sheet (see also Part I, Item 3 “Quantitative and Qualitative Disclosures about Market Risk–Currency Risk” below).

Global Economic Conditions

Our operations are impacted by global economic conditions, including inflation, tariffs, interest rate fluctuations and supply chain constraints, and we take actions to modify our plans to address such economic conditions. To date, the impact from supply chain disruptions has been limited, but we may experience more severe supply chain disruptions in the future. The most significant cost increases that are passed on to customers are for fuel and delivery, but there are other costs for which the pass through to customers is less direct, such as repairs and maintenance, and labor. Tariffs could result in the costs we incur being more than anticipated. The impact of inflation, tariffs and interest rate fluctuations may be significant in the future. We continue to assess the economic environment in which we operate and take appropriate actions to address the economic challenges we face.

Components of Results of Operations

Revenues

Our revenues are derived primarily from renting equipment to customers. Ancillary to our principal equipment rental business, we also generate revenue from the sale of used rental equipment, the sale of new equipment, merchandise and consumables, and the provision of certain services to support our customers. Sales and other tax amounts collected from customers and remitted to government authorities are accounted for on a net basis and, therefore, excluded from revenue.

Equipment rentals primarily includes (i) revenue generated from renting equipment to customers, including re-rent revenue generated from renting specific pieces of equipment from third-parties and then re-renting that equipment to our customers, (ii) fees for loss damage waiver, which allow customers to limit the risk of financial loss in the event our equipment is damaged or lost, and (iii) delivery and collection revenue, which relates to the fees charged to our customers for equipment delivery and collection of rental equipment.

Equipment rentals revenue is recognized on a straight-line basis over the period of the rental contract. These lease contracts are operating leases under ASC 842. As a rental contract can extend across financial reporting periods, we record accrued revenue (unbilled rental revenue) and deferred revenue at the beginning and end of each reporting period so that equipment rentals revenue is stated appropriately in the financial statements. Receivables from unbilled equipment rentals revenue are included in “Prepaid expenses and other current assets” and deferred equipment rentals revenue is included in “Accrued expenses and other liabilities” in the condensed consolidated balance sheet. Provisions for discounts, rebates to customers and other adjustments are provided for in the period the related equipment rentals revenue is recorded.

Delivery and collection revenue is recognized when the delivery or collection, respectively, has occurred and the performance obligation is therefore fulfilled.

Sales of rental equipment comprises our revenue from the sale of used rental equipment, which is recognized when control of the asset transfers to the customer, which is typically when the asset is picked up by, or delivered to, the customer and when significant risks and rewards of ownership have passed to the customer. Revenue from the sale of rental equipment in connection with trade-in arrangements with certain manufacturers from whom we purchase new equipment is accounted for at the lower of transaction value or fair value based on independent appraisals. If the trade-in price of a unit of equipment exceeds the fair market value of that unit, the excess is accounted for as a reduction of the cost of the related purchase of new rental equipment.

Sales of new rental equipment, merchandise and consumables comprises our revenue from the sale of new rental equipment, parts, and supplies, which is recognized in the same manner as the sale of used rental equipment, as well as revenue earned from equipment management and similar services for rental customers, which is recognized as the services are provided. The types of new equipment that we sell vary by location and include a variety of tools and supplies, small equipment, safety supplies and consumables.

Cost of Revenues

Our cost of revenues is comprised of the costs incurred in connection with the rental and sale of our products and services, including depreciation of rental equipment.

Cost of equipment rentals, excluding depreciation comprises the costs associated with the rental of our equipment, such as staff costs at our stores, including salaries and related benefits and retirement costs; delivery and fuel costs; spare equipment costs; repair and maintenance costs; insurance costs; warranty claim costs; cost of consumables; variable lease costs and short-term lease costs associated with renting equipment from third-parties and then re-renting that equipment to our customers; and rent and utilities related to the local store facilities in which we operate.

Depreciation of rental equipment comprises the depreciation costs for our rental fleet. Rental equipment is recorded at cost and depreciated over the estimated useful life of the equipment to its residual value using the straight-line method.

Cost of rental equipment sales comprises the costs associated with the sale of our used equipment, including the net book value of the rental assets sold and associated sales costs, such as auction fees.

Cost of sales of new equipment, merchandise and consumables comprises the costs associated with the sale of new equipment, merchandise and consumables and related services, including the cost of merchandise and new equipment.

