With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are advertising, diversified outsourcing services, and financial data services.

Fortune Sector Leaders: Business Services

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-352-United Rentals

The world's largest equipment rental company boasts a fleet of around 665,000 construction and industrial units.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-340-United-Rentals

The Connecticut-based company provides rental equipment to construction and industrial sites in the U.S. and Canada.

Collectively, the ranked companies produced a three-year average shareholder return of 19%, vs. 11% for the S&P 500.

Fastest Growing Companies 2020 88. United Rentals

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This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

This year's Fastest-Growing Companies marks the 19th running of the list. In our annual list of public companies with the most stellar three-year profit, revenue, and stock growth, Facebook makes its first appearance.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Shale rules! That’s the lesson of the latest edition of our annual list of public companies with the most stellar three-year profit, revenue, and stock growth. 

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United Rentals is the largest equipment rental company in the world. It supplies rentals of over 4,700 different classes of equipment to construction companies, manufacturers, municipalities, homeowners, and government entities. The company offers a wide range of equipment from backhoes, forklifts, and power tools to pressure washers, air conditioners, and surface protection mats. Founded in 1997, the company operates in the United States, Canada, Europe, Australia, and New Zealand.

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United Rentals (URI): Company Profile, Stock Price, News, Rankings

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United Rentals

united rentals

Good morning, and welcome to the United Rentals Investor Conference Call. Please be advised this call is being recorded. Before we begin, please note that the company's press release, comments made on today's call and responses to your questions contain forward looking statements. The company's business and operations are subject variety of risks and uncertainties, many of which are beyond its control, and consequently, actual results may differ materially from those projected. A summary of these uncertainties is included in the safe harbor statement contained in the company's press release.

For a more complete description of these and other possible risks, please refer to the company's annual report on Form 10 ks for the year ended 12/31/2024, as well as to subsequent filings with the SEC. You can access these filings on the company's website at www.unitedrentals.com. Please note that United Rentals has no obligation and makes no commitment to update or publicly release any revisions to forward looking statements in order to reflect new information or subsequent events, circumstances, or changes in expectations. You should also note that the company's press release and today's call include references to non GAAP terms such as free cash flow, adjusted EPS, EBITDA and adjusted EBITDA. Please refer to the back of the company's recent investor presentation to see the reconciliation from each non GAAP financial measure to the most comparable GAAP financial measure.

Speaking today for United Rentals is Matt Flannery, President and Chief Executive Officer and Ted Grace, Chief Financial Officer. I will now turn the call over to Mr. Flannery. Mr. Flannery, you may begin.

Thank Thank you, operator, and good morning, everyone. Thanks for joining our call. Yesterday afternoon, we were pleased to report solid second quarter results, which reflected a continuation of the momentum we reported last quarter. More importantly, our updated guidance speaks to the confidence both we and our customers have in the remainder of the year. Critical to the success is our team of over 27,000 individuals who focus on being the partner of choice for our customers and live our One UR culture every day.

This includes putting safety at the forefront of everything we do to enable us to deliver a superior value proposition and ultimately, the results our shareholders have come to expect. In the second quarter specifically, we again saw growth across both our industrial and construction end markets, healthy demand for used equipment and ongoing optimism from the field, which is reinforced by our Customer Confidence Index. So having said all this, today I'll review our second quarter results and touch on our updated 2025 guidance. Then I'll discuss a recent win, which illustrates our strategy in the utility vertical, followed by a look into how our best in class telematics is helping our customers improve their own productivity. Afterwards, Ted will review the financials in detail before we open up the call to Q and A.

So with that, let's start with the second quarter results. Our total rental revenue grew by 4.5% year over year to $3,900,000,000 and within this, rental revenue grew by 6.2 to $3,400,000,000 both second quarter records. Fleet productivity increased by 3.3% supported by disciplined execution. Adjusted EBITDA increased to a second quarter record of $1,800,000,000 translating to a margin of nearly 46%. And finally, adjusted EPS came in at $10.47 Now let's turn to customer activity.

