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UNITED RENTALS, INC. (URI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered record revenue and adjusted EBITDA; revenue of $3.719B and adjusted EPS of $8.86. Management reaffirmed full-year 2025 guidance and announced a new $1.5B share repurchase authorization to be largely completed in 2025 .
  • Versus S&P Global consensus, URI modestly beat on revenue ($3.719B vs $3.609B*) and EPS ($8.86 vs $8.813*). Adjusted EBITDA of $1.671B exceeded EBITDA consensus of $1.613B*, aided by a $52M merger termination benefit; excluding this, adjusted EBITDA was ~$1.619B, still a slight beat* .
  • Margins compressed: net income margin down 170 bps YoY to 13.9% and adjusted EBITDA margin down 60 bps YoY to 44.9%, driven by lower used equipment margins, ancillary mix and delivery/repositioning costs, and higher SG&A/interest (partly from the terminated H&E deal) .
  • Specialty rental strength (+21.8% YoY; +14.8% pro forma) and healthy used equipment demand (record OEC sold) support in-year momentum; free cash flow was $1.082B with net leverage at 1.7x and total liquidity of $3.345B .

Values with * are from S&P Global.

What Went Well and What Went Wrong

  • What Went Well

    • Record first-quarter revenue ($3.719B) and adjusted EBITDA ($1.671B); “2025 is off to a solid start…record first-quarter revenue and adjusted EBITDA” — CEO Matthew Flannery .
    • Specialty rentals drove growth (+21.8% YoY; +14.8% pro forma) on strong end-market demand and cross-selling; management continues to see double-digit growth runway .
    • Free cash flow robust at $1.082B; net leverage improved to 1.7x; new $1.5B buyback signals confidence and capital return discipline .

  • What Went Wrong

    • Margin compression: net income margin down 170 bps (13.9%), adjusted EBITDA margin down 60 bps (44.9%), primarily from lower rental gross margin (esp. Specialty), weaker used equipment margins, higher SG&A and bridge financing fees tied to the terminated H&E deal .
    • Used equipment GAAP gross margin declined to 44.3% (from 48.8% YoY), reflecting normalization in pricing; adjusted margin fell to 47.2% (from 53.3%) .
    • Delivery/repositioning costs and ancillary mix diluted margins; CFO estimated ~50 bps impact from ancillary mix and ~30 bps from fleet repositioning in Q1 .

Financial Results

MetricQ1 2024Q4 2024*Q1 2025
Revenue ($USD Billions)$3.485 $4.095*$3.719
Net Income ($USD Millions)$542 $689*$518
Diluted EPS (GAAP) ($)$8.04 $10.48*$7.91
Adjusted EPS ($)$9.15 N/A$8.86
Net Income Margin (%)15.6% 16.8%*13.9%
Adjusted EBITDA ($USD Billions)$1.587 $1.900 $1.671
Adjusted EBITDA Margin (%)45.5% 46.4% 44.9%

*Q4 2024 values retrieved from S&P Global.

Revenue and EPS vs estimates:

MetricConsensus (Q1 2025)Actual (Q1 2025)Surprise
Revenue ($USD Billions)$3.609*$3.719 +$0.110B*
EPS (Normalized) ($)$8.813*$8.86 +$0.05*
EBITDA ($USD Billions)$1.613*$1.671 (Adj.) +$0.058B*

Values with * are from S&P Global.

Segment performance (equipment rentals):

SegmentQ1 2024 Revenue ($USD Billions)Q1 2025 Revenue ($USD Billions)Gross Margin Q1 2024Gross Margin Q1 2025
General Rentals$2.070 $2.099 32.9% 32.3%
Specialty$0.859 $1.046 49.1% 43.1%
Total Equipment Rentals$2.929 $3.145 37.7% 35.9%

KPIs and cash metrics:

KPIQ1 2024Q1 2025
Fleet Productivity (reported)N/A+3.1%
Fleet Productivity (pro forma for Yak)N/A+1.9%
Avg OEC YoY ChangeN/A+3.3%
Used Equipment Sales Proceeds ($USD Millions)$383 $377
Used Equipment GAAP Gross Margin (%)48.8% 44.3%
Used Equipment Adjusted Gross Margin (%)53.3% 47.2%
Free Cash Flow ($USD Billions)$0.869 $1.082
Net Leverage (x)N/A1.7x
Total Liquidity ($USD Billions)N/A$3.345

