Ashtead Group plc

and welcome to the Ashtab Group PLC full year and Q4 results analyst call. I will shortly be handing you over to Brendan Horgan and Alex Peace, who will take you through today's presentation. There will be an opportunity for Q&A later in the call. For now, over to Brendan Horgan and Alex Peace at Ashtab Group PLC.

Thank you, Operator, and good morning, all. Welcome to the Ashton Group for your results presentation. I'm joined, as usual, this morning by Alex Pease and Will Shaw. But in addition, we have Kevin Powers with us, who joined in May to lead our investor relations for Sundial Rentals when the primary listing moves to the U.S. early next year. Kevin, now, as you would expect, is working very closely with Will and the team. And most of all, we're happy to have him on board. Turning to slide three, I'll begin this morning as I always do by addressing our Sunbelt team members listening in or perhaps more significantly on the recorded call later in the morning U.S. time. Referencing slide three to specifically recognize their leadership and the health and safety of our people, our customers, and the members of the communities that we serve. Your commitment and efforts resulted in a fiscal year with a total recordable incident rate 0.65 and a lost time rate of 0.1. Both of these metrics represent record performance in frequency and severity. This is all achieved through the team's collective and ongoing progress of our Engage for Life program, which is central to the Sunbelt culture. Part of this progression, and importantly, keeping our guards up against complacency, was the holding of our 13th annual safety throughout which every single branch, every day, the week of May 12th, held engaging sessions with all of our team members introducing and reinforcing practices and habits of a world-class safety organization. So to the team, thank you. Thank you for your efforts to date and your ongoing commitment to Engage for Life. Turning now to the highlights for the year on slide four. We delivered strong performance in the year, with group and North America rental revenues up 4%, which was consistent with the guidance that we gave in December. These rental revenues and strong fall through delivered group EBITDA growth of 3% to $5 billion, PBT of $2.1 billion, and earnings per share of $3.70. These are record rental revenues and EBITDA for the year, with group EBITDA also progressing from a margin standpoint to 47%. From a capital allocation standpoint and in accordance with our Sunbelt Ford Auto priorities, we invested $2.4 billion in capex. This fueled existing location fleet needs and greenfield openings. Despite this level of investment, we delivered near record free cash flow of $1.8 billion. This fueled for us record returns to shareholders of $886 million through dividends paid in the year of $544 million and share buybacks of $342 million. Our current $1.5 billion buyback program, which as you know was initiated just in December, we fully intend to complete the balance in the current year. This year's results were achieved as we executed our plans to gain from the clear and ongoing structural momentum in our business and our industry and our ever-strong positioning within it, such as gaining shares, among large strategic customers across many construction and non-construction market segments, including the exciting Mega Projects Arena, which continues to expand in this era of deglobalization, technology-related construction, and infrastructure. This also came from the rapid growth of our newly opened 3.0 location and the everyday winning of new customers, gaining market share through new customers, who seek solutions through a broad range of general and specialist products and services. I'll give some added color on these points in just a moment. This was a year of execution and investment in the ongoing improvement in our business while capturing the available growth from the current market conditions and positioning us for even more growth and success in the future. This leads me nicely into an update on our 4.0 progress of the year And we'll begin that on slide six. We launched Dumbbell 4.0 at our powerhouse event in April of 24. And since then, our team has been laser focused on advancing each of the five actual components, which you know as customer, growth, performance, sustainability, and investment. Over the next few slides, I'll highlight some of the successes we have delivered in the first year and the plans to progress to deliver even more. starting with customer and growth on 5.7. Our customer obsession journey is well underway. During the year, we introduced enhanced training programs touching every one of our team members and recently launched a new customer obsession metric to provide real-time customer feedback to our team members. Illustrating our customer obsession and growth are the 42,000 new customers added in the year, on top of the 118,000 new customers added during 3.0. In total, these market share gains, these customers generated $1.9 billion of rental revenue growth in the year. Contributing to these market share gains and ongoing growth is our ability to leverage our expanded network of locations and density to further advance the cross-selling prowess between our general tool and specialty businesses. We successfully added 61 locations throughout North America in the year, with a nice mix of general tool and specialty businesses. These are helping to drive growth and advance our clustered market strategy by delivering added convenience, depth and breadth of products and solutions. Importantly, growth in the year continued to be supported by rate progression, as we were able to demonstrate to our customers the value of our extensive range of products, services, and value-add solutions. Moving to performance on slide eight. Our performance actual component is designed to leverage our platform, optimize our processes, and energize our technology, all with the output of improved customer experience and operational efficiencies, contributing to margin improvement over the course of Sunbelt 4.0. There were three main areas of focus you'll remember that were embedded in this actionable component. First, leveraging our SG&A through extracting the value from the investments we made during 3.0. In the year, we delivered efficiencies allowing us to reduce G&A costs while still delivering expansion and growth. Second, is the growth and maturation of the 401 locations. These locations which were opened or added during the three years of SubBot 3.0. These locations have grown to over $1.9 billion in revenue, which is 19% higher than last year, and $900 million in EBITDA, while also progressing margin by 280 basis points in a year. These locations are on average only 33 months young, So I think we can agree there's ample runway for growth and covet in these 401 new locations. There's a detailed scorecard I think you'll want to check out of this new cohort in Appendix 543. Thirdly, operational excellence, which is built to leverage our scale and leading technology platforms across our network of locations and cluster markets. Along the areas of opportunity are logistics and repair and maintenance activities, which is worthy of a little bit more detail on slide nine. The logistics associated with delivering rental assets to our customers and executing field service and repair is a part of our operations, a large part of our operations, and therefore a large cost base in which we currently spend roughly $1 billion a year. Operationally, we've been moving to a market-based logistics model, or internally we refer to the MLO, where our drivers, trucks, and dispatchers serve all locations in the cluster rather than being allocated to individual locations, as was historically the case. By the end of the year, we had embedded envelope operations in 16 of our clustered markets and have seen immediate improvement in metrics in these clusters. For example, in the four envelopes that were in place for the full year, Our days to pick up, which is the time it takes for us to pick up equipment after, of course, a customer is called off, was reduced by over 25%, and the spend on third-party haulers was reduced by 40%. We continue to advance our MLO expansion with a playbook to reach in excess of 30 of our top 50 markets by the end of this year, 26. This transition to MLOs has been supported by our full launch of DDoS 4.0, our proprietary Vehicle Dispatch Optimization System, which has been reimagined and repowered to improve availability, utilization, efficiency, and user and customer experience resulted in improved order capture through a clear path to say yes to our customers. Every single branch and MLO are now using this new system and beginning to realize its early benefits. Finally, touch on sustainability and investment on slide 10. On the environmental front, we're on track to meet our 2034 target to reduce our scope 1 and scope 2 carbon intensity by 50%, with a number of ongoing initiatives around our transportation fleet and how we source electricity for our locations. And on investment, we allocated capital dynamically throughout the year to maintain our fleet, fuel growth categories, and greenfield openings, and bolt-on acquisitions, and have executed returns to shareholders through increased dividends and share buybacks. So in summary, Ford Auto is off to a strong start with further exciting progress expected in this new fiscal year. So with that, I'll hand over to Alex to cover the financials in more detail, but also give our guidance for the year. Alex? Thanks, Brendan, and good morning, Edwin.

