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UNITED RENTALS, INC. (URI)·Q4 2024 Earnings Summary

Executive Summary

  • United Rentals delivered fourth-quarter records in total revenue ($4.095B), rental revenue ($3.422B), adjusted EBITDA ($1.900B), and adjusted EPS ($11.59), while GAAP diluted EPS was $10.47; adjusted EBITDA margin compressed 210 bps YoY to 46.4% due to used normalization and lower-margin mix .
  • Specialty rental revenue grew 30.5% YoY (18% organic excluding Yak), while General Rentals rose 2.2%; management emphasized strong demand across data centers, manufacturing, power, and large projects .
  • 2025 standalone guidance introduced: total revenue $15.6–$16.1B, adjusted EBITDA $7.2–$7.45B, free cash flow $2.0–$2.2B; implied low-50s recovery rate on ~$2.8B OEC sold and ~50 bps adjusted EBITDA margin compression midpoint as reported, flat ex-used .
  • Board raised the quarterly dividend by 10% to $1.79 per share; buybacks paused ahead of H&E acquisition closing, with free cash flow earmarked to delever pro forma net leverage from ~2.3x to ~2.0x within 12 months post-close .

What Went Well and What Went Wrong

What Went Well

  • Fourth-quarter records across revenue, EBITDA, and EPS demonstrated resilient execution; CEO: “our unique value proposition…provides the foundation…to drive sustainable long-term value” .
  • Specialty strength: rental revenue +30.5% YoY; organic +17.8% ex Yak; management plans ~50+ 2025 cold-starts to sustain growth .
  • Strong used demand: record OEC sold in Q4 with $452M proceeds at 48.9% adjusted margin and 53% recovery rate, enabling fleet rotation and capital efficiency .

What Went Wrong

  • Margin compression: adjusted EBITDA margin down 210 bps YoY to 46.4% driven by used pricing normalization, lower-margin ancillary/re-rent and new equipment mix; net income margin down 140 bps YoY to 16.8% .
  • Rental gross margin pressures in both segments: General Rentals -170 bps to 37.4%; Specialty -170 bps to 45.5% largely from depreciation (Yak) and cost variability .
  • Free cash flow declined 10.8% YoY to $2.058B on higher cash taxes and working capital, despite higher net income .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Total Revenue ($USD Billions)$3.728 $3.992 $4.095
Rental Revenue ($USD Billions)$3.119 $3.463 $3.422
Diluted EPS (GAAP, $)$10.01 $10.70 $10.47
Adjusted EPS ($)$11.26 $11.80 $11.59
Adjusted EBITDA ($USD Billions)$1.809 $1.904 $1.900
Adjusted EBITDA Margin (%)48.5% 47.7% 46.4%
Net Income Margin (%)18.2% 17.7% 16.8%

Segment Breakdown (Q4):

Segment MetricQ4 2023Q4 2024
General Rentals – Rental Revenue ($USD Billions)$2.289 $2.339
General Rentals – Rental Gross Margin (%)39.1% 37.4%
Specialty – Rental Revenue ($USD Billions)$0.830 $1.083
Specialty – Rental Gross Margin (%)47.2% 45.5%

KPIs and Operational Metrics:

KPIQ3 2024Q4 2024
Fleet Productivity YoY (%)3.5% 4.3%
Fleet Productivity YoY ex Yak (%)1.9% 2.0%
Avg OEC YoY Change (%)3.8% 4.1%
Ancillary & Re-rent Contribution to Rental Rev Change (%)1.6% 2.8%
Used Equipment Proceeds ($USD Millions)$321 $452
Used Equipment GAAP Gross Margin (%)45.2% 45.4%
Used Equipment Adjusted Gross Margin (%)49.5% 48.9%
Used Recovery Rate (%)54% 53%
Avg Age of Sold Assets (months)95 ~96

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($B)FY 2025N/A$15.6–$16.1 Introduced
Adjusted EBITDA ($B)FY 2025N/A$7.2–$7.45 Introduced
Net Rental CapEx after Gross ($B)FY 2025N/A$2.2–$2.5; Gross $3.65–$3.95 Introduced
Net Cash from Ops ($B)FY 2025N/A$4.5–$5.1 Introduced
Free Cash Flow excl M&A/Restructuring ($B)FY 2025N/A$2.0–$2.2 Introduced
Used Sales Proceeds ($B)FY 2025N/A~$1.45 Introduced
Used Recovery Rate (%)FY 2025N/ALow 50s Introduced
Adjusted EBITDA Margin (qualitative)FY 2025N/A~50 bps compression midpoint as reported; flat ex-used Introduced
Dividend per Share (Quarterly, $)2025$1.63 (Q4 2024) $1.79 Raised 10%

