United Rentals shares surged on Thursday, leading the S&P 500, after the company reported stronger-than-expected first-quarter results and raised its full-year guidance on the back of robust demand across construction and industrial markets.
The equipment rental provider posted adjusted earnings per share of $9.71 for the first quarter, up from $8.86 a year earlier and well above Wall Street expectations of about $8.95.
Total revenue rose roughly 7% year over year to about $3.98 billion, exceeding analyst estimates of $3.87 billion, according to FactSet.
The strong performance triggered a sharp rally in the stock, which climbed about 23.7% to $993.22 during the session, making it the top performer in the S&P 500.
The stock is now up 32% in April and about 19% year to date.
Strong demand drives record rental revenue
United Rentals’ results were underpinned by broad-based growth across its business lines, particularly in nonresidential construction and industrial end markets.
“Markets saw strong growth led by nonresidential construction and infrastructure,” said CEO Matthew Flannery. “On the industrial side, power and mining and minerals were notable standouts.”
Flannery noted that the company benefited from a wide range of new construction projects during the quarter, spanning healthcare, infrastructure, power, manufacturing, industrial, and data centre developments.
Rental revenue increased 8.7% year over year to a record $3.42 billion, while average original equipment cost rose 5.7%.
Fleet productivity improved by 2.3%, reflecting efficient asset utilisation. However, used equipment sales declined 7.2%, highlighting mixed performance across non-rental segments.
Specialty rental operations continued to outpace the core business, with revenue rising 13.8%, although margins in this segment declined due to higher costs and changes in revenue mix.
Margins expand as profitability improves
At the consolidated level, profitability showed modest improvement.
Gross profit reached $1.47 billion, translating to a margin of 36.9%, compared with 36.5% a year earlier. Operating income stood at $869 million, with operating margins edging up to 21.8%.
Adjusted EBITDA came in at $1.76 billion, with margins expanding to 44.1%, up 80 basis points year over year.
The quarter included a $45 million restructuring charge linked to cost reduction efforts, compared with $1 million in the prior-year period.
Despite this, selling, general, and administrative expenses remained broadly flat at $441 million, indicating cost discipline.
United Rentals maintained a strong balance sheet, with total liquidity of $3.38 billion and a net leverage ratio of 1.9. Net cash provided by operating activities rose to $1.51 billion, while free cash flow was $1.05 billion.
The company also returned $500 million to shareholders through share buybacks and dividends during the quarter.
Outlook raised on strong momentum
Buoyed by its first-quarter performance, United Rentals raised its full-year 2026 outlook across key metrics.
The company now expects total revenue between $16.9 billion and $17.4 billion, up from its previous range of $16.8 billion to $17.3 billion. Adjusted EBITDA is projected between $7.625 billion and $7.875 billion, while free cash flow guidance remains unchanged at $2.15 billion to $2.45 billion.
“The year is playing out better than we expected just a few months ago. Feedback from the field continues to be optimistic, particularly for large projects,” Flannery told analysts.
Looking ahead, the company also expects to benefit from major global events, with Flannery noting that United Rentals “expects to be a key partner” for the FIFA World Cup, as infrastructure and stadium upgrades gather pace across host countries.
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