So before I get into the numbers, I thought it would be helpful to give you a brief update on the relisting process. with over 96% voting in favor of the resolutions. We're making good progress on the U.S. gas conversion and on Sarbanes-Oxley compliance, which means we're still on track to implement the move of the primary listing to the New York Stock Exchange in Q1 of calendar year 2026. We're also beginning to make plans for an investor event in New York shortly thereafter, which we'll be providing more details on as we progress through this year. turning now to the full year results themselves on slide 13. Firstly, as you may have noticed this morning, we've reassessed the basis of our segmental disclosures. The group operates under two primary geographic regions, reflecting its North American activities and assets and its U.K. activities and assets. The North American business is farther split operationally as general school and specialty, reflecting the nature of its products and services and the management structure of the group. As such, the group has identified its reportable operating segments as North America General Tools, North America Specialty, and the UK, which we believe reflects better the basis on which we review the performance of the business internally and aligns with the basis of our strategic growth plan, Sunbelt 4.0. Prior year comparative information has been restated to reflect these updated segments. To help you navigate your way through this change, we've included the full year results under the old segmentation on slide 31 in the appendix. Group rental revenue increased 4%. Total revenue was down 1%, reflecting the planned lower level of used equipment sales. Our growth was delivered with strong margins, an adjusted EBITDA margin of 47%, and an operating profit margin of 25%. As expected, After an interest expense of $559 million, adjusted pre-tax profit was 5% lower than last year at $2.1 billion. The higher interest expense reflects principally higher average debt levels. As explained at Q3 and in the press release, we are adjusting out non-recurring costs associated with the move of the group's primary listing to the U.S. These amounted to $15.4 million in the year. We will continue to track these as we move through the new fiscal year. Adjusted earnings per share were 370 cents. On slide 14, we've shown the group performance adjusting out the impact of the sales of used equipment, which were significantly lower in fiscal year 25 versus fiscal year 24. As you can see, Now turning to the businesses, slide 15 shows the performance for North American General Tool. Rental revenue for the year grew by 1% to $5.9 billion. This has been driven by a combination of volume and rate improvement, demonstrating the power of our diversified business model as well as our disciplined execution. As Brendan will discuss later, strengthened megaprojects have mitigated ongoing moderating conditions in the local commercial construction market. sales than last year, which I referred to earlier. As Brendan has already explained, we have been laser focused on the performance actual component of Sunbelt 4.0, and the team is making strong progress, driving value from our significant investments in logistics, telematics, maintenance execution, and we're already seeing the results. The team is also demonstrating strong cost control discipline with operating costs around 5% below prior year. These actions resulted in an EBITDA margin of 54%. After the impact of lower gains on disposals and the higher depreciation charge, operating profit was $2.1 billion compared to $2.4 billion last year. Operating margins were 33% and ROI was 20%. Now turning to North American specialty on slide 16. Rental revenue was 8% higher than a year ago at $3.3 billion. As with GT, This has been driven by a combination of volume and rate improvement. Rental revenue growth in the fourth quarter was impacted by the inclusion of both film and TV and oil and gas, which were both down significantly in the quarter. We took similar actions taken to control cost and specialty, and this has contributed to an even down margin of 48% compared to 44% last year. After the impact of the higher depreciation charge on the larger fleet, Operating profit was approximately $1.1 billion at a 33% margin, and ROI was 30%, clearly illustrating the higher returns achievable in the specialty business. As specialty becomes a larger part of the overall business portfolio, it should help drive up overall group returns in the future. Turning now to the UK on slide 17, and please note that all of these numbers are now in U.S. dollars. UK rent In line with the 4.0 strategy, the focus in the U.K. remains on delivering operational efficiency and long-term sustainable returns in the business. While we continue to make progress on rental rates, these need to progress farther. As a result, the U.K. business delivered an EBITDA margin of 26% and generated an operating profit of $69 million at an 8% margin, an ROI of 7%. Across all three segments, our results have shown the resilience of our business model and our disciplined execution despite challenging market conditions. Slide 18 sets out the group's cash flows for the year. This emphasizes the strong cash generation capability of the business across a wide range of market conditions. We maintain a strong focus on working capital management, which has resulted in cash flow from operations of $5 billion in the 12 months, which is a 99% conversion from EBITDA. As many are aware, two of the key attributes of our business model is both the resilience across a range of market conditions, which I mentioned previously, and the agility with which we can control capital spending, reallocating capital dynamically to maximize value. some pockets of growth. This strategy generated near-record free cash flow for the year of $1.8 billion, despite some of the transitory softness we've discussed. This ended up significantly higher than our guidance of around $1.4 billion, principally because of the timing of fleet landings at the end of the year where payment will be made in fiscal year 2026. While we've reduced our capital expenditure, this has not been at the expense of the future. We've executed on our fleet disposal plan as intended. We've isolated areas of the business with lower demand and dynamically reallocated our spending to growth markets, such as power and HVAC, and specialty businesses more broadly, as well as the megaprojects arena where demand is higher. We're also using our improved logistics and telematics system to proactively reposition our existing fleet to higher growth markets. One example of this is utilizing Lake Pass Center Network to fund more than 60% of the OECD required in our greenfield locations. This is how we can continue to grow even when our absolute spending in capital dollars is lower. Turning now to slide 19 and our guidance for revenue, capital expenditure, and free cash flow for fiscal year 2026. We expect group rental revenue growth to be between flat and plus 4% reflected of our end markets. Growth capital expenditure is planned to be in the range of $1.8 to $2.2 billion, and I will give a little bit more detail on this in just a moment. Finally, based on this guidance, we expect free cash flow to be between $2.0 and $2.3 billion, which again reflects the timing and payment of fleet landings around fiscal year end. On slide 20, I've broken down that CapEx guidance. you'll see that we're planning rental fleet capex as follows. For North America, between $1.3 and $1.6 billion, and for the U.K., between $110 and $130 million. For North America's general tool in the U.K., these are largely replacement requirements. While in North America's specialty, we're still funding pockets of growth. In all cases, there is a focus on improving time utilization and taking advantage of the latent capacity in the fleet that we already own. It's also worth noting that lead times with our key suppliers are relatively short at the moment, so there's considerable flexibility in these plans as market conditions improve. And so with that, I'll hand the call back over to Brendan. Thanks, Alex. I'll now move on to some operational details, beginning with North America on slide 22.