We continue to see growth in both our GenRent and Specialty businesses. Specialty rental revenue grew 14% year over year, while opening 21 cold starts in the second quarter. We remain on track to open at least 50 this year. By vertical, our construction end market saw impressive growth across both infrastructure and non residential construction, while our industrial end market saw particular strength within power, metals and minerals and chemical process. We continue to see new projects kicking off with a few recent examples, including data centers, hospitals, and airports.

Now turning to the used market, we sold $600,000,000 of OEC in line with our expectations. The demand for used equipment remains healthy and we're on track to sell approximately $2,800,000,000 of fleet this year. In response to the continued customer demand I discussed earlier, we spent nearly $1,600,000,000 on rental CapEx in the quarter, also in line with our expectations. Specialty and large projects continue to fuel growth, and we feel that we're well positioned to serve these based on our go to market approach and our one stop shop value proposition. Subsequently, year to date, we've generated free cash flow of $1,200,000,000 with the expectation to now generate between $2,400,000,000 and $2,600,000,000 for the full year, which includes the benefit from the recent changes in federal tax policy.

Our ability to generate free cash flow remains a distinguishing feature of the company. As you've heard me say repeatedly, the combination of our industry leading profitability, capital efficiency and the flexibility of our business model enables us to generate meaningful free cash flow throughout the cycle and in turn allocate that capital in ways that allow us to create long term shareholder value. In regards to capital allocation, our balance sheet is in excellent shape. This quarter, after funding organic growth, we returned $534,000,000 to shareholders through a combination of share buybacks and our dividend. And for the full year, we now expect to return nearly $2,400,000,000 to shareholders and Ted will get into more details in a bit.

Our leverage of 1.8 times remains towards the lower end of our targeted range, leaving plenty of dry powder to support growth and return excess capital to our shareholders. And M and A remains a core element of our strategy with the team focused on finding opportunities to put capital to work at attractive returns. Now let's turn to the rest of 2025. As evidenced by our updated guidance, our expectations for the year at the midpoint are total revenue growth of 4% or 5% ex use with EBITDA margins north of 46%. Our CapEx expectations are unchanged, while we do expect higher free cash flow as I discussed earlier.

Looking beyond 2025, we continue to focus on driving profitable growth. Key to this is partnering with our customers, so we're able to meet their demands and improve their own productivity. Through our one stop shop offering, supported by unmatched technological capabilities, we're able to serve our customers and drive repeat business. The rental business is very much based on trust and we're diligent in our approach to building this by delivering on our commitments. Our value proposition to the customer goes beyond just equipment.

We have a large and reliable fleet, enabled with technology to further customer productivity, all of which is supported by the best team in the industry. One of the vertical strategies we focus on since 2016 is utilities. The acquisition of Yak last year was the perfect opportunity to marry this strategy with an additional product. Case in point, the utility vertical is now north of 10% of our revenue versus 4% fewer than ten years ago. Just recently, a large utility customer awarded us a five year agreement because we took the time to work with operators across their business, functioning like we were part of their company.

We offered a wide range of solutions the customer needed and through the power of cross sell, now rent them products across every specialty business we have. Furthermore, they're now asking how else can we partner together, which is exactly where you want to be as a value added service provider. On the technology front, this year we continue to enhance our advanced telematics offering, which helps customers operate even more efficiently. By utilizing the unique functionality of our telematics and total control software, customers can realize meaningful savings across all their fleet needs. With complete visibility to their rental fleet and aggregated information across multiple projects, optimizing consumption and productivity becomes a reality.

Our capabilities also help customers reduce unauthorized equipment use and subsequent fuel consumption and overage fees. Instances such as these, where we help boost productivity and budget efficiency, make us a better partner to our customers and enable repeat business. And while these are just a few examples of the things we're doing to be the partners of choice for our customers, I think they provide concrete examples of how our strategy is allowing us to win. In closing, the year continues to play out as expected with our team doing an outstanding job supporting customers to drive profitable growth. Our business model, strategy, competitive advantages and capital discipline will allow us to generate compelling returns for shareholders in the long term.

