EquipmentShare.com Inc.
11/10/2026 | Press release | Distributed by Public on 11/10/2026 07:36
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
You should read the following discussion of our financial condition and results of operations in conjunction
with our unaudited condensed consolidated financial statements, including the notes thereto, included elsewhere in
this Form 10-Q. In addition to historical information, the following discussion and analysis contains forward-
looking statements that reflect our plans, estimates, and beliefs. Our actual results and the timing of events could
differ materially from those anticipated in the forward-looking statements. Factors that could cause or contribute to
these differences include those discussed below and under Part I, Item 1A, "Risk Factors" in our 2025 Form 10-K
particularly in the "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" sections.
Overview
We are a leading tech-enabled construction solutions provider dedicated to enabling job sites to run more
productively and safely. Through our rental service and retail centers, we offer our customers a comprehensive
portfolio of equipment asset management solutions enabled through our T3 platform, which we believe is the
leading sensor-to-cloud fleet management tool in the commercial construction industry and which provides value-
added services to our customers by managing people, assets, and materials in real time.
We are one of the largest and fastest-growing equipment rental providers in the U.S. based on revenue. As of
September 30, 2026, we operated 408 full-service branch locations, 9 standalone dealership sites, and 31 building
materials and hardware retail stores across 45 states, with a diversified managed fleet portfolio of more than 302,000
pieces of equipment and approximately 430,000 trackers operating on our T3 platform. As of September 30, 2026,
we had 9,734 employees who support us in solving industry inefficiencies by providing smart jobsite technology, as
well as operating our equipment rental and retail and service centers.
Our rental fleet, including support vehicles and trailers, consists of equipment that we (i) own, (ii) lease as
lessee under operating lease arrangements with third-party lessors such as an Original Equipment Manufacturer
("OEM") and financial institutions, or (iii) lease as lessee under our OWN Program. As of September 30, 2026,
208,390 pieces of equipment were owned by us; 997 pieces of equipment were leased by us as a lessee under
operating lease arrangements with third parties such as OEMs and financial institutions; and 93,478 pieces of
equipment were leased by us as lessee, and rented by us to our customers, under our OWN Program. Leased
equipment refers to equipment subject to operating lease contracts with third parties such as OEMs and financial
institutions in which we have contracted use of the equipment for a defined period. OWN Program equipment refers
to equipment sold to OWN Program participants and subsequently leased back and operated by us under the OWN
Program lease and revenue-sharing structure. Both leased and OWN Program equipment are part of our equipment
under management.
Our Business Activities and Operating Environment
We are engaged principally in the business of renting equipment that is managed by and fully enabled with our
T3 platform. This includes equipment that we own, lease, or is rented from third parties through our OWN Program.
Ancillary to our principal business of equipment rental and related services, we also sell used rental equipment, sell
new equipment and consumables, and offer certain services and support to our customers.
We operate our business through the following reportable segments: (i) Equipment Rental and Services
Operations, comprised of recurring activity performed at our full-service branch locations, such as equipment rentals
and related services (including allocated telematics revenue related to rental customer access to the T3 platform),
and sales of parts, supplies and maintenance services to construction contractors and others, and (ii) Equipment
Sales, comprised of sales by us of new or used equipment made at any of our branch locations and dealership sites,
including equipment sales to participants in the OWN Program. All other business activities include telematics SaaS
subscriptions, software applications, and related telematics devices purchased by customers for their owned fleet, as
well as building materials and hardware supplies.
Key Factors Affecting Our Performance
Demand for Construction Equipment. Our business is primarily impacted by the demand in the U.S. for
construction equipment for use in non-residential, infrastructure, governmental, industrial, and residential
construction, demolition, maintenance, energy operations, and other construction activities. Demand levels for heavy
construction equipment are particularly dependent on the expected level of major infrastructure construction and
repair projects, which is a function of expected economic growth and government spending.
We expect to benefit if tariffs lead to onshoring of manufacturing and result in construction of new facilities, but
our results will be negatively affected if construction of energy transition infrastructure is reduced due to lower
subsidies or other factors.
Seasonality and Weather Conditions. The rental of construction equipment is seasonal, which causes our
quarterly results and our available cash flow to fluctuate during the year. Our customers generally purchase and rent
equipment in preparation for, or in conjunction with, their busy season, which is typically late spring to November.
However, weather conditions impact the timing of our customers' busy season, which may cause greater than
expected fluctuations in our quarterly financial results year over year. Seasonal weather trends, particularly severe
wet or dry conditions, can have a significant impact on regional construction market performance by affecting the
ability to undertake construction projects. In addition, numerous external factors such as credit markets, government
subsidies and tariffs, commodity prices, and other circumstances may disrupt normal rental and/or purchasing
practices and sentiment, further contributing to the fluctuations.
Moreover, because equipment sale transactions with OWN Program participants occur unevenly throughout the
year, depending on demand, period-over-period comparisons may not reflect underlying trends. These transactions
may also result in a higher percentage of our revenue being attributable to an OWN Program participant for the
period during which one or more equipment sale transactions with such party occurred. The OWN Program has
consistently attracted strong demand across multiple sources of capital, including institutional investors who
purchase as a buying group through a collective vehicle and finance their equipment purchases through asset-backed
securities ("ABS"). To satisfy this demand, we have organized for these investors sales of large packages of
equipment and have conducted these sales on an episodic basis. Accordingly, period-over-period comparisons may
not reflect underlying trends and fluctuations in our operating results and make it difficult for us to predict our future
operating results.