Selling, General and Administrative Expenses

Selling, general and administrative expenses comprise operating costs that are not directly related to our revenue generating activities. These costs primarily include sales commissions; staff costs for management and support staff, including salaries and related benefits and retirement costs; legal and professional fees; restructuring costs related to the Redomiciliation and U.S. Listing; bad debt charges; advertising expenses; technology licensing costs; and administrative overhead expenses.

Non-rental Depreciation and Amortization

Non-rental depreciation and amortization includes depreciation expenses related to property and equipment, including land and buildings, motor vehicles, and office and workshop equipment, as well as amortization of intangible assets, including customer lists and contracts, and amortization of finance lease right-of-use assets.

Interest Expense, Net

Interest expense, net comprises the difference between interest receivable on funds invested and interest payable on borrowings and finance lease liabilities.

Other Income, Net

Other income, net comprises gains/losses from disposals of non-rental assets, changes due to foreign currency exchanges, gains/losses from the remeasurement of equity investments and various other miscellaneous non-operating expenses.

Provision for Income Taxes

Provision for income taxes consists of an estimate of U.S. federal and state, Canadian, U.K. and foreign income taxes based on enacted U.S. federal and state, Canadian, U.K. and foreign tax rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws. We continue to maintain a valuation allowance related to specific net deferred tax assets where it is not more likely than not that the deferred tax assets will be realized.

Results of Operations

The table below summarizes our consolidated results of operations for the periods indicated.

(In millions)

25

Three Months Ended July 31, 2026 Compared With Three Months Ended July 31, 2025

Revenues

Equipment rentals. Total equipment rentals revenue increased by $326 million, or 13%, to $2,927 million in the three months ended July 31, 2026, from $2,601 million in the three months ended July 31, 2025, representing 94% and 93% of total revenues in the three months ended July 31, 2026 and 2025, respectively. The increase in total equipment rentals revenue arose predominantly due to increases in rental volume in both of our North American segments, as well as positive rental rate momentum. As of July 31, 2026, our dollar utilization was 55%, compared to 54% as of July 31, 2025. The average original equipment cost (“OEC”) of our rental fleet increased by 6% in the three months ended July 31, 2026, compared to the three months ended July 31, 2025. See “—Key Financial Metrics—Key Performance Indicators” below for the definition of and further information on dollar utilization.

On a segment basis, equipment rentals revenue attributable to the North America – General Tool, North America – Specialty and United Kingdom segments represented 56%, 37% and 7%, respectively, of total equipment rentals revenue in the three months ended July 31, 2026, compared to 59%, 33% and 8%, respectively, in the three months ended July 31, 2025.

North America – General Tool. Equipment rentals revenue attributable to the North America – General Tool segment increased by $113 million, or 7%, to $1,648 million in the three months ended July 31, 2026, from $1,535 million in the three months ended July 31, 2025. This increase was primarily attributable to a 5% increase in the average OEC coupled with an increase in physical utilization, supported by positive rental rate movements, offset by general inflationary factors, resulting in no change in dollar utilization of 47% compared with the prior year. In the three months ended July 31, 2026, equipment rentals revenue attributable to same-store and greenfield sites increased by 6%, compared to the three months ended July 31, 2025, while revenues attributable to bolt-on acquisitions since May 1, 2025 contributed a further 1% of equipment rentals revenue growth over the same period.

North America – Specialty. Equipment rentals revenue attributable to the North America – Specialty segment increased by $216 million, or 25%, to $1,070 million in the three months ended July 31, 2026, from $854 million in the three months ended July 31, 2025. This increase was primarily due to a 13% increase in the average OEC, with increased rental volumes, coupled with an increase in dollar utilization to 77% compared to 74% in the prior year reflecting increased fleet utilization and efficiency. In addition, given the higher fuel prices coupled with higher demand in the quarter for certain ancillary services, revenues associated with fuel, pickup and delivery, and other ancillary services increased disproportionally to rental only revenue for North America - Specialty. In the three months ended July 31, 2026, equipment rentals revenue attributable to same-store and greenfield sites increased by 19% compared to the three months ended July 31, 2025, while equipment rentals revenue attributable to bolt-on acquisitions since May 1, 2025 contributed a further 6% of equipment rentals revenue growth over the same period.

