United Rentals Q3 Earnings Call Highlights

Key Points

• Record Q3 performance: United Rentals’ revenue rose 16% year over year to $4.9 billion, while rental revenue increased 18% to $4.3 billion. Adjusted EBITDA climbed 21% to $2.3 billion, and adjusted EPS rose 33% to $15.55.
• Growth driven by major projects and specialty rentals: Demand remained strong across construction, infrastructure, energy, manufacturing and data centers, while specialty rental revenue grew 35%. The company added 12 specialty locations during the quarter, bringing its year-to-date total to 40.
• Full-year outlook raised: United Rentals now expects 2026 revenue of $18.0 billion to $18.2 billion and adjusted EBITDA of $8.3 billion to $8.4 billion. It reaffirmed free cash flow guidance of $2.15 billion to $2.45 billion and expects to return roughly $2 billion to shareholders through buybacks and dividends.

United Rentals NYSE: URI reported record third-quarter results and raised its full-year outlook, citing sustained demand from large projects across construction, infrastructure, energy, manufacturing and data-center-related end markets.

Total revenue rose 16% year over year to $4.9 billion during the third quarter, while rental revenue increased 18% to a record $4.3 billion, President and Chief Executive Officer Matt Flannery said. Adjusted EBITDA reached a record $2.3 billion, with the adjusted EBITDA margin expanding 160 basis points from a year earlier to 47.6%. Adjusted earnings per share increased 33% to a record $15.55.

“Large projects across a variety of end markets are driving our growth, and we expect this momentum will carry for the remainder of this year and into next year,” Flannery said.

Rental Demand and Specialty Growth

Rental revenue growth was supported by a 12.9% increase in owned equipment rental revenue, or OER. Chief Financial Officer Ted Grace said OER growth reflected a 7.9% increase in average fleet size and fleet productivity of 6.5%, partly offset by assumed fleet inflation of 1.5%.

Flannery said fleet productivity benefited from rate, time utilization and mix. He added that pricing has continued to increase and should remain important as the company works to recover inflation-related costs. United Rentals manages pricing throughout the year rather than relying on a single renewal period, he said.

Specialty rental revenue grew 35% from the prior-year quarter. The company opened 12 specialty locations, or “cold starts,” during the period, bringing its year-to-date total to 40. Flannery said every specialty business line delivered double-digit growth in the quarter.

Construction activity increased in non-residential and infrastructure markets, while industrial activity was supported by double-digit growth in power, metals and minerals, according to management. The company said it began projects during the quarter in energy, manufacturing, infrastructure and data-center-related markets.

Executives characterized local markets as stable, with Flannery saying they contributed “a couple of points of growth” in the quarter. However, he said large projects and larger customers remained the primary growth drivers. Management did not offer a forecast for when local markets could accelerate as interest rates decline, saying it would rely on feedback from its local operating teams during its planning process.

Margins, Costs and Fleet Investment

Grace said adjusted EBITDA increased by $385 million from a year earlier, driven primarily by a $417 million gain in rental gross profit. Used-equipment gross profit increased by $8 million, while gross profit from other business lines added $14 million. SG&A expense rose $54 million, but declined 20 basis points as a percentage of revenue.

The company said cost discipline helped it offset inflationary pressures and the lower-margin mix associated with ancillary and re-rent revenue. Ancillary and re-rent revenue grew more than 37% during the quarter, outpacing OER growth.

Management attributed improved operating efficiency to labor absorption, maintenance and repair productivity, and delivery-cost controls. Grace said restructuring actions announced earlier in the year performed in line with expectations, but were not a major contributor to the year-over-year margin improvement.

United Rentals increased gross rental capital expenditures by $1.8 billion in the third quarter, bringing year-to-date spending to $4.7 billion. Flannery said the investments respond to current demand and high time utilization, while the company’s expectation for growth in 2027 also supports the decision to add fleet.

Specialty operations receive a disproportionately large share of growth capital expenditures because of cold starts and their higher growth rate, Flannery said. Within general rentals, capital spending has been spread broadly across the company’s equipment categories to serve major projects.

Management said re-rent activity primarily reflects strong demand and high utilization, although it can also help meet customer needs when equipment is unavailable locally or is needed for a short period. Grace said equipment added through capital expenditures could shift some revenue from re-rent toward OER over time.

Used Equipment, Cash Flow and Capital Allocation

The company sold $677 million of original equipment cost, or OEC, during the quarter, generating $348 million of proceeds. The adjusted margin was 46.3%, and the recovery rate was 51.4%. United Rentals expects to sell about $2.8 billion of OEC for the full year at a recovery rate in the low-50% range.

Grace said the used-equipment market has normalized and remains supported by deep demand. He characterized current used-equipment margins as normalized and said the company was not expecting significant variability.

Year-to-date free cash flow exceeded $1.4 billion, while return on invested capital increased 30 basis points year over year to 12.3%. Net leverage was 1.8 times at the end of September, within the company’s target range of 1.5 times to 2.5 times, and total liquidity exceeded $2.6 billion.

United Rentals returned about $1.5 billion to shareholders through the third quarter, including $1.125 billion in repurchases and $371 million in dividends. The company still plans to repurchase $1.5 billion of stock during 2026. Combined with dividends, it expects to return roughly $2 billion to shareholders for the year.

The company also noted that S&P upgraded its credit rating to investment grade earlier in the month. Grace said the designation should provide lower borrowing spreads over time as United Rentals refinances or issues debt, but does not alter its capital-allocation framework of funding organic growth, pursuing acquisitions and returning excess capital to shareholders.

Raised 2026 Outlook

United Rentals raised its full-year total revenue outlook to a range of $18.0 billion to $18.2 billion, up $450 million at the midpoint from prior guidance. Adjusted EBITDA guidance increased by $300 million to $8.3 billion to $8.4 billion.

• Gross rental capital expenditures are now expected to be $5.2 billion to $5.5 billion.
• Net capital expenditures are projected at $3.75 billion to $4.05 billion.
• Free cash flow guidance was reaffirmed at $2.15 billion to $2.45 billion.
• Used sales are expected to total about $1.45 billion.

At the midpoint, the updated revenue outlook implies total revenue growth excluding used sales of more than 13%, compared with the company’s initial expectation of roughly 6% growth. Grace said the EBITDA forecast also implies approximately 70 basis points of full-year margin improvement after adjusting for the prior-year H&E termination fee and the current-year gain from the sale of the company’s scaffolding business.

Looking toward 2027, management said it remains encouraged by customer sentiment, diversified end-market exposure and demand for large projects. Flannery said the company is more bullish on the longer-term outlook than it was six to 12 months ago, while acknowledging that some areas, including residential construction and downstream oil and gas activity, remain softer.

About United Rentals (NYSE:URI)

United Rentals, Inc is an equipment rental company serving construction, industrial, infrastructure, utilities, government and other commercial customers. The company provides access to equipment and related services through a network of rental locations, helping customers manage projects without purchasing and maintaining all of the equipment they need.

Its rental fleet includes aerial work platforms, earthmoving equipment, material-handling equipment, general construction tools, trucks and trailers, and light-duty equipment.

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