And with that, I'll hand the call over to Ted, and then we'll take your questions. Ted, over to you. Thanks,

Matt, and good morning, everyone. As Matt just shared 2025 continues to progress as expected with second quarter records across total revenue, rental revenue and EBITDA. Looking ahead, our updated guidance reflects the demand we see across our end markets supported by our differentiated strategy and strong execution. So with that said, let's jump into the numbers. Rental revenue increased $200,000,000,000 year over year or 6.2% to a second quarter record of over $3,400,000,000 supported again by growth from large projects and key verticals.

Within this OER increased by $141,000,000 or 5.4% driven by 3.6% growth in our average fleet size and fleet productivity of 3.3% partially offset by assumed fleet inflation of one and a half percent. Also within rental ancillary and re rent grew by roughly 10% year on year adding a combined $59,000,000 of revenue. Similar to Q1, ancillary growth continues to outpace OER by healthy margin, driven largely by specialty where value added services are a key element of our strategy to be the partner of choice for our customers. Turning to our used results, we generated $317,000,000 of proceeds at an adjusted margin of 48.3% and a 53% recovery rate, both of which reflect sequential improvements. Underpinning these results, we sold $600,000,000 of OEC in the quarter, which is essentially flat year on year.

Moving to EBITDA, as I mentioned, adjusted EBITDA was a second quarter record at $1,810,000,000 translating to an increase of $41,000,000. Within this rental gross profit contributed $86,000,000. This was partially offset by used where the normalization of the used market drove the majority of the $36,000,000 decline in used gross profit dollars. SG and A increased $18,000,000 year over year, but was flat as a percent of sales at 10.7%. And finally, the EBITDA contribution from other non rental lines of businesses increased $9,000,000.

Looking at profitability, our second quarter adjusted EBITDA margin was 45.9% implying 100 basis points of compression, including the impact of normalizing used margins. Excluding the impact of used, our second quarter margin compression was a bit better at 70 basis points. With the usual caveat that year over year quarterly comparisons are always going to be subject to normal variability. In general, we continue to see the same margin dynamics that we discussed in April. The biggest of these includes the relative outgrowth of lower margin ancillary revenue versus core rental growth, which obviously has a dilutive impact on our rental margins as we've discussed the last several quarters.

Our second quarter profitability was also impacted by higher delivery costs driven largely by strong growth in our matting business and the ongoing fleet repositioning tied to the increased dispersion of growth across our footprint. Finally, and more generally, it remains a relatively inflationary environment while we continue to make important investments in areas like specialty cold starts and technology. And while these decisions do drag on margins, we view them as smart choices that both support future growth and provide attractive returns. The last thing I'll mention on the P and L side of things is our adjusted earnings per share of $10.47 Shifting to CapEx, second quarter gross rental CapEx was $1,570,000,000 consistent with normal seasonality. Moving to returns and free cash flow, our return on invested capital 12.4% remained well above our weighted average cost of capital, while year to date free cash flow of $1,200,000,000 keeps us on track to hit our full year target.

Our balance sheet remains very strong with net leverage of 1.8 times at the June and total liquidity of $3,000,000,000 I'll note this was after returning $9.00 $2,000,000 to shareholders year to date, including $235,000,000 via dividends and $667,000,000 through share repurchases. As you saw in our press release supported by the strength of our underlying business and the benefits from recent tax reform, we have increased our plan share repurchases for the year by $400,000,000 to $1,900,000,000 This represents roughly 3.8% of our current market capitalization. In total, between dividends and share repurchases, we now intend to return almost 2,400,000,000 in cash to shareholders in 2025 equating to close to $37 per share or a return of capital yield of about 4.7%. Now, let's shift to the updated guidance we shared last night, which reflects our confidence in delivering another year of solid results. As previously mentioned, we are raising the midpoints of guidance for total revenue, adjusted EBITDA and free cash flow while narrowing the ranges for both revenue and EBITDA as we normally do at this point of the year.