United Kingdom. Equipment rentals revenue attributable to the United Kingdom segment decreased by $3 million, or 1%, to $209 million in the three months ended July 31, 2026, from $212 million in the three months ended July 31, 2025.

Sales of rental equipment. Total revenues from the sale of rental equipment decreased by $18 million, or 17%, to $85 million in the three months ended July 31, 2026, from $103 million in the three months ended July 31, 2025, representing 3% and 4% of total revenues in the three months ended July 31, 2026 and 2025, respectively. This decrease in sales of rental equipment reflects a lower volume of used equipment sales compared to the three months ended July 31, 2025, partially offset by an improvement in used equipment pricing and mix of the types of assets sold.

On a segment basis, revenues from the sale of rental equipment attributable to the North America – General Tool, North America – Specialty and United Kingdom segments represented 63%, 24% and 13%, respectively, of total revenues from the sale of rental equipment in the three months ended July 31, 2026, compared to 69%, 22% and 9%, respectively, in the three months ended July 31, 2025.

North America – General Tool. Revenues from the sale of rental equipment attributable to the North America – General Tool segment decreased by $17 million, or 24%, to $54 million in the three months ended July 31, 2026, from $71 million in the three months ended July 31, 2025.

North America – Specialty. Revenues from the sale of rental equipment attributable to the North America – Specialty segment decreased by $3 million, or 13%, to $20 million in the three months ended July 31, 2026, from $23 million in the three months ended July 31, 2025.

United Kingdom. Revenues from the sale of rental equipment attributable to the United Kingdom segment increased by $2 million, or 22%, to $11 million in the three months ended July 31, 2026, from $9 million in the three months ended July 31, 2025.

Sales of new equipment, merchandise and consumables. Total revenues from the sale of new equipment, merchandise, and consumables increased by $6 million, or 6%, to $103 million in the three months ended July 31, 2026, from $97 million in the three months ended July 31, 2025, representing 3% of total revenues in both the three months ended July 31, 2026 and 2025. This increase was primarily due to a higher volume of new equipment sales, which were most pronounced in the North America – Specialty segment.

On a segment basis, revenues from the sale of new equipment, merchandise and consumables attributable to the North America – General Tool, North America – Specialty and United Kingdom segments represented 40%, 41% and 19%, respectively, of total revenues from the sale of new equipment, merchandise and consumables in the three months ended July 31, 2026, compared to 44%, 34% and 22%, respectively, in the three months ended July 31, 2025.

North America – General Tool. Revenues from the sale of new equipment, merchandise and consumables attributable to the North America – General Tool segment decreased by $2 million, or 5%, to $41 million in the three months ended July 31, 2026, from $43 million in the three months ended July 31, 2025.

North America – Specialty. Revenues from the sale of new equipment, merchandise and consumables attributable to the North America – Specialty segment increased by $10 million, or 31%, to $42 million in the three months ended July 31, 2026, from $32 million in the three months ended July 31, 2025.

United Kingdom. Revenues from the sale of new equipment, merchandise and consumables attributable to the United Kingdom segment decreased by $2 million, or 9%, to $20 million in the three months ended July 31, 2026, from $22 million in the three months ended July 31, 2025.

Total revenues. For the reasons explained above, total revenues increased by $314 million, or 11%, to $3,115 million in the three months ended July 31, 2026, from $2,801 million in the three months ended July 31, 2025.

Cost of Revenues

Cost of equipment rentals, excluding depreciation. Cost of equipment rentals, excluding depreciation increased by $193 million, or 18%, to $1,265 million in the three months ended July 31, 2026, from $1,072 million in the three months ended July 31, 2025. This increase was primarily due to an increase in staff costs, reflecting, in part, activity levels within the business, and fuel costs, reflecting market based factors and the increase in fuel revenue, in particular, in the North America - Specialty segment. In addition, higher costs associated with repairs and maintenance of equipment were experienced.