The North American business delivered good rental and revenue growth in the year of 4%. Specialty performed strongly with growth of 11%. with General Tool up one. As Alex mentioned, the fourth quarter growth figure for specialty reflects the fact that the North American specialty segment for reporting purposes now includes oil and gas and film and TV, which were previously reported in the U.S. General Tool and as part of Canada, respectively. So I'll say that again. Oil and gas would have been part of the GT segment. reporting previously, and filming TV, of course, would have just been captured in Canada as that was recorded. Excluding this, North American specialty grew 8% in Q4 and 12% for the full year. As expected, we continue to realize moderating local non-res construction market activity through the fourth quarter, and this is all set in part by the ongoing strength of the mega project landscape and the broader non-construction markets Importantly, rental rates continue to progress year-on-year as utilization levels are improving across the industry. We anticipate continued discipline in our business as we deliver added value to our customers. This is ongoing evidence of the progressing structural change in the business and leveraging our internal pricing tools and disciplined rate approach. Moving on to slide 23, we'll cover the activities and outlook for the construction and markets. Consistent with our usual reporting of construction activity and forecasts, the slide lays out the latest dots, figures, and starts, momentum, and put in place. Outlook for construction growth continues to be underpinned by megaprojects and infrastructure work, which remains strong and in some cases are gaining even further momentum. This is a portion of the market where we enjoy outside share and continue to be positioned extraordinarily well as more of these very large projects begin and enter planning. Our cross-functional sellers and solutions experts are highly engaged with these contractors, our customers, and in many cases, the owner or developer themselves, bringing our broad range of solutions and capabilities to bear on these not only large but highly complex projects. At the same time, as I've already mentioned, the local commercial construction space continues to moderate compared to what were really high recent years. As this prolonged environment of uncertainty has weighed on local and regional developers. This predominantly impacts some of the small, mid, and regional-sized contractors. Nonetheless, the SMB contractor landscape is a powerful and important part of our customer base. Although we're seeing some positive trends in local planning, it will take some time for this segment to see a meaningful uptick. However, it will rebound. As I've said before, when it does, I think it will quite strongly. When this inevitability happens, we're in a position of strength to benefit. Benefit with our customer relationships, cross-selling opportunities, coverage of products, services, and markets, and capacity. All part of our long-held plussard market strategy. Let's move on and talk a bit more about mega projects on slide 24. This is, of course, a slide you should now be pretty familiar with. lineates megaproject starts in count and value, looking at the last three years have gone by, as well as the next three years. This is broken down in our fiscal years for context. What should you draw from this update? Particularly when compared to equivalents, stock stats from our prior updates is one, some have been pushed a bit right. This should come as no surprise, showing projects of started. However, this should not be confused with projects being canceled. And two, the funnel keeps growing as the megaproject landscape continues to expand and strengthen. This megaproject era is being driven by deglobalization, technology advancement, and the related construction that comes from that, manufacturing and production modernization, and infrastructure. For these reasons and ongoing momentum, we believe this is a feature of our end markets which will be present at a significant scale for years to come. We continue to experience a very strong win rate in this arena and are highly engaged in project planning and solutions with associated customers and project owners. Turning now to slide 25, which of course puts in scale our non-construction end markets. Over half of our business is outside of commercial construction. As we have detailed over the years and probably best showcased most clearly during our Anytown exhibit as part of last year's event in Atlanta, these markets are both large and expansive. So many of our product categories have remarkably universal applications, which presents a vast opportunity to advance rental penetration ever more broadly across our end markets. Whether it's the planned or the unplanned, there are abundant activities throughout these non-construction markets where our products and services deliver the requisite solutions. We've made great progress across these segments over the years and will continue to do so throughout 4.0. So, these are big end markets with big opportunities to continue the expansion of our TAMs. Moving to capital allocation on slide 26. Alex or I have covered most of these capital allocation elements throughout this morning's presentation. However, I'll highlight again our launching of our buyback program in December of up to $1.5 billion over 18 months. This program takes into account our latest CapEx plans and demonstrates the optionality and confidence which comes from the fundamental strength in our cash-generative growth model. As I said in the highlights, we expect to complete this buyback in full in the current year while maintaining leverage within our target range of one to two times. There's also a robust bolt-on M&A landscape, which we've so often exercised. Our business development team continues to work our pipeline to find opportunities that align with our strategy, which will surely result in future additions. All this is consistent with our long-held policy, and we to allocate capital on this basis throughout 4.0. Turning to the summary slide on 27. And to conclude, we've had a year of strong performance, delivering record rental revenues and EBITDA through capturing the available growth in these market conditions. The results again demonstrate the through-the-cycle cash generation, which is so powerful at our current scale and current margin. with which we deploy through our capital allocation priorities to maximize our benefits in this structural growth business. We have dynamic flexibility and optionality to invest in segments, organic expansion, M&A, market opportunities, and, of course, returns to shareholders as we've covered through today's update. Our business is growing and our business is improving, positioning us for even more success over the years to come. We look forward to a strong fiscal 26 as we continue to grow and advance our business to benefit all of our stakeholders. And with that, Operator, we'd be happy to open the line for Q&A.

Thank you. If you wish to ask a question, please press star 1 on your telephone keypad. That is star 1 on your telephone keypad. And if you wish to retract your question again, please press star two. And up first, we have a question from Lush Mahendra Raja from JP Morgan. Please go ahead. Your line is open.

Morning. Morning, guys. Thanks for taking my questions. I've got three, I think, if that's okay. Okay. I mean, it'd be good to get some colour on May trading and what you're seeing there. I mean, looking at that chart on slide 22, 23, 24 lines, just to be good to get an update on what you're seeing there. So that was the first question. The second is just on the rental revenue guidance. I guess how are you thinking about the building blocks of that in terms of global, like projects, rates, et cetera, sort of time utilization, I guess, as well, and sort of how do you see the sort of phasing of that recovery through the year and, I guess, what gets you to the upper end. And then the last is just on your comments around the start of the presentation on market share and sort of some of the accounts you've been winning in the last year or the last four years. And when you look at those accounts, I mean, I presume they're mostly in sort of local, but we could get some colour there. I mean, how is that working with the backdrops? rates and sort of still taking market share? I mean, can you talk about some of the dynamics there and how you think you've been successful in sort of continuing to drive market share? Sure. Thanks, Lush. I'm going to do one and three, and Alex will take two.

