United Rentals (NYSE:URI) executives said construction-equipment rental demand has exceeded the company’s expectations this year, led by an accelerating pipeline of large projects and supported by continued strength in specialty rental operations.
Speaking at a Morgan Stanley event, Chief Executive Officer Matt Flannery said the company entered the year expecting large projects to drive most of its growth while local markets remained stable. That pattern has largely held, he said, but the pace of large-project activity has been stronger than anticipated.
Demand Resilience Despite Cost and Rate Questions
Chief Financial Officer Ted Grace said the company has navigated macroeconomic uncertainty, including unexpectedly high diesel costs. Diesel prices have averaged $5.34 per gallon year to date, compared with $3.66 per gallon a year earlier, according to Grace.
However, he said customer confidence had not indicated a meaningful change in outlook despite discussion around interest rates, longer-term bond yields and broader economic conditions. Grace said the construction-rental market and the U.S. economy have remained resilient through fluctuations in rates.
Flannery and Grace attributed the company’s performance partly to a long-standing strategy of serving large contractors and major projects. Flannery said United Rentals has spent decades building relationships with major customers and expanding its ability to provide multiple equipment and service categories through a single provider.
The company now has seven specialty business units, which Flannery said are particularly relevant for complex large-scale projects. Grace also highlighted United Rentals’ vertical-market strategies in power and infrastructure, including relationships with engineering and construction firms as well as utilities.
Grace said the company began publicly emphasizing its power vertical strategy in 2016, before recent growth trends associated with electrification and artificial intelligence. He said United Rentals also built its infrastructure strategy around the belief that domestic infrastructure investment would eventually increase, including through its acquisition of Neff.
Rental Penetration and Industry Supply Discipline
Flannery said the American Rental Association measures equipment-rental penetration in the high-50% range, or about 59%, up five or six percentage points from five years ago. While he did not offer a specific long-term target, Flannery said he views rental penetration as a secular opportunity.
“I believe that penetration in our industry is a one-way staircase,” Flannery said, citing the industry’s increased reliability and sophistication as reasons customers continue to rely on rental equipment.
Executives also said they see constructive supply-and-demand conditions across the rental industry. Flannery said discipline means avoiding the practice of forcing fleet into markets without adequate demand and instead matching equipment investment to market needs responsibly.
Grace said some public competitors reduced capital expenditures in 2023 and 2024 while continuing to grow, actions he described as evidence of broader industry discipline. He said that when supply is aligned with demand, rental providers are better positioned to achieve positive rental rates and asset economics.
According to Grace, industry utilization was positive year over year in every month during 2025 and has continued to be positive year to date in 2026.
Specialty Growth, Services and Capital Allocation
United Rentals expects its specialty business to continue delivering double-digit organic growth, according to Grace. He said the company sees additional customer-penetration opportunities across its specialty operations, including in its more established trench and power businesses.
Power is the company’s largest specialty segment and its fastest-growing one, Grace said. Flannery also pointed to opportunities in matting, mobile storage and modular offerings, where the company still has areas of geographic whitespace in its national network.
The company supports data-center projects during their construction phases, executives said. Grace said United Rentals’ total fleet includes more than 2 gigawatts of generating capacity and can support projects with roughly 100 megawatts of temporary generating capacity. However, he said the company does not provide the long-term base-load power required by hyperscale data centers.
Executives also discussed ancillary services such as pickup and delivery, installation, setup and breakdown, and fueling. Grace said these offerings provide customers with convenience and allow them to focus on their core construction work. While the services are less profitable than the company’s core equipment-rental revenue, he said they carry contribution margins in the low-20% range and require little capital deployment.
On capital allocation, Flannery said the company’s acquisition pipeline remains robust, though United Rentals will continue to apply strategic, cultural and financial criteria to potential deals. Grace said acquisitions can be uneven from year to year and that the company is comfortable repurchasing its own shares when it lacks attractive opportunities to deploy capital through deals.
Grace said a potential investment-grade credit-rating upgrade would not constrain United Rentals’ ability to pursue acquisitions. He said the company estimates it has approximately $15 billion of debt-funded acquisition capacity and is on positive outlook with both major rating agencies.
Technology and AI Initiatives
Flannery said United Rentals is also using technology and artificial intelligence to improve customer service and internal operations. The company recently announced an AI-powered equipment agent accessible through ChatGPT, designed to help customers identify equipment that may be needed for specific jobs.
United Rentals has nearly 400,000 telematics devices on its equipment fleet, Flannery said. He said the resulting data, combined with AI capabilities, could enhance tools involving pricing optimization, logistics and equipment repair troubleshooting.
“Our job isn’t to invent the technology,” Flannery said, “it’s to deploy it in a way that’s digestible to the customer.”
About United Rentals (NYSE:URI)
United Rentals, Inc is an equipment rental company serving construction, industrial, commercial, government and residential customers. The company provides access to a broad range of equipment without requiring customers to purchase and maintain their own fleets.
Its rental offerings include aerial work platforms, earthmoving equipment, material-handling equipment, trucks and trailers, power-generation and climate-control equipment, pumps, tools, trench-safety products and traffic-control equipment.