Depreciation of rental equipment. Depreciation of rental equipment costs increased by $12 million, or 3%, to $470 million in the three months ended July 31, 2026, from $458 million in the three months ended July 31, 2025. The increase was primarily due to a larger fleet size and the continued impact of life cycle inflation on our fleet. Depreciation in the North America – General Tool segment (including non-rental depreciation) increased by $8 million, or 2%, to $359 million in the three months ended July 31, 2026, from $351 million in the three months ended July 31, 2025. Depreciation in the North America – Specialty segment (including non-rental depreciation) increased by $10 million, or 7%, to $146 million in the three months ended July 31, 2026, from $136 million in the three months ended July 31, 2025. Depreciation in the United Kingdom segment (including non-rental depreciation) decreased by $4 million, or 9%, to $41 million in the three months ended July 31, 2026, from $45 million in the three months ended July 31, 2025.

Cost of rental equipment sales. Cost of rental equipment sales decreased by $20 million, or 22%, to $70 million in the three months ended July 31, 2026, from $90 million in the three months ended July 31, 2025. This decrease was primarily due to the lower volume of used equipment sales in the period, predominantly in the North America – General Tool segment, as discussed above. In the North America – General Tool segment, cost of rental equipment sales decreased by $15 million, or 25%, to $46 million in the three months ended July 31, 2026, from $61 million in the three months ended July 31, 2025. In the North America – Specialty segment, cost of rental equipment sales decreased by $7 million, or 30%, to $16 million in the three months ended July 31, 2026, from $23 million in the three months ended July 31, 2025. In the United Kingdom segment, cost of rental equipment sales increased by $2 million, or 33%, to $8 million in the three months ended July 31, 2026, compared with $6 million in the three months ended July 31, 2025.

Cost of sales of new equipment, merchandise and consumables. Cost of sales of new equipment, merchandise and consumables increased by $3 million, or 5%, to $61 million in the three months ended July 31, 2026, from $58 million in the three months ended July 31, 2025. This primarily arose in the North America - Specialty segment, as discussed above.

Total cost of revenues. For the reasons explained above, total cost of revenues increased by $188 million, or 11%, to $1,866 million in the three months ended July 31, 2026, from $1,678 million in the three months ended July 31, 2025.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $29 million, or 7%, to $443 million in the three months ended July 31, 2026, from $414 million in the three months ended July 31, 2025. This increase was primarily due to increased staff costs in the three months ended July 31, 2026. This was partially offset by the decrease in non-recurring costs related to restructuring and relisting activities, which totaled $6 million in the three months ended July 31, 2026, compared to $13 million in the three months ended July 31, 2025.

Non-rental Depreciation and Amortization

Non-rental depreciation and amortization increased by $2 million, or 2%, to $115 million in the three months ended July 31, 2026, from $113 million in the three months ended July 31, 2025. This increase reflects higher depreciation expenses on our non-rental assets, including our delivery vehicle fleet and property.

Interest expense, net

Interest expense, net increased by $12 million, or 13%, to $107 million in the three months ended July 31, 2026, from $95 million in the three months ended July 31, 2025. This increase was primarily due to higher average debt levels, partially offset by lower average interest rates during the three months ended July 31, 2026, compared to the three months ended July 31, 2025.

Other income, net

Other income, net remained constant at $7 million in the three months ended July 31, 2026 and the three months ended July 31, 2025.

Net Income

For the reasons explained above, net income increased by $65 million, or 17%, to $438 million in the three months ended July 31, 2026, from $373 million in the three months ended July 31, 2025.

Liquidity and Capital Resources

Sources and Uses of Cash

Our primary existing sources of liquidity are (i) cash generated from operations, (ii) cash generated from sales of tangible fixed assets (primarily used rental equipment), and (iii) borrowings available under our ABL Facility.

We anticipate that our principal short-term (over the next 12 months) and long-term needs for cash relating to our operations will be to fund (i) payment of operating expenses, (ii) purchases of rental equipment and inventory items offered for sale, (iii) servicing and repayment of debt, (iv) acquisitions, (v) payment of dividends, and (vi) share repurchases. We plan to fund such cash requirements through cash provided by operating activities and through borrowings available under our ABL Facility. However, we may also seek additional financing through, for example, the issuance of equity, debt securities and/or other borrowings.

As of July 31, 2026, we had cash and cash equivalents of $32 million (of which $4 million was held in Canadian dollars and $10 million in British pounds) and an available borrowing amount of $3,512 million under our ABL Facility. We believe that our existing sources of cash, both cash provided by operating activities and available through our ABL Facility, will be sufficient to support our liquidity and capital requirements over the next 12 months.

Cash Flows

The table below presents a summary of our cash flows for the periods indicated.

