United Rentals Earnings Call: Record Results, Firm Outlook

United Rentals ((URI)) has held its Q4 earnings call. Read on for the main highlights of the call.

United Rentals Leans on Record Results Amid Cost Pressures in Latest Earnings Call

United Rentals’ latest earnings call struck a broadly upbeat tone, underscoring record revenue, record rental income and EBITDA, strong free cash flow, and aggressive capital returns, while openly acknowledging pockets of near-term pressure. Management emphasized that 2025’s operational and financial performance gives them confidence in their 2026 outlook, even as softer fleet productivity, choppy specialty mix in matting, and elevated repositioning and inflationary costs weigh modestly on margins. Overall, the narrative was one of a company using its strong balance sheet and cash generation to invest for growth and reward shareholders, while working through manageable operational headwinds.

Record Revenue and EBITDA Underpin the Quarter

United Rentals delivered another set of records in the fourth quarter, with total revenue up 2.8% year over year to $4.2 billion and rental revenue rising 4.6% to $3.58 billion, both Q4 highs. Adjusted EBITDA reached $1.901 billion, with an as‑reported EBITDA margin of 45.2%, highlighting the underlying profitability of the rental model even as the company absorbed higher costs tied to fleet logistics and project activity. Management framed these results as evidence of resilient demand across end markets and a solid platform to drive continued growth.

Profitability and Returns on Capital Remain Solid

Earnings quality remained strong, with adjusted EPS of $11.09 in the fourth quarter and a full‑year return on invested capital of 11.7%, comfortably exceeding the company’s weighted average cost of capital. This spread signals that United Rentals is not only growing but doing so efficiently, creating economic value rather than simply expanding for scale’s sake. For investors focused on capital discipline, the ROIC figure is a key validation of management’s deployment of both balance sheet capacity and operating capital.

Free Cash Flow Fuels Aggressive Capital Returns

The company’s cash generation was a standout. United Rentals produced roughly $2.18 billion in free cash flow in 2025, equating to a healthy free cash flow margin in the mid‑teens (around 13.5%–14%). Management put that cash to work for shareholders, returning nearly $2.4 billion via about $1.9 billion of share repurchases and $464 million in dividends. The fact that capital returns exceeded free cash flow underlines both the company’s confidence in its outlook and the strength of its balance sheet, with buybacks serving as a key lever to enhance per‑share earnings power over time.

2026 Growth and Profitability Outlook Shows Steady Expansion

Looking ahead, United Rentals guided 2026 total revenue to a range of $16.8 billion to $17.3 billion, implying roughly 5.9% growth at the midpoint and more than 6% growth when excluding used equipment sales. Adjusted EBITDA is expected between $7.575 billion and $7.825 billion, with margins essentially flat at the midpoint once a prior one‑time benefit is stripped out. Management stressed that, even with ongoing cost pressures, the business should sustain robust profitability while continuing to grow revenue at a healthy mid‑single‑digit clip, reflecting both steady demand and careful pricing and fleet management.

Capital Allocation in 2026: Buybacks and Dividend Growth

Capital allocation remains shareholder‑friendly. For 2026, United Rentals plans to repurchase $1.5 billion of its own shares and to raise its quarterly dividend by 10% to $1.97, or $7.88 on an annualized basis. To support a multi‑year repurchase strategy, the company also announced a new $5 billion share buyback authorization. These moves signal a commitment to return substantial capital to shareholders while still funding growth initiatives, suggesting management sees the stock as attractive and cash flows as durable.

Fleet Investment and CapEx Strategy Support Future Demand

United Rentals continues to invest heavily in its fleet to support current and future demand. Gross rental CapEx in 2025 totaled about $4.19 billion. For 2026, the company expects gross CapEx of $4.3 billion to $4.7 billion and net CapEx of $2.85 billion to $3.25 billion. Within that, maintenance CapEx is pegged near $3.4 billion, implying roughly $1.1 billion earmarked for growth CapEx at the midpoint. This balance reflects a strategy of keeping the existing fleet in top condition while selectively expanding into high‑demand categories and geographies.

Specialty Business Delivers Momentum and Expansion Opportunities

The specialty segment continued to be a growth engine, delivering broad‑based gains and benefiting from ongoing expansion. United Rentals opened 60 specialty “cold‑start” locations in 2025, including 13 in the fourth quarter, and management expects to keep growing specialty at a double‑digit pace. The company highlighted significant remaining geographic “white space,” with around 40 cold‑starts referenced in 2026 commentary, underscoring a multi‑year runway for higher‑margin specialty offerings that can diversify revenue and support overall growth and margin resilience.

Balance Sheet Strength Provides Strategic Flexibility

United Rentals enters 2026 with a solid financial foundation, ending the year with net leverage at 1.9x and more than $3.3 billion of total liquidity. This balance sheet strength gives the company flexibility to manage cycles, fund its heavy CapEx program, pursue opportunistic acquisitions or expansions, and sustain elevated shareholder returns. For investors, the combination of moderate leverage and ample liquidity reduces risk while allowing management to stay aggressive in pursuing growth.

