United Rentals, Inc. (NYSE:URI) Q4 2025 Earnings Call Transcript

United Rentals, Inc. (NYSE:URI) Q4 2025 Earnings Call Transcript January 29, 2026

Operator: Good morning, everyone, and welcome to the United Rentals Investor Conference Call. Please be advised that this call is being recorded. Before we begin, please note that the company’s press release, comments made on today’s call and responses to your questions contain forward-looking statements. The company’s business and operations are subject to a variety of risks and uncertainties, many of which are beyond its control. And consequently, actual results may differ materially from those projected. A summary of these uncertainties is included in the safe harbor statement contained in the company’s press release. For a more complete description of these and other possible risks, please refer to the company’s annual report on Form 10-K for the year ended December 31, 2025, as well as the subsequent filings with the SEC.

You can access these filings on the company’s website at www.unitedrentals.com. Please note that United Rentals has no obligation and makes no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations. You should also note that the company’s press release and today’s call include references to non-GAAP terms such as free cash flow, adjusted EPS, EBITDA and adjusted EBITDA. Please refer to the back of the company’s recent investor presentation to see the reconciliation from each non-GAAP financial measure to the most comparable GAAP financial measure. Speaking today for United Rentals is Matt Flannery, President and Chief Executive Officer; and Ted Grace, Chief Financial Officer.

I will now turn the call over to Mr. Flannery. Please go ahead, sir.

Matthew Flannery: Thank you, operator, and good morning, everyone. Thanks for joining our call. As you know, in 2025, we again committed to doubling down on being our customers’ partner of choice. This translates to working hand-in-hand with our customers to provide an unmatched experience across our one-stop shop of gen rent and specialty products, coupled with industry-leading technology and a world-class team. Ultimately, this all culminates in our value proposition, which not only improves the customers’ productivity and efficiency, but also positions us to outperform the market. I’m pleased that our team’s steadfast dedication to this commitment, in addition to an unwavering focus on safety and operational excellence resulted in another year of record revenue and EBITDA, as you saw in our results reported yesterday afternoon.

Today, I’ll start with a recap of our fourth quarter and full year 2025 results, followed by our expectations for 2026, which we expect to be another year of profitable growth. I’ll keep my remarks brief before Ted reviews the financials in detail, and then we’ll open the line for Q&A. So let’s start with the quarter’s results. Our total revenue grew by 2.8% year-over-year to $4.2 billion. Within this, rental revenue grew by 4.6% to $3.6 billion, both fourth quarter records. Fleet productivity increased by 0.5%, contributing to OER growth of 3.5%. Adjusted EBITDA came in at $1.9 billion, resulting in a margin of 45.2%. And finally, adjusted EPS came in at $11.09. Now let’s turn to customer activity. We again saw growth across both our gen rent and specialty businesses in the quarter.

Q&A Session

Specialty continues to exhibit healthy and broad-based growth. We remain focused on expanding our specialty footprint and capitalizing on the geographic white space available. In 2025, we opened an additional 60 cold-starts, including 13 in the fourth quarter. Importantly, we remain confident that the combination of geographic expansion, the power of cross-sell and the addition of new products to our portfolio will enable us to continue growing our specialty business at a double-digit rate for the foreseeable future while also expanding our competitive moats and providing attractive returns. By vertical, our construction end markets saw growth across both infrastructure and nonresidential construction, while our industrial end markets saw particular strength within power.

Similar to last quarter, data centers and power were drivers of growth, but certainly not the only ones. Our project pipeline is larger than ever, and we saw new projects kick off across health care, pharmaceuticals and infrastructure to name a few. Now turning to the used market. We sold $769 million of OEC in the fourth quarter at a 50% recovery rate. For the full year, we sold slightly less OEC than we originally forecast as we held on to some high-time used assets to meet demand. Importantly, the demand for used equipment remains healthy. For the full year, we spent nearly $4.2 billion on a combination of maintenance and growth rental CapEx, which resulted in a free cash flow generation of $2.2 billion for a free cash flow margin of 14%.