So simply put, you know, in terms of entry rates, May was plus two in North America on a billion-per-day basis. And, you know, you mentioned that graph on slide 22, which you're right, shows that separation in terms of speed on rent. You know, we're certainly not here calling, you know, some change to that local non-res market. But nonetheless, we're pleased with that progress. And, you know, we'd like to post a couple more quarters of that as we move forward. But anyway, 2% on a billions per day basis. I'm glad you asked this question about market share. I'm actually going to refer to a few slides here, and I think the first one would be beneficial to take a look at, which is slide seven. In slide seven, we just demonstrate the real progress that we continue to make in terms of adding new customers. And let's just be clear here. These are B2B accounts. These are businesses that before having an account with Sunbelt Rentals, they did one of two things. Mostly, they rented from someone else, They would have owned equipment rather than rented equipment. But nonetheless, you know, we added 42,000 new customers that generated over $400 million in revenue in the current fiscal year. And those 118,000 customers that we added over the course of just three years and three years, those added $1.4 million. So for a combined $1.9 billion. When you start to think about the context, lean into your questionnaire a bit when it comes to, you know, you suspect these are mostly local. Yeah, of course they are local. What happens is, I mean, let's face it, you know, we went through a period as a business and as an industry when you had, you know, not a whole heck of a lot of supply and a pretty really surprisingly strong end market. And, you know, the sales force at large was, you know, they were shuffling to say yes and finding availability. When things do get a bit tighter, albeit good, you know what you do? You turn more stones. And that's exactly what this illustrates in terms of the sales force, finding more customers and easier wins there. And these are winning market share. And, of course, when you talk about slide eight there, which I'll refer to now, is really these new locations. And when you think about gaining market share, these are 401 locations in the center of that slide that are only 33 months old on average. There's that appendix five, which is slide 43, that will be worth you taking a look at. But these businesses grew 19% in 2020. total revenue of 24% in rental revenue in a year. There's only one answer as to where that revenue is coming from, and that's coming from ongoing gains. And then finally, and I'll get off of my market share talk here, if you refer to slide 40, we have chronicled really well, Janelle actually led this during our capital markets event in April of 24, of our deciles in the 50s. We are winning market share with the big, we're winning market share with the middle, and we're winning market share with the little. Unapologetically, we are a proportionally higher SME to some of our competitors, but it's an equal part of the market that we really like. But if you take, for instance, that slide, I'll just reference a couple of lines illustrating the winning and growing of the top. So what we're 22 customers that made up Last year, we're 20 of our customers, and instead of 20 million as a median, it's 28 million today. The second death foul was 99 customers. Today, it's 75. Don't mistake that for losing customers. The point is those customers are getting larger significantly. So those customers went from doing 7 million a year to doing 10 million a year. So this really demonstrates our ongoing growth in market share on these mega projects. but also through leaning in and turning in a few more stones. That's one in three lush, and as I said, Alice will do two.

Yes, let me just give you a little bit of color on the rental revenue guidance. So obviously in the prepared remarks, we referenced sort of flat to 4%, so midpoint at 2%. So, you know, again, a fairly modest amount of growth driven really predominantly by the specialty business. So if you want to weight the specialty business versus... versus the general tool, you'd find specialty, you know, probably in the mid-single-digit range, and then GT, you know, still positive, probably in the lower end of the single-digit range. And then, you know, the UK probably looks a little bit more flattish year over year. If you think about bridging that to your total revenue, remember we're in this world where we'll probably have lower sales of used equipment, so that's probably year, so that ought to give you a pretty good estimate on what total revenue looks like. Probably one last point to make, and then I'll go into what would bring you to the lower end or the higher end of that range. So if you think about seasonality on that total revenue, remember in the first half of last year, we had about $100 million of hurricane revenue. as Brendan would have mentioned in his prepared remarks, you know, we're yet to sort of call the sequential strengthening of the non-residential local construction market, which would also sort of lead you to a more back half-weighted year. So, you know, in terms of the underlying assumptions and what might lead you to the lower versus the higher end of that range, obviously, you know, at the higher end of the range, we would anticipate you know, an accelerated strengthening of that non-residential construction and an increased utilization, you know, of our existing fleet. So just to dimensionalize that, you know, 2% increase in utilization represents about $350 million of incremental revenue. So to the extent we're utilizing that latent capacity to drive growth, you know, that would be positive and obviously continued rate progression, which is what we're seeing. So, to the extent you don't see either one of those two things materialize, that would probably lead you more towards the lower end of that range. So, hopefully that helps give you some additional color. Okay. Thank you very much.

Thank you. And up next, we have a question from Katie Fleischer from KeyBank Capital Markets. Please go ahead.

Hey, good morning. You mentioned some of the cost controls that were put in place this quarter that you executed well on that were able to drive some of that margin improvement. Can you just talk about the opportunity to maybe build upon those and how we should think about the opportunities to strengthen margins going forward?

Sure. So I'll hit the first part of the question, and then Brendan will actually talk at more length around margin progression. Sure. So, yes, we took some action last year around just getting our cost structure more in line. And so, as you know, during Sunbelt 3.0, there were significant investments, particularly on the technology stack, you know, that required us to really add resources to do the coding and the development of that technology architecture. You know, as we got through the back end of Sunbelt 3.0, you know, we really looked hard at evaluating whether that those investments needed to continue or whether we could actually take some of the fixed cost structure out of the business and we did in fact remove some of the fixed cost structure out of the business. That being said, a lot of the margin progression is really leveraging those investments that we made during 3.0 through things like the MLO, the optimization of our repair and maintenance activity

the leverage come through, and I'll let Brendan talk in more detail about that. I think really, thanks for the question, Katie, and I think Alex has really hit it. I'll just kind of double down on the fact that this was, of course, part of the plan. As we answered some about 4.0, we clearly outlined what those three steps were. Some of the G&A activity Alex mentioned is just what you would expect. You go through a build period, and then you prepare yourself for a run period. The overarching at the SG&A level to build on top of that what our expectations and ambitions are around Sunbelt 4.0 as we continue to grow the business. You know, we doubled the size of specialty over 3.0, and you put in place some infrastructure in order to do that, and now that's in place, and you move that forward. And then really these efficiencies. You know, I would have mentioned in the prepared marks, you know, this delivery process, That's a small segment of the total. But, you know, as an organization, when I mentioned $1 billion in North America, just to touch over a billion in the denominator there, you know, $250 million of that or so is wages for our skilled drivers we have that deliver great customer service. It's almost matched that amount by haulers. And we know that we have the embedded efficiencies, but you have to marry the technology with that to actually be able to extract it, and that's what we're seeing. So this is not an overnight thing. I want to emphasize this is margin progression over the course of 4.0. You know, really good start as you'd expect year one, you know, in these sort of, you know, moderated growth arena that Alex would have outlined in terms of that range. You know, it's a bit harder to come by, but nonetheless, you know, we are confident about that progression as we move forward throughout 4.0.

