United Rentals, Inc. 2026 Q3 Earnings Call

Please go ahead, sir. Thank you, operator, and good morning, everyone.

Thanks for joining our call. Yesterday afternoon, we were very pleased to report our third quarter results, which are a testament to our strategy, the team's dedication to the customer, and the unmatched breadth and scale of our premier offering. We came into 2026 expecting another year of growth. As evidenced by our results, the business continues to perform better than we expected. 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. We remain well-positioned to outperform the industry with our broad footprint, our unmatched one-stop shop offering, accompanied by exceptional levels of service and leading technology, and of course, our unwavering commitment to safety. These capabilities, combined with our customers' confidence and backlogs, support our revised guidance.

We came into the year dedicated to being the partner of choice for our customers, accompanied by a laser focus on finding cost efficiencies. I am very pleased with the team's efforts and how the year is playing out. Team United continues to raise the bar, providing an unmatched offering for our customers while also generating strong returns. Let us get into the details of our third quarter results and our updated full year guidance, and then Ted will get into more details around the numbers before we open up the call to Q&A. Starting with the quarter's results, total revenue grew by 16% year over year to $4.9 billion. Within this, rental revenue grew by 18% to $4.3 billion, both quarterly records. Fleet productivity of 6.5% contributed to OER growth of 12.9%. I will note that time and mix all contributed to the quarter's productivity along with rate.

Adjusted EBITDA was a record of $2.3 billion, resulting in a margin of 47.6%, an improvement of 160 basis points year-over-year. Finally, adjusted EPS came in at $15.55, up 33% year-over-year, and another quarterly record. Now, let's discuss customer activity. The third quarter again saw growth across both our gen rent and specialty business. Specialty was a standout with rental revenue growth of 35% year-over-year, including 12 cold starts, which brings us to 40 cold starts year to date. Notably, each specialty line of business reported strong double-digit growth in the quarter. By vertical, the trends of the first half of the year carried into the third quarter. Construction continues to grow across non-residential and infrastructure. On the industrial side, power once again posted double-digit growth, as did metals and minerals.

As I mentioned earlier, a variety of end markets drive our growth. This diversified exposure is an important and very intentional part of our strategy. With this in mind, we saw projects kick off in the third quarter across numerous end markets, including energy, manufacturing, infrastructure, and data centers. Now turning to the used market, we sold $677 million of OEC at a 51% recovery rate. The demand for used equipment remains strong, and we still expect to sell approximately $2.8 billion of fleet this year. Given the demand from our customers and our replacement of sold equipment, we spent $1.8 billion on gross rental CapEx in the quarter. This takes us to $4.7 billion year to date. The combination of a strong demand environment and fleet productivity underpins this additional spend as we ensure we support our customers while driving profitable growth.

Subsequently, we generated year-to-date free cash flow of $1.4 billion. Even with higher CapEx needs, we are able to generate meaningful free cash flow due to a combination of our industry-leading profitability, capital efficiency, and the flexibility of our business model. This strong free cash flow is redeployed in ways that allow us to augment shareholder value and is a critical part of our strategy. Finally, our capital allocation in the quarter reflects the disciplined framework we employ. Our balance sheet is very healthy, allowing us to support both organic and inorganic growth, and to also return nearly $500 million to shareholders during the quarter through a combination of share buybacks and our dividend.

Our leverage of 1.8 times remains well within our targeted range of 1.5 to 2.5 times, leaving plenty of dry powder to support growth and to return excess capital to our shareholders. We have long talked about the importance of financial strength to support our strategy and to drive long-term value creation. To this point, we were very pleased to see S&P acknowledge our efforts with their upgrade of our credit rating to investment grade earlier this month. As we enter the last few months of 2026, our focus is unchanged. The demand environment for large projects remains robust, supporting our revised guidance, which reflects over 12% total revenue growth, with EBITDA margins over 46%, all at the midpoint.

We increased our CapEx guidance to over $5.3 billion at the midpoint as we see the opportunity to put even more equipment on rent while generating strong free cash flow and returns. In conclusion, the United Rentals team's diligent focus on our strategy day in and day out is delivering results we are all very proud of. Over the last nearly 30 years, we built and continue to expand a value proposition which differentiates us in the industry. Our business model is truly unique and goes beyond purely equipment rental. By layering on technology, innovation, and unmatched service across both our specialty and gen rent businesses, we support our customers' productivity and drive a better partnership. For our shareholders, this translates to profitable growth, strong free cash flow, and compelling returns.

With that, I will hand it over to Ted to review our financial results, and then we will take your questions. Over to you, Ted. Thanks, Matt.

Good morning, everyone. As Matt just shared, the team delivered strong results that exceeded even our raised expectations from last quarter. Quarterly records for total revenue, rental revenue, EBITDA, and EPS. Beyond that, we raised our full year guidance for revenue and EBITDA to reflect our expectations that this performance will continue through year-end in support of a record 2026. Before we get into the details of the updated guidance, let us review the third quarter's results. As you saw in our press release, rental revenue increased 17.8% to over $4.3 billion, supported once again by the team's strong execution across large projects and key verticals. Within this, OER increased by 12.9%, driven by a 7.9% increase in our average fleet size and fleet productivity of 6.5%, partially offset by assumed fleet inflation of 1.5%.

Finally, within rental revenue, ancillary and re-rent grew over 37%, again outpacing OER growth by a healthy margin. Pivoting to used, we sold $677 million of OEC in the quarter, generating $348 million of proceeds at an adjusted margin of 46.3% and a 51.4% recovery rate. As Matt mentioned, consistent with our initial guidance, we are on track to sell approximately $2.8 billion of OEC this year at a recovery rate in the low 50s in what remains a healthy used equipment market. Next, let us turn to adjusted EBITDA, which increased $385 million to a record of over $2.3 billion. This was driven primarily by a $417 million increase in rental gross profit and an $8 million increase in used gross profits. SG&A increased by $54 million, translating to a 20 basis point improvement as a percentage of revenue, while gross profits from other lines of businesses added $14 million.

Looking at profitability, our third quarter adjusted EBITDA margin increased 160 basis points to 47.6%, reflecting another quarter of strong cost discipline. While there will always be some quarter-to-quarter variability, we are very pleased with our team's ability to efficiently leverage our third quarter growth to offset the impacts of both lower margin ancillary and re-rent revenues and other inflationary pressures. Shifting to CapEx, we've responded to robust customer demand by investing over $4.7 billion in gross rental CapEx year to date, which is an increase of almost $1 billion year-over-year. Moving to returns and free cash flow, our return on invested capital increased 30 basis points year-over-year to 12.3%, which remains comfortably above our weighted average cost of capital, while our free cash flow year to date has exceeded $1.4 billion.