In terms of specifics, for total revenue, we're increasing the midpoint by $100,000,000 while narrowing the range to $15,800,000,000 to $16,100,000,000 implying full year growth of roughly 4% at midpoint. Within this, I'll note that our used sales guidance is unchanged at 1,450,000,000 on approximately $2,800,000,000 of OEC sold implying total revenue growth ex used of about 5%. Importantly, the increase to total revenue guidance is primarily due to stronger growth from lower margin ancillary with our underlying expectations largely unchanged as years continue to play out as expected. On adjusted EBITDA, we increased the midpoint by $50,000,000 while narrowing the range to $7,300,000,000 to $7,450,000,000 Notably, this primarily reflects the net impact of the H and E termination benefit. As was the case of revenue, our underlying expectation for EBITDA is largely unchanged as again, the year has continued to play out as expected.

On the CapEx side, no changes with the year still expected in the range of 3.65 to $3,950,000,000. And finally, we are raising our free cash flow guidance by $400,000,000 to 2,400,000,000.0 to $2,600,000,000 translating to a free cash flow margin of 15.7% at the midpoint of updated guidance. The increase in free cash flow primarily reflects the benefits of recently enacted tax reform, which reinstated full expensing of CapEx and thus will reduce our cash taxes as was the case with both revenue and EBITDA, our core expectations for free cash flow are largely unchanged. So to wrap up my prepared remarks, overall another solid quarter with and I promise this is the last time I'll say it before Q and A, the year playing out in line with our expectations. So with that, let me turn the call over to the operator for Q and A. Operator, please open the

We'll take our first question from David Raso with Evercore ISI. Please go ahead. Your line is open.

Hi, thank you for the time. I mean, it appears that the time utilization year to date is probably a little better than you'd say was feared six months ago. But the kind of capturing of inflation, the price cost as well as the ancillary mix is sort of maybe a little disappointing on the drop through on the margins. Can you help us how you're thinking about price cost for the second half of the year? Any actions you're taking on the cost side, some of the moving equipment between branches, how to maybe minimize those costs and how you think about ancillary growth versus the growth in owned equipment fleet in the second half versus as you mentioned, right, the first half ancillary has grown a lot faster than the OER fleet?

And then I have a quick longer term question after that. Thank you.

Sure, David, this is Matt. I'll the latter part of that question, right, and talk about the ancillary. So when you think about everything that's in ancillaries, whether that's fuel, whether that's setup and breakdown of engineered solutions, anything from power solutions to job trailers and mobile storage. Right? Those those would all fall in the ancillary bucket.

The one that we're pointing to as outsized, for lack of a better word, is a delivery, which is also an ancillary. And when you think about the first half of the year, one of the big movers there is the acquisition that we lapped in March. That business comes with a lot of ancillary and specifically a lot of delivery costs. And that's really a pass through. So when we think about that impact, not just on the top line revenue, but also why you don't get a lot of margin for it, it's because it's not the way it's not intended for that.

So it's something we're going to do for our customers and we continue to do. But you saw a deceleration of that from Q1 to Q2 as we lapped Yak. And we expect as that becomes less prevalent that we won't have that same level of impact and drag of ancillary in the back half of the year. That's in our expectation. And then we'll update you guys how that's come along in October. As far as price cost, I'll let Ted take that.

Yes. Thanks, David. So I'd say overall, we've been pleased with how both price, which is French for rate has played out and costs, in line with expectations. We continue to see very good discipline across the market.

So that's one of the things that's critical. When you think about kind of how costs have played out, again, in line with expectations, there are a couple of things that go into this. Matt touched on the ancillary and certainly that's something we've talked about the last few quarters. That is dilutive to the margin that you see. That kind of is what it is from the standpoint of taking care of our customers and it doesn't cost us dollars, right?

It's a pass through in many regards, but you do see that manifest in both margins and flow through. Beyond that, the one cost that we have called out more discreetly consistently has been delivery. And I'd say within that, again, gets to ancillary. The other part has been that repositioning of fleet. In the quarter, we think that was probably another $15,000,000 of moving fleet across our network to ensure high time utilization and efficient capital utilization.

