Hello, and welcome to the Ashtead Group plc Full Year and Q4 Results Analyst Call. I will shortly be handing you over to Brendan Horgan and Alex Pease, 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 Pease at Ashtead Group plc.

Thank you, operator, and good morning, all, and welcome to the Ashtead Group full year 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 Sunbelt 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 3. 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 3 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 of 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 week, throughout which every single branch, every day, the week of May 12, 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 4. We delivered strong performance in the year with…

Thanks, Brendan, and good morning, everyone. So before I get into the numbers, I thought it would be helpful to give you a brief update on the relisting project. As you know, we received strong support from our shareholders at last week's EGM with over 96% voting in favor of the resolutions. We're making good progress on the U.S. GAAP conversion and our 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 closures. The group operates under 2 primary geographic regions, reflecting its North American activities and assets and its U.K. activities and assets. The North American business is further split operationally as general tool and specialty reflecting the nature of its products and services and the management structure of the group. As such, the group has identified as reportable operating segments as the North America general tools, North America Specialty and the U.K. 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…

Thanks, Alex. I'll now move on to some operational detail, beginning with North America on Slide 22. The North American business delivered good rental-only revenue growth in the year of 4%. Specialty performed strongly with growth of 11% with general tool up 1%. 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 is part of Canada, respectively. So I'll say that again, oil and gas would have been part of the GT reporting previously, and film and TV, of course, would have just been captured in Canada as that was reported. Excluding this, North American Specialty grew 8% in Q4 and 12% for the full year. As expected, we continue to realize moderating local nonres construction market activity through the fourth quarter, and this is offset in part by the ongoing strength of the mega project landscape and the broader nonconstruction markets, both of which I'll further detail shortly. Importantly, run 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 end market. Consistent with our usual reporting of construction activity and forecast, the slide lays out the latest Dodge figures starts momentum and put in place. Outlook for construction group continues to be underpinned by mega projects and infrastructure work, which remains strong and in some cases, are gaining even further momentum. This…

[Operator Instructions] First, we have a question from Lush Mahendrarajah from JPMorgan.

I've got 3, I think, if that's okay. The first is just on sort of exit rates and current trading. I mean it would be good to get some color on May trading and what you're seeing there. I mean, looking at that chart on Slide 22, sort of shows fleet and rent pulling away from the sort of '23, '24 lines. Just be good to get an update on sort of what you're seeing there? So that's 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 local, mega projects, rates, et cetera, and sort of time utilization, I guess, as well? And 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 at 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 4 years. I mean when you look at those account wins, I mean, I presume they're mostly in sort of local, but it would be good to get some color there. I mean, how is that working? I mean the backdrop is tough. You're pushing rates and sort of still taking market share. I mean, can you just talk about some of the dynamics there and how you think you've been so successful in sort of continuing to drive market share?

Sure. Thanks, Lush. I'm going to do 1 and 3, and Alex will take 2. So simply put in terms of entry rate, May was plus 2% in North America on a billings per day basis. And you mentioned that graph on Slide 22, which you're right, shows that separation in terms of fleet on rent. We're certainly not here calling some change to that low gold nonres market. But nonetheless, we're pleased with that progress. And we'd like to post a couple more quarters of that as we move forward. But anyway, 2% on a billings per day basis. I'm glad you asked this question about market share. And 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 7. In Slide 7, we just demonstrate the real progress that we made -- we continue to make in terms of adding new customers. And let's just be clear. These are B2B accounts. These are businesses that before having an account with some rentals, they did 1 of 2 things. Mostly, they rented from someone else. And secondly, perhaps they would have owned equipment rather than rent equipment. But nonetheless, we added 42,000 new customers that generated over $400 million in revenue in the current fiscal year. And there's 118,000 customers that we added over the course of just 3 years, in 3 years, those added $1.4 billion, so for a combined $1.9 billion. When you start to think about the context to lean into your question there a bit when it comes to you suspect these are mostly local. Yes, of course, they are local. What happens is -- I mean, let's face it, we went through a period as a business…

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 of 2%. So again, a fairly modest amount of growth driven really predominantly by the specialty business. So if you want to weigh specialty business versus the general tool, you'd find specialty probably in the mid-single-digit range. And then GT still positive, probably in the lower end of the single-digit range. And then the U.K. 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 about a $40 million headwind year-over-year. So that obviously gives 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. So I think it's reasonable to expect the year to be more back half weighted than front half as you think about the timing. And obviously, as Brendan would have mentioned in his prepared remarks, we're yet to sort of call the sequential strengthening of the nonresidential local construction market, which would also sort of lead you to a more back half-weighted year. So in terms of the underlying assumptions and what might lead you to the lower versus the higher end of that range. Obviously, at the higher end of the range, we would anticipate an accelerated strengthening of that nonresidential construction and an increased utilization of our existing fleet. So just to dimensionalize that, 2% increase in utilization represents about $350 million of incremental revenue. So to the extent we're utilizing that latent capacity to drive growth, 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 2 things materialize, that would probably lead you more towards the lower end of that range. So hopefully, that helps give you some additional color.

