EquipmentShare.com Inc. Q4 FY2025 earnings call

Good morning. Thank you for attending today's Equipment Share Q4 and full year 2025 financial results conference call. We're pleased to report strong fourth quarter and full year 2025 results as we continue executing against our operational and financial objectives. Our top priority is solving problems for customers. Driven by our differentiated, tech-empowered offering, a strong demand environment in the end marks we serve, and a relentless focus on execution, 2025 was a banner year for EquipmentShare. The equipment rental industry is fragmented. Job sites are getting larger, faster moving, and more operationally demanding. Our integrated model combines physical distribution at scale, operator grade experience, and our proprietary technology platform, T3. T3 connects the job site with a sensitive server environment and creates unified data. It powers both our operations and provides insights to customers. We incurred $252 million of one-time new market startup cost in 2025 to support new site openings, and expect those sites to contribute meaningfully to earnings and cash flow as they mature. The OWN program works as EquipmentShare purchases new equipment, enters it into the rental fleet, then sells into the OWN program, with participants including high-net-worth individuals, family offices, and institutional investors. The program's success is powered by T3.

Full year 2025 highlights: Rental segment revenue was $2.7 billion, up 34% year over year. Adjusted core EBITDA was $1.7 billion, up 32% year over year. Mature site rental segment adjusted EBITDA margin was 54%, in line with the target of over 50%. Mature site return on invested capital was 16.5%.

For the full year ending December 31st, 2026, we expect rental segment revenue of $3.3 billion to $3.6 billion, representing 27% year-over-year growth at the midpoint. OEC of $10 billion to $11 billion. Full service rental locations of $421 to $429. Total revenues of $5 billion to $5.5 billion. Adjusted core EBITDA of $1.8 billion to $1.9 billion. Growth capex of $2.1 billion to $2.3 billion. Net rental capex of $759 million to $839 million. And to own program payouts of $891 million to $947 million.

The call mentions that forward-looking statements are based on current expectations and assumptions and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. Please refer to our earnings press release, our earnings presentation, and our SEC filings for a discussion of these risks and uncertainties.

Q: Jerry Reddick with Wells Fargo Securities asked to expand on the conversation on the mature site performance in the quarter and about cohort developments.

A: In 2025 and Q4, strong performance from mature sites with margins at 54% for the year and 16.5% RIC. Growth of immature sites was a little bit faster ramp than usual in 2025, and years two through five data set is pretty similar with low 50s margins.

Q: Joe Ritchie with Goldman Sachs asked about the cadence for the new rental site location and margin expansion.

A: The 73 new sites is linear in nature. As more than 50% of stores are mature, it will improve the margin profile across the entire company.

Q: Rob Wertheimer with Mel's Research asked about how seeing the rest of the year, if smaller markets have bottomed and gaining share in megaprojects.

A: Megaprojects are leading a construction surge. We have flexibility to take advantage in different times as we are embedded in customers' workflows. 90% of revenue in 2025 is driven by national and regional customers.

Q: Aaron Tamsen with Citizens asked about the durability of T3 and why it's hard for competitors to emulate.

A: We've been developing T3 for over a decade, it's a sensor-to-server environment, OEM agnostic, and we built it from the ground up. The industry has different choices in technology, but our platform is a decade ahead in development.

Q: Mig Dobre with RW Baird asked about customer sentiment since the start of the war and impact on P&L from higher diesel prices.

A: Not seeing macro pressures from customers now, but higher diesel prices will drive efficiency which drives towards equipment sharing.

Q: Jamie Cook with Truist Securities asked about visibility to 2026 and longer-term OEC targets.

A: 27% growth year over year is a cadence we've been executing on for the last decade. Longer-term OEC target is still $20 billion or more.

Q: Ken Newman with T-Bank asked about new market startup costs and expectations for the revenue growth of the building products business.

A: $2.5 million per new market. The building products business will follow the disciplined growth of the rental business.

Q: Avi with UBS asked about strategy for staffing new branches and expectations for equipment sales this year.

A: We use tools for technicians to do jobs better and have massive influx of applicants. Equipment sales' main drivers are used equipment and re-owned program, with OWN program margins typically about 10 to 15%.

Q: Scott Schneeberger with Oppenheimer asked about the model having in tail and evolution of specialty rental.

A: There's an increase of existing customers with organic adoption. Specialty rental is extremely important, grew 34% year-over-year, and includes various asset categories like energy support, HVAC, pumps, compressed air, and site solutions.