I’ll say it again, as I do every quarter. The combination of our industry-leading profitability, capital efficiency and the flexibility of our business model enables us to generate meaningful free cash flow throughout the cycle and in turn, allocate that capital in ways that allow us to create long-term shareholder value. In 2025, specifically, we allocated capital as we always do, first by funding organic growth and then complementing this with inorganic growth. We then return our remaining cash to shareholders. In 2025, we returned nearly $2.4 billion of excess cash flow to shareholders through a combination of our share buybacks and our dividend. Looking forward, I’m pleased to share that we plan to repurchase $1.5 billion of shares in 2026 and to increase our quarterly dividend by 10%, reflecting our third consecutive annual increase since introducing our dividend in 2023.

Now let’s turn to our 2026 guidance, which implies total revenue growth ex used of over 6%. This is supported by customer sentiment indicators, solid backlogs and most importantly, feedback from our field teams. In many ways, we expect the construct of demand in ’26 to be similar to last year with large projects and dispersed geographic demand driving most of our growth. We’ll remain focused on capital efficiency, but repositioning costs will likely remain elevated. Having said this, we’re very aware of the importance of profitability and margins. Our guidance, which implies flat margins at the midpoint ex the benefit of the H&E termination fee last year, embeds cost actions we’re proactively taking to improve our efficiency and support profitability.

We all know yesterday’s touchdowns don’t win tomorrow’s games. Our culture of always wanting to do more and never being satisfied with the status quo is in our DNA. This was on full display a few weeks ago when we held our annual management meeting in St. Louis. We brought together almost 3,000 team members to both celebrate our wins and to find new ways to be an even better partner to our customers as we look to outperform the end market while having an even greater focus on efficiency and profitability. We have an incredible team at United Rentals with a culture that is unmatched in our industry. This is a real differentiator and gives me confidence we can take our momentum and continue to build a best-in-class company. I’m proud to say that the team walked away from the meetings energized and ready to deliver on the expectations our guidance reflects.

In closing, I’m excited for what lies ahead for United Rentals. Our team puts customers at the center of everything we do, which positions us well in both the short and long term to capitalize on the opportunities ahead of us and to continue to outpace the industry. Our strategy, business model, competitive advantages and capital discipline allow us to generate compelling shareholder returns for the long term. With that, I’ll hand the call over to Ted, and then we’ll take your questions. Ted, over to you.

William Grace: Thanks, Matt, and good morning, everyone. As Matt just shared, we were pleased with a number of our achievements in 2025, including full year records for total revenue, rental revenue and EBITDA, strong free cash flow and attractive returns as we navigated through some of the unique dynamics woven into the current demand backdrop. Looking more closely at the fourth quarter, we were pleased with our core results, which were partially offset by shortfall in used volumes and some choppiness in our matting business, which I’m sure we’ll talk more about this morning. So with that said, let’s dive into the numbers. Rental revenue increased $159 million year-over-year or 4.6% to a fourth quarter record of $3.58 billion, supported again by growth from large projects and key verticals.

Within this, OER increased by $97 million or 3.5%, driven by 4.5% growth in our average fleet size and fleet productivity of 0.5%, partially offset by assumed fleet inflation of 1.5%. Also within rental revenue, ancillary and re-rent grew by over 9%, adding a combined $62 million as ancillary growth continued to outpace OER. Moving to used. We generated $386 million of proceeds at an adjusted margin of 47.2% and a 50% recovery rate on $769 million of OEC sold. This brought our full year OEC sold to $2.73 billion, up slightly from 2024, but a bit below our guidance of $2.8 billion as we held on to high-time used fleet in certain categories. Taking a step back, at this point, we think the used market has normalized coming off the extremes we saw in 2022 and 2023, and we do expect 2026 to see healthy demand.

Importantly, though, we’re at recovery rates that will continue to support strong unit economics across the life cycle of our fleet. Turning to EBITDA. Adjusted EBITDA came in at $1.901 billion with a $33 million increase in our rental gross profit dollars more than offset by a $39 million decline in used gross profits due primarily to the shortfall in volumes that I mentioned. On a dollar basis, SG&A ex stock comp was flat year-on-year, translating to a 20 basis point improvement as a percentage of revenue, while other non-rental lines of businesses added $7 million. Looking at profitability. On an as-reported basis, our fourth quarter adjusted EBITDA margin was 45.2%, implying 120 basis points of compression or 110 basis points, excluding the impact of used.