You know, and the other, just the final point that I'd make that Brendan again touched on in his prepared remarks, the progression of the locations, of course, 3.0. For context, year one of those locations, EBITDA margin is around 32%. When we exited 2025, that margin rate was closer to 49%. So as we scale those locations and mature those new businesses, we will actually get the margin more in line with what our broader group margins are. year. So I think the continued progression of the greenfield business is another area where we drive significant margin potential.

Okay, great. Thank you both. That's helpful. Just another quick follow-up on that. I think here I heard you mention that a specialty becomes a larger part of the business. We can expect that to drive some stronger performance. How do you think about that long-term split between GenRent and specialty and Is your M&A strategy going forward going to reflect that greater emphasis on the specialty business?

Yeah, I mean, if you look at the 401 that Alex just referenced that we talked about before on, you know, while growing, in general, sold nicely when you had a really strong end market, as Alice will begin guiding today, it's a bit more than 30% of the total business, and we would expect that to continue to migrate. A lot of it really just depends on what the end market unfolds. You know, as you see a return to that local non-res, whenever that may be the case, you know, your GT business will grow a bit more in line with, or maybe not So our thing is this, and it's important, even as Alex would have mentioned kind of the range there between GT and specialty, our specialty business by design captures and has an ongoing opportunity for a very broad TAM. And as a result of that, you'll see some undulation in certain segments, but overall, we like that. So you would expect that to progress over time. You know, one would see it growing, you know, closer to the 50% mark over quite some time. But much of that, again, has to do with what the end market deals us from a non-RES standpoint. All right. Thanks. I'll pass it on. Thank you.

Thank you. And for Morgan Stanley, we now have Anneliese Vermeulen with our next question. Please go ahead.

Hi. Good morning, Brendan. Good morning, Alex. So just coming back to the market share gains, could you elaborate? You know, you've talked a lot about the 42,000 new customers you've added in the year. Do you think you also took share with existing customers in terms of share of wallet relative to other rental players? And as part of that, do you think you've benefited in that regard from some of the disruption at some of your competitors in the in recent months? And therefore, do you think that that market share progression can continue at the same pace looking ahead? And then secondly, on the locations, I think you mentioned, Alex, You'd expect to do north of 60 locations this year. How do you think about the mix there in terms of greenfields versus bolt-ons? I think you've mentioned previously valuations starting to normalise, so could we see more bolt-on activity this year, particularly in the context of that fairly buoyant free cash flow you expect it to generate? And then lastly, just on this big and beautiful bill, I think I gained from Will this morning that if the bonus depreciation rules were enacted, then that would benefit your free cash flow, I think. Is there anything else we should consider if that bill does go ahead in terms of what it can mean for your numbers? Thank you.

Joy and Lisa, short answer to your first question is yes. When it comes to market share, as I would have demonstrated looking at that cohort slide, we are this remarkably national or North American reaching company today, and we bring these capabilities to bear with these national strategics, which are growing significantly. But we're also gaining share across those debt files, of which we're very confident. I'm not going to Comments on, you know, disruption or otherwise, you know, I think that, you know, consolidation as we have demonstrated for years and years is very positive for the industry, and I'm sure that that will all go just fine throughout that whole thing. The 60, just for reference that Alice mentioned, the 60 that were opened over the course of last year, we have plans for similar location ads this year. Those are just our greenfields. not to be confused with what would be. So our bulk on M&A that we would do in large part would be incremental to those green fields. And as I said, look, it is as busy a pipeline as we have seen. As you know, based on, you know, I'll say this gently, only completing five acquisitions over the last fiscal year, you know, we have been, you know, firmly holding to our valuation metrics. And it goes through the ordinary meat grinder in our business of both location, where it is, proximity to the rest, the specialty business line that it may bring, the culture of the business, the reputation of the business, but also valuation. And we thought there was a bit of a disconnect there for a while. And none, and I mean none of the businesses that we had interest in, have transacted. So there's a number of them out there that we have talked with and we have put our valuation on, and they're choosing to contemplate, and we're choosing to wait. So time will tell in terms of what that is. But make no mistake, it is a robust landscape. And in the meantime, we're just going to grind away doing what we do, adding to the next chapter of the 401 locations that we have talked about.

And Alex, the big story is all about the forest appreciation. And I'll give you some color on that. more broadly. So as you think about sort of the gas tax rates, the statutory tax rate, that's typically we anticipate around the 25, 26% rate. Now if you shift over to the cash tax, because we do have such a significant amount of depreciation, cash tax is around 34%. And so your specific question, what's the potential impact of going from the current regime where we're winding down the bonus depreciation to a that will be worth around 10 percentage points. So that would take you from your 34% to your 24%, roughly around $200 million of cash impact. So it is a fairly material impact. Of course, you know, as we thought about guidance, we thought about current tax, the current

with the impact beyond the broader economy, I'd say that may be a touch above our collective pay grades here. But, you know, worth mentioning related to the bonus depreciation, that also includes capital investment in, you know, manufacturing, production, so construction in other words, and the other one, of course, from an overall consumer appetite, you know, if there were the ability, and I'm not a stating a pro or a con in this, but when it comes to taxes on overtime, for instance, that's quite a boost to the skilled trade across the land, and obviously it's a big part of the overall consumer. So time will tell. Obviously, it's going through this process through Congress, which is, at a minimum, an interesting one to watch as it goes through this process, of course, of reconciliation. Anything else, Elise?

Yeah, that's very clear. Coming back to the market share gains briefly, again, that pace of adding new customers that you've done, how much of that do you think has been sort of the launch of 4.0? Or rather, do you think that that pace of new customer wins, do you think you can continue that over the coming year and in years ahead?