And next, we have a question from Katie Fleischer from KeyBanc Capital Markets.

You mentioned some of the cost controls that were put in place this quarter that you executed well on that we're 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. 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 that required us to really add resource to do the coding and the development of that technology architecture. As we got through the back end of Sunbelt 3.0, 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. And that's where you really see the leverage come through and I'll let Brendan talk in more detail about that.

Well, 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 enter Sunbelt 4.0, we clearly outlined what those 3 steps were. Some of the G&A activity Alex mentioned is just what you would expect to go through a build period and then you prepare yourself for a run period. The overarching theme is this though -- from an SG&A standpoint. We have, in place, 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. We doubled the size of specialty over 3.0, and you put in place some infrastructure order to do that. And now that's in place and you move that forward. And then really these efficiencies, I would have mentioned in the prepared remarks, this delivery cost recovery and in those markets, reducing outside hauler by 40% in those 4. I appreciate that's a small segment of the total. But as an organization, when I mentioned $1 billion in North America, just to touch you over $1 billion in the denominator there, $250 million of that or so is wages for our skilled drivers we have that deliver great customer service. It's almost matched that in outside 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, a really good start as you'd expect year 1 in these sort of moderated growth arena that Alex would have outlined in terms of that range. It's a bit harder to come by. But nonetheless, we are confident about that progression as we move forward throughout 4.0.

And the other -- just the final point that I'd make, as Brendan again touched on in his prepared remarks, the progression of the locations that we added. So remember, we added 401 locations over the course of 3.0. For context, year 1 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, and there's still probably 200 or 300 basis points more upside as we scale those and we'll continue to invest to the tune of north of 60 locations in this year. So I think the continued progression of the greenfield businesses is another area where we drive significant margin potential.

Okay. Great. 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 gen rent and specialty? And is your M&A strategy going forward going to reflect that greater emphasis on the specialty business?

Yes. I mean it's likely. If you look at the 401 that Alex just referenced that we had talked about before on what you'll see highlighted there in Slide 43. That was, of course, bias to our specialty business over the course of that time. From an M&A standpoint, as you can imagine, we scour that and it's quite robust in the specialty landscape as well. Over the course of the last 4 years, if you think about it, we've more than doubled the specialty business while growing general tool nicely when you had a really strong end market. But as Alex will again guide you today, it's a bit more than 30% of total business, and we would expect that to continue to migrate. A lot of it really just depends on what the end market unfolds. As you see a return to that local nonres whenever that may be the case. Your GT business will grow a bit more in line with or maybe not lagging to the extent in which it does from the specialty business. So our thing is this, and it's important, even as Alex would have mentioned kind of the -- a 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, one would see it growing closer to 50% mark over quite some time, but much of that again has to do with what the end market deals does from a nonresi endpoint.

And from Morgan Stanley, we now have Annelies Vermeulen with our next question.

Brendan, Alex, I have 3 as well, please. So just coming back to market share gains, could you elaborate -- 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 benefited in that regard from some of the disruption at some of your competitors 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 mentioned previously valuations starting to normalize. So could we see more bolt-on activity this year, particularly in the context of that fairly buoyant free cash flow you expected to generate. And then lastly, just on the bigger 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, could you -- is there anything else we should consider if that bill does go ahead in terms of what it can mean for your numbers?

Annelies, short answer your first question is, yes, when it comes to market share, as I would have demonstrated looking at that cohort slide. Those -- 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 deciles of which we're very confident. I'm not going to comment on disruption or otherwise, I think that 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 Alex mentioned, the 60 that were opened over the course of last year. We have plans for similar location adds this year. Those are just our green fields, not to be confused with what would be. So our bolt-on M&A that we would do in large part would be incremental to those greenfields and as I've said, it is as busy a pipeline as we have seen. As you know, based on -- I'll say this gently, only completing 5 acquisitions over the last fiscal year, we have been 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 the 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 [indiscernible].

I'll take the bonus depreciation, and I'll give you some color on tax more broadly. So as you think about sort of the GAAP tax rate and 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 the big beautiful bill proposal where we reinstate the 100% depreciation, that will be worth of 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, as we thought about guidance, we thought about current tax regime, we didn't contemplate what may happen in the future. So that would be upside to the guidance that we provided.