That to us is smart spending, but it does obviously kind of provide something like $15,000,000 of drag on EBITDA. Beyond that, really we continue to be in a pretty inflationary environment. We've talked about that. We're managing through that really well. And we've talked about the investments we continue to make that we think are smart investments that we don't want to forego simply for the sake of chasing some arbitrary margin.

And I'm not suggesting that you're saying we should do that, but that's why we've gone as far as calling these out and helping people understand what's going on. So we do think we're managing price cost very effectively as we continue to manage both through those cost dynamics I talked about and the investments we continue to make and we can dig into any of that if you want.

It sounds like the second half of the year, the reason the year over year incrementals ex used are going to improve is more that ancillary growth getting more in line with owned fleet, not necessarily a better price cost. Is that a fair comment? So I was just fishing if there was any maybe less equipment being moved second half versus the first half, whatever maybe, I was just curious on that price cost dynamic. It sounds like it's more ancillary back in line is really why

Yes, that's fair. That's fair. That will be the biggest mover. But I mean, we'll never stop going after the cost and the price cost balance. That's what we do every day. But that's a fair characterization.

I would agree. I mean, we've talked about that increased dispersion of growth and that's really what's driving the repositioning of fleet. We do expect that to continue. And frankly, was a normal dynamic prior to that kind of really high growth period where it was so broad based that we didn't have to kind of move fleet. But just to kind of help with the numbers, if you think about, call it roughly $100,000,000 of higher ancillary in the first half than OER might have otherwise suggested.

People just want to play with sensitivity, start applying a margin to that and back it out and that'll give you a sense for how that margin performed ex ancillary, right? And so we've talked about ancillary being maybe on the order of 20% contribution margin. It does depend what that composition looks like. Delivery frankly is going to be at the lower end of that because that's really a pass through as Matt I think mentioned. So at least that'll allow people to start playing with sensitivities to understand how two half versus one half we expect to play out.

Yes, I guess at 17%, 18% of rental revenue, ancillary is large enough. I just wasn't sure if maybe there's a way to start pricing for that better, right? It's a service, I know it's stickiness for the customer, but I was just wondering if you saw it as now core enough to the business, do we try to get paid for it a little bit more? I mean, that's sort of what I was fishing for on the But no, I appreciate the growth rates getting closer to each other is going to be a help on the year over year drag.

And then last real quick, the comment about 26 profitable growth, given your mix today is a little more toward larger projects than say in the past years, How would you describe your visibility on 26 versus say this time last year looking at 25? And I'm not looking for a big macro view on interest rates or tariffs, just kind of broadly, truly what do you have in conversations with customers, you know, maybe even things already booked for spring delivery of '26 versus the visibility you had this time last year? Thank you. That's it for me. Sure,

Dave. I would just say outside of large projects, right, the bigger the project, the more planning takes place. Outside of those large projects, we don't have any comments on visibility to '26. But that being said, we do expect the tailwinds that we've been talking about, whether that's the mega projects, whether that's power, whether that's infrastructure, continue to be tailwinds. And then we'll update as we get through our planning process in the fourth quarter and update you guys on that. Thanks.

We'll take our next question from Michael Feniger with Bank of America. Please go ahead. Your line is open.

Good morning, thanks for taking my questions. Ted, you raised the free cash flow outlook. I understand it's the big beautiful bill act. You're targeting now to deliver a record free cash flow level of $2,500,000,000 Two to three years ago, we were kind of discussing that $2,000,000,000 was the baseline free cash flow of the business. Is 2,500,000,000.0 now your new baseline free cash flow going forward?

And what are you think the moving pieces that we should think about for free cash flow growth in 2026? I'm thinking of fleet age on CapEx, disposal of used, maybe even shifts within that CapEx as specialty continues to grow. Just what are some of the moving pieces there if this is our new baseline free cash flow going forward?

Yes. So you're right, Mike. We did talk about $2,000,000,000 as kind of a normalized free cash flow number. And this is additive, at least in the foreseeable future based on what we've got from this new tax bill. So I do think it's fair, all else equal, that you can kind of tack it on and assume that that number has gone up on the order of $400,000,000 The benefit obviously is immediately accrues to cash flow from operations.