Well, yeah, I mean, look, just to point out the 42,000 customers, those are accounts that we have opened, rented, Rest assured, there's a pipeline of accounts that have been opened that we haven't quite yet gotten to the rental point. Some of those happened yesterday that we'll rent next week, etc. But just do the math there. You had $118,000 over the course of three years, and then you had $42,000 in the course of the first year of 4.0. So it's all, in a way, remarkably normal. The biggest difference is, when you look at cost of acquisition of these new accounts, this year, of course, apps and bolt-ons, these are just fresh, organic, brand-new accounts that the sales force has gotten. So We have every confidence not only to speak to our market share gains, but think about it more broadly when we get off of that market share piece, which is just look how big the landscape is in terms of opportunity for growth. Our business has been around for a bit, right? And we've added 140,000 new accounts over the course of four years. That's really what you have to think about in terms of how much progress there is to extend, as we talked about so often, the proliferation process. of rental with so many different customers out there. I mean, our room for opportunity to ongoing growth in customers is dynamic.

That's very helpful. Thank you both for all the details.

Thank you. Thank you. And we now move on to Will Kirkness from Bernstein. Please go ahead. Your line is open.

Thanks very much. I just have a couple of clarification questions, really. The first one is, Just looking at rental revenue growth in the fourth quarter, general tours was plus one from minus one in Q3. With the reallocations that have happened, I wondered if you could give us a number, as you did with specialty. Secondly, just kind of thinking about utilization, I guess you gave the uplift of what a couple of percentage points would be. Is that about how far away you feel you are from a good utilization number, or is there even a little bit more to do? And then lastly, just on the accounting side, it looks a bit of reallocation in central costs and also to UK profitability. I just wondered if you could explain that.

Thank you. Let me start, and then I'll have Brendan follow up. So on the rental revenue in Q4, the number – look at as it relates to reallocations probably wouldn't affect your comparable. Remember, film and TV has always been within the specialty business. The difference is we didn't report specialty. So it would have been in the Canadian segment. And then the oil and gas business was historically within, again, would have been within the general tool business. But again, we didn't report So, there really wasn't a reallocation issue as you look at the historical reporting comparability. In terms of the reallocation of support costs, that predominantly affects the North American business. So, that wouldn't affect the profitability of the UK business. Remember, the UK business largely has all of its own support costs. Whereas, within North America, a lot of that cost is held centrally within our support So what we tried to do was pull out things that were not directly contributing to the contribution of those individual reporting segments. But it would not have affected the U.K. profitability margin. And remind me again, Will, because I lost track of that. What was your second question?

I want you to talk about that. So time utilization as I would have called it. Look, we feel good about, you know, hours sort of reaching that inflection point in terms of year-on-year. So you've got a bit of latent capacity there, which, of course, we will exercise, which really gives you – it's quite a nice position to be in. In other words, you've got some latent capacity to realize progress as we've demonstrated, but also, you know, as we do see, whenever it may be, some of the market conditions turning – where you can actually test that and be confident of that before you were to up CapEx as a, for instance. But furthermore, across the industry, you know, what we've seen is a better balancing from a supply and demand standpoint, which will underpin that rate piece that I talked about. But again, Will, just to reference on that slide 22, I appreciate there's that You know, Canada had some pockets of some real strength and then a bit of, you know, drag from a resi standpoint in Ontario in particular. And then U.S. was broadly, when you look at it, kind of across territories. You know, it looks a bit like that, the minus one and plus one.

Okay. Thanks so much.

Thanks, Will. Thank you. And we're now moving to a question from Arnold Lehman from Bank of America. Please go ahead. Your line is open.

Thank you very much. Good morning, Brandon. Good morning, Alex. First, just a clarification on Q4 rental revenue. The published is plus one, and then on a billing day basis, plus three. Is this just a working day effect, or is there anything else you mentioned, the small discrepancy? Secondly, on your fiscal 26 capex guidance, Is it all replacement at this stage, or is there any growth? I think, you know, at the midpoint, about $2 billion. Is there any growth context in there at this stage, or is it just replacement? And lastly, I guess more broadly, your business model is working. There's less growth, less context, and therefore more free cash flow generation, at least for fiscal 26. What is your mindset about it? Are you... disappointed by the growth, or are you happy about more free cash flow, i.e., if tomorrow growth comes back, will you happily ramp up the cap tech very quickly, which would negatively impact your free cash flow? I mean, it's more of a qualitative question, but any color would be helpful. Thank you.

I'll start with the last one there in terms of this point of having. You just run the business, and as we've said, at our current scale and margin, it's one of the remarkably powerful and dynamic attributes of this business. You know, we say sort of internally, I've said to a number of people, you know, I say record-free cash flow. I say record-free cash flow, and I appreciate that technically it's a touch short of record-free cash flow, but I'm going to use that actually to bring you to a slide that I think is important to understand, which is slide 32. And the reason why I can't say, emphatically, record free cash flow was, in fact, in fiscal year 2021, we generated $1,822,000,000 in free cash flow. And this year, we generated $1,790,000,000 in free cash flow. But look at the difference. Back in 2021, you remember, of course, that was really the full year of COVID, where you completely cut the ticket off from a CapEx standpoint, and you deal with that Black Swan event, which we did. And a lot of that investment would come very, very late in the year, and you'd invest less than a billion. Whereas this year, we still put a hardy two and a half billion dollars of capex in the investment. To maintain our fleet, to grow, make no mistake, our fleet in certain segments where there's strong, strong demand, but we still generate nearly $1.8 billion in free cash flow. And the way in which we allocated, we were very pleased to do. Remarkably comfortable with the one and a half billion dollar buyback. So not disappointed at all in the growth. That's just a matter of what happens from an end market standpoint. key to it all, Alice would have touched on this in the prepared script. Yes, it's the growth, but it's also the remarkable resilience and now so clearly demonstrating the strength of the free cash flow through the cycle. Alice also commented on the shorter lead times. We're not too sure when we see increased demand, whether that be coming from even more mega project wins or fueling specialty businesses like our power and HVAC climate control business that's still growing in really strong figures, or some of our even smaller but newer businesses like temporary fence or temporary walls or our industrial tool business, we will fuel those in a minute. Our load banks team comes to us and says, can we have an extra $50 million in capex because we have an order pipeline that will be higher than the fleet that we have, the inventory that we have in our fleet. Of course we will, and we have all the flexibility to do so. And at some point in time, we'll see markets turn from a local standpoint the other way. And very quickly, we will amp up that capex. And from a lead time standpoint, today you're talking for your core product, 60 to 120 days. Some of the things around power, et cetera, are a bit longer. But those, of course, are planned differently. Your first question is purely billing days, a number of days, so nothing else to that. And our capex, as it relates to fiscal year 26, It's really a tale of two worlds. Our general tool business would have been really leaning into a replacement exercise. And certainly, let's not forget this phrase that we've so often used, growth disguises replacement. So John and the team who have gone through their CapEx planning, if you have an area that's got a bit less demand and you have 10 telehandlers replaced, you may only replace seven of them, but if the company will buy 10, And we'll put those extra three into a market that's growing significantly. From a specialty standpoint, of course, there's replacement, but you'll have more growth embedded in that, given the nature of the trajectory of that business.