Costs of Equipment and Inflation. Significant changes in the purchase price or residual values of equipment or
interest rates can have a significant effect on our profitability depending on our ability to adjust pricing for these
changes. Inflationary pressures and other factors have led to increases in the prices of some equipment and products
that we purchase, and in the costs of our operations, which may be partially offset by increases in the prices we
charge our customers. A sizeable portion of the equipment we lease as lessee through our OWN Program is owned
by third parties who have financed equipment purchases through the issuance of ABS, and a reduction in residual
values could trigger liquidation events for these OWN Program participants and may require them to sell their
construction equipment, which may cause a disruption in our ability to lease and re-rent the construction equipment
to our customers.
Our profitability is dependent upon a number of other factors, including the volume, mix, and pricing of rental
transactions, and the utilization of equipment.
Our business requires significant expenditures for equipment, and we require substantial liquidity and/or access
to capital to finance such expenditures. See "-Liquidity and Capital Resources" below.
Geographic and Fleet Expansion
Our geographic expansion of full-service equipment rental branch locations, and the corresponding increase in
total equipment rental fleet size as we supply new branch locations, is one of the primary factors affecting our
results. The additional branch locations and rental fleet, combined with equipment sales, were the primary drivers
for total revenue increasing from $945 million for the three months ended September 30, 2025 to $1,468 million for
the three months ended September 30, 2026, or at a growth rate of 55.3%, and $2,808 million for the nine months
ended September 30, 2025 to $3,905 million for the nine months ended September 30, 2026, or at a growth rate of
39%.
In line with customer demand and our growth strategy, we have increased the number of full-service equipment
rental branch locations from 342 as of September 30, 2025 to 408 as of September 30, 2026, an increase of 66 new
full-service equipment rental branch locations. In conjunction with the opening of these new full-service equipment
rental branch locations, we incurred $168 million and $186 million of new market start-up costs during the nine
months ended September 30, 2026 and 2025, respectively.
We correspondingly increased our fleet size from 235,044 units of equipment under management as of
September 30, 2025 to 302,865 as of September 30, 2026, reflecting the growth in original equipment cost ("OEC")
under management, which includes equipment we own and rent to customers, as well as equipment owned by third
parties and leased by us, as lessee through our OWN Program, and rented to our customers, from $8,053 million as
of September 30, 2025 to $10,663 million as of September 30, 2026, or an increase of 32%.
Expansion of OWN Program
The growth in our business through geographic and fleet expansion has been partially achieved through the
execution of our strategy to expand our OWN Program. Under the OWN Program, participants may purchase from
us new or used (typically less than four years old) equipment which is fully enabled with T3. Concurrently, we enter
into a lease arrangement with the participant whereby we are the lessee and this qualified equipment is placed on our
T3 platform, to be rented to our customers. Rental revenue generated from equipment enrolled under the OWN
Program is divided and shared between us and the owner of the equipment, and for the duration of the arrangement
we manage the owner's equipment utilizing the T3 platform.
Amounts we pay to OWN Program participants to lease their equipment are presented as OWN Program
payouts within cost of revenues. At the end of the sharing period under the OWN Program, we may assist the owner
with remarketing services if the equipment is to be sold in the market as used construction equipment. We also offer
several add-on services to the owner of the equipment.
Revenue earned from equipment that is in the OWN Program has no depreciation expense or interest expense
for us because we do not own, and therefore do not finance, such equipment. Thus, we have been able to implement
this portion of our managed fleet growth without incurring additional debt. When rental equipment is enrolled in the
OWN Program, rather than purchased and owned by us, we incur lease expense in the form of OWN Program
payouts, which are recorded as cost of revenues, instead of depreciation expense and interest expense associated
with rental equipment that is purchased. OWN Program payouts were $254 million and $185 million for the three
months ended September 30, 2026 and 2025, respectively, $704 million and $512 million for the nine months ended
September 30, 2026 and 2025, respectively. This expansion increases cost of revenues (before depreciation expense)
and decreases depreciation expense and interest expense, which affects gross profit (before depreciation expense),
EBITDA (which we define and calculate as net income before interest expense, income taxes, depreciation expense
and amortization expense, and non-cash stock compensation expense), and EBITDA margins. We expect to further
increase our usage of the OWN Program, which will increase OWN Program payouts in cost of revenues and reduce
gross profit (before depreciation) and EBITDA margins, as compared to rental equipment that is purchased and
placed in our rental fleet. In addition, OWN Program payouts plus depreciation have grown at a faster rate than the
growth of revenue. Total equipment rental fleet OEC under our management increased $2,610 million, or 32%, from
$8,053 million as of September 30, 2025 to $10,663 million as of September 30, 2026. The total equipment rental
fleet OEC enrolled in the OWN Program grew by $1,605 million, or 39%, Company-owned equipment rental fleet
OEC grew by $1,049 million, or 28%, and the equipment rental fleet OEC under operating leases decreased by $44
million during the same period. During the nine months ended September 30, 2026, OWN Program payouts
increased 38% compared to the nine months ended September 30, 2025; of that increase, 40% was attributed to the
growth of the average equipment rental fleet OEC enrolled in the OWN Program. Because the OWN Program
payouts are variable and primarily based on the amount of rental revenue generated by the applicable equipment
during the period, changes in demand from our customers for specific types of rental equipment affects the amount
of equipment rental and related services revenue generated.