(In millions)

Cash Flows from Operating Activities

Net cash inflow provided by operating activities decreased by $28 million, or 3%, to $840 million in the three months ended July 31, 2026, from $868 million in the three months ended July 31, 2025, primarily due to movements in working capital due to an increase in accounts receivable and decrease in accounts payable, offset by improved income from operations.

Cash Flows from Investing Activities

Net cash outflow used in investing activities increased by $1,016 million, or 241%, to $1,438 million in the three months ended July 31, 2026, from $422 million in the three months ended July 31, 2025, primarily due to an increase in payments for purchases of rental equipment, which were $759 million in the three months ended July 31, 2026 compared to $394 million in the three months ended July 31, 2025, and payments for acquisitions of businesses, which were $667 million in the three months ended July 31, 2026 compared to $20 million in the three months ended July 31, 2025.

Cash Flows from Financing Activities

Net cash provided by financing activities increased by $1,045 million, or 235%, to $601 million in the three months ended July 31, 2026, from cash used in financing activities of $444 million in the three months ended July 31, 2025, primarily attributable to net proceeds from debt of $984 million in the three months ended July 31, 2026 compared to net repayments of debt of $92 million in the three months ended July 31, 2025. Additionally, $56 million was spent on share repurchases under the buyback program launched in March 2026 during the three months ended July 31, 2026, for which there were $330 million of comparable outflows in the three months ended July 31, 2025. This was partially offset by dividends paid of $307 million in the three months ended July 31, 2026, compared to no dividends paid in the three months ended July 31, 2025, reflecting a shift in the timing of dividend payments with the Company intending to provide shareholders with a regular cash return consistent with U.S. market practice. Following the end of the quarter, on September 9, 2026, the Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock, payable on October 2, 2026, to stockholders of record as of September 18, 2026.

Borrowings

The following section summarizes certain material provisions of our long-term debt facilities and current obligations.

(In millions)

Senior notes

The Company has issued $7,400 million principal amount of various tranches of senior notes (collectively, the “senior notes”). As of July 31, 2026, one series of senior notes is classified as a current liability, while the others are classified as non-current liabilities. During the period, the Company issued two additional series of senior notes with a principal balance of $1,200 million.

First priority senior secured credit facility (“ABL Facility”)

The Company maintains the ABL Facility with commitments of $4,750 million until November 2029. The amount utilized as of July 31, 2026 was $1,217 million (including letters of credit totaling $4 million).

Other

The Company was in compliance with all debt covenants that were in effect as of July 31, 2026. See Note 9, Debt to the Unaudited Condensed Consolidated Financial Statements in “Item 1. Unaudited Condensed Consolidated Financial Statements” of this report for further details regarding the Company’s debt.

There have been no significant changes to the Company’s accounting policies on valuing or managing the risk of financial instruments during the three months ended July 31, 2026.

Off-Balance Sheet Arrangements

We had no material off-balance sheet arrangements as of July 31, 2026.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies as disclosed in our annual report on Form 10-K for the year ended April 30, 2026.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 2, "Basis of Presentation and Significant Accounting Policies" in Part I, Item 1 “Unaudited Condensed Consolidated Financial Statements” of this Quarterly Report.

Segment Information

Our reportable operating segments are: (i) North America – General Tool, (ii) North America – Specialty, and (iii) the United Kingdom (see “Segment Information” under Item 1 “Unaudited Condensed Consolidated Financial Statements” for further information). This division reflects the basis upon which we review the performance and allocate resources to the business.

The Company manages debt, its lease portfolio, and taxation centrally, rather than by operating segments. Accordingly, segmental costs are stated excluding the impact of ASC 842 lease accounting in relation to the Company’s property leases, and before interest and taxation, which are reported as central cost items. There are no material sales between the operating segments.

Our Chief Operating Decision Maker (the “CODM”), is the primary individual in control of resource allocation between the segments. Segment performance and resource allocation are evaluated based on adjusted segment operating profit. The most significant allocation determinations made by the CODM using adjusted segment operating profit relate to purchases of rental equipment. These determinations are generally made throughout the year.

In addition to segment results, we also report capital expenditure and assets by operating segment. Capital expenditure represents additions to rental equipment, property and equipment, and includes additions through the acquisition of businesses. Operating segment assets exclude corporate assets, such as cash and cash equivalents, corporate facilities, other intangible assets, and tax assets.