Thank you very much.

Thank you. And we're moving on to a question from Redburn Atlantic. Please go ahead. Your line is open.

Thank you. Good morning. Two questions, Phil, please. Firstly, just back to the topic of capital allocation and M&A. Just to, I wonder if you can help me understand the, you mentioned, you've been very clear that the, you know, it's price that's the sort of sticking point in terms of M&A. So, I guess, theoretically, were the, you know, the price to come down, would you be happy bringing acquired assets and branches into the business? even if demand hadn't, you know, hadn't improved much? And would you, I suppose, mirror that with, you know, in that scenario with a reduction in your own capex to try to drive up utilization? You understand the sort of, I guess, the perspective I'm coming from. So that's the first question. And the second question, really, sort of shelving the, you know, the Dodge construction forecasts, you know, for the time being. Have your customers or conversations with your customers all sort of at all since the events of early April and the uncertainty that they've created. I wonder, Brendan, perhaps you could sort of talk about anything that you want to in terms of how the conversations might have altered against that context. Thank you. Sure. Thanks, Neil. I'll work backwards on that. Our discussion with the larger

customers, but also the owners in that sense. So I'm speaking to this mega project landscape. They've not really changed much. Obviously, everyone's trying to just understand what the rules of engagement are. But when you look at what the strength is really in that segment, there's obvious things we've talked about around EV and batteries in general that are a bit softer. Really, in our view, that's more got to do with just end in general. But outside of that, when you look at data centers, I can say data centers three times in terms of not only what those progressing to start, but also the pipeline is in that environment. When you look at semiconductor, when you look at LNG, those plans are continuing to move forward. So with those larger customers, we're continuing to see their pipelines actually expand, expanding. So their outlook is actually in improving, even when it comes to sporting arenas, et cetera. We're just trying to get a grasp, of course, of what those costs might be. I think there's varying expectations in terms of what it all may come out to. In terms of capital allocation, you know, the theory you painted was, you know, if more of the businesses that we like and we'd be happy to acquire would be more in our level of valuation. Well, of course, we would acquire them. And I don't think you take a short-term view of that. Most of these that we would do, you know, you have this interplay between are you adding fleet to a marketplace, for the sake of part of what you're getting to, and what was for a period of time probably oversupplied a bit to where we are today. Look, we look at an acquisition not as a six-month or what could happen in the current year. You know, these are long-term decisions in nature, and that's exactly how we take them. So, yes, we would do that. And really, one doesn't necessarily depend on the other as it relates to would we take our CapEx down. It all depends on the deal. Generally speaking, the type of acquisitions we do, one of the common characteristics is they're undercapitalized. These are individual businesses. They don't get overly leveraged. And what we bring is, quite often, quite a growth to the overall fleet mix. But also you picked up on a really good point Alex made in his prepared remarks, how we've been able to fuel 60% of the fleet of our greenfields we opened during FY25 through existing fleets and locations, speaking to some of that latent capacity. So that's our view, big pipeline out there. And I'm glad you asked about that commentary on customers. Now, when you talk to our OFRs and DMs about local customers, I think the same thing they'll tell you, they're just scraping and clawing a bit more. Because, you know, if you look out most any skyline in some of the cities, there's just a bit less of that out there than what there once was. So that's one that, of course, we keep a close eye on when it comes to activity day in and day out.

Thank you. Thank you. That's very helpful.

Thank you. Thank you. And from Barclays, we now have James Rose with our next question. Please go ahead.

Hi, thanks. Good morning. I've got two, please. The first is on general tool margins versus specialty margins. The EBITDA gap between them is about six points at the moment, 54 to 48. Is that a central gap we should expect in the longer term, or how would you characterize it? Is there more upside in general versus specialty for the longer term? And then second, if we look at the ROI for specialty, it's 30%. Is that a level which... if it could be sustained all throughout 4.0, that is a sensible sort of incremental ROI we can think about for specialty?

Yeah, I'll start here. I mean, look, fundamentally, and actually it was quite lost on some over the course of 3.0 when we so rapidly expanded our specialty business. But the specialty business is going to have, EVIT DA margin than you will do with general tools. But then when you get to EVIT or operating profit, you'll have a higher margin relative to general tools. And from the ROI standpoint, of course, a lower capital intensive business is going to lead to fundamentally a higher ROI at the levels which we have. I wouldn't, you know, certainly from an ROI standpoint, maintain that over the course of You know, there are so many product assets within specialty in particular that just have a longer useful life than those generators. Take for instance, you know, large generators, load banks, air conditioners, chillers. These are not machines that are operated with someone sitting in the seat or holding the steering wheel. These are self-contained units that have the capability to run for a long, long time and the customers are remarkably happy with them over time. So, again, that speaks to, James, the very nature of that book value getting lower and, of course, your return being higher. There will always be puts and takes in any sort of year. Take, for instance, the year we had. As strong as the year we had in specialty was, remember it was absent a lot of that E&D revenue from the project, of course, that we had talked about that had the issues late last year and through this year. So we were absent so much of that labor revenue that we would have otherwise had Did I get both of your questions there, James? Yeah, both in one. Thanks very much. Okay.

Thank you. Thank you. And we're moving on to a question from Alan Wells from Jefferies. Please go ahead.

Hey, good morning, Brendan. Good morning, Alex. If you'll excuse me, please. You talked a lot about the optimistic outlook for megaprojects. Could you maybe just remind us what the rough portion is now exposed to these types of projects and how that's maybe trending year over year. And then secondly, just on specialty, if I understand that correctly, so the Q4 growth would be 8% without the reclassification that compares to 9. It's obviously still slowed a little bit during the year. It's running slightly below that of your largest peers, things closer to 15. Can you maybe talk a little bit about some of the color around the slowdown and maybe where some of that relative underperformance is particularly thinking about is it more end market related or the specific verticals that you're exposed to. And then third question, just maybe some comments on rates and apologies if I missed this earlier. Obviously, you still talk about rates progressing positively. Just provide a bit more color around this and maybe how you think about expectations for FY26. Anecdotally, we hear that obviously the rate environment is a bit more challenging and maybe at the local market there's a bit more kind of questions around some of the rate discipline in the industry, but maybe bigger players versus smaller players, that's less relevant. But any comments there would be really appreciated. Thank you.