Components of Revenues and Expenses
Our revenues are primarily derived from the rental or sale of construction equipment, as well as related parts,
supplies and services, and consist of:
•Equipment rental and related services (includes revenue associated with the rental of equipment including
ancillary revenue from equipment delivery and pickup, rental protection plans, and fueling charges);
•Sales of new or used rental equipment and sales of new equipment, including revenue from equipment sales
subsequently listed on our marketplace under the OWN Program;
•Sales of equipment parts, supplies, and services (primarily relating to warranty services and maintenance
and repair services provided to customers); and
•Sales that we call "platform revenue," which includes telematics software-as-a-service and related hardware
revenues, as well as the sale of building materials, small tools and construction supplies at our retail
locations.
Our expenses primarily consist of:
•Direct operating costs (primarily costs incurred at our rental branch locations that collectively support our
Equipment Rental and Services Operations segment, including, but not limited to, wages and related
benefits, service costs in connection with our rental equipment, site operating costs, pickup and delivery
expenses in connection with rental equipment, maintenance, fuel, parts, and supplies);
•OWN Program payouts;
•Equipment sales cost of revenues;
•Platform expense;
•Depreciation and amortization expense relating to equipment used in operations and capitalized software;
•Selling, general and administrative expenses; and
•Interest expense.
Our revenues and expenses are described in more detail below.
Revenues
Equipment Rental and Related Services
Our core service is the rental of equipment to customers on a daily, weekly, and monthly basis, enabled by our
T3 platform. The equipment we rent includes company-owned equipment, equipment we lease as a lessee, and
equipment that is leased from other parties in the OWN Program and re-rented to customers. We generate rental
revenue from equipment that is in our OWN Program by leasing equipment from owners on a month-to-month or
longer basis and then renting that equipment to our customers. Under nearly all of our OWN Program contracts, we
have control over the equipment and the equipment owner is not able to redeploy or retrieve the equipment while
under rent. Depending on the terms and conditions, we present rental revenue that we generate and OWN Program
payouts that we incur on OWN Program contracts either on a gross basis or a net basis.
In addition to equipment rental revenue, including from our OWN Program, we also generate revenue from
rental customers from the sale of rental protection plan ("RPP") services designed to protect them from potential
damage or loss to the equipment they rent, environmental fees assessed on the rental asset and fuel recovery fees that
we charge to our customers.
Equipment Sales
We have established a retail process to sell new and used equipment as a recurring part of our business. In
addition, we sell equipment assets to third parties, including third parties who have financed equipment purchases
through the issuance of ABS, and allow the customer to place the equipment in our OWN Program to be rented to
our customers. We sell new and used equipment through a variety of channels, including retail sales to customers,
sales to wholesalers, brokered sales, and auctions. We generate revenue from the sale of new and used equipment,
which we present net of sales and other tax amounts collected from customers and remitted to government
authorities. When we act as agent in connection with the sale of new equipment to, for example, a contractor or an
OWN Program participant, among other reasons, we present revenue from the sale of such equipment net in our
consolidated statements of net income. When we are the principal in the transaction, we present revenue from the
sale of equipment on a gross basis, with sales revenue included in equipment sales revenue and the related cost of
revenues included in equipment sales cost of revenues in our consolidated statements of net income.
Equipment Parts and Supplies and Services
As an integral part of our Equipment Rental and Services Operations, we sell equipment parts and supplies and
provide maintenance, and repair services to customers, as well as the owners of equipment who are participants in
our OWN Program. Revenue generated from the sale of equipment parts and supplies is presented net of sales and
other tax amounts collected from customers and remitted to government authorities. We also generate revenue from
the provision of ad hoc and preventative maintenance, and repair services to our customers, as well as warranty
repairs. We provide warranty repair services on behalf of OEMs in order to fulfill the warranty extended by OEMs
to their customers. Revenue that we generate from warranty repair services represents compensation for the service
performed by us and is presented on a gross basis.
Platform Revenue
Platform revenue is comprised of revenue from telematics services and the sale of custom electronic
components, including telematics tracker devices and cloud-based access control keypads, and revenue from
building materials and hardware supplies. Revenue from telematics is generated through monthly subscriptions to
our T3 platform and its full suite of capabilities, which we provide to our customers as a SaaS subscription. In
addition, our equipment rental arrangements also provide customers with access to our T3 platform and we allocate
a portion of the transaction consideration from equipment rentals to telematics revenue. Our T3 platform provides
customers with access to proprietary digital tools to help manage their jobsites more productively and safely and
enables customers to streamline maintenance and prevent theft, and equipment misuse. Our T3 platform also enables
equipment owners with subscriptions to place their equipment on our OWN Program to be rented to our customers.
Revenue from building materials and hardware supplies is derived from the sale of such materials and supplies at
our retail stores.
Cost of Revenues
Direct Operating Costs
Direct operating costs include the costs that we incur at our rental branch locations that collectively support our
Equipment Rental and Services Operations segment, including, but not limited to, wages and related benefits,
service costs in connection with our rental equipment, site operating costs, pickup and delivery expenses in
connection with rental equipment, maintenance, fuel, parts, and supplies.
OWN Program Payouts
Amounts we pay to OWN Program participants, as a variable lease expense for their share of rental revenue
generated by us from equipment enrolled under the OWN Program, are presented as OWN Program payouts within
cost of revenues.
Equipment Sales
Equipment sales cost of revenues includes our OEC, less accumulated depreciation, related to equipment that
we sell when we act as the principal in the transaction.