The table below presents selected financial information by reportable segment.

(In millions)

(1) Staff costs comprise salaries and related benefits and retirement costs.

(2) Other segment items comprise spares, vehicle, facility and other miscellaneous costs.

Adjusted segment operating profit

North America – General Tool. In the North America – General Tool segment, equipment rentals revenue increased $113 million, or 7%, in the three months ended July 31, 2026 driven primarily by volume growth, with the average original equipment cost increasing 5%, coupled with an increase in physical utilization, supported by positive rental rate movements, offset by general inflationary factors. This increase in equipment rentals revenue was partially offset by increases in certain variable costs of the business. Staff costs increased by $37 million, or 11%, in the three months ended July 31, 2026, reflecting in part activity levels, while increases in fuel costs reflected market based factors. Adjusted segment operating profit increased by $20 million, or 4%, to $539 million, from $519 million in the three months ended July 31, 2025.

North America – Specialty. In the North America – Specialty segment, equipment rentals revenue increased $216 million, or 25%, in the three months ended July 31, 2026, with the increase in average original equipment cost of 13% supporting volume growth. In addition, given the higher fuel prices coupled with higher demand in the quarter for certain ancillary services, revenues associated with fuel, pickup and delivery, and other ancillary services increased disproportionally to rental only revenue for North America - Specialty. This increase in equipment rentals was partially offset by increases in certain variable costs of the business. Staff costs increased by $33 million, or 19%, reflecting higher activity levels, while other variable costs, such as internal rental repairs and fuel costs also increased. Adjusted segment operating profit increased by $73 million, or 24%, to $373 million in the three months ended July 31, 2026, from $300 million in the three months ended July 31, 2025.

United Kingdom. In the United Kingdom segment, adjusted segment operating profit remained constant at $20 million in the three months ended July 31, 2026, compared to the three months ended July 31, 2025.

Please see “Results of Operations” above for a further discussion of our segment results during the periods presented.

Key Financial Metrics

We use the following key performance indicators ("KPIs") and non-GAAP financial measures to analyze our business performance and financial position and to develop strategic plans, which we believe provide useful information to the market to aid in understanding and evaluating our results of operations and financial position in the same manner as our management team. Certain judgments and estimates are inherent in our process to calculate these metrics. Certain of these metrics are operating statistics that may not be derived from our condensed consolidated financial statements. These metrics are presented for supplemental information purposes only, should not be considered a substitute for financial information presented in accordance with U.S. GAAP, and may differ from similarly titled metrics or measures presented by other companies. See “Non-GAAP Financial Measures” below for our definitions of these non-GAAP financial measures, information about how and why we use these non-GAAP financial measures and a reconciliation of each of these non-GAAP financial measures to its most directly comparable financial measure calculated in accordance with U.S. GAAP.

The following table sets forth a summary of the key financial metrics.

($ in millions, unless otherwise stated)

(1) Non-GAAP financial measure. See “—Non-GAAP Financial Measures” below for definitions and reconciliations to the most directly comparable U.S. GAAP measure.

Key Performance Indicators

We use the KPIs “dollar utilization” and “original equipment cost” (or “OEC”) to evaluate our business, measure our performance, identify trends and make business decisions. These measures are not directly comparable to, and should not be considered a substitute for, financial information presented in accordance with U.S. GAAP, and may differ from similarly titled metrics or measures presented by other companies.

Dollar utilization

We consider “dollar utilization” to be a KPI on a segment basis. Dollar utilization reflects the ratio of rental revenue earned from equipment compared with the original cost of equipment. Dollar utilization is calculated as (i) revenue from equipment rentals in each month during the preceding twelve-month period divided by (ii) average original equipment cost of our fleet measured during such period, in each case on a segment basis. Dollar utilization is influenced by various factors, including the average original equipment cost of our rental fleet, the level of physical utilization of our rental fleet, customer rental rates, ancillary rental revenues, inflation, as well as customer and product mix.

Management believes that dollar utilization provides useful information to investors and management to demonstrate how effectively we recover value from our rental assets. Management uses dollar utilization when reviewing operating performance on a segment basis and to help inform capital allocation decisions within the business.

