United Rentals (NYSE:URI) reported what executives called a “strong start” to the year, posting first-quarter records for revenue, EBITDA and earnings per share and raising full-year guidance. President and CEO Matt Flannery said the company is carrying momentum into the peak construction season and continues to see encouraging feedback from customers, particularly tied to large projects.
First-quarter results set records
Flannery said total revenue rose 7% year-over-year to nearly $4.0 billion, with rental revenue increasing nearly 9% to $3.4 billion, both first-quarter records. He attributed the performance to growth, margins and fleet productivity, highlighting the company’s “broad and unmatched offering” across general rentals and specialty, investments in technology, and service execution.
Grace said rental revenue growth was supported “primarily by growth from large projects and key verticals.” He said OER (original equipment rental) increased 6.5% driven by a 5.7% increase in average fleet size and 2.3% fleet productivity, partially offset by fleet inflation of 1.5%.
Demand drivers: specialty growth, large projects, and key verticals
Executives pointed to broad-based activity across both general rentals and specialty. Flannery said specialty revenue grew 14% year-over-year, with growth across all specialty lines and 17 “cold starts” opened during the quarter.
By end market, Flannery said construction performance was led by non-residential construction and infrastructure, while industrial demand was supported by “power and mining and minerals,” with power continuing to deliver double-digit growth. He said new projects began during the quarter across healthcare, infrastructure, power, industrial manufacturing, and data centers.
On the local market environment, Flannery said the company continues to view local markets as stable. “We think the local markets continues to be stable,” he said, adding that the major project pipeline and specialty growth remain key growth drivers.
Asked about a potential demand tailwind from the World Cup, which Flannery mentioned in prepared remarks as beginning in the second quarter, Grace said investors should not model a meaningful incremental impact. “In the scale of our company, I wouldn’t model anything extra for the World Cup,” he said, noting it was already embedded in guidance.
Fleet productivity, pricing, and competition
Fleet productivity of 2.3% was a key focus in the Q&A, including how it may trend through the year. Grace said the market’s supply-demand dynamics remain supportive and reiterated that the company’s goal is to overcome the 1.5% inflation “bogey.” “We continue to get positive rate,” he said, adding that time utilization has remained high and that prior-quarter mix headwinds were viewed as anomalous.
Flannery said the company remains focused on capital efficiency and getting paid for its differentiated offering. He also described mix as a “wild card” that is difficult to predict, referencing the unexpected impact on fleet productivity in the fourth quarter.
On competition in general rentals, Flannery said competition is always present but emphasized differentiation. He said United Rentals has built “a competitive moat” around its offering and targets customers who value its one-stop-shop capabilities, adding that the major project pipeline supports opportunities to provide broader solutions.
Flannery also addressed concerns about OEM dealers expanding rental fleets, saying overlap with United Rentals’ fleet is limited and it is not a major competitive factor outside of certain local market situations.
Cost controls, restructuring, used equipment, and capital allocation
Management discussed cost execution as a contributor to margin performance. Grace said United Rentals recorded $45 million of restructuring charges in the first quarter related primarily to “consolidation of overlapping facilities and headcount reductions.” For the full year, he said the company expects $55 million to $65 million of restructuring charges, and estimated the benefit from these actions at roughly $45 million to $50 million for the full year, with about $10 million in the first quarter.
Flannery said the branch and facility actions were “specific and surgical,” and emphasized there was not meaningful revenue trade-off because the company did not exit markets. “95% plus of our equipment’s delivered,” he said, adding that closures largely addressed “extra real estate” retained after acquisitions.
Delivery and repositioning costs were also a recurring topic. Flannery said the company is not trying to eliminate repositioning and delivery challenges, but to mitigate them with new processes, and that sustaining execution during the second and third quarters will be critical as activity levels increase. Grace said delivery improved by roughly 10 to 15 basis points as a percent of revenue year-over-year, and noted that repositioning has been most pronounced in specialty, though he said the margin drag has improved substantially versus last year.
On fuel, Grace said most exposure is managed through pass-through mechanisms such as a delivery calculator that is updated regularly, and through hedging for internally consumed diesel.
In the used equipment market, Flannery said the company sold $680 million of OEC (original equipment cost) at a 51% recovery rate and remains on track to sell approximately $2.8 billion of fleet during the year, supported by strong used demand. Grace added that used sales generated $350 million of proceeds at an adjusted margin of 47.4% and a 51.5% recovery rate.
United Rentals spent $874 million on gross rental capex in the quarter, and Flannery said the company generated $1.1 billion of free cash flow. Grace put free cash flow at more than $1.05 billion and said return on invested capital was 11.8%.
Capital allocation remained a focus. Flannery said leverage was 1.9x and within the company’s targeted range. Grace said United Rentals returned $500 million to shareholders in the quarter, including $125 million in dividends and $375 million in share repurchases.
Guidance raised as company heads into busy season
Grace said the company raised its outlook based on demand momentum and customer sentiment. Updated guidance calls for:
- Total revenue: $16.9 billion to $17.4 billion (up $100 million from initial guidance)
- Adjusted EBITDA: $7.625 billion to $7.875 billion (up $50 million)
- Gross capex: $4.4 billion to $4.8 billion (up $100 million), implying net capex of $2.95 billion to $3.35 billion
- Free cash flow: $2.15 billion to $2.45 billion
- Used sales: around $1.45 billion
Grace said the higher capex outlook reflects stronger demand and is expected to be offset by higher operating cash flow. He also said the company still plans to repurchase $1.5 billion of shares in 2026 and, combined with dividends, expects to return roughly $2 billion to shareholders, which he equated to about $32 per share and a roughly 4% return of capital yield based on the current share price.
In closing remarks, Flannery reiterated confidence in another record year, pointing to multi-year tailwinds for large projects, ongoing cost and capital discipline, and what he described as a resilient business model and strong balance sheet.
About United Rentals (NYSE:URI)
United Rentals, Inc (NYSE: URI) is a leading equipment rental company headquartered in Stamford, Connecticut. The firm provides rental solutions and related services to construction, industrial, commercial, and municipal customers. Its business model centers on providing access to a broad fleet of equipment on a short-term or long-term basis, enabling customers to avoid the capital expenditure of ownership and to scale equipment use to match project needs.
The company’s product and service offerings span general construction equipment and a range of specialty categories, including aerial work platforms, earthmoving and excavation machines, material handling equipment, pumps, power and HVAC systems, trench and shoring solutions, and tools.