Platform Expense
Platform expense primarily represents (1) costs relating to the telematics services provided to customers,
including the cost of tracker devices and cloud-based access control keypads installed on equipment owned by our
customers, and other custom electronic components; (2) the cost of building supplies, materials and hardware sold to
customers; and (3) other operating costs for our retail stores.
Depreciation and Amortization
Depreciation and amortization includes non-cash expenses relating to the depreciation of our rental equipment
in the fleet and the amortization of capitalized costs relating to the development of our T3 platform.
Depreciation of rental equipment includes depreciation of various classes of our construction equipment,
delivery vehicles, trailers, and installed telematics tracker devices. We estimate that we may hold the asset in its
rental fleet for a period of five to ten years to generate rental revenue, after which it will be sold or otherwise
disposed of to another party. We also estimate the residual value of the equipment at the time of expected disposal.
Depreciation expense is calculated using a straight-line method and recorded over the estimated holding period.
The total capitalized cost of our T3 platform includes direct costs that result in additional functionality of our
software, including payroll and related costs for employees directly associated with the development project.
Capitalized software is amortized over an estimated useful life of five years.
Selling, General and Administrative Expenses
Selling, general and administrative expenses primarily include costs associated with operating leases, costs
incurred by us in connection with marketing of manufacturers' equipment, net of reimbursements we receive from
such manufacturers for such costs, payroll costs, insurance costs, legal costs, marketing and travel costs, technology
costs, and certification and training costs. In addition, depreciation of our buildings and improvements, including
leasehold improvements, furniture, fixtures, office equipment, and capitalized start-up costs are classified within
selling, general and administrative expenses.
Other Income (Expense)
Interest Expense
Interest expense primarily represents interest on our outstanding debt. Any interest or penalties incurred relating
to income tax filings, if any, are also reported within interest expense.
Other Income, Net
Other income, net includes gains and losses on investments in equity securities, realized gains on available-for-
sale debt securities, fees relating to properties assigned to other parties, construction development fees earned for
managing construction activities at properties owned by other parties, gain on sale of properties and other assets, and
other miscellaneous income.
Results of Operations
Three Months Ended September 30, 2026 Compared with Three Months Ended September 30, 2025
|
Three Months Ended September 30,
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|||||||
|
2026
|
2025
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$ Change
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% Change
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||||
|
($ in millions)
|
|||||||
|
Revenues
|
|||||||
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Equipment rental and related services ................
|
$985
|
$672
|
$313
|
47%
|
|||
|
Equipment sales ..................................................
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76%
|
||||||
|
Equipment parts and supplies and services .........
|
74%
|
||||||
|
Platform revenue:
|
|||||||
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Telematics ......................................................
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140%
|
||||||
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Other ...............................................................
|
48%
|
||||||
|
Total revenue ....................................................
|
1,468
|
55%
|
|||||
|
Cost of revenues
|
|||||||
|
Direct operating costs ..........................................
|
63%
|
||||||
|
OWN Program payouts .......................................
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37%
|
||||||
|
Equipment sales cost of revenues .......................
|
87%
|
||||||
|
Platform expense .................................................
|
126%
|
||||||
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Depreciation and amortization ............................
|
27%
|
||||||
|
Total cost of revenues ......................................
|
1,006
|
57%
|
|||||
|
Gross profit .......................................................
|
51%
|
||||||
|
Selling, general and administrative expenses .....
|
43%
|
||||||
|
Operating income ..............................................
|
83%
|
||||||
|
Other income (expense):
|
|||||||
|
Interest expense ...................................................
|
(88)
|
(75)
|
(13)
|
17%
|
|||
|
Other income, net ................................................
|
(19)
|
(73)%
|
|||||
|
Total other expense, net ...................................
|
(81)
|
(49)
|
(32)
|
65%
|
|||
|
Income before income taxes ...............................
|
140%
|
||||||
|
Provision for income taxes ..................................
|
78%
|
||||||
|
Net income .........................................................
|
$20
|
$6
|
$14
|
233%
|
|||
Total revenue. Our revenue was $1,468 million for the three months ended September 30, 2026, compared to
$945 million for the three months ended September 30, 2025, an increase of $523 million, or 55%. Our four sources
of revenues over the period are further discussed below:
Equipment rental and related services. Equipment rental and related services revenue accounted for 67% of our
revenue for the three months ended September 30, 2026, compared to 71% of our revenue for the three months
ended September 30, 2025. Our equipment rental revenue and related services was $985 million for the three months
ended September 30, 2026, compared to $672 million for the three months ended September 30, 2025, an increase of
$313 million, or 47%. Approximately $215 million of the increase in equipment rental and related services revenue
is driven by an increase in construction demand in the U.S., our strategy to increase our geographical presence, and
value afforded to our customers from our T3 platform. Accordingly, we increased the number of our full-service
equipment rental branch locations from 342 as of September 30, 2025 to 408 as of September 30, 2026. In addition,
we grew our fleet OEC under management from $8,053 million as of September 30, 2025 to $10,663 million as of
September 30, 2026, and increased the size of our fleet from 235,044 units to 302,865 units of equipment under
management as of September 30, 2025 and 2026, respectively. Changes in the mix of equipment rented and price
changes increased equipment rental and related services revenue by $98 million.