And the reason I bring that up is that net free cash flow was obviously dependent on a lot of factors. So it is inherently assumptive. So if and as you see ebbs and flows in CapEx based on different growth rates we assume, that would be something you'd have to think about. But I'd say as it relates to kind of a normalized expectation, calling it 2.4, something like that is not unreasonable.

Yes. I think I captured it right. Would be with similar levels of growth CapEx. The more organic growth you're going to achieve, obviously, you're to spend more on CapEx that will have some impact on the cash flow, but it certainly would be a good business decision.

Fair enough. And Matt, just with these data centers that we keep seeing in the headlines and CapEx on the AI side, that should be breaking ground in next few years. I believe 40% of your rental budget there is specialty. Just as we see this theme continue to evolve this year, next year, just how does this drive your mix going forward? How does this drive your mix when you think of your business in terms of and your CapEx spend, how those budgets work?

And when you talk about the power vertical specifically, is that are you seeing a tighter market there? Is that better condition for rate? And is that where incremental dollars have to go? Thank you.

So as we've talked to you guys about for a while, we continue to invest in specialty at a faster pace of growth CapEx in the overall business for a couple of reasons. They have white space and then specifically in these major projects and cold starts as well. And in these major projects, the more complex project, the more opportunity we have to cross sell. So it certainly is a bigger opportunity than in the general market on these major projects and with these major customers. That's why it's a big part of our go to market strategy.

Outside of that, I wouldn't call out any uniqueness to the data centers versus other projects. It is a big chunk of work right now and one that we feel really good about, both currently and forward looking. But I wouldn't say there's going to be any change. And as far as for the CapEx and any change of the spend, because we do believe we have white space and strong growth opportunity for specialty, both existing and maybe getting to find new products as well, we will continue we expect to continue to outpace our CapEx. Outside of that, I wouldn't call it anything specific for data centers.

And we'll take our next question from Angel Castillo with Morgan Stanley. Please go ahead. Your line is open.

Hi. Good morning. Thanks for taking my question. Just wanted to ask just on the on the conversation of the one big beautiful bill. Curious understand what the implications are for your cash flow.

But are you hearing as you have your kind of customer confidence index in conversations, are you seeing any step change or difference in behavior of kind of projects, how quickly they might be moving forward or kind of the appetite to move forward with things on kind of CapEx projects given OPPB reform?

Yes, I'll take that one. I guess what I'd say is we always caution people from confusing correlation and causation, but certainly we've seen our customer confidence feedback stay at high levels and probably get fractionally better versus where we would have been in April. And that certainly that trend has continued since early July. So we feel really good about it. Our customers obviously feel very good about their own prospects.

And in terms of what that translates to, time will tell. But all else equal, you would say that some of these tax policies obviously should be advantageous to project economics.

Understood. And then maybe a little bit of a bigger or longer timeframe type of question. In your slides, you have the rent versus buy kind of benefits to your customers and you show how kind of rental market has kind of steadily exceeded the non resi market and essentially kind of gaining share here of the customer's wallet. But some of the data, I guess, the slides only go through 2022. So just given a lot of the kind of big changes we've seen due to inflation or the varying challenges around macro geopolitics and that project space today as well as the benefits we just talked about with OVBB or even your telematics kind of benefits that you now provide the customer.

Can you talk about what you're seeing on the ground today in terms of rental equipment penetration of the market in equipment? And just kind of any anecdotal or data evidence as to how is that trending? Is it accelerating in terms of the customer's appetite to buy versus rent? Particularly thinking about specialty and the heavier kind of construction equipment outside of areas. So anything you can share there?

Yes, I'll start and then Matt can kind of jump in after. But so just speak to speak specifically to that chart, the American Rental Association restated the market. And so the reason we cut that off at 2022 is you could no longer have an apples to apples comparison and I hope that's footnoted, it was previously. To the core of your question, however, we do absolutely think penetration continues to improve and we think there's a lot of runway there. That to us is very clear.

