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UNITED RENTALS, INC. (URI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered record revenue and adjusted EBITDA, with total revenue $4.229B (+5.9% y/y) and adjusted EBITDA $1.946B (46.0% margin); adjusted EPS was $11.70. Management raised FY25 revenue and capex guidance on stronger large-project demand, despite margin pressure from delivery/ancillary mix and higher specialty depreciation .
  • Results vs consensus: revenue beat ($4.229B vs $4.159B*), but adjusted EPS missed ($11.70 vs $12.29*); management attributed margin headwinds primarily to elevated delivery/repositioning costs and mix shift to ancillary services . Values retrieved from S&P Global.
  • Guidance raised: FY25 total revenue to $16.0–$16.2B (from $15.8–$16.1B) and gross rental purchases to $4.0–$4.2B (from $3.65–$3.95B); free cash flow reduced to $2.1–$2.3B reflecting higher fleet investment to serve demand .
  • Stock reaction catalysts: raised revenue and capex guidance, sustained large-project momentum into 2026, plus continued capital returns (targeting $1.9B buybacks in 2025; $1.79 quarterly dividend declared) .

What Went Well and What Went Wrong

  • What Went Well

    • Large-project demand drove third-quarter records in total and rental revenue; fleet productivity rose 2% y/y; specialty rental revenue grew 11.4% y/y .
    • CEO: “Our updated guidance reflects the momentum we expect to carry through the rest of the year… our one-stop-shop model, unparalleled service levels, and industry-leading technology differentiates our value proposition” .
    • Balance sheet/liquidity remained strong: net leverage 1.86x; total liquidity $2.452B; amended ABL to $4.5B capacity, extended to 2030; ROIC 12.0% TTM .

  • What Went Wrong

    • Margin pressure: adjusted EBITDA margin fell 170 bps y/y to 46.0% (net income margin down 110 bps to 16.6%) on higher delivery/repositioning costs and used-equipment normalization .
    • Specialty margins compressed 490 bps y/y to 45.1%, largely from higher depreciation (matting) and delivery costs; CFO quantified delivery costs up ~20% y/y in Q3, implying >$30M additional cost (~80 bps EBITDA margin drag) .
    • Free cash flow guide lowered to $2.1–$2.3B (from $2.4–$2.6B) to fund higher capex; used equipment gross margins also reflected continued normalization vs prior year .

Financial Results

Quarterly trend (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Total Revenue ($B)$3.719 $3.943 $4.229
Rental Revenue ($B)$3.145 $3.415 $3.665
GAAP Diluted EPS ($)$7.91 $9.59 $10.91
Adjusted EPS ($)$8.86 $10.47 $11.70
Adjusted EBITDA ($B)$1.671 $1.810 $1.946
Adjusted EBITDA Margin (%)44.9% 45.9% 46.0%
Net Income Margin (%)13.9% 15.8% 16.6%

Q3 2025 performance vs YoY and consensus

MetricQ3 2024Q3 2025 Consensus*Q3 2025 Actual
Total Revenue ($B)$3.992 $4.159*$4.229
Adjusted EPS ($)$11.80 $12.29*$11.70
Adjusted EBITDA Margin (%)47.7% —46.0%
Net Income Margin (%)17.7% —16.6%

Values retrieved from S&P Global.

Segment performance

SegmentQ2 2025 Rental Revenue ($B)Q2 2025 GM (%)Q3 2025 Rental Revenue ($B)Q3 2025 GM (%)
General Rentals$2.268 35.1% $2.400 36.7%
Specialty$1.147 45.8% $1.265 45.1%
Total Equipment Rentals$3.415 38.7% $3.665 39.6%

KPIs and other operating metrics

KPIQ3 2025
Fleet Productivity YoY (%)+2.0%
Average OEC YoY (%)+4.2%
Ancillary + Re-rent Contribution to Rental Rev YoY (%)+1.1%
Used Equipment Sales Proceeds ($M)$333
Used Equipment GAAP GM (%)44.1%
Used Equipment Adjusted GM (%)45.9%
OEC Sold ($M) / Recovery Rate (%)$619 / 54%
Net Leverage (x)1.86x
Total Liquidity ($B)$2.452
ROIC (TTM) (%)12.0%

Guidance Changes

MetricPeriodPrevious Guidance (Q2)Current Guidance (Q3)Change
Total RevenueFY 2025$15.8–$16.1B $16.0–$16.2B Raised
Adjusted EBITDAFY 2025$7.3–$7.45B $7.325–$7.425B Narrowed (midpoint maintained)
Net Rental Capex After Gross PurchasesFY 2025$2.2–$2.5B after $3.65–$3.95B gross $2.55–$2.75B after $4.0–$4.2B gross Raised
Net Cash from OperationsFY 2025$4.9–$5.5B $5.0–$5.4B Narrowed
Free Cash Flow (ex M&A/Restructuring)FY 2025$2.4–$2.6B $2.1–$2.3B Lowered

