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UNITED RENTALS, INC. (URI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 delivered second-quarter records in rental revenue ($3.415B), adjusted EBITDA ($1.810B, 45.9% margin), and adjusted EPS ($10.47), while total revenue reached $3.943B; net income was $622M (15.8% margin) .
  • Versus S&P Global consensus, revenue beat ($3.94B vs ~$3.89B) while adjusted EPS was modestly below ($10.47 vs ~$10.54); Q1 also beat both top-line and adjusted EPS consensus, reinforcing demand resilience (Values retrieved from S&P Global).*
  • Guidance raised: FY25 total revenue to $15.8–$16.1B, adjusted EBITDA to $7.3–$7.45B, operating cash flow to $4.9–$5.5B, and FCF to $2.4–$2.6B; 2025 share repurchases lifted by $400M to $1.9B, supported by tax reform tailwinds .
  • Key stock catalysts: stronger ancillary-driven top-line, higher FCF via tax reform, increased buybacks, and continued specialty outgrowth; offset by margin dilution from ancillary/service mix and delivery/repositioning costs called out on the call .

What Went Well and What Went Wrong

What Went Well

  • Specialty strength: Specialty rental revenue +14.0% YoY to $1.147B; management highlighted continued outgrowth and “particular strength in our specialty business and in large projects,” underpinning raised guidance .
  • Free cash flow and capital returns: YTD FCF $1.198B and net leverage at 1.8x; planned 2025 repurchases increased by $400M to $1.9B, aided by reinstated full expensing of CapEx under tax reform .
  • Positive fleet productivity and disciplined execution: Fleet productivity +3.3% YoY with CEO citing momentum and best-in-class telematics/Total Control enhancing customer productivity (“our best-in-class technology offerings…will enable us to continue to generate profitable growth”) .

What Went Wrong

  • Margin pressure: Adjusted EBITDA margin down 100 bps YoY to 45.9% and net income margin down 110 bps to 15.8%, driven by lower rental gross margin and used equipment normalization, plus delivery and labor/benefits cost headwinds .
  • Ancillary mix diluting margins: CFO emphasized outsized ancillary growth (delivery, fueling, services) is “dilutive to the margin,” contributing to flow-through pressure, though still accretive in EBITDA dollars .
  • Used equipment margins normalized: Used proceeds $317M with adjusted margin 48.3% (vs 51.8% a year ago), reflecting market normalization; GAAP margin 46.1% .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Total Revenue ($USD Billions)$3.773 $3.719 $3.943
Rental Revenue ($USD Billions)$3.215 $3.145 $3.415
GAAP Diluted EPS ($)$9.54 $7.91 $9.59
Adjusted EPS ($)$10.70 $8.86 $10.47
Adjusted EBITDA ($USD Billions)$1.769 $1.671 $1.810
Adjusted EBITDA Margin (%)46.9% 44.9% 45.9%
Net Income ($USD Millions)$636 $518 $622
Net Income Margin (%)16.9% 13.9% 15.8%

Segment Breakdown

Segment MetricQ2 2024Q1 2025Q2 2025
General Rentals – Rental Revenue ($USD Billions)$2.209 $2.099 $2.268
General Rentals – Rental Gross Margin (%)36.3% 32.3% 35.1%
Specialty – Rental Revenue ($USD Billions)$1.006 $1.046 $1.147
Specialty – Rental Gross Margin (%)48.0% 43.1% 45.8%

KPIs

KPIQ2 2024Q1 2025Q2 2025
Fleet Productivity (% YoY)—3.1% 3.3%
Avg OEC Change (% YoY)—3.3% 3.6%
Used Equipment Sales Proceeds ($USD Millions)$365 $377 $317
Used Equip Adjusted Gross Margin (%)51.8% 47.2% 48.3%
Used Recovery Rate (%)—51% 53%
YTD Free Cash Flow ($USD Billions)$1.065 $1.082 $1.198
Net Leverage (x)1.8x (Dec-2024) 1.7x (Mar-31-2025) 1.8x (Jun-30-2025)
Total Liquidity ($USD Billions)$2.8 (Dec-2024) $3.345 (Mar-31-2025) $2.996 (Jun-30-2025)

