Equipment rental company United Rentals (NYSE:URI) reported Q1 CY2025 results exceeding the market’s revenue expectations , with sales up 6.7% year on year to $3.72 billion. The company expects the full year’s revenue to be around $15.85 billion, close to analysts’ estimates. Its non-GAAP profit of $8.86 per share was 0.5% above analysts’ consensus estimates.
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Revenue: $3.72 billion vs analyst estimates of $3.63 billion (6.7% year-on-year growth, 2.5% beat)
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Adjusted EPS: $8.86 vs analyst estimates of $8.81 (0.5% beat)
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Adjusted EBITDA: $1.67 billion vs analyst estimates of $1.61 billion (44.9% margin, 3.6% beat)
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The company reconfirmed its revenue guidance for the full year of $15.85 billion at the midpoint
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EBITDA guidance for the full year is $7.33 billion at the midpoint, in line with analyst expectations
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Operating Margin: 21.6%, down from 24.4% in the same quarter last year
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Free Cash Flow Margin: 29.1%, up from 24.6% in the same quarter last year
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Organic Revenue rose 4.2% year on year, in line with the same quarter last year
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Market Capitalization: $41.18 billion
United Rentals’ latest quarter was shaped by ongoing expansion in both its core general rental business and the fast-growing specialty segment, with management highlighting the strength of large project demand and healthy used equipment sales. CEO Matthew Flannery emphasized that the company’s focus on cross-selling and adding value-added services has allowed United Rentals to deepen relationships and drive revenue through its one-stop-shop strategy. The team cited a robust start to the year, supported by operational execution and continued customer optimism in construction and industrial markets.
On the company’s outlook, management reaffirmed guidance for the full year, pointing to solid customer backlogs and confidence among national accounts. Flannery noted that while macroeconomic uncertainty remains, internal indicators and customer feedback suggest a steady environment for the remainder of the year. CFO Ted Grace underscored that cost discipline and capital allocation remain priorities, with the company well-positioned to react if conditions change. “The year is playing out in a standard seasonal growth pattern and gives us a lot of confidence that there will be the demand to meet our goals here,” Flannery told analysts.
United Rentals’ management credited the quarter’s performance to solid demand across construction and industrial segments, the continued scale-up of specialty rentals, and disciplined capital allocation. The quarter also reflected margin headwinds due to a shift in business mix and higher delivery costs.
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Specialty segment momentum: The specialty rental business experienced double-digit growth, driven by demand from large projects and expanded product offerings. Management cited the opening of eight new specialty locations as a key enabler for this momentum.
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Growth in value-added services: Ancillary services such as fueling, delivery, and installation—especially within specialty—outpaced the core rental business and supported deeper customer engagement, even as these offerings compressed overall margins.
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Used equipment demand: United Rentals achieved record proceeds from used equipment sales, with management attributing this to strong market demand rather than pricing benefits from new equipment tariffs, which have not yet impacted the market.
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Operational challenges and margin mix: Costs related to the repositioning of fleet for large projects, as well as a greater share of lower-margin ancillary revenue, contributed to the year-on-year margin compression. Management stated that these factors are largely a function of customer needs and are expected to fluctuate with demand.
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Capital allocation strategy: The company completed a prior share repurchase program and announced a new $1.5 billion authorization. Management reiterated that funding organic growth and maintaining a strong balance sheet are top priorities, with M&A opportunities in specialty remaining a focus.
Management expects that the company’s performance in the coming quarters will be influenced by continued demand for large projects, growth in specialty rentals, and the ability to manage costs amid a shifting revenue mix.
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Specialty growth as a key lever: United Rentals aims to maintain double-digit specialty segment growth through geographic expansion and new product introductions, supporting both revenue and customer retention.
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Macro and tariff uncertainty: Management believes that any increase in tariffs or macroeconomic volatility could make equipment rental more attractive compared to ownership, potentially boosting demand. However, such factors may also impact construction activity and margin structure.
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Cost management and operational flexibility: The company’s ability to flex costs with volume and adapt to changing project needs, especially in repositioning fleet and adjusting ancillary service delivery, will be critical to maintaining profitability in a slower growth environment.
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David Raso (Evercore ISI): Asked about the sustainability of fleet productivity and the impact of tariffs on customer rental decisions. Management clarified that most 2025 equipment purchases are insulated from tariffs and that productivity should remain steady.
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Rob Wertheimer (Melius Research): Sought details on margin headwinds from fleet repositioning and ancillary mix. Management explained these are driven by project locations and customer needs, with cost impacts expected to vary.
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Jamie Cook (Credit Suisse): Probed confidence in achieving through-cycle incremental margins amid slower top-line growth. CFO Ted Grace maintained that margin expansion remains achievable as growth accelerates and cost leverage improves.
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Michael Feniger (Bank of America): Requested insight into the drivers of specialty growth and its sustainability. CEO Flannery emphasized broad-based demand, product expansion, and cross-selling as ongoing contributors.
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Kyle Menges (Citi): Asked about visibility into backlog and the effect of future tariffs on used equipment values. Management indicated strong backlog visibility from major projects and no current tariff impact on used values.
Looking forward, StockStory analysts will be monitoring (1) the pace and breadth of specialty rental expansion, including new cold starts and product lines, (2) how United Rentals manages margin pressures arising from business mix and operational costs, and (3) the company’s ability to capitalize on demand from large-scale projects amid macroeconomic and tariff uncertainties. Developments in the M&A pipeline and the effectiveness of cross-selling strategies will also be important indicators of future growth.
United Rentals currently trades at a forward P/E ratio of 14.2×. Is the company at an inflection point that warrants a buy or sell? The answer lies in our free research report.
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