We continue to see the same market and margin dynamics play out in the fourth quarter that we experienced all year. From a cost perspective, the biggest of these was again elevated delivery expense, driven largely by fleet repositioning costs, which we’d estimate provided roughly 70 basis points of headwind in the quarter. Beyond that, growth in ancillary is roughly another 20 basis points of headwind, while we also continue to manage through above-trend inflation in a few notable areas, including facilities and insurance. As you heard from Matt, we expect the demand construct in 2026 to look similar to 2025. We expect that most of our growth will again be led by large projects at the same time that our strategy to provide products and services to our customers is likely to drive outgrowth in ancillary revenues.

With that said, our entire team is working hard to mitigate the headwinds this presents to overall margins as strategically, we continue to believe that providing our customers with these additional services is an important competitive advantage and helps drive higher OER growth. Shifting to CapEx. Fourth quarter gross rental CapEx was $429 million, bringing our full year total to $4.19 billion. Moving to returns. Our return on invested capital of 11.7% remained comfortably above our weighted average cost of capital. And turning to free cash flow, we generated $2.18 billion, translating to a healthy free cash flow margin of 13.5%. Our balance sheet remains very strong with net leverage of 1.9x at the end of December and total liquidity of over $3.3 billion.

This was after returning $2.4 billion to shareholders during the year, including $464 million via dividends and $1.9 billion through repurchases. Combined, this equated to a little better than $37 per share. Now let’s shift to the updated guidance we shared last night, which reflects our confidence in delivering another year of solid results. Total revenue is expected in the range of $16.8 billion to $17.3 billion, implying full year growth of 5.9% at midpoint. Within this, I’ll note that we’re guiding used sales to roughly $1.45 billion on OEC sold of around $2.8 billion, implying total revenue growth ex used of 6.2% at midpoint. Our adjusted EBITDA range is $7.575 billion to $7.825 billion. Excluding the H&E benefit in 2025, this implies adjusted EBITDA margins of flat at midpoint year-on-year.

Importantly, this guidance embeds actions we will be taking in 2026 to offset the cost dynamics I mentioned earlier and speaks to our focus on protecting margins as we work through some of the unique factors facing us until local markets rebound. And from a cost perspective, we’re better able to leverage the efficiencies that our network density will provide. On the fleet side, our gross CapEx guidance is $4.3 billion to $4.7 billion, an increase from 2025 of approximately $300 million at midpoint. This reflects our confidence in the market in 2026 and beyond. Net CapEx is expected in a range of $2.85 billion to $3.25 billion. Now within all of this, we take our 2026 maintenance CapEx at around $3.4 billion, implying growth CapEx of roughly $1.1 billion at midpoint.

And finally, we’re guiding to another year of strong free cash flow in the range of $2.15 billion to $2.45 billion. Shifting to capital allocation. As always, our priority is to fund profitable growth, whether it’s organic or through M&A. Following this, we focus on deploying surplus cash flow in ways to maximize shareholder returns. With that in mind, we are again increasing our quarterly dividend per share by 10% to $1.97, translating to an annualized dividend of $7.88. Additionally, we intend to repurchase $1.5 billion of common stock in 2026, supported in part through our new $5 billion share repurchase program that is intended to enable buybacks for the next several years. So in total, we intend to return roughly $2 billion to shareholders this year, equating to approximately $32 per share or a return of capital yield of about 3.5% based on our current share price.

So with that, let me turn the call over to the operator for Q&A. Operator, please open the line.

Operator: [Operator Instructions] We’ll go first this morning to Steven Fisher of UBS.

Steven Fisher: I wanted to just ask you, Matt, maybe a bigger picture question on ancillary services. Using the, I guess, the baseball innings analogy, where do you think you are on the evolution of this? Is this sort of like the second or third inning where you have a much wider breadth of services left to offer here? Or are we more like kind of sixth to seventh inning and it’s a more targeted list? And I guess what’s the message around the ROIC on these additional sources of EBITDA and points of customer service?

Matthew Flannery: Sure, Steve. It would be hard for me to characterize because I don’t know what other products or services we’ll add in the future, right? It depends on — because we need to do them at scale. So it depends on finding if we’re going to add additional services to the portfolio, which usually come along with products, right, new products that we’re offering, when or how fast that’s going to happen. But I will say that our goal overall is to continue to have as many solutions for the customer as possible. We’re a big believer in one-stop shop. We know that our partners want someone that could do as much for them as possible to consolidate their vendor base and to have strong services throughout the network of what they need, and that’s going to be our driver.