Guidance Changes

MetricPeriodPrevious Guidance (Jan 30, 2025)Current Guidance (Apr 23, 2025)Change
Total Revenue ($USD Billions)FY 2025$15.6–$16.1 $15.6–$16.1 Maintained
Adjusted EBITDA ($USD Billions)FY 2025$7.2–$7.45 $7.2–$7.45 Maintained
Net Rental Capex after Gross ($USD Billions)FY 2025$2.2–$2.5 (gross $3.65–$3.95) $2.2–$2.5 (gross $3.65–$3.95) Maintained
Net Cash from Ops ($USD Billions)FY 2025$4.5–$5.1 $4.5–$5.1 Maintained
Free Cash Flow excl. merger/restruct. ($USD Billions)FY 2025$2.0–$2.2 $2.0–$2.2 Maintained
Share Repurchase Authorization ($USD Billions)FY 2025–Q1 2026N/ANew $1.5B authorization; intent to repurchase $1.5B in 2025 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
AI/Technology initiativesNext-gen telematics; ProBox OnDemand; ongoing tech investment Investments in specialty, technology; data/AI foundational work Continued tech and analytics investments; efficiency and customer experience emphasis Steady buildout
Supply chainImproved normalization enabling cadence Supply chain in good shape; normal capex cadence Repositioning costs tied to dispersion of growth; delivery/logistics impact Operationally stable, cost headwinds
Tariffs/MacroNot a focusMacro slower growth phase; inflation absorption Tariff uncertainty favors rental; 2025 capex largely locked; cost exposure manageable Monitoring; modest positive for rental mix
Product performance (Specialty)+24% YoY; strong cross-sell Strong double-digit growth; cold starts as accelerant +21.8% YoY; +14.8% pro forma; ongoing double-digit confidence Strong, durable growth
Regional/Vertical trendsNon-res + industrial strength; manufacturing power Non-res, manufacturing, power; local market variability Power/chemicals strong; local accounts visibility lower but guidance confident Mixed; large projects offset local softness
Regulatory/LegalN/AOutlook for IIJA funds supporting infra N/ANeutral
R&D executionTechnology rollouts, data work Continued investments despite slower cycle to preserve long-term ROI Emphasis on tech-enabled sourcing and fleet optimization Continued investment

Management Commentary

  • “I’m pleased…record first-quarter revenue and adjusted EBITDA. I’m also pleased to reaffirm our full-year guidance…reinforce our expectations for another year of profitable growth.” — CEO Matthew Flannery .
  • “Ancillary revenue again significantly outpaced our core rental growth…good business…but dilutive impact on margins ~50 bps…repositioning reduced margin ~30 bps.” — CFO William Grace .
  • “Priority #1…funding growth while maintaining a healthy balance sheet…returned nearly $370M to shareholders…new $1.5B program.” — CEO Matthew Flannery .
  • “Used market demand healthy…on track to sell ~$2.8B of fleet this year.” — CEO Matthew Flannery .

Q&A Highlights

  • Margins: Analysts probed margin compression drivers; management quantified ancillary (~50 bps) and repositioning (~30 bps) impacts and noted mix and normal variability for the remainder (~70 bps) .
  • Tariffs: 2025 capex already negotiated (>80% POs); uncertainty tends to favor rental; multi-vendor sourcing and potential pass-through discussed .
  • Backlog/Demand: Confidence supported by large projects, backlogs, customer sentiment; local accounts visibility lower but within guidance ranges .
  • Specialty Growth: Double-digit growth expected across platforms; power/HVAC strong; cold starts (~50 planned in 2025) remain a growth lever .
  • Capital Return: New $1.5B buyback; intent to return ~$2B to shareholders in 2025 including dividend; ~5% return of capital yield discussed .

Estimates Context

  • URI beat revenue and EPS consensus modestly. Revenue: $3.719B vs $3.609B*, EPS (normalized): $8.86 vs $8.813*, EBITDA (company adjusted): $1.671B vs EBITDA consensus $1.613B*. Mix and merger termination benefit (+$52M) aided EBITDA; excluding the benefit (~$1.619B), EBITDA still slightly above consensus* .
  • Estimate revisions are likely minor upward on EBITDA and slightly positive on revenue/EPS given beats and reaffirmed guidance; margin drivers (ancillary, delivery) may temper longer-term margin assumptions .

Values with * are from S&P Global.

Key Takeaways for Investors

  • Reaffirmed FY25 guidance with a clean beat on Q1 top/bottom line; narrative supportive of steady mid-single-digit core rental growth and strong specialty momentum .
  • Margin compression was driven by strategic ancillary/services and repositioning costs; expect mix-related dilution to persist but be offset by EBITDA dollar growth and larger project cadence .
  • Capital return is a near-term catalyst: new $1.5B buyback with intent to repurchase $1.5B in 2025, plus $1.79 quarterly dividend; robust FCF and 1.7x leverage provide flexibility .
  • Specialty segment remains the growth engine (double-digit trajectory); continued cold starts and cross-sell deepen penetration across large projects and national accounts .
  • Used equipment market healthy (record OEC sold); normalization of margins likely continues, but volume supports fleet rotation and capital efficiency .
  • Macro/tariff uncertainty may marginally favor rental over ownership; 2025 cost exposures largely locked; multi-sourcing mitigates risk .
  • Near-term trading: constructive on capital return and beats; watch margin commentary and ancillary mix in Q2 for confirmation of stabilization. Medium-term thesis: durable multi-year specialty growth, strong FCF, disciplined capital allocation underpin compounding returns .

Citations: Press release and 8-K ; Earnings call Q1 2025 ; Prior calls Q4/Q3 2024 .

Values from S&P Global: marked with *.