Used Equipment Sales Miss on Volume, Pressuring Profit

One of the few soft spots was used equipment sales. Full‑year original equipment cost (OEC) sold came in at $2.73 billion, a bit shy of the $2.8 billion target, mainly because the company chose to keep high‑time assets on rent to satisfy demand. In Q4, United Rentals sold $769 million of OEC at a 50% recovery rate, generating $386 million of proceeds and an adjusted margin of 47.2%. However, used gross profit fell by about $39 million in the quarter, largely due to the volume shortfall. While the used equipment market itself remains healthy, the timing of asset dispositions created a drag versus prior guidance.

Matting Business Volatility Creates Mix and Productivity Noise

The matting business introduced unexpected volatility. A large pipeline project was pushed out of Q4, leading to lumpier results and a material impact on mix and fleet productivity during the quarter. Management emphasized that this was primarily a timing issue, not a structural demand problem, but acknowledged that near‑term results in matting are likely to remain uneven. For investors, this segment adds some quarter‑to‑quarter noise to fleet performance metrics, even as underlying demand for large project work appears intact.

Fleet Productivity Softness Tied to Mix and Timing

Fleet productivity lost some steam in the fourth quarter, advancing only 0.5% versus 2.2% for the full year and roughly 2.0% in the third quarter. Management attributed most of the Q4 deceleration to mix and timing, particularly the matting issue, which alone reduced fleet productivity by about one percentage point compared with Q3. While this softness bears watching, the company framed it as a temporary effect rather than a sign of waning demand, pointing to solid activity levels and robust rental revenue growth.

Margins Face Compression Amid Cost Pressures

Despite strong revenue and EBITDA, margins came under some pressure. Adjusted EBITDA margin contracted by around 120 basis points year over year in Q4, or about 110 basis points excluding the used equipment business. Elevated delivery and fleet repositioning costs alone were estimated to be a roughly 70‑basis‑point headwind. Additional pressure came from strong growth in ancillary services and above‑trend inflation in facilities and insurance. Management outlined actions to mitigate these costs but noted that the full benefits will take time to materialize.

Repositioning and Transportation Costs to Stay Elevated

United Rentals expects repositioning and transportation costs to remain elevated into 2026 as large projects and geographically dispersed demand continue to drive the need to move equipment around the network. While this supports revenue growth, it also adds to expense intensity. The company is implementing mitigation strategies—such as optimizing logistics and network density—but indicated that these efforts will phase in, meaning cost relief will be gradual rather than immediate. This dynamic is embedded in the company’s guidance, which assumes flat margins at the midpoint despite these headwinds.

Used Market Normalization Brings Timing Risks

Management described the used equipment market as “normalized” compared with the extreme conditions of recent years, with demand still healthy but pricing and volumes no longer at peak levels. The decision to keep certain high‑time assets on rent rather than sell them contributed to execution variance versus 2025 guidance on used sales. This highlights an ongoing timing risk: optimizing between on‑rent earnings and disposition proceeds can create short‑term noise even if long‑term economics remain attractive. Investors should expect continued tactical adjustments as the company navigates this more balanced used market environment.

Guidance Signals Steady Growth with Focused Cost Control

United Rentals’ 2026 guidance paints a picture of steady expansion backed by disciplined capital allocation and active cost management. The company expects total revenue of $16.8 billion to $17.3 billion, equating to roughly 5.9% growth at the midpoint and more than 6% growth excluding used equipment. Used sales are projected at about $1.45 billion on roughly $2.8 billion of OEC sold. Adjusted EBITDA is guided to $7.575 billion–$7.825 billion, with margins roughly flat at the midpoint once prior one‑offs are removed. On the investment side, gross rental CapEx is pegged at $4.3 billion–$4.7 billion, with net CapEx of $2.85 billion–$3.25 billion and maintenance CapEx near $3.4 billion, implying around $1.1 billion in growth CapEx. Free cash flow is targeted at $2.15 billion–$2.45 billion. The company plans to return roughly $2 billion to shareholders through $1.5 billion of buybacks and a higher dividend, representing about $32 per share and roughly a 3.5% yield, with cost actions built into the outlook to offset elevated repositioning and ancillary pressures.

In closing, United Rentals’ earnings call painted the picture of a company delivering record results and robust cash returns while working through manageable operational challenges. Strong rental demand, expanding specialty operations, and a solid balance sheet provide a firm base for mid‑single‑digit revenue growth and resilient margins in 2026. While used sales timing, matting lumpiness, and higher logistics and inflationary costs weigh modestly on profitability, management’s clear cost‑mitigation plans and shareholder‑friendly capital allocation reinforce a constructive investment story for investors tracking the stock into the next year.