Equipment sales. Equipment sales revenue accounted for 20% of our revenue for the three months ended
September 30, 2026, compared to 18% of our revenue for the three months ended September 30, 2025. Equipment
sales revenue was $294 million for the three months ended September 30, 2026, compared to $167 million for the
three months ended September 30, 2025, an increase of $127 million, or 76%. The change was primarily due to our
disciplined and selective equipment sales into the OWN Program, resulting in an increase of $139 million in sales of
construction equipment to existing and new participants in our OWN Program, partially offset by a decrease of $12
million in the sale of new and used equipment to contractors and other end users. As we increase the size of our
OWN Program, transactions with OWN Program participants may result in a higher percentage of our revenue being
attributable to an OWN Program participant for the period during which one or more equipment sale transactions
with such party occurred. We have experienced strong interest from participants in the OWN Program for
construction equipment enabled by T3, as owners get real-time data on usage, health, and performance of the
machines rented exclusively by EquipmentShare and re-rented to our customers. The OWN Program has allowed us
to scale the fleet OEC under our management in order to meet customer demand for construction equipment enabled
by T3.
Equipment parts and supplies and services. Equipment parts and supplies and services revenue accounted for
8% of our revenue for the three months ended September 30, 2026, compared to 7% for the three months ended
September 30, 2025. Equipment parts and supplies and services revenue was $122 million for the three months
ended September 30, 2026, compared to $70 million for the three months ended September 30, 2025, an increase of
$52 million, or 74%. This increase was primarily due to our expansion into new markets, resulting in additional full-
service branch locations added to our nationwide network, which increased from 342 locations as of September 30,
2025 to 408 locations as of September 30, 2026. Equipment parts and supplies and services revenue increased $31
million from mature branch locations primarily attributed to the expansion of our product and service offering in
mature branch locations, and $21 million from new branch locations open less than 24 months as a result of the
addition of 66 full-service branch locations.
Platform revenue. Platform revenue accounted for 5% of our revenue for the three months ended September 30,
2026, compared to 4% of our revenue for the three months ended September 30, 2025. Platform revenue from
telematics was $36 million for the three months ended September 30, 2026, compared to $15 million for the three
months ended September 30, 2025, an increase of $21 million or 140%. This increase was primarily due to an
increase in revenues related to the sale of custom electronic components following our September 2025 acquisition
of the controlling interests in The Morey Corporation ("Morey"), a business that designs, manufactures, and sells
custom electronic components, including telematics tracker devices and cloud-based access control keypads.
Platform revenue from the sale of construction materials, building supplies, and hardware across our building
materials and hardware retail stores was $31 million for the three months ended September 30, 2026, compared to
$21 million for the three months ended September 30, 2025, an increase of $10 million primarily attributable to the
addition of 9 building materials and hardware retail stores.
Cost of revenues. Cost of revenues was $1,006 million for the three months ended September 30, 2026,
compared to $639 million for the three months ended September 30, 2025, an increase of $367 million, or 57%. Our
sources of cost of revenues over the period are further discussed below:
Direct operating costs. Direct operating costs were $358 million for the three months ended September 30,
2026, compared to $220 million for the three months ended September 30, 2025, an increase of $138 million, or
63%. The increase in direct operating costs is primarily due to the expansion of our footprint through the addition of
66 full-service branch locations, which increased from 342 locations as of September 30, 2025 to 408 locations, and
the increase of the rental fleet under our management as of September 30, 2026. The additional operating locations
and rental fleet under our management drove increases in wages and related benefits of $23 million, and logistics,
maintenance, and other site operating costs of $117 million.
OWN Program payouts. OWN Program payouts were $254 million for the three months ended September 30,
2026 compared to $185 million for the three months ended September 30, 2025, an increase of $69 million, or 37%.
Approximately $74 million of the increase is attributed to the growth of the average fleet OEC under management
enrolled in the OWN Program, which grew from $4,037 million in 2025 to $5,636 million in 2026, or 40%. Changes
in demand for specific types of rental equipment and the mix of equipment rented partially offset the increase in
OWN program payouts by $5 million.
Equipment sales cost of revenues. Equipment sales cost of revenues was $243 million for the three months
ended September 30, 2026, compared to $130 million for the three months ended September 30, 2025, an increase of
$113 million, or 87%. This increase was primarily due to a $124 million increase in equipment sales cost of
revenues associated with sales to existing and new participants in the OWN Program, partially offset by a $11
million decrease in equipment sales cost of revenues resulting from lower equipment sales to contractors and other
end users.
Platform expense. Platform expense was $43 million for the three months ended September 30, 2026, compared
to $19 million for the three months ended September 30, 2025, an increase of $24 million or 126%. This increase
was primarily attributed to the addition of 9 hardware retail stores and the acquisition of Morey in September 2025.
Depreciation and amortization. Depreciation and amortization accounted for 11% of our cost of revenues for
the three months ended September 30, 2026, compared to 13% of our cost of revenues for the three months ended
September 30, 2025. Depreciation and amortization was $108 million for the three months ended September 30,
2026, compared to $85 million for the three months ended September 30, 2025, an increase of $23 million, or 27%.
This increase was primarily due to a $20 million increase in depreciable equipment expense on rental equipment due
to an increase in the size of our fleet and in average cost of owned equipment in our rental equipment, and a $2
million increase in amortization expense on capitalized software due to an increase in average capitalized costs
related to the continued development of our T3 platform.