As far as the ROI on these, just one thing to remember, although these may be margin dilutive, most of these services, if not all, are not capital intense. So this net-net on a cash perspective, these are profitable. They just dilute margins. We’re not doing work for free. But at the same time, it’s very much connected to the fleet that we rent. So it’s important that the more we separate ourselves by doing these extra services for the customer is a big important part of our strategy.

Steven Fisher: Very helpful. And then maybe just on M&A and the pipeline. It looks like you did some smaller deals in the fourth quarter after a quiet few quarters. Can you just talk about kind of what you added in the quarter? And then just curious how active the pipeline is? Did you continue any activity here in the first quarter? And what sort of the range of size of deals you’d consider here? Are there any sort of chunkier deals that you could still do?

Matthew Flannery: Yes. So on the latter part of your question, the pipeline is pretty robust. And there’s some chunky deals in there, right, specifically when we’re looking at opportunities in specialty. But the deals that we did at the end of the year here in ’25 were pretty small deals, to your point. We did one trench deal. We did a portable sanitation deal, a very small one to help fill out the footprint. And we did fill out — we bought an aerial company in Australia to fill out that product offering, which will help those folks continue to serve more — have more solutions for their customers there. But no impact — not a large impact numerically, but strategically, they all tie in. And as far as what we’re going to do in ’26, we worked a very robust pipeline this year.

We didn’t get — we got 3 over the transom at the end. It’s really more about finding the right fit, finding the right partner. And at the end of the day, the math has got to work. So we’re pretty picky there, but there’s plenty of opportunity. It just — it’s got to fit for us strategically and financially.

Operator: We’ll go next now to Jerry Revich of Wells Fargo.

Jerry Revich: Ted, I’m wondering if you wouldn’t mind unpacking the comments you made within specialty. You mentioned there’s some variance in the portfolio on Matting. Can you just talk about the growth trajectory for the businesses, which ones are tracking better? And any additional color you want to provide on Matting would be helpful.

William Grace: Yes, yes, absolutely. Thanks for the question. So we saw broad-based strength in specialty again. Matting was affected in the quarter by a pushout of really one particular project that we had expected would benefit the fourth quarter. It’s a large pipeline project that simply has been pushed out. So we’ve got the Matting contract. We know we’re going to be on it and the pipeline itself is moving forward. But that was certainly something that we had not expected, and that’s just the nature of some of the large projects they do, I’d say, in their specific verticals that can move. Otherwise, every vertical was up in specialty, very pleased with the results. And going forward, just as you think about Matting, on a pro forma basis, that business was up 30% for us in ’25.

It was up 55% as reported. When we bought Yak, we said our goal was to double the business within 5 years, and we’re very happy to report that we’re ahead of plan, and we’ve been very happy with the business. It’s going to be a little lumpier, right? And they can have just the effect of timing shifts, and that’s really what you saw in the fourth quarter. But as I said, we’ve been super pleased with the acquisition and the growth, the returns that that’s providing, and we’re really optimistic with the outlook there, both within their kind of core products or end markets, pipelines and transmission lines, but also as we extend those products into other verticals. Matt, would you add anything?

Matthew Flannery: No, well said. The team is doing a good job, just a little lumpier than what you folks are used to seeing from us.

Jerry Revich: Okay. Super. And then can I ask in general rental, we’re seeing really strong demand for earthmoving equipment, but aerials really lagging. Is that a function of the large projects and data centers being less aerials intensive? And curious if you’re seeing based on your customer checks an inflection in starts in retail and office that could be interesting as we head through ’26. Curious what you’re seeing on those fronts.

Matthew Flannery: Yes. We’re actually not experiencing that, Jerry. We’ve been pretty strong in our aerial usage and growth and really the whole project — product portfolio has been strong. So we’re not seeing a delineation there, separation between the dirt and the aerial. Maybe on the OEM side, there’s some stuff going on that you’re referring to, but we’re not seeing it in our customers’ demand needs.

William Grace: And then, Jerry, in terms of your question about kind of office and retail, I can’t — I mean, there are projects that kind of come across the transom. I don’t think we’ve seen any inflection. I would say, overall, the outlook for commercial is probably going to be relatively muted, and it’s other areas of the nonres that are really going to drive — continue to drive what we think will be strong growth.