Annelies, you also sort of alluded to what would the impact be on the broader economy. I'd say that may be a touch above our collective pay rates here. But worth mentioning related to the bonus depreciation, that also includes capital investment in manufacturing, production, so construction in other word -- in other words. And the other one, of course, from an overall consumer appetite, if there were the ability, and I'm either stating a pro or a con in this, but when it comes to taxes on -- over time, as for instance, that's quite a boost to the skilled trade across the land and obviously, as 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, Annelies?

That's very clear. Just 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?

Yes. I mean, look, just to point out, the 42,000 customers. Those are accounts that we have opened, we rented. Rest assured, there is a pipeline of accounts that has been opened that we haven't quite yet gotten to the rental point. Some of those happened yesterday that will rent next week, et cetera, but just do the math here. You had 118,000 over the course of 3 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, absent bolt on, 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 4 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 of rental with so many different customers out there. I mean, our room for opportunity to ongoing growth in customers is dynamic.

And we now move on to Will Kirkness from Bernstein.

I just had a couple of clarifications questions really. The first one, just looking at rental revenue growth in the fourth quarter, general tools was plus 1% from minus 1% in Q3. Just 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 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, there looks to have been a reallocation in central costs and also to U.K. profitability. I just wondered if you could explain that?

Let me start and then I'll have Brendan follow up. So on the rental revenue in Q4, the number that you would 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 that externally, so that would be within the U.S. reported segment. 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 U.K. business. Remember, the U.K. business largely has all of its own support costs, whereas within North America, a lot of that cost is held centrally within our support office. 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, what was your second question?

Through time utilization, as I would have [indiscernible]. Look, we feel good about our sort of reaching that inflection point in terms of year-on-year. So you've got a bit of late 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 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, what we've seen is a better balancing from a supply and demand standpoint, which will underpin that rate piece that I've talked about. But again, Will, just to reference on that Slide 22, I appreciate there's that one piece on GT. That has got oil and gas as the U.S. and Canada, but those are reflected across the 8 quarters as shown. And you're not going to have all that big of a difference between U.S. and Canada. Canada had some pockets of some real strength and then a bit of drag from a resi standpoint in Ontario, in particular. And then U.S. was -- broadly when you look at it kind of across territories, it looks a bit like that, the minus 1%, plus 1%.

We're now moving to a question from Arnaud Lehmann from Bank of America.

Firstly, just a clarification on Q4 rental revenue, the published is plus 1% and then on a billing day basis, plus 3%. Is this just a working day effect? Or is there anything else to mention the small discrepancy. Secondly, on your fiscal '26 CapEx guidance? Is it all replacement at this stage? Or is there any growth? I think at the midpoint, about $2 billion, is there any growth CapEx in there at this stage? Or it's just replacement? And lastly, I guess more broadly, your business model is working, there's less growth, less CapEx 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 CapEx 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.

Yes. I'll start with the last one there in terms of this [indiscernible] happy. Look, 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. We say sort of internally -- I've said to a number of people, I say record free cash flow. And 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, in fact, record free cash flow was, in fact, in fiscal year 2021, we generated $1.823 billion in free cash flow. And this year, we generated $1.790 billion 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 us pick it 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 invest less than $1 billion, whereas this year, we still put a hardy $2.5 billion 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 a $1.5 billion buyback. So not disappointed at all in the growth. That's just a matter of what happens from an end market standpoint. The key to it all, Alex…

And we're moving on to a question from Neil Tyler from Redburn Atlantic.

Two questions still, 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 -- it's price that's the sort of sticking point in terms of M&A. So I guess, theoretically, were the price to come down, would you be happy bringing acquired assets and branches into the business even if demand hadn't improved much. And would you, I suppose, mirror that, in that scenario, with a reduction in your own CapEx to try to drive up utilization, if 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 Dodge construction forecasts for the time being. Have your customers or conversations with your customers altered at all since the events of early April and the uncertainty that they've created. Brendan, perhaps you can sort of talk about anything that you want to -- in terms of how the conversations might have altered against that context.

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 is 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 about to do with just demand in general. But outside of that, when you look at data centers, I can take data centers 3x 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 expanding. So their outlook is actually 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 too. In terms of capital allocation, the scenario you painted was it more of 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 on that, most of these that we would do, you have this interplay between are you adding fleet to a marketplace which is 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…

And from Barclays, we now have James Rose with our next question.

I've got 2, please. The first is on general tool margins versus specialty margins and the EBITDA gap between them is about 6 points at the moment, 54% to 48%. Is that a sensible gap we should expect in the longer term? Or how would you characterize? Is there more upside in general versus specialty for the longer term? And then second, if we look at the ROI for specialty which is 30%, is that a level which you think could be sustained all throughout 4.0? Is that a sensible sort of incremental ROI we can think about for specialty?