Selling, general and administrative expenses. Selling, general and administrative expenses were $345 million
for the three months ended September 30, 2026, compared to $242 million for the three months ended September
30, 2025, an increase of $103 million, or 43%. The increases in selling, general and administrative expenses were
primarily attributed to our expansion of full-service branch locations and growth strategy. To support our expansion,
we hired 545 additional staff resulting in an increase of $36 million in selling, general and administrative expense
associated with higher payroll, benefits and travel costs. Our expansion of full-service locations also resulted in
higher facilities and non-rental vehicles lease expense and associated costs of $13 million. The growth of our
business and expansion of our full-service branch locations also increased administrative costs such as insurance,
legal, professional expenses and non-income based taxes by $9 million and other miscellaneous administrative
expenses by $19 million. Additionally, increased stock-based compensation expense of $26 million was recorded
primarily for the IPO Founders Awards for the three months ended September 30, 2026.
Interest expense. Interest expense was $88 million for the three months ended September 30, 2026, compared to
$75 million for the three months ended September 30, 2025, an increase of $13 million, or 17%. This increase was
primarily due to an increase in average outstanding debt balances to fund our expansion strategy including purchases
of construction equipment for our fleet, partially offset by lower average interest rates under our asset-based
revolving credit facilities.
Total other expense, net. Total other expense, net was $81 million for the three months ended September 30,
2026, compared to $49 million for the three months ended September 30, 2025. The increase in interest expense of
$13 million for the three months ended September 30, 2026, compared to the three months ended September 30,
2025, was the result of our higher average outstanding borrowing for the three months ended September 30, 2026,
and as a result of lower miscellaneous income of $19 million due to higher realized and unrealized net gains on
investments in the prior year.
Provision for income taxes. The provision for income taxes was $16 million for the three months ended
September 30, 2026, compared to a provision for income taxes of $9 million for the three months ended September
30, 2025, an increase in income tax expense of $7 million, or 78%. The change in income tax expense is primarily
due to an increase in operating income to $117 million for the three months ended September 30, 2026, as compared
to operating income of $64 million for the three months ended September 30, 2025, applying the estimated annual
effective tax rate for each period that reflects the expected full-year income and related tax expense. Differences
between applicable federal and state statutory tax rates and the effective income tax rates for the income tax
provision recorded by us are primarily due to the Section 162(m) limitation and other nondeductible expenses,
discrete excess tax benefits from stock-based compensation, and the Texas franchise tax, offset by research and
development tax credits.
Net Income. Net income increased by $14 million to $20 million for the three months ended September 30,
2026, as compared to net income of $6 million for the three months ended September 30, 2025, due to $53 million
of higher operating income, partially offset by $32 million of higher total other expense, net and $7 million of higher
income tax provision.
Nine Months Ended September 30, 2026 Compared with Nine Months Ended September 30, 2025
|
Nine Months Ended September 30,
|
|||||||
|
2026
|
2025
|
$ Change
|
% Change
|
||||
|
($ in millions)
|
|||||||
|
Revenues
|
|||||||
|
Equipment rental and related services ................
|
$2,483
|
$1,744
|
$739
|
42%
|
|||
|
Equipment sales ..................................................
|
21%
|
||||||
|
Equipment parts and supplies and services .........
|
45%
|
||||||
|
Platform revenue:
|
|||||||
|
Telematics ......................................................
|
189%
|
||||||
|
Other ...............................................................
|
93%
|
||||||
|
Total revenue ....................................................
|
3,905
|
2,808
|
1,097
|
39%
|
|||
|
Cost of revenues
|
|||||||
|
Direct operating costs ..........................................
|
50%
|
||||||
|
OWN Program payouts .......................................
|
38%
|
||||||
|
Equipment sales cost of revenues .......................
|
20%
|
||||||
|
Platform expense .................................................
|
179%
|
||||||
|
Depreciation and amortization ............................
|
27%
|
||||||
|
Total cost of revenues ......................................
|
2,745
|
2,009
|
37%
|
||||
|
Gross profit .......................................................
|
1,160
|
45%
|
|||||
|
Selling, general and administrative expenses .....
|
39%
|
||||||
|
Operating income ..............................................
|
78%
|
||||||
|
Other income (expense):
|
|||||||
|
Interest expense ...................................................
|
(231)
|
(207)
|
(24)
|
12%
|
|||
|
Other income, net ................................................
|
(13)
|
(33)%
|
|||||
|
Total other expense, net ...................................
|
(204)
|
(167)
|
(37)
|
22%
|
|||
|
Income (loss) before income taxes ......................
|
(48)
|
(117)%
|
|||||
|
Benefit from income taxes ..................................
|
(2)
|
(23)
|
(91)%
|
||||
|
Net income (loss) ................................................
|
$10
|
$(25)
|
$35
|
(140)%
|
|||
Total revenue. Our revenue was $3,905 million for the nine months ended September 30, 2026, compared to
$2,808 million for the nine months ended September 30, 2025, an increase of $1,097 million, or 39%. Our four
sources of revenues over the period are further discussed below:
Equipment rental and related services. Equipment rental and related services revenue accounted for 64% of our
revenue for the nine months ended September 30, 2026, compared to 62% of our revenue for the nine months ended
September 30, 2025. Our equipment rental and related services revenue was $2,483 million for the nine months
ended September 30, 2026, compared to $1,744 million for the nine months ended September 30, 2025, an increase
of $739 million, or 42%. Approximately $558 million of the increase in equipment rental and related services
revenue is driven by an increase in construction demand in the U.S., our strategy to increase our geographical
presence, and value afforded our customers from our T3 platform. Accordingly, we increased the number of our full-
service equipment rental branch locations from 342 as of September 30, 2025 to 408 as of September 30, 2026. In
addition, we grew our rental fleet OEC under management from $8,053 million as of September 30, 2025 to $10,663
million as of September 30, 2026, and increased the size of our rental fleet from 235,044 units to 302,865 units of
equipment under management as of September 30, 2025 and 2026, respectively. Changes in the mix of equipment
rented and price changes increased equipment rental and related services revenue by $181 million.