Note: FCF reduced to fund higher fleet investment; cash from operations midpoint unchanged .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Large project demand & pipelineSolid momentum; specialty-led growth; reaffirmed/raised FY guide; large projects strong Higher win rates; accelerated capex to meet demand; 2026 expected to be a growth year Improving
Ancillary/delivery costsInflation and delivery costs pressured margins in Q1/Q2 Delivery costs +20% y/y in Q3; ~80 bps EBITDA drag; ancillary outpaced OER and is margin-dilutive Worsening (cost drag)
Specialty (matting/Yak) depreciationSpecialty margins compressed; Yak drove higher depreciation 490 bps y/y GM decline; ~200 bps from depreciation Mixed (growth with margin drag)
Used equipment marketNormalizing margins; strong proceeds in Q1/Q2 Healthy demand; $619M OEC sold; 54% recovery rate Stable
Capex & fleet positioningRaised gross purchases and buybacks in Q2 Raised gross purchases to $4.0–$4.2B; capex acceleration in Q3 to meet demand Increasing
Local marketsBroad demand previously; mixed in Q2 Local markets flattish; growth led by mega projects Stable to Soft
Power verticalGrowing focus (multi-quarter) ~11–12% of revenue; nearly tripled since 2016 focus Improving
2026 outlookNot quantified earlierExpecting healthy growth; more detail in January Positive

Management Commentary

  • CEO Matt Flannery: “Our team did an outstanding job… as we continued to lean into growth across both our general rentals and specialty businesses, and our updated guidance reflects the momentum we expect to carry through the rest of the year.”
  • “Looking ahead… growth opportunities… particularly within large projects and across key verticals… one-stop-shop model… industry-leading technology differentiates our value proposition” .
  • CFO Ted Grace on margin drivers: “Delivery costs increased 20% year on year… implies over $30 million of additional cost… almost 80 bps drag on EBITDA margins” .
  • On 2026: “Based on what we see today, 2026 will be another year of healthy growth” .
  • On ancillary mix: ancillary/re-rent grew >10% and outpaced OER; positive GP dollars but dilutive to margins .

Q&A Highlights

  • Capex acceleration and 2026: Q3 capex was not a 2026 pull-forward; accelerated to meet large-project wins; 2026 still expected to be a growth year; plan to refine cadence during planning .
  • Delivery/ancillary headwind: Delivery (thin margins) and ancillary mix are structurally dilutive; cost spike driven by fleet repositioning to mega projects and use of outside haul during seasonal peak .
  • Specialty margins: ~200 bps of the 490 bps y/y GM compression due to accelerated depreciation in matting (Yak); remainder from delivery/ancillary .
  • End-market commentary: Local markets flattish; growth led by mega projects across infrastructure, nonresidential, data centers, semis, hospitals, LNG, airports; power vertical now ~11–12% of revenue (up from ~4% in 2016) .
  • Cold starts & footprint: 18 specialty cold starts in Q3; 47 YTD; potentially 10–12 more in Q4 depending on real estate/talent; 2026 plans forthcoming .

Estimates Context

  • Q3 2025 vs S&P Global consensus: Revenue beat ($4.229B vs $4.159B*), adjusted EPS miss ($11.70 vs $12.29*). Values retrieved from S&P Global.
  • Implications: Street likely to raise revenue and capex assumptions but temper margin/EPS expectations near-term given quantified delivery cost drag (~80 bps) and continued ancillary mix; management kept EBITDA midpoint unchanged while raising revenue, citing lower pull-through from ancillary and delivery cost dynamics in Q4 .

Comparison table

MetricConsensus*Actual
Revenue ($B)4.159*4.229
Adjusted EPS ($)12.29*11.70

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Large-project momentum remains the core growth engine; management raised FY25 revenue and gross purchases and sees healthy growth into 2026—supportive for multi-quarter top-line resilience .
  • Near-term margin headwinds are quantifiable and tied to delivery/repositioning and ancillary mix; management is exploring fleet positioning and capex approaches to mitigate costs in 2026 .
  • Specialty growth (including matting) is strong but depreciation-intensive; expect ongoing mix pressure on margins even as revenue scales .
  • Capital returns remain robust (targeting $1.9B buybacks in 2025; $1.79 dividend declared), with leverage <1.9x and ample liquidity—supporting downside protection and optionality for M&A .
  • Used equipment market healthy (54% recovery rate), supporting capex recycling and fleet refresh into 2026 .
  • Trading setup: revenue/guide momentum is positive, but EPS flow-through constrained by delivery/ancillary dynamics; upside catalysts include improved fleet positioning, ancillary pricing/efficiency, and local-market reacceleration .

Additional Disclosures and Notes

  • Dividend: $1.79 per share payable Nov 26, 2025 to holders of record Nov 12, 2025 .
  • Liquidity/ABL: ABL upsized to $4.5B and maturity extended to 2030 in Q3 .
  • Non-GAAP reconciliations: Adjusted EPS and adjusted EBITDA reconciliations provided in company materials .

Values retrieved from S&P Global.