Operator: We go next now to Angel Castillo with Morgan Stanley.

Oliver Z Jiang: This is Oliver on for Angel today. I was just curious on fleet productivity. Can you guys talk about what drove the year-over-year improvement this quarter? And if it’s possible at a high level, what your outlook implies directionally for those factors, rate and time for 2026?

Matthew Flannery: Sure, Oliver. So when we look at the 0.5% fleet productivity in Q4, there’s a couple of things that I knew we need to handhold here because some things that aren’t as apparent to you guys. So qualitatively, when we think about the construct of that, our full year fleet productivity was 2.2%. We’re very pleased with that. That shows that we’re outpacing the inflation. And just in the most simple terms, we’re growing our rent revenue faster than we’re growing our fleet. That’s really what we’re measuring here. In Q4, we had some impact. So if I think about the 2.0 that we had in Q3, which was more like a full year number versus the 0.5% in Q4, when I look at the factors, rate was positive. As a matter of fact, almost on top of each other of the benefit that we had from rate in Q3 versus Q4 in this we’re exactly the same.

Time was slightly less positive than we had in Q3. So that was a little bit of a drag. The big number here and why we’re talking about it is mix. So just the Matting choppiness that Ted talked about, which is all bulk. That’s why it shows up in mix. Those aren’t serialized assets for those mats. That alone change from Q3 to Q4 was worth a point of fleet productivity. So that’s the big mover there. We usually, frankly, wouldn’t talk about an individual business segment, but we understand that this is unique and it was such a needle mover that we wanted to talk about it. Once again, pleased with the Matting business, but that lumpiness and because it’s all bulk had a big negative mix impact on our fleet productivity. Otherwise, we would look much more similar to our full year and our Q3 numbers.

Oliver Z Jiang: Got it. Understood. That’s really helpful. And then maybe just one more, switching gears on competitive dynamics. I mean we were just curious if you’ve seen or heard any changes on the ground in terms of having a competitor recently IPO, whether that’s potentially a positive or negative impact for you guys now and also longer term?

Matthew Flannery: Yes. So a little bit different, right? As you can imagine, between Wall Street and Main Street here. That change of where they get their funding doesn’t really change anything on the Street. We think the supply-demand dynamics are good. We think that’s why you had asked earlier about what’s implied. That’s why we — in our guidance. That’s why we still expect to have positive fleet productivity next year. We understand the competitive nature of the industry, but we think the important part of it and probably being public will help that even more. We think the most important part of it is that the industry needs to continue to be disciplined because we’ve all absorbed price increases on fleet for the past few years.

So the importance of the components of fleet productivity are still important, getting good utilization, getting strong rate improvement. These are all things that are must for the rental industry and certainly something that we are focused on, and we believe the industry is as well.

Operator: We go next now to Jamie Cook with Truist.

Kevin Wilson: This is actually Kevin Wilson on for Jamie. I wanted to ask about cold-starts. I think you’re expecting 40 specialty cold-starts in 2026, which is healthy, but down a bit from the number you had 2025 and 2024. I am wondering if you could speak to the strategy there and just your strategy around the footprint over the medium term in the context of revenue growth coming from more geographically dispersed customer demand, maybe where you’re finding the strongest opportunities for organic growth? Anything on the verticals within specialty you’re targeting for those cold-starts this year?

Matthew Flannery: All right, Kevin. So I’ll take them one piece at a time here, and you’ll have to remind me later if I forget. So the cold-starts specifically — that’s okay. The cold-starts specifically, we don’t really look at these as we tell you about them on a calendar year, but I wouldn’t read anything into the 40 versus the 60. I think we originally targeted 50 for 2025, and the team got ahead in the pipeline, but there continues to be a pipeline of markets they want to enter. And where that number ends up has to do with where do they find the right real estate and talent to open it up. And most of this is continuing to expand our one-stop shop, right? So most of these cold-starts are in specialty offerings, filling in the white space, specifically for one of the — some of the new product lines.

So we feel really good about that. As far as where is the organic growth coming from and we think about — it’s all the end markets we’ve talked about. We believe that the construct, as Ted had said earlier, of demand in 2026 is going to be similar to what it was in ’25, where the large projects and specialty are going to drive most of the growth. We think that plays into all of our product lines. That’s the whole point about the one-stop shop offering is that’s going to create growth for gen rent and specialty. And outside of that in the verticals, it’s the same stuff you guys would see. Power is still really strong. Nonres has been very resilient and strong. Even if you pull data centers out of nonres, it’s still positive, strong. So we feel really good about that.