Equipment sales. Equipment sales revenue accounted for 24% of our revenue for the nine months ended
September 30, 2026, compared to 28% of our revenue for the nine months ended September 30, 2025. Equipment
sales revenue was $955 million for the nine months ended September 30, 2026, compared to $790 million for the
nine months ended September 30, 2025, an increase of $165 million, or 21%. The change was primarily due to an
increase of $158 million in sales of construction equipment to existing and new participants in our OWN Program,
including third parties who have financed equipment purchases through the issuance of ABS, and an increase of $7
million in the sale of new and used equipment to contractors and other end users. As we increase the size of our
OWN Program, transactions with OWN Program participants may result in a higher percentage of our revenue being
attributable to an OWN Program participant for the period during which one or more equipment sale transactions
with such party occurred. We have experienced strong interest from participants in the OWN Program for
construction equipment enabled by T3, as owners get real-time data on usage, health, and performance of the
machines rented exclusively by EquipmentShare and re-rented to our customers. The OWN Program has allowed us
to scale the fleet OEC under our management in order to meet customer demand for construction equipment enabled
by T3.
Equipment parts and supplies and services. Equipment parts and supplies and services revenue accounted for
7% of our revenue for the nine months ended September 30, 2026, compared to 7% for the nine months ended
September 30, 2025. Equipment parts and supplies and services revenue was $287 million for the nine months ended
September 30, 2026, compared to $198 million for the nine months ended September 30, 2025, an increase of $89
million, or 45%. This increase was primarily due to our expansion into new markets, resulting in additional full-
service branch locations added to our nationwide network, which increased from 342 locations as of September 30,
2025 to 408 locations as of September 30, 2026. Equipment parts and supplies and services revenue increased $47
million from mature branch locations primarily attributed to the expansion of our product and service offering in
mature branch locations, and $42 million from new branch locations open less than 24 months as a result of the
addition of 66 full-service branch locations.
Platform revenue. Platform revenue accounted for 5% of our revenue for the nine months ended September 30,
2026, compared to 3% of our revenue for the nine months ended September 30, 2025. Platform revenue from
telematics was $101 million for the nine months ended September 30, 2026, compared to $35 million for the nine
months ended September 30, 2025, an increase of $66 million, or 189%. This increase was primarily due to an
increase in revenues related to the sale of custom electronic components following our September 2025 acquisition
of the controlling interests in Morey, a business that designs, manufactures, and sells custom electronic components,
including telematics tracker devices and cloud-based access control keypads. Platform revenue from the sale of
construction materials, building supplies, and hardware across our building materials and hardware retail stores was
$79 million for the nine months ended September 30, 2026, compared to $41 million for the nine months ended
September 30, 2025, an increase of $38 million primarily attributable to the addition of 9 building materials and
hardware retail stores.
Cost of revenues. Cost of revenues was $2,745 million for the nine months ended September 30, 2026,
compared to $2,009 million for the nine months ended September 30, 2025, an increase of $736 million, or 37%.
Direct operating costs. Direct operating costs were $856 million for the nine months ended September 30, 2026,
compared to $572 million for the nine months ended September 30, 2025, an increase of $284 million, or 50%. The
increase in direct operating costs is primarily due to the expansion of our footprint through the addition of 66 full-
service branch locations, which increased from 342 locations as of September 30, 2025 to 408 locations, and the
increase of the rental fleet under our management as of September 30, 2026. The additional operating locations and
rental fleet under our management drove increases in wages and related benefits of $67 million, and logistics,
maintenance, and other site operating costs of $218 million.
OWN Program payouts. OWN Program payouts were $704 million for the nine months ended September 30,
2026 compared to $512 million for the nine months ended September 30, 2025, an increase of $192 million, or 38%.
Approximately $205 million of the increase is attributed to the growth of the average fleet OEC under management
enrolled in the OWN Program, which grew from $3,766 million in 2025 to $5,285 million in 2026, or 40%. Changes
in demand for specific types of rental equipment and the mix of equipment rented partially offset the increase in
OWN program payouts by $13 million.
Equipment sales cost of revenues. Equipment sales cost of revenues was $783 million for the nine months ended
September 30, 2026, compared to $654 million for the nine months ended September 30, 2025, an increase of $129
million, or 20%. This increase was primarily due to an increase of $119 million in equipment sales cost of revenues
for sales to existing and new participants in the OWN Program and $10 million in equipment sales to contractors
and other end users primarily due to our ability to reach a greater customer base through our expansion of full-
service branch locations, which increased from 342 as of September 30, 2025 to 408 as of September 30, 2026.
Platform expense. Platform expense was $106 million for the nine months ended September 30, 2026,
compared to $38 million for the nine months ended September 30, 2025, an increase of $68 million or 179%. This
increase was primarily attributed to the addition of 9 hardware retail stores and the acquisition of Morey in
September 2025.
