United Rentals (NYSE:URI) reported record second-quarter revenue and earnings while raising its 2026 outlook, as management said large projects and specialty rental demand continued to run ahead of expectations.
President and CEO Matt Flannery said the company’s growth “accelerated in the quarter,” supported by customers that “remain optimistic, particularly around large projects,” along with continued cost discipline. He said the company’s equipment breadth, technology, service levels and safety focus continue to differentiate United Rentals in the market.
Large Projects and Specialty Rentals Drive Growth
Flannery said United Rentals saw growth in both its General Rentals and specialty businesses. Specialty rental revenue increased 25% year over year, with growth across all lines of business and 11 cold starts during the quarter.
By vertical, Flannery said construction posted strong growth, led by nonresidential and infrastructure activity. On the industrial side, power continued to deliver double-digit growth, while metals and minerals also grew at a healthy pace. He said project activity started in a range of end markets, including hospitals, airports and LNG terminals, while data centers remained a source of growth.
During the question-and-answer portion of the call, Flannery said the major project pipeline was “stronger and deeper,” citing activity tied to power, semiconductor projects, infrastructure, airports, stadiums and pharmaceuticals. He also said semiconductor-related work and power projects accelerated in the second quarter.
Local markets, by contrast, were described as stable with modest growth. Flannery said local customer activity grew in the low single digits and suggested that lower interest rates, residential construction growth and renewed small-business investment could help spur broader local market improvement.
Fleet Productivity, CapEx and Used Equipment Sales
Fleet productivity contributed 3.4% to original equipment rental, or OER, growth of 9% in the quarter, Flannery said. CFO Ted Grace said OER increased by $246 million, driven by 7.1% growth in average fleet size and fleet productivity of 3.4%, partially offset by assumed fleet inflation of 1.5%.
Ancillary and re-rent revenue grew nearly 28%, adding a combined $188 million, Grace said. He noted that the company has been able to pass through higher fuel and delivery costs, though those revenues brought limited incremental margin dollars.
United Rentals sold $624 million of original equipment cost, or OEC, in the used market during the quarter, generating $330 million in proceeds, an adjusted margin of 47.3% and a 52.9% recovery rate. Flannery said the company remains on track to sell approximately $2.8 billion of fleet this year, supported by strong used equipment demand.
The company spent nearly $2.1 billion on gross rental capital expenditures in the second quarter and $2.9 billion year to date, exceeding its initial expectations. Flannery said the demand environment is outpacing the company’s original expectations, and the company is operating at “historically high time utilizations.”
In response to analyst questions, Flannery said United Rentals would not add fleet simply to chase late-2026 revenue. He said the company has confidence in the large project pipeline carrying into next year, though management did not provide 2027 guidance.
Margins and Cost Controls Remain in Focus
Grace said adjusted EBITDA, excluding a $49 million net benefit from the sale of the company’s scaffolding business, increased $197 million year over year to a second-quarter record of just over $2 billion. The increase was primarily driven by a $231 million increase in rental gross profit and a $3 million increase in used gross profit. Selling, general and administrative expense rose $39 million but was flat as a percentage of revenue.
On an as-reported basis, second-quarter adjusted EBITDA margin increased 70 basis points year over year. Excluding the scaffolding gain and the outsized growth in ancillary and re-rent revenue, Grace said margins increased 40 basis points year over year, which he said provided a better view of core cost performance.
Management fielded several analyst questions about delivery, repositioning, labor and repair costs. Grace said the company’s core cost categories of labor, delivery and repair and maintenance showed positive absorption year to date and in the second quarter. Flannery said the company has changed processes and increased coordination to better manage delivery and repositioning costs, despite higher fuel costs.
Grace said higher internal fuel costs represented an incremental 20 to 30 basis points of year-over-year headwind in the quarter. He also said the company realized approximately $12 million of second-quarter benefit from restructuring activities and remains on track for $45 million to $50 million of realized savings in 2026.
Guidance Raised for 2026
United Rentals raised its full-year 2026 guidance, with management saying demand continued to exceed expectations as the company progressed through its busy season.
- Total revenue: Now expected between $17.5 billion and $17.8 billion, up $500 million from prior guidance.
- Adjusted EBITDA: Raised by $300 million to a range of $7.975 billion to $8.125 billion.
- Gross rental CapEx: Increased by $450 million to a range of $4.85 billion to $5.25 billion.
- Net CapEx: Expected between $3.4 billion and $3.8 billion.
- Free cash flow: Reaffirmed at $2.15 billion to $2.45 billion.
- Used equipment sales: Still expected around $1.45 billion.
Grace said the updated outlook implies full-year growth excluding used sales of more than 10% at the midpoint, compared with original guidance closer to 6%. He said the company still expects to maintain flat margins year over year while bringing revenue growth to the bottom line.
Balance Sheet and Capital Returns
United Rentals generated nearly $1.2 billion of free cash flow year to date after funding growth, according to Flannery. Grace said return on invested capital was 11.8%, remaining above the company’s weighted average cost of capital.
Net leverage was 1.8 times at the end of June, within the company’s target range of 1.5 times to 2.5 times, and total liquidity was nearly $3 billion. Grace said S&P recently raised the company’s credit outlook to positive from stable, with the potential for an upgrade from high yield to investment grade within the next 12 months.
Grace said a potential investment-grade rating would not change United Rentals’ capital allocation strategy, adding that management believes the company can pursue an upgrade without constraining its ability to execute on mergers and acquisitions.
The company returned nearly $500 million to shareholders during the quarter through share repurchases and dividends. Year to date, it has returned $998 million, including $750 million through repurchases and $248 million through dividends. Grace said United Rentals still intends to repurchase $1.5 billion of shares in 2026, and combined with the dividend, expects to return roughly $2 billion to shareholders this year.
Flannery said the M&A pipeline remains “robust,” with opportunities across deal sizes. He said specialty rental offerings and new product areas remain priorities, while the company also continues to evaluate deals that could fill geographic or product gaps.
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.