And the ones that are still dragging would be the residential, which is not a big part of our portfolio and a little bit of petrochem, whereas I think you see the rig count in Q4, if I believe my memory is correct, was down 8%. So outside of that, there’s nothing specific I’d call out.

Kevin Wilson: That’s helpful. And then just a follow-up on that with the growth coming from large projects. I guess like what can you — what’s embedded in the revenue guide in terms of local market demand? Can we still call that flattish, which is, I think, what you said last quarter? Or just what’s your level of visibility?

Matthew Flannery: Yes. Yes, you’re on it, Kevin. We still think that’s — and it will vary market by market. But overall, in generality, we’ll call that flattish. And with most of the growth, as I said in my opening remarks, coming from the big projects. That pipeline is as big as it’s ever been in my 35 years. So it’s going to be more of the projects, and this does not contemplate a big rebound in the local markets. But to be fair, not a deterioration as well. We think steady as she goes in the local market.

Operator: We’ll go next now to Kyle Menges with Citigroup.

Randi Rosen: This is Randi on for Kyle. You guys mentioned that you guys alluded to another strong year of growth in large projects. I mean I’m just wondering, based on your recent conversations with customers and what you’re seeing in the market, in your mind, what inning do you think we’re in, in terms of this mega project spend? I mean it sounds like it’s going to be strong this year, pretty strong this year, but more of a longer-term outlook would be super helpful in terms of how spend could go over the next couple of years.

William Grace: Yes, I’ll start there, Randi. I’d say the outlook for the so-called mega projects is very healthy. It’s certainly hard for us to judge what inning we’re in, but we certainly don’t think it’s later innings. And we base this on a lot of things. But frankly, we’ve got a pretty broad assortment of drivers within large projects. So we’ve talked about infrastructure. We’ve talked about stuff within technology. We’ve talked about power, certainly data centers. But at this point, we’re kind of following, call it, 6, 7 or 8 tailwinds that we’ve been talking about for years. And when you aggregate the dollars that are expected to be invested in those areas, we think there’s a very healthy amount of runway ahead of us.

Randi Rosen: Got it. That’s helpful. And then I guess just in reference to some of the cost actions that you mentioned in your prepared remarks to offset some of the headwinds this year. Can you just give us some color on some of those actions you’re taking and what you might expect those to contribute to margins this year?

Matthew Flannery: Yes. So we probably won’t call it the contribution, but it’s all embedded within the guidance. But what we’re — one of the areas you can imagine, we’re really focused on is we’ve talked all year about these repositioning costs. Well, if large projects are going to keep driving the growth, we’re still going to have those, but we’ve got a lot of actions in place. How can we mitigate those? How can we do it better? We can’t eliminate them. It’s part of driving great fleet efficiency and fleet productivity is moving those assets to places where the work is, but we’re going to — we got more eyeballs on it and we put some more tools in place. And then just any other hard cost actions we could take to help the team.

So we’ll talk about that as we achieve them as we go along. But we feel good that we’ve got an action plan in place to protect our margins and to make sure regardless how demand shows up, we — as we said earlier, we believe in profitable growth, not growth for growth sakes, and we’re going to make sure the team is focused on protecting margin here in ’26.

Operator: We’ll go next now to Tim Thein with Raymond James.

Unknown Analyst: Tim on for Tim here. So on the fleet productivity discussion earlier, I guess, kind of another reminder of some of the challenges of interpreting that number from the outside. But just is it — and maybe I missed it earlier, but in terms of the plan for ’26, just in terms of how you see the year playing out, it’s still Matt, the expectation that your ability — or you have the ability to outgrow that assumed inflation. Is that within the targets for ’26?

Matthew Flannery: Yes. Yes. Embedded in that guidance is that expectation that we’ll at least reach that 1.5% hurdle. And where we end up in the guidance and where we end up on that will — that deconstruct the revenue will be the answer. We might have some lumpiness, not — hopefully not as severe in Q1 still with the mix. And that’s why we don’t really forecast this because the mix is a wildcard, right? That’s the result of a lot of moving pieces there. So — but the most important pieces of it, rate and time, we still feel good about. We may not have a huge time improvement, but we’re running at really high levels of time utilization. So we’ll stay tuned there, but we certainly continue to focus on rate and mix will be what it will be. And we think at the end of the day and embedded in this guidance is that will be positive fleet productivity to make sure we can offset that inflation.