I think for a lot of reasons, which we've talked about and we can get into specifics, it's just so much more appealing at so many levels for the vast majority of customers to rent over own. And as we just do more and more for them and consolidate kind of that one stop shopping value proposition and deliver for them every day, we're just going to continue to be a better partner. And I think that's going to continue to drive that secular penetration in the outgrowth.

And Angle, I would just add that at the end of the day, the industry has matured and become a much more reliable partner, which was one of the reasons people would have owned in the past. But we're also here to drive safety and productivity. So even penetration from self or non compliance, self performance or non compliance, like we do in our Trent Safety business, is another opportunity. So I think awareness, increased and improved product offerings will continue to drive penetration to TensPoint.

We'll take our next question from Jerry Revich with Goldman Sachs. Please go ahead. Your line is open.

Hi. This is Clay on for Jerry. Quick one for me. Your fleet productivity growth accelerated year over year and we estimate sequentially as well. Can you expand on the drivers of the acceleration?

And also, how do you view the disconnect with some of the slowing non res construction indicators over the quarter?

Sure, Clay. So we feel really good about the fleet productivity to your point. We had committed to the beginning of year that we expected to drive positive fleet productivity this year, which in its basic form means we're going to have rent revenue growth greater than fleet growth. And that's happening. I would say, qualitatively, the industry continues to get positive rate.

That's necessary because we still have to overcome the inflation that we've absorbed and cost of fleet over the last couple of years and the supply demand dynamics are allowing that to happen. We specifically have been continuing to drive very high levels of time utilization for a couple of years now. So we're really pleased with that and that's taken a lot of focus and admittedly some costs as Ted pointed to on the delivery, on the outside hauling costs. But that's a smart capital decision. We continue to do that.

And then the rest of it was mix, fell in our favor this quarter. That's a variable that frankly is a result of a lot of different decisions customers make, where they rent, what they rent, how long they rent, so to name a few. And to absorb any extra inflation over and above the 1.5 peg that we put out there. So we feel really good about that output and we expect to drive positive productivity for the full year.

So thank you. Maybe on the second part, tying it to those non res indicators, look we pay attention to them. There's an ebb and flow, certainly we see a lot of things that are quite positive. You can look at our results, probably first and foremost, you can look at our customer confidence. So those are the things that really are going to be to us more important and more indicative than kind of looking at a mosaic of data points.

Got it. Thanks for that. And then quick follow-up for me on the just how you guys are viewing the M and A pipeline currently and how that evolved over the year? Thanks.

Sure, Clay. Yeah, we continue to work a pretty robust pipeline. As we proved with this in the first quarter, we're still very disciplined. So you have to get to that last hurdle of financial after we find the strategic partners and and and and the ones that we think will fit in the organization well. So this is not a lack of opportunity.

It's just making sure that, you know, we cross all three of those hurdles on our three legged stool and and find the right dance partner. So we continue to work the pipeline. We've this is a capability we've built, and and one that we expect to utilize. It's just we're we're not gonna force it. We're gonna make sure we've got we get a lot of credit for being smart integrators.

I think it starts on the front end where we're smart buyers. So we'll continue to work the pipeline.

We'll take our next question from Jamie Cook with Truist Securities. Please go ahead. Your

line Hi. Is Good morning. I guess two questions for me. Ted, sorry, getting back to the ancillary business. Just thinking about it from a long term perspective, this and re rent, it's becoming a bigger part of your business.

I'm just wondering, given the importance of the business and the value that it adds to customers, it's lower margin, to what degree should we start to think about United Rentals as more of an EBITDA story and sort of take the 50% to 60% incremental margin target off the table because it's not relevant anymore and maybe you're not incremental profit story anymore. Just trying to think how you're thinking about that longer term. I guess, so why don't we start there and then I'll ask my second question?

Yes. And it's something you and I have talked about a bunch, Jamie. I mean, do think at the end of the day, EBITDA generation is critical to us. How you get there matters a ton. Obviously, we need to be efficient in every regard.