Original equipment cost

We consider original equipment cost to be a KPI on a segment basis. OEC reflects the original cost of our equipment on rent.

Management believes that OEC, along with dollar utilization, provide useful information to investors and management to demonstrate the utilization of our rental equipment. Management uses OEC when reviewing operating performance on a segment basis and to help inform capital allocation decisions within the business.

Non-GAAP Financial Measures

The condensed consolidated financial statements included elsewhere in this document have been prepared in accordance with U.S. GAAP. However, management believes that certain non-GAAP financial measures provide additional meaningful financial information that may be relevant when assessing its ongoing performance. We use the non-GAAP financial measures “EBITDA,” “EBITDA margin,” “adjusted EBITDA,” “adjusted EBITDA margin,” “free cash flow” and “adjusted operating profit.” These financial measures are not defined or recognized under U.S. GAAP and are presented because we believe that these measures provide both management and users of our condensed consolidated financial statements with useful additional information when evaluating our operating and financial performance. However, these non-GAAP financial measures should not be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. They should not be viewed as alternatives to operating income (loss), net income (loss), operating cash flows, or other measures of financial performance or liquidity presented in accordance with U.S. GAAP. Consequently, the methodology used for their calculation may not be consistent with that adopted by other companies and, therefore, the non-GAAP measures presented may not be comparable with those of other companies. Some of the limitations of non-GAAP measures are that: (i) they do not reflect our cash expenditures or future requirements for capital investments or contractual commitments; (ii) they do not reflect changes in, or cash requirements for, our working capital needs; and (iii) they do not reflect the significant interest expense or cash requirements necessary to service interest or principal payments on our debt.

EBITDA, EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin

We use the non-GAAP measures “EBITDA,” “EBITDA margin,” “adjusted EBITDA,” and “adjusted EBITDA margin” to evaluate our overall financial performance. The composition of these measures is not addressed or prescribed by U.S. GAAP. We define EBITDA as net income before provision for income taxes, interest expense, net, depreciation of rental equipment and non-rental depreciation and amortization. Adjusted EBITDA represents EBITDA before stock-based compensation expense, net and restructuring costs, which relate to costs associated with the Redomiciliation and U.S. Listing and in the three months ended July 31, 2026, the operational restructure of the United Kingdom segment. These items are excluded from adjusted EBITDA to allow investors to make a more meaningful comparison between our core performance over different periods of time, as well as with those of similar companies. EBITDA margin is defined as EBITDA divided by total revenues. Adjusted EBITDA margin is defined as adjusted EBITDA divided by total revenues.

Management believes that EBITDA, EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin, when viewed with our U.S. GAAP results and the accompanying reconciliations, provide useful information about our operating performance and period-over-period growth, and provide additional information that is useful for evaluating the operating performance of our core business without regard to potential distortions. Additionally, management believes that EBITDA and adjusted EBITDA help investors gain an understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made and debt is serviced.

The table below presents a reconciliation of the non-GAAP measures EBITDA and adjusted EBITDA to net income, as well as the EBITDA margin and adjusted EBITDA margin to net income margin, which in each case represents, in management's view, the most directly comparable U.S. GAAP measure, for the periods indicated.

($ in millions, unless otherwise stated)

(1) Restructuring costs relate to staff and other costs incurred in relation to the Redomiciliation and U.S. Listing and, in the three months ended July 31, 2026, the operational restructure of the United Kingdom segment.

(2) Net income margin is calculated as net income divided by total revenues.

Free cash flow

We use the non-GAAP measure “free cash flow” to reflect the cash retained prior to discretionary expenditure on acquisitions and returns to shareholders. The composition of these measures is not addressed or prescribed by U.S. GAAP. We define free cash flow as net cash provided by operating activities less net expenditure on rental and non-rental equipment (comprising payments for purchases of equipment less disposal proceeds received in relation to sales of equipment).

Management believes that free cash flow provides useful information to management and investors as an additional liquidity measure because it measures the amount of cash available, after net expenditures on rental and non-rental equipment, for activities such as making discretionary expenditures on acquisitions and providing returns to shareholders.

The table below presents a reconciliation of the non-GAAP measure free cash flow to net cash provided by operating activities, which represents, in management’s view, the most directly comparable U.S. GAAP measure, for the periods indicated.