Unknown Analyst: Got it. Okay. And then just in terms of the — your plan on fleet loadings and just CapEx in ’26 from a timing standpoint, just given that you pulled forward a little bit more CapEx into 4Q, does that impact the timing in terms of how you expect to land that fleet in ’26? Or is it more of a normal cadence…

Matthew Flannery: Yes. I’d say more of the normal cadence, Tim. I’d say the — in that 15% to 20% range in Q1. In the middle quarters, it will vary depending on how fast we’re getting deliveries and how good the team is doing driving utilization, but we’ll be in that 70%, 75% range and then the balance in Q4. So pretty similar to what we’ve been doing.

Operator: We’ll go next now to Ken Newman of KeyBanc Capital Markets.

Kenneth Newman: Maybe to start off, Ted, I think you mentioned in your prepared remarks having to hold on to some high-time used equipment, which impacted used sales volumes this quarter. Can you give a little more color on that? And just what exactly were those categories kind of reflecting?

William Grace: Yes, absolutely. So as you saw in our guidance, we initially expect or what we’ve consistently said is we expected to sell about $2.8 billion of OEC across the year, and we came in at about $2.73 billion. So you can see that shortfall really was in the fourth quarter specifically. And we had a number of regions that just ran busier with certain high-time assets. So you would think things that might reach high in the air. So it could be aerial products, telehandlers, things of that sort would probably be the most notable categories. And so obviously, those things were on rent. We weren’t going to pull them from customers to sell them. And so that really kind of explains the deviation in terms of the used mess.

Kenneth Newman: Got it. Okay. And then maybe just for my follow-up, I just wanted to circle back to the margin guide. It sounds like you expect some of these cost actions that you’re implementing to help offset the ancillary and delivery mix as we go through the year. Just any help on how to think about the margin progression? Is that something that you expect to take place more materially in the back half? Or just — is this going to be something that you expect day 1 here in the first quarter?

Matthew Flannery: Yes. To your point, it’s something that will progress. This isn’t going to be a light switch. And specifically, when you think about some of the mitigation and repositioning costs, just by definition, more of that will happen when we have more activity. So in our peak quarters of volume is when the opportunity is. But then even some of the other costs that we’re taking out, it will build up along with when the costs are usually achieved, so to speak, or actually not achieved. So we’ll still have some noise here in Q1. And then as we work through the year, we believe we’ll start to see the benefits of some of these actions.

Operator: We’ll go next now to Steven Ramsey of Thompson Research.

Steven Ramsey: I wanted to touch on the growth CapEx number of $1.1 billion, I believe you said for the year. Maybe to remind us how that compared to 2025 and if the nature of the growth CapEx this year is similar to ’25.

William Grace: Yes. So if you look at what we did in 2025, total CapEx was, call it, with rounding $4.2 billion. Within that, there was probably something like $3.4 billion of what we would call maintenance. So that would imply something on the order of $800 million, $900 million of growth CapEx in the year. So I think in my comments, I mentioned there was an additional $300 million of growth CapEx. That will really focus on 2 areas. One is continuing to drive the growth in specialty and then taking care of large projects where we’re going to need more fleet. Matt, anything you’d add there?

Matthew Flannery: No, I think that covers it.

Steven Ramsey: Okay. That’s helpful. And then one other thing. I wanted to get some insights on the ancillary piece and if you are intentionally trying to drive this revenue on the ground and incentivizing it with the sales force? Or how much of that is a function of specialty having higher ancillary revenue that carries with it?

Matthew Flannery: Yes. No, this is much more of a response to what the customers’ needs are. And for some of it, it’s actually setup. So think about if we’re doing setup for a job trailer or some kind of setup for a power or HVAC setup. So a lot of this stuff comes with products that we’re supplying, and it’s just the need that the customer has where they like us to do it for them versus doing it themselves. So it’s not really — it’s certainly not something that’s driven by the sales team. This is driven by the needs of the customer along with the products that we’re serving them with.

Operator: We’ll go next now to Neil Tyler with Rothschild & Co Redburn.