But the mix dynamic that you're getting at is something that we need to make sure people do understand. So our goal always has been and always will be driving margin expansion on an underlying basis. Sometimes that's a little easier, sometimes it's more challenging for a number of reasons. In this case and most recently, obviously, this ancillary dynamic has been kind of the biggest headwind and I think I touched on this with one of David's questions. But at the end of the day, like we need to serve our customers, that is the most important thing And we need to make sure we're doing it in a profitable fashion and then explaining the results to the investment community and anybody else.

So I would say going forward, goals are always going to be driving margin expansion. What that flow through looks like will be dependent on a host of factors, but ultimately you're driving underlying margin improvement. And we do think that the team has done a great job managing costs over the last several years in this kind of higher inflationary slower growth environment. And once we kind of start moving forward, we do think we'll get more positive absorption of fixed costs that will support kind of driving margin expansion.

Thanks. And then I guess my second question, understanding you again don't want to talk too much about 2026, but one of your peers put out a CapEx guide understanding it's not calendar year, but implied CapEx for next year down, I think, in the high teens. Just trying to think about how you're thinking about the setup. I mean, you tend to replace your equipment more regularly. You're growing in specialty and we have some positive dynamics from the bill.

Just wondering as you think about things, would that be something more specific to a competitor? And do you still think the environment is robust enough that CapEx as we look to 2026 could be, I guess, healthier than what your peers are talking about? Thank you.

Yeah. I'm not going to get into forecasting 2026, but I will say that we feel good about the environment that we're in right now. I talked about how we believe some of the tailwinds we've been pointing to for a couple of years are going to continue. And the local markets maybe not growing, but we don't think it's retreating. So that narrative kind of tells you where we are with it.

We don't have to make that decision today. But that would be I would be surprised if we were to cut forward looking, because to your point, the biggest spend is replacing fleet, and we we're very, very diligent about that. So we can keep the fleet refreshed and and and give a good value prop to our customers. And the end markets are good for for used sales, as you see in our results. So there's nothing that tells me that we would lean that direction. We'll stay tuned. We'll tell you in January.

We'll take our next question from Kyle Mengus with Citigroup. Please go ahead. Your line is open.

Thank you. I was hoping if you could talk about used recovery a little bit. It actually improved sequentially in the quarter. So I guess does that signal that we're through this period of normalization for the used sales recovery and then just what's driving some of the maybe tightness in supply versus demand sequentially?

Yeah, Kyle, I would say that, well, I think Jamie just pointed to as far as supply demand, some other folks had extra capacity coming into this year that they were going to utilize, and that's great. We think that shows the discipline of the industry. You'd rather see people absorb the capacity they have versus add to that pile and therefore have unnatural actions to put it into the market. So that's great news, and that's part of the supplydemand dynamic. The other part of the recovery is we've built an engine where we do a lot of retail.

That's also a sign that the end markets are good because customers don't buy equipment to sit on it. And I would say that after the adjustments post COVID, and if you wanna take q one to q two sequential improvement in recovery, I think went from '51 to '53, we are seeing seeing it stabilize. Where that ends up, I think our full year guide is somewhere in the middle of that, What we kind of inferred, where we'd be on that, I would say we feel it has stabilized and we'll continue mix will have some impact on that, how much you do in retail in a quarter. But for the full year, we think we've targeted the right area, the right ballpark.

Got it. Thank you. And then just on the guide and taking the adjusted EBITDA up by that $50,000,000 for that H and E termination fee. I'm just trying to understand that. I thought that was that you guys got that in Q1.

So I guess just why was that not included in the guide in Q1 and not until this quarter? Just trying to understand that dynamic. Thanks.

Yes. Obviously, you saw us kind of reaffirm the guidance in April. And at that stage of the year, it's very unusual for us to kind of update guidance, right? So those ranges were maintained versus what we introduced in January. As we get to the second quarter in July, we start tightening those ranges.

And so it was really we felt more appropriate to call it out in the context of that updated range, which is just tighter. But I think that explains it. Yes. If I remember correctly,

on the April call, did tell everybody wasn't in there and that we would be updating it. So obviously, we'll live up to the commitment that we made.

United Rentals (URI) Q2 2025 Earnings Call Transcript

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