(In millions)

34

Adjusted operating profit

We use the non-GAAP measure “adjusted operating profit” to evaluate the underlying profitability of our core operations. The composition of this measure is not addressed or prescribed by U.S. GAAP. We define adjusted operating profit as operating income after other (income) expense, net, and before amortization of acquired intangibles, stock-based compensation expense, net, and restructuring costs, which relate to costs associated with the Redomiciliation and U.S. Listing and, in the three months ended July 31, 2026, the operational restructure of the United Kingdom segment.

Management believes that adjusted operating profit provides useful information to management and investors about our underlying profitability without regard to non-core items that may not be indicative of our main business activities, thus allowing for a more meaningful comparison between our core performance over different periods of time, as well as those of other similar companies.

The table below presents a reconciliation of the non-GAAP measure adjusting operating profit to operating income, which represents, in management's view, the most directly comparable U.S. GAAP measure, for the periods indicated.

(In millions)

(1) Restructuring costs relate to staff and other costs incurred in relation to the Redomiciliation and U.S. Listing and, in the three months ended July 31, 2026, the operational restructure of the United Kingdom segment.

We are exposed to a variety of market risks, primarily related to changes in interest rates and foreign currencies.

Interest Rate Risk

As of July 31, 2026, we had $8,556 million of outstanding debt, of which 86% bears interest at a fixed rate and 14% bears interest at a floating rate. Since our accounting policy requires all borrowings to be held at amortized cost, the carrying value of fixed rate debt is unaffected by changes in credit conditions in the debt markets and, accordingly, there is no exposure to fair value interest rate risk. We are, however, exposed to interest rate risk on our floating rate debt under the ABL Facility, and fluctuations in interest rates may affect our interest expense under the ABL Facility and any new debt arrangement.

Our ABL Facility is priced based on average availability according to a grid, varying from the applicable benchmark interest rate (SOFR for U.S. dollar, SONIA for British pound and CORRA for Canadian dollar loans) plus 125 basis points to 137.5 basis points. As of July 31, 2026, the interest rates applicable to the floating rate debt were the applicable benchmark interest rate plus 125 basis points. As of the same date, based on the amount of floating rate debt outstanding, Sunbelt’s pre-tax profits would change by approximately $12 million for each percentage point change in interest rates applicable to the floating rate debt and, after tax effects, equity would change by approximately $9 million. The amount of our floating rate debt may fluctuate as a result of changes in the amount of debt outstanding under the ABL Facility.

We periodically utilize interest rate swap agreements to manage and mitigate our exposure to changes in interest rates. However, as of July 31, 2026, we had no such swap agreements outstanding. We may also at times hold cash and cash equivalents which earn interest at a variable rate.

Currency Risk

Although our reporting currency is the U.S. dollar, we derived 15% of our revenue for the three months ended July 31, 2026 from companies that have non-U.S. dollar currencies, primarily British pounds and Canadian dollars from our U.K. and Canadian businesses, respectively. Consequently, any change in exchange rates between the U.S. dollar and British pound or the Canadian dollar will affect our consolidated income statement and balance sheet when our results are translated into U.S. dollars for reporting purposes.

Our exposure to exchange rate movements on trading transactions is relatively limited. All subsidiary companies invoice revenue in their respective local currency and generally incur expense and purchase assets in their local currency. Consequently, we do not routinely hedge either forecast foreign exchange exposures or the impact of exchange rate movements on the translation of overseas profits into U.S. dollars.

Based on the currency mix of our profits and debt levels, interest and exchange rates as of July 31, 2026, a 1% change in the Canadian dollar and British pound to U.S. dollar exchange rates would impact pre-tax profits on an annualized basis by $0.1 million and equity by $22.7 million. As of July 31, 2026, we had no outstanding foreign exchange contracts.

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company’s management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a–15(e) and 15d–15(e) of the Exchange Act, as of July 31, 2026. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of July 31, 2026.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended July 31, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our results of operations and financial condition are subject to numerous risks and uncertainties described in our Annual Report on Form 10-K for the fiscal year ended April 30, 2026 (the “2026 Form 10-K”), which risk factors are incorporated herein by reference. There are no material changes from the risk factors set forth in the 2026 Form 10-K. You should carefully consider the risk factors in our 2026 Form 10-K in conjunction with the other information contained in this report. Should any of these risks materialize, our business, financial condition and future prospects could be negatively impacted.