Earnings Call Themes & Trends

TopicQ2 2024 (Prev -2)Q3 2024 (Prev -1)Q4 2024 (Current)Trend
AI/Technology initiativesInvestments in telematics, customer tech; internal efficiency tools Next-gen telematics; ProBox OnDemand tool tracking rollout Continued tech investment; intentional spend modestly drags flow-through but viewed as high ROI Steady build; execution focus
Supply chain / CapEx cadenceCapEx $1.4B in Q2; supply chain improving Gross CapEx $1.3B; cadence normalized 2025 CapEx cadence expected historically normal; no back-half weighting Normalizing cadence
Macro / SentimentConfidence despite mixed datapoints; ability to flex fleet Customers positive; interest rate easing expectations; hurricanes immediate response Post-election sentiment improved; management not overreacting to executive orders Constructive
Specialty growth~18% organic growth ex Yak; broad-based +24% YoY (15% ex Yak); 15 cold-starts +30.5% YoY (17.8% ex Yak); ~50+ cold-starts planned in 2025 Accelerating
Used marketAdjusted margins normalized; recovery ~59% in Q2 Adjusted margin ~49.5%; recovery 54%; older assets sold Proceeds $452M; adjusted margin 48.9%; recovery 53% Normalization continues
Power/Grid/InfrastructureGrowing end market; strong power business Investments and tailwinds early innings Power ~10% of revenue; grid upgrades needed; infrastructure spending supportive Sustained tailwind
M&ARobust pipeline; international toe-holds Continued pipeline; balance sheet strong H&E acquisition pending; buybacks paused; deleveraging planned Strategic focus

Management Commentary

  • “Fourth-quarter records across revenue, EBITDA and earnings…Our unique value proposition…provides the foundation…to drive sustainable long-term value” — CEO Matthew Flannery .
  • “Adjusted EBITDA increased to a fourth quarter record of $1.9 billion…adjusted EPS grew year-over-year to $11.59” — CEO overview of Q4 .
  • “We expect to sell around $2.8 billion of OEC [in 2025] translating to recovery rate in the low 50s…implies ~50 bps of margin compression at the midpoint of guidance” — CFO William Grace .
  • “We’ll be raising our quarterly dividend by 10% year-over-year to $1.79 per share” — CEO .
  • “Specialty rental revenue impressively grew more than 30% year-over-year and even without Yak, a strong 18%” — CEO .

Q&A Highlights

  • Ancillary/re-rent and margin math: storm-related opportunities and Specialty setup services lifted ancillary/re-rent; excluding used and stronger new sales, EBITDA margin down ~130 bps; adjusting for ancillary/re-rent, margin down ~60 bps with implied flow-through ~40% .
  • Large projects pipeline: similar to last year; demand carried into 2025; normal seasonality expected—no back-half weighting .
  • Power vertical scale: ~10% of total revenue; solar/wind small; grid upgrade needs durable, regardless of politics .
  • Specialty organic growth: ~18% ex Yak; strong growth across mobile storage (Pac-Van), Yak, Reliable Onsite Services; plan for ~50+ 2025 cold-starts .
  • Fleet productivity outlook: aim to outrun ~1.5% fleet inflation; time utilization targeted neutral; constructive rate environment persists .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS, revenue, and EBITDA was unavailable at time of writing due to data access limits; we therefore cannot quantify beats/misses versus consensus today [Tool error].
  • Given reported records in revenue/EBITDA/EPS and YoY rental revenue growth (+9.7%), sell-side models may need to reflect: continued used margin normalization, lower-margin ancillary/re-rent mix, Specialty-led growth, and 2025 guidance implying ~3.3% revenue growth at midpoint and ex-used flat EBITDA margins .

Key Takeaways for Investors

  • Specialty strength is the core growth engine (30.5% YoY; 17.8% ex Yak), with planned ~50+ cold-starts in 2025; expect cross-sell to large projects and power to sustain outperformance .
  • Margins compressed primarily on used normalization and lower-margin mix; ex-used profitability is steadier—focus attention on used recovery rates (low-50s guided) and ancillary/re-rent composition through 2025 .
  • 2025 standalone guide is conservative but constructive: revenue $15.6–$16.1B, adjusted EBITDA $7.2–$7.45B, FCF $2.0–$2.2B; watch H1 cadence and local market sentiment normalization .
  • Capital allocation shifts near term: dividend raised to $1.79; buybacks paused to fund H&E acquisition and delever to ~2.0x within 12 months post-close—monitor pro forma integration and leverage trajectory .
  • Used market demand remains healthy (record OEC sold), but pricing normalizes; monitor recovery rates and asset age to gauge margin path and fleet rotation efficacy .
  • Fleet productivity continues to outrun inflation; with time utilization targeted neutral and constructive pricing, expect rental revenue to grow faster than fleet growth, supporting returns even in a slower growth phase .
  • Macro tailwinds (data centers, manufacturing, power/grid, infrastructure) plus tech investments (telematics, tool tracking) enhance customer entanglement and operational efficiency—near-term flow-through drag should be offset by medium-term ROI .