Well, I'll take an order one, two there, and maybe Alex will touch on three around rates. Megan makes, first of all, let's go to 30,000 feet. Half our business is not construction. Half our business is construction. In recent years from a start, not a put in place, measures or things to that, you know, even from an analyst standpoint. But nonetheless, that's what ours is. That's not yet making up 30% of the put in place by the very nature we talked about in terms of time, in terms of ramp. And as we've said, you know, we will enjoy at least two XR shares. So I think those give you the component parts to sort of build to that mega project. But overall, you know, you're talking kind of, you know, still single digits, but approaching high single digits of the overall revenue, and we would expect that to climb as more progress starts and you get some more craft as it relates to those. Specialty, look, I appreciate you quoting some others from time to time, and you can pick any point in the cycle, and there will always be differences based on what is happening from a market standpoint. We have designed our specialty business to be clear again, to be very much broad from a TAM standpoint, and actually help us from an overall diversity and balancing our business out during certain times of economic cycles. Let's not forget to reflect over, say, for instance, post-COVID, when we saw still explosive growth in our specialty business, And when you think about those lines, it's worth understanding the puts and takes that I said. So if we just look at the year, power and HVAC plus 20, climate 10%, industrial tool 15, trench plus 13, ground protection plus 11, temporary fencing plus over 150%, plus 60% for temporary walls. But you will always have things like scaffolding minus 17, 18% because it's going to be a luckier business when you have big projects. You're going to have businesses like our temporary structures where you've got some migrant camps that come down or you've got some mega projects that were expensive in temporary structures that will come down. You can't miss the broader point of what really is a runway for ongoing structural progression within specialty. We don't spend much of our time measuring that up against what someone else might quote as their version of specialty. It's all demonstrating specialty's abilities.

So I'll touch on the rate expectations. Obviously, we don't talk specifically about rate other than to say that we have seen it continue to progress and we anticipate seeing it continue to progress. And that's driven by a couple things. Obviously, Brendan refers frequently to the structural progression of the industry and the level of discipline that we've been demonstrating. All the players have been demonstrating really just managing fleet capacity and do in years past. But more importantly, we view pretty strongly that we're able to capture the value for the service that we provide to the marketplace. So we are not a commodity, industrial, cyclical business. We are a business services company. And so let me give you some examples of how that manifests itself. First of all, the quality of our assets is second to none. So when we talk about replacement capital this year quality of our assets. Brendan mentioned about the mix of our fleet being variable, the levels of utilization perhaps allowing us to extend the useful lives for some period of time, but our assets are second to none. The second is the breadth of our asset portfolio. When you think about competing with a smaller local provider, they just can't provide the breadth of Brendan will talk about the logistics and our ability to place fleet anywhere within our clustered markets, our ability to mobilize service 24 hours a day in an asset breakdown. And then just the scale that we have to service national accounts on a national basis that, again, local regional providers can't do. So frequently, or almost always, as Brendan will talk about in one-on-one, The quality of the conversation with our customers does not revolve around rate. It really revolves around the breadth of service that we can provide. And so, yes, we continue to expect rates to progress based on all those things that I've described. Thank you. Thank you.

Thank you. And our final question for today comes from Carl Rainsford from Burenburg. Please go ahead. Your line is open.

Good morning, Brendan and Alex. Just three for me as your qualifications, really. But first, on your growth guidance, the zero to 4%, I appreciate that you've adapted the reporting segments, but is there any way you could give some colour on how the US, Canada and UK fit into that equation, please? The second, depending on how the cycle progresses over the next 12 months, But are you able to give any sort of guidance around used equipment sales versus the 2025 number of $470 million based on how you're seeing things today? And lastly, just really a follow-up on Will's question around the U.K., I see cost is down around 6% or 7% in North America general tools in the proxy, but roughly flat to very slightly down in the U.K., I'm aware this is immaterial from a group perspective and perhaps a misunderstanding, but could you touch on if there's a structural issue in the U.K. around the ability to derive efficiencies like you had in the U.S.? Thank you.

So let me take the first part of your question, and then I'll turn it over to Brendan to talk specifically about the U.K. So on the zero to four percent guidance, breaking that down, I think I gave sort of directionally the split between GT, especially in my prior comments, As it relates to the U.S. versus Canada, you know, we think about those as the North American market. And so there's a lot of synergy across the two markets. Canada, obviously, you'll see we anticipate continued softness in the film and TV business, which we pointed to, again, in the prepared remarks. I don't think we anticipate that changing. But that, you know, going forward, you'll see reflected in the specialty results. The other area in Canada, which is perhaps a little bit different than – Then the U.S. market is we have more heavy exposure to residential construction, particularly in Ontario, sort of the eastern provinces. And that part has been a little bit softer. So in terms of relative strength between the U.S. and Canada, I would anticipate the U.S. being a little bit stronger, a little bit overweighted on that 0% to 4% growth, partially offset by the Canadian business. And then I actually I heard you ask a question about used equipment sales, but I didn't fully hear it. Brendan's nodding at me that he did hear it, so I'll turn the last two questions over to him.

I think really from a – you'll see, of course, the guidance of proceeds of $475 million. And, you know, if you do the math, the math was a bit less. Gains year on year, which is a combination of quantum, but also really us just taking kind of the residual values, if you will, that we've been experiencing towards the back part of the year. We saw it come down over the course of the year. We've been experiencing some flattening in that as of recent months. And, you know, if history is a predictor of the future, that tends to normalize when you do kind of find that bottom point quickly. So that's what our position is. Obviously, as we go through the quarter, we'll update if that's any change. But that's not really the underlying business. Appreciate the fact that it impacts cost. Now, your point on cost around the U.K., you know, as you would have heard kind of throughout for Ford Auto, et cetera, you know, this business has improved remarkably in terms of the service we're giving to our customers and the operational capabilities. What Phil and the team are major focused on now, incumbent in Ford Auto, which in short is to achieve accessible levels of return and sustain them. And part of that challenge is just the cost base that goes along with this business, in particular G&A, and that is part and parcel of the plan that the team is employing. I'm sure that Alex and I would both agree that they have a good plan on the table for the year, and we'll see how that progresses. But, you know, in the end, that is a tax-share tip. And when we get that margin and to deploy that business. Perfect.

Thank you very much. Thanks, Carl.

Thank you. And that concludes today's Q&A session, so I'd like to hand the call back to the management team for any additional or closing remarks.

Thank you, everyone, for taking the time this morning and allowing us to go through our growth in the year, the real resilience that we have in this business, illustrating our advancement in all of our Sunbelt, Ford Auto, actionable components, and, of course, the cash. So thank you for your time, and we look forward to speaking with you at Q1.

This now concludes today's call. Thank you for joining. You may now disconnect your lines.