United Rentals, Inc. (URI Quick QuoteURI - Free Report) witnessed a 2.9% rise in its share price during the after-hours trading session yesterday, following the release of the first-quarter 2025 results. The company’s earnings per share (EPS) and revenues surpassed the Zacks Consensus Estimate. On a year-over-year basis, the top line increased, but the bottom line declined.

The company reported record first-quarter revenues and adjusted EBITDA, driven by strong demand across construction and industrial-end markets. This performance, along with sustained customer activity, supported the reaffirmation of full-year guidance as the company enters its peak season.

With a clear focus on its established strategy, the company continues to prioritize disciplined capital deployment and operational efficiency. Backed by a solid balance sheet and a new $1.5 billion share repurchase authorization, the company is positioned to sustain growth, generate strong free cash flow and create long-term value.

United Rentals’ Quarterly Highlights

Adjusted EPS of $8.86 topped the Zacks Consensus Estimate of $8.84 by 0.2%. The reported figure, however, decreased 3.2% from the prior-year adjusted figure of $9.15 per share. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Total revenues were $3.719 billion in the quarter, surpassing the consensus mark of $3.563 billion by 4.4%. On a year-over-year basis, the top line grew 6.7%.

Equipment Rentals’ revenues increased 7.4% from the year-ago quarter to $3.145 billion, marking a record high for the first quarter. Fleet productivity inched up 3.1% year over year and the same increased 3.1%, excluding the impact of the Yak acquisition. Average original equipment at cost increased 3.3% year over year.

Used equipment sales (or sales of rental equipment) decreased 1.6% from a year ago to $377 million. This produced an adjusted gross margin of 47.2%, which contracted 610 basis points (bps). The decrease in the year-over-year adjusted gross margin primarily resulted from the ongoing normalization of the used equipment market, which includes pricing adjustments.

URI’s Segment Discussion

General Rentals: This segment registered 1.4% year-over-year growth in rental revenues to a first-quarter record of $2.099 billion. Rental gross margin contracted 60 bps year over year to 32.3%, indicating the impact of inflation and normal cost variability, including higher delivery and certain other costs.

Specialty: Segmental rental revenues improved 21.8% year over year to a first-quarter record of $1.046 billion. Excluding the impact of the Yak acquisition, rental revenues grew 14.8% year over year. Rental gross margin, however, contracted 600 bps year over year to 43.1%, indicating higher depreciation expense related to the Yak acquisition. This was further impacted by a larger portion of 2025 revenues coming from lower-margin ancillary services. Rising inflation and normal cost variability also added pressure. In addition, expenses related to repositioning the fleet to meet strong demand contributed to the overall decrease in gross margin.

URI’s Margins

The company’s total equipment rentals’ gross margin contracted 180 bps year over year to 35.9%.

Adjusted EBITDA for the reported period grew 5.3% year over year to $1.7 billion. Our estimate for the metric was $1.605 billion. However, the adjusted EBITDA margin contracted 60 bps to 44.9%. This decline in the adjusted EBITDA margin primarily stemmed from a decreased rental and used equipment sales gross margin, along with higher SG&A expenses. However, this was partially offset by the positive impact of the H&E break-up fee.

URI Gains From H&E Deal Termination

United Rentals entered into a merger agreement with H&E in January 2025, which was terminated in February. As a result, the company received a $64 million break-up fee. After deducting related transaction costs, a net benefit of $39 million was recorded in the first-quarter results.

Balance Sheet of URI

United Rentals had cash and cash equivalents of $542 million as of March 31, 2025, up from $429 million at 2024-end. Total liquidity was $3.345 billion at the first-quarter end. Long-term debt at the first quarter of 2025-end was $11.5 billion, down from $12.23 billion at 2024-end.

On March 31, 2025, the net leverage ratio was 1.7x compared with 1.8x on Dec. 31, 2024. Return on invested capital decreased 10 bps year over year to 12.6% for the trailing 12 months ended on March 31, 2025.

During the first quarter of 2025, cash from operating activities improved 38.5% year over year to $1.425 billion. Free cash flow grew 24.5% year over year to $1.082 billion for the said period.

During the quarter, the company returned $368 million to its shareholders, including $250 million through share repurchases and $118 million in dividends.

URI’s 2025 Guidance Raised

Total revenues are now expected to be in the range of $15.6-$16.1 billion compared with $15.1-$15.3 billion expected earlier. The new expectation reflects quite an improvement from $15.345 billion reported in 2024.

Adjusted EBITDA is now projected to be between $7.2 billion and $7.45 billion compared with $7.115 billion and $7.215 billion projected earlier. The guidance reflects an increase from $7.160 billion reported in 2024.

Net rental capital expenditure is now anticipated to be in the range of $2.2-$2.5 billion (after gross purchases of $3.65 billion to $3.95 billion) compared with $2.235 billion after gross purchases of $3.756 billion in 2024.

Net cash provided by operating activities is anticipated to be in the range of $4.5-$5.1 billion. Free cash flow (excluding the impact of merger and restructuring-related payments) is expected to be in the range of $2-$2.2 billion.

URI Stock’s Zacks Rank

Currently, United Rentals carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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