United Rentals, Inc. Q2 FY2025 earnings call

• Matt Flannery noted solid second quarter results with growth in industrial and construction end markets, and updated 2025 guidance. Specialty rental revenue grew 14% YOY with 21 cold starts in Q2. Spent $1.6 billion on rental CapEx, generated $1.2B free cash flow YTD. - Ted Grace detailed financials: rental revenue up 6.2% to $3.4B, used proceeds $317M with 48.3% margin, adjusted EBITDA $1.81B, margin 45.9%. SG&A increased $18M YOY but flat as % of sales. - Discussed utility vertical win and telematics helping customer productivity, with telematics enhancing efficiency and reducing costs for customers.

Total rental revenue grew 4.5% year-over-year to $3.9 billion. Rental revenue grew 6.2% to $3.4 billion, both second quarter records. Adjusted EBITDA increased to a second quarter record of $1.8 billion, with a margin of nearly 46%. Specialty rental revenue grew 14% year-over-year, opening 21 cold starts in the second quarter. Specialty rental revenue grew 14% year-over-year, while opening 21 cold starts in the second quarter. We remain on track to open at least 50 this year. Used equipment sales: we sold $600 million of OEC, in line with expectations. We generated $317 million of proceeds at an adjusted margin of 48.3% and a 53% recovery rate, both of which reflect sequential improvements. Year-to-date, we've generated free cash flow of $1.2 billion, with the expectation to now generate between $2.4 billion and $2.6 billion for the full year.

• Raised midpoint of total revenue guidance to $15.8B-$16.1B, implying full year growth of roughly 4% at midpoint. - Adjusted EBITDA midpoint increased by $50 million to $7.3B-$7.45B. - Free cash flow guidance raised by $400 million to $2.4B-$2.6B. - CapEx unchanged at $3.65B-$3.95B. - Benefit from recent tax reform on free cash flow.

Q: David Raso asked about price cost, ancillary growth, and 2026 visibility.

A: Matt Flannery said ancillary growth deceleration from Q1 to Q2 as Yak acquisition lapped, expecting less drag in back half. Ted Grace discussed price cost management and ancillary margin.

Q: Michael Feniger asked about free cash flow baseline and M&A pipeline.

A: William Edward Grace said free cash flow baseline increased due to tax bill, Matt Flannery mentioned robust M&A pipeline but disciplined.

Q: Angel Castillo asked about customer behavior and rental penetration.

A: William Edward Grace said customer confidence high, Ted Grace discussed rental penetration continuing to improve.

Q: Clay Williams asked about fleet productivity and M&A pipeline.

A: Matt Flannery said fleet productivity driven by rate, time utilization, and mix; robust M&A pipeline but disciplined.

Q: Jamie Cook asked about ancillary margin and CapEx.

A: William Edward Grace discussed ancillary margin impact on EBITDA, Matt Flannery said no plan to cut CapEx.

Q: Kyle Menges asked about used recovery and EBITDA guide.

A: Matt Flannery said used recovery stabilized, William Edward Grace explained H&E termination fee inclusion in guide.

Q: Steven Fisher asked about CapEx and reacceleration.

A: Matt Flannery said multiple paths to growth, William Edward Grace mentioned tailwinds from election and tax reform.

Q: Ken Newman asked about local accounts and utility projects.

A: Matt Flannery said local market stabilized, William Edward Grace discussed power project timelines.

Q: Steven Ramsey asked about GenRent growth and utility progress.

A: Matt Flannery and William Edward Grace discussed GenRent growth from broad-based demand, Yak helping utility via cross-selling.

Q: Neil Tyler asked about ownership shift and rate discipline.

A: Matt Flannery and William Edward Grace said rental remains better option due to reliability and offerings, rate discipline industry-wide.

Q: Scott Schneeberger asked about M&A and value-added services.

A: William Edward Grace discussed capital allocation framework, Matt Flannery talked about value-added services to add customer value