Yes. 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 -- it's going to be less capital intensive and, therefore, smaller D. So fundamentally, you have a specialty business that will generally have a lower EBITDA margin than you will do with general tool. But then when you get to EBIT or operating profit, you'll have a higher margin relative to general tool and from an ROI standpoint, of course, a lower capital-intensive business that is going to lead to fundamentally a higher ROI at the levels which we have. I wouldn't -- I mean I would -- certainly, from an ROI standpoint, maintaining that over the course of 4.0, there's no reason why one of the things you'll see in the future of our CapEx as we go forward. When you think about mix, there are so many product assets within specialty, in particular, that just have a longer useful life than does gen rent. Take, for instance, 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, this year, we had a strongest of 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 have 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 and specialty still posted those really strong results despite that headwind, which actually carry on a bit into the now new current year. Does that -- was that -- did I get both of your questions there, James?

Yes.

And we're moving on to a question from Allen Wells from Jefferies.

A few for me, please. You obviously talked a lot about the optimistic outlook for mega projects. Could you maybe just remind us what the rough portion of your North American business is now exposed to these types of projects and how that's maybe trended 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%. That's obviously still slowed a little bit during the year and it's running slightly below that of your largest peer, which I think is closer to 15%. Can you maybe talk a little bit about some of the color around the slowdown, 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 for 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 FY '26. 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.

Well, I'll take them in order 1, 2 there and maybe Alex will touch on 3 around rate. Mega mix, first of all, let's go to 30,000 feet. Half of our business is non construction, half our business is construction. In recent years, from a start, not a put in place, you've had about 30% of starts that would have met our definition of mega projects. That would be $400 million and above. Everyone has kind of got a different measure as related to that, even from an analyst's standpoint, but nonetheless, that's what ours is. That's not yet making up 30% of the put in place by the very nature that we've talked about in terms of time, in terms of ramp. And as we've said, we will enjoy at least 2x our shares. So I think those give you the component parts to sort of build to that mega project. But overall, you're talking kind of still single digits but approaching high single digits of the overall revenue, but we would expect that to climb as this more progressive starts and you get some more crust 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 were all differences based on what is happening from an end market standpoint. We have designed our specialty business and our specialty business segments. 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, as 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 lumpier business when you have big projects, you're going to have businesses like our temporary structures where you have got some minor camps that come down, where 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 will spend much more time measuring that up against what someone else might quote is, as their version of specialty, it's all demonstrating specialties ability to continue to grow.

Yes. So I'll touch on the rate expectations. Obviously, we don't talk specifically about rate other than to say that we do. We have seen it continue to progress, and we anticipate seeing it continue to progress. And that's driven by a couple of things. Obviously, Brendan refers frequently into 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 healthy balance sheets that allow us to do things that maybe we hadn't been able to 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 and utilizing latent capacity, don't confuse that with diminishing the 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. So when you think about competing with a smaller, local providers, they just can't provide the breadth of products and services that we can provide. And so we're able to extract value because of that. Third, the customer service. 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, if an asset breaks down. 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 and that we can provide. And so yes, we continue to expect rates to progress based on all those things that I've described.

And our final question for today comes from Carl Raynsford from Berenberg.

Just 3 for me, which are clarifications, really. But the first on your growth guidance of 0% to 4%. I appreciate that you've adapted the reporting segment. But is there any way you could give some color on how the U.S., Canada and U.K. fit into that equation, please? The second [indiscernible] depend 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 as the proxy, but roughly flat to very slightly down in the U.K. Whether 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 drive efficiencies like you had in the U.S.?

Yes. 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 0% to 4% 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, we think about those as the North American market, and so there's a lot of synergy across the 2 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 -- going forward, you'll see reflected in the specialty results. The other area in Canada where -- which is perhaps a little bit different than the U.S. market as 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 didn't -- I heard you ask the question about used equipment sales, but I didn't fully hear it. Brendan is nodding at me that he did hear it, so I'll turn the last 2 questions over to him.

Yes. I think really from a -- you'll see and, of course, the guidance of proceeds of $475 million. And if you do the math on that, we have 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 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 quarters, we'll update if there's any change. But that's not really the underlying business. I appreciate the fact that it impacts cost. Your point on costs around the U.K., as you would have heard kind of throughout 4.0, et cetera, 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 laser-focused on now incumbent in 4.0, which, in short, is to achieve acceptable levels of returns 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 of 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 in the end, that is a business that is cash generative. And when we get that margin and by extension, return level to where it need be. Part of that will indeed be cost and just the reconfiguring of how we deploy that.

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.

Yes. 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 our Sunbelt 4.0 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.