EquipmentShare.com Inc Class A Common Stock 2026 Q2 Earnings Call

Please go ahead. Good morning, and welcome to EquipmentShare's second quarter 2026 financial results conference call.

Joining me today are Javic Schlacks, founder and Chief Executive Officer, Willy Schlacks, founder and President, Mark Wopata, Chief Data Officer and Executive Vice President of Finance, and David Marquardt, Chief Financial Officer and Chief Accounting Officer. Last night, we issued our earnings press release and posted an earnings presentation to our investor relations website. We encourage you to review those materials alongside today's remarks. Please be advised that the call is being recorded. Comments made on today's call and responses to your questions may contain forward-looking statements within the meaning of applicable securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our earnings press release, presentation, and SEC filings for a discussion of those risks.

EquipmentShare has no obligation to update or revise forward-looking statements made on this call. We will also reference certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are included in our earnings press release. With that, I'll turn the call over to Javic.

Thank you, Rhett, and good morning everyone. EquipmentShare delivered another exceptional quarter, supported by healthy customer demand, continued market share gains and disciplined execution across the business. Rental segment revenue increased more than 39% year-over-year, and mature rental locations generated 55% trailing 12-month margins. Mature locations now represent 56% of our rental network. Adjusted core EBITDA grew to $531 million. This is the metric we use to compare our performance with the rest of the rental industry that own and finance equipment entirely on the balance sheet. We also expanded our fleet under management to nearly $10 billion of OEC. These results reflect the strength and durability of our growth model. Approximately 91% of rental segment revenue comes from national and regional customers supporting some of the largest and most complex construction projects in the country.

As we expand into new markets, approximately 75% of first-year rental segment revenue comes from customers already doing business with EquipmentShare. We believe this reflects the strength of our customer relationships and creates significant embedded earnings power as today's growth locations become tomorrow's mature markets. With our existing footprint, we believe at maturity, this is already a $4 billion core EBITDA business. Our capital allocation decisions also reflect the strength of the business and our long-term outlook. On July 9th, our board authorized a $500 million share repurchase program through December 31st, 2028, providing flexibility to act on compelling opportunities or market dislocations while remaining within our leverage and liquidity targets. While we believe that authorization is a prudent tool to have, our priority remains investing in the significant organic growth opportunities ahead and continuing to transform the industry. Moving to our updated outlook.

The midpoint of our rental segment revenue guidance implies approximately 33% growth for the full year. To put the second half in context, our guidance implies approximately 28% rental segment revenue growth in the back half against a second half of 2025 that itself grew approximately 36% year-over-year as large-scale mega projects began ramping across our network. While the full-year guide implies some conservatism in the back half of 2026, it represents very strong growth against an exceptionally strong prior year comparison. There's also some timing to consider. Our 39% growth in the second quarter represented significant outperformance as fleet absorption ran ahead of plan due to accelerated mega project wins and our ability to deploy against that demand. In Q2 alone, we put more than $750 million of new fleet on rent for the first time, including fleet we had originally expected to deploy in Q3.

Importantly, the underlying demand environment remains strong. Our mega project pipeline continues to expand. We're seeing upward pressure on rental rates, and we have substantial new fleet coming into the business. We're excited about the momentum heading into the second half of the year and believe the investments we have made set the stage for strong performance in 2027. Moving down the P&L, we also continue to expect modest rental segment margin expansion in the second half, as our network matures, fleet absorption improves, and we realize additional operating efficiencies. Taken together, we believe our guidance reflects conservative assumptions for the second half. At the midpoint, we're guiding to approximately 28% growth against a prior year period that grew approximately 36%.

Given the demand visibility, deployed fleet, and continued strength in our mega project pipeline, we believe the second half of the year is de-risked, and we see a meaningful opportunity to outperform. Moving to the story of the quarter. The construction environment remains one of the strongest backdrops I've experienced in over 25 years in construction. Demand across our core non-residential and industrial markets continues to be supported by large, multi-year investments in data centers, advanced manufacturing, healthcare, energy and transportation infrastructure. These large, complex projects require dependable service, coordinated execution, and long-term customer partnerships, areas where EquipmentShare continues to differentiate itself. Against that backdrop, we believe that EquipmentShare continues to grow substantially faster than the broader rental market while maintaining pricing at or above our rental competitors, demonstrating that our growth is being driven by the value we deliver rather than competing on price.

That outperformance is driven by three factors. First, we continue to win with national and regional customers, which represented approximately 91% of our trailing 12-month revenue as of June 30, 2026. These customers increasingly want larger strategic partners that can consistently support projects across multiple markets through one integrated platform. Second, we are expanding our geographic network in response to identifiable customer demand. We have opened 39 full-service rental locations year to date and remain on pace to meet our full-year expectations. Importantly, more than 75% of first-year revenue at new locations comes from customers already doing business with EquipmentShare elsewhere in our network. That customer pull is what gives us confidence to enter new markets and provides a strong foundation for those locations to scale. Third, T3 continues to deepen customer relationships by improving equipment visibility, reducing downtime, and helping customers manage increasingly complex job sites.

We continue to have strong visibility into customer demand and the project pipeline, reinforcing our confidence in the industry outlook. This is a different rental industry today. Projects are larger, longer duration, and more complex, giving us greater visibility into demand and confidence to continue investing beyond the opportunity. One recent customer relationship illustrates how these advantages come together. Earlier this quarter, I visited one of the largest healthcare construction projects underway in the U.S., where EquipmentShare was selected as the sole source equipment partner across core fleet, industrial tooling, fueling, temporary power, and job site technology. What stood out wasn't just the scale of the project. It was the depth of the partnership. The customer dedicated approximately five acres on the site to an EquipmentShare operations yard, complete with a full-service operations and maintenance facility built specifically for our team.

Walking the job site, the customer talked about the visibility, service, and coordination we provide. But what impressed me most was that they were already planning to expand our relationship as they develop additional campuses around the country. To me, that reflects a much broader trend. Whether it's healthcare, advanced manufacturing, data centers, energy or transportation infrastructure, customers increasingly want a partner that can support the entire job site, not just provide equipment. That's exactly where EquipmentShare continues to win, allowing us to support more of our customers' equipment needs while capturing a greater share of their spend. Before turning the call over, I'd also like to briefly provide an update on our corporate governance initiatives and an update regarding our related party transactions wind down plan. We have enhanced our board with the appointment of Damian and Harley as independent directors.

Damian also joined our audit committee and brings significant public company and audit committee experience, including serving on the audit committee of a Nasdaq-listed public company. Harley brings deep knowledge of EquipmentShare, having previously served on our board during an important period of the company's growth. Historically, EquipmentShare entered into certain related party arrangements involving the founders, primarily through participation in the OWN program and property leases. About a year ago, we began substantially reducing those arrangements, and we have made meaningful progress. As of the end of the second quarter, less than $1 million of the $5.5 billion OWN program fleet remained owned by these related parties. Our remaining related party arrangements involving the founders primarily relate to certain real estate used in our operations, for which we have paid just under $5 million in lease payments year to date.

We remain committed to substantially reducing these related party arrangements by the end of 2026, with the objective of transitioning off of these related party transactions as we enter 2027. I will now turn it over to Willy to discuss T3.