Neil Tyler: I wanted to come back to the margin drag from the transportation costs and just sort of think about that bigger picture. Ted, I think you said it was 70 basis points in the fourth quarter, and it’s really started to feature more significantly in the second half. So there’s 2 parts to the question. Firstly, is there any aspect of these additional costs that reflects the change in the fleet being more specialized and so perhaps less fungible. I think you’re probably going to cover that one-off quite quickly. But the second part of the question is, in the context of what you assume for flattish local small project growth, if that proves a little conservative in the back half of the year, particularly, would we — should we expect the margin drag from transportation costs to disappear as a sort of natural effect of a pickup and a more broad-based acceleration in demand growth?

Matthew Flannery: Sure, Neil. So I’ll take the first part first. From a fungibility of fleet, this is not a fleet composition dynamic. There may be some exceptions to that, right, some specific assets that you might need to move for an LNG plant that’s unique. But for the most part, 95-plus percent of our fleet is extremely fungible. And that’s a big tenet of our business model and how we believe in. We don’t really get into unique one-off kind of serving one end market products because the lack of fungibility and then therefore, productivity you can drive out of it. And your point about the local market is a great one. But I wouldn’t call it conservative. The way we see today, we do not expect there to be big growth in the local market.

If that changes, we’ll react as always. But when it does, that will allow us to use the density of our network, right, our entire cost structure to help drive growth, and it will be more efficient as opposed to having to reposition fleet and some of the stuff that comes with mobilizing to these large projects. So your thesis, we agree with 100%. We don’t expect that local market repair. It’s not embedded in our guidance for 2026.

Operator: We’ll go next now to Scott Schneeberger with Oppenheimer.

Scott Schneeberger: Just a quick follow-up first on fleet productivity. You mentioned the matting was a whole point that impacted the fourth quarter on a delay. Is that something that’s going to appear as like an outstanding or unique fleet productivity impacting first quarter? Or is it a push out a little bit farther? Just anything we should look at that would be abnormal in that first quarter?

Matthew Flannery: Yes. So I do think it’s abnormal. Could we get some of that in Q1? Yes, we could. It depends on when these projects actually mobilize, right? It has — some of these large projects do have a big impact. But — so one — as I said earlier, we don’t forecast the quarters because that mix component is so volatile. I think more importantly, for the full year, which is what we buy the fleet for and what we measure fleet productivity on, we do expect to have positive fleet productivity. And I expect it to be positive in Q1, just may not be meet our expectations and time will tell. We could get surprised, things can mobilize quickly. So we’re not as focused on the quarters there as much as we are making sure full year, the fleet that we’re spending on the CapEx on is bringing us the returns, and we’re utilizing it in an efficient, profitable way.

Scott Schneeberger: And then just on — you guys speak often to technology investments often in the same breath as cold-starts. Just curious, obviously, it’s embedded in this guidance you provided for 2026. But what are some of the technology investment focuses that you’ve had in recent years? How is that going to look different in 2026? And is that budget going up or down within this implied guidance?

William Grace: Yes. Definitely, technology spend will be up in ’26 versus ’25. I think like a lot of companies, we’re investing in a lot of different opportunities and initiatives. Some I would describe as more elective and some are critical. So we continue to try to leverage more and more technology to drive greater operating efficiency. So we’ve got a number of projects that would be designed to help with fleet efficiency, frankly, with repositioning costs and delivery costs. There’s other things that are mandatory like cyber and protection. So there’s a lot of stuff that we’re investing on, all of which we’re excited about the ROI on it where it’s critical like anything defensive like cyber. Matt, anything you’d add there?

Matthew Flannery: No, no, I agree.

Operator: Thank you. And gentlemen, it appears we have no further questions today. Mr. Flannery, I’d like to turn the conference back to you, sir, for any closing comments.

Matthew Flannery: Great. Thanks, operator, and thanks to everyone on the call. We appreciate your time. Glad you could join us today. Our Q4 investor deck has the latest updates. And as always, Elizabeth is available to answer any of your questions. So until we talk again in April, please stay safe. Operator, you can now end the call.

Operator: Thank you, Mr. Flannery, and thank you, Mr. Grace. Again, ladies and gentlemen, this brings us to the end of today’s meeting. We appreciate your time and participation. You may now disconnect.