Guidance Changes

MetricPeriodPrevious Guidance (Apr 23)Current Guidance (Jul 23)Change
Total RevenueFY 2025$15.6B–$16.1B $15.8B–$16.1B Raised (midpoint +$100M)
Adjusted EBITDAFY 2025$7.2B–$7.45B $7.3B–$7.45B Raised (midpoint +$50M)
Net Rental CapEx after Gross PurchasesFY 2025$2.2B–$2.5B after gross $3.65B–$3.95B $2.2B–$2.5B after gross $3.65B–$3.95B Maintained
Net Cash from Operating ActivitiesFY 2025$4.5B–$5.1B $4.9B–$5.5B Raised
Free Cash Flow (ex merger/restructuring)FY 2025$2.0B–$2.2B $2.4B–$2.6B Raised (+$400M)
Share RepurchasesCY 2025$1.5B program (intent $1.5B 2025) Planned 2025 repurchases increased by $400M to $1.9B; program size lifted to $2.0B (carryover ~$350M into 2026) Raised
DividendQ3 2025 Pay$1.79 per share (declared) $1.79 per share (declared) Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Specialty outgrowthSpecialty +30% YoY; ex Yak +18%; cold starts continue Specialty +21.8% YoY; pro forma +14.8%; margin dilution from ancillary/delivery Specialty +14% YoY; strength in matting and large projects Sustained double-digit growth; mix dilutive to margins
Ancillary mix & marginsAncillary/re-rent growth dilutes margins; flow-through ~33% ex used/new Ancillary +19% vs OER +5%; margin drag; delivery/repositioning costs Ancillary growth “dilutive,” with ~$15M fleet repositioning drag on EBITDA; expected deceleration H2 Persistent margin headwind, moderating as Yak lap/delivery normalizes
Fleet productivity & utilization2025 guide embeds positive productivity; constructive rate environment 3.1% reported; 1.9% pro forma; positive time utilization 3.3% YoY; targeted positive productivity for full-year Positive; rates disciplined, time utilization high
Used equipment marketRecord OEC sold; adjusted margins ~49% Proceeds $377M; adjusted margin 47.2%; recovery ~51% Proceeds $317M; adjusted margin 48.3%; recovery ~53%; normalization continuing Stabilizing recovery; normalized margins
Capital allocationFCF ~$2.06B; dividend up 10% to $1.79 New $1.5B buyback; dividend $1.79 Buyback increased to $1.9B; ABL upsized to $4.5B; liquidity ~$3.0B; FCF guide raised More cash returned; tax reform boosts FCF
Technology & telematicsIndustry-leading tech cited Strategy: one-stop shop + technology differentiation “Best-in-class telematics” and Total Control improving customer productivity Ongoing tech enablement supports stickiness
Macro/tariffs/taxInflation persists; slower phase of cycle 2025 CapEx negotiated; tariffs impact manageable; uncertainty favors rental Tax reform reinstating full expensing lifts FCF; Fed potential easing supportive Policy tailwinds to FCF/sentiment
M&A pipelineH&E announced; later terminated; pipeline robust Robust pipeline; focus on specialty/tuck-ins Active, disciplined; capital returns balanced with M&A optionality Remains active, disciplined

Management Commentary

  • “Our updated guidance is a result of the growth we achieved across both our general rentals and specialty businesses… and the momentum we are carrying into the remainder of the construction season.” — CEO Matthew Flannery .
  • “Adjusted EBITDA was a second-quarter record at $1.81 billion… margin compression includes the impact of normalizing used margins… and higher delivery costs driven by matting growth and fleet repositioning.” — CFO Ted Grace .
  • “We now expect to return nearly $2.4 billion to shareholders [in 2025]… leverage of 1.8x remains toward the lower end of our targeted range.” — CFO Ted Grace .
  • “Advanced telematics and Total Control software… help customers operate more efficiently, reducing unauthorized use, fuel consumption and overage fees.” — CEO Matthew Flannery .

Q&A Highlights

  • Margin dynamics: Ancillary growth (delivery/fueling/services) dilutes margins; fleet repositioning added ~$15M drag in Q2; expected to moderate in H2 as Yak lap/delivery decelerate .
  • Free cash flow baseline: Tax reform (full expensing) lifts normalized FCF by ~$400M; baseline now about $2.4B “all else equal,” subject to growth CapEx needs .
  • Used recovery/margins: Recovery rate stabilized (~51%→~53% sequential); normalization of used margins persists but demand remains healthy .
  • CapEx setup: 2025 gross rental CapEx unchanged ($3.65–$3.95B); unit counts and supplier pricing stable; ABL upsized post quarter .
  • 2026 visibility: No broad visibility beyond large projects; tailwinds in infrastructure/power/utilities expected to continue .

Estimates Context

MetricQ2 2024Q1 2025Q2 2025
Revenue Consensus Mean ($USD Billions)3.7783.6093.892
Revenue Actual ($USD Billions)3.7733.7193.943
Primary EPS Consensus Mean ($)10.5198.81310.536
Adjusted/Primary EPS Actual ($)10.708.8610.47
Primary EPS – # of Estimates211817
Revenue – # of Estimates171414

Values retrieved from S&P Global.*

Implications:

  • Q2 revenue beat consensus; EPS modest miss relative to S&P’s “Primary EPS” (which aligns to adjusted EPS history for URI); top-line momentum stronger than expected while margin mix/ancillary diluted EPS vs expectations .

Key Takeaways for Investors

  • Revenue quality is increasingly ancillary-driven; expect sustained top-line resilience with some EBITDA margin dilution from mix/delivery while specialty continues to outgrow .
  • Guidance raised across revenue, adjusted EBITDA, operating cash flow, and FCF; 2025 buybacks increased to $1.9B, signaling confidence and enhanced capital return profile .
  • Tax reform is a material FCF catalyst (baseline +~$400M); supports elevated shareholder returns and optionality for disciplined M&A .
  • Used market normalization should persist but appears to be stabilizing; recovery rates improved sequentially and remain healthy, supporting fleet rotation and capital efficiency .
  • Watch H2: expected moderation of delivery/repositioning cost drag and ancillary growth pace (post Yak lap) could aid margins/flow-through sequentially .
  • Strategic focus on utilities/power/data center projects and technology-enabled service (Total Control/telematics) underpin competitive differentiation and customer stickiness .
  • Dividend maintained ($1.79/quarter) and ABL upsized to $4.5B; balance sheet/liquidity remain robust (net leverage 1.8x; ~$3.0B liquidity) .

Notes and additional references:

  • Q2 press release/8-K details: revenue, EPS, EBITDA, margins, guidance, capital management, YTD cash flows and segment performance .
  • Q2 earnings call transcript: commentary on margin mix, delivery/repositioning, tax reform FCF tailwinds, specialty growth, M&A pipeline, macro .
  • Q1 2025 8-K: reaffirmed guidance baseline; rental revenue, specialty margins, ancillary dynamics; FCF and leverage; dividend/buyback .
  • Dividend announcement (Jul 23): $1.79 per share quarter .
  • Conference call notice (Jul 10) .

*Values retrieved from S&P Global.