Depreciation and amortization. Depreciation and amortization accounted for 11% of our cost of revenues for
the nine months ended September 30, 2026, compared to 12% of our cost of revenues for the nine months ended
September 30, 2025. Depreciation and amortization was $296 million for the nine months ended September 30,
2026, compared to $233 million for the nine months ended September 30, 2025, an increase of $63 million, or 27%.
This increase was primarily due to a $54 million increase in depreciable equipment expense on rental equipment due
to an increase in the size of our fleet and in average cost of owned equipment in our rental equipment, and a $7
million increase in amortization expense on capitalized software due to an increase in average capitalized costs
related to the continued development of our T3 platform.
Selling, general and administrative expenses. Selling, general and administrative expenses were $948 million
for the nine months ended September 30, 2026, compared to $680 million for the nine months ended September 30,
2025, an increase of $268 million, or 39%. The increases in selling, general and administrative expenses were
primarily attributed to our expansion of full-service branch locations and growth strategy. To support our expansion,
we hired approximately 2,034 additional staff resulting in an increase of $97 million in selling, general and
administrative expense associated with higher payroll, benefits and travel costs. Our expansion of full-service
locations also resulted in higher facilities and non-rental vehicles lease expense and associated costs of $35 million.
The growth of our business and expansion of our full-service branch locations also increased administrative costs
such as insurance, legal, professional expenses and non-income based taxes by $19 million and other miscellaneous
administrative expenses by $49 million. Additionally, increased stock-based compensation expense of $68 million
was recorded primarily for the IPO Founders Awards for the nine months ended September 30, 2026.
Interest expense. Interest expense was $231 million for the nine months ended September 30, 2026, compared
to $207 million for the nine months ended September 30, 2025, an increase of $24 million, or 12%. This increase
was primarily due to an increase in average outstanding debt balances to fund our expansion strategy including
purchases of construction equipment for our fleet, partially offset by lower average interest rates under our asset-
based revolving credit facilities.
Total other expense, net. Total other expense, net was $204 million for the nine months ended September 30,
2026, compared to $167 million for the nine months ended September 30, 2025, an increase of $37 million, or 22%.
This increase was primarily due to higher interest expense of $24 million for the nine months ended September 30,
2026, compared to the nine months ended September 30, 2025, resulting from our higher average outstanding
borrowing for the nine months ended September 30, 2026, and as a result of lower miscellaneous income of $13
million due to higher realized and unrealized net gains on investments in the prior year.
Benefit from income taxes. The benefit from income taxes was $2 million for the nine months ended September
30, 2026, compared to $23 million for the nine months ended September 30, 2025, a decrease of $21 million, or
91%. The change in the benefit from income taxes is primarily due to an increase in operating income to $212
million for the nine months ended September 30, 2026, as compared to operating income of $119 million for the
nine months ended September 30, 2025, applying the estimated annual effective tax rate for each period that reflects
the expected full-year income and related tax expense, partially offset by discrete excess tax benefits from stock-
based compensation. Differences between applicable federal and state statutory tax rates and the effective income
tax rates for the income tax benefit recorded by us are primarily due to the Section 162(m) limitation and other
nondeductible expenses, discrete excess tax benefits from stock-based compensation, and the Texas franchise tax,
offset by research and development tax credits.
Net income (loss). Net income increased by $35 million to a net income of $10 million for the nine months
ended September 30, 2026, as compared to net loss of $25 million for the nine months ended September 30, 2025,
due to $93 million of higher operating income, partially offset by $37 million of higher total other expense, net and
$21 million of lower income tax benefit.
Key Performance Metrics
We regularly review a number of financial measurements and operating metrics to evaluate our operating
performance, measure our growth and make strategic investment decisions. In addition to traditional U.S. generally
accepted accounting principles ("U.S. GAAP") performance measures, such as total revenue and net income, we use
supplemental performance operating metrics such as OEC Under Management, and the non-GAAP financial
measure EBITDA.
Non-GAAP Financial Measure
We refer in this Form 10-Q to EBITDA, a non-GAAP financial measure that is not prepared in accordance with
U.S. GAAP. This non-GAAP financial measure should be considered supplemental to and is not a substitute for
financial information prepared in accordance with U.S. GAAP. Our use of the term EBITDA may vary from the use
of similar terms by other companies in our industry and accordingly may not be comparable to similarly titled
measures used by other companies.
EBITDA. EBITDA is a key metric used by management and our Board to assess our financial performance. We
define EBITDA as net income before interest expense, income taxes, depreciation and amortization and non-cash
stock compensation expense, which we believe, when excluded, provide investors with a useful representation of our
ongoing operations and performance. Certain items excluded from EBITDA are significant components in
understanding and assessing a company's financial performance, such as a company's cost of capital and tax
structure, as well as the historic costs of depreciable assets, none of which are reflected in EBITDA. Our
presentation of EBITDA should not be construed as an indication that results will be unaffected by the items
excluded from EBITDA.
The table below reconciles net income to EBITDA for each of the periods indicated:
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||
|
2026
|
2025
|
2026
|
2025
|
||||
|
(In millions)
|
|||||||
|
Net income (loss) ..............................
|
$20
|
$6
|
$10
|
$(25)
|
|||
|
Provision for (benefit from) income
taxes ..................................................
|
(2)
|
(23)
|
|||||
|
Depreciation and amortization
expense ..............................................
|
|||||||
|
Interest expense .................................
|
|||||||
|
Non-cash stock compensation
expense(1) ...........................................
|
|||||||
|
EBITDA ..........................................
|
$276
|
$186
|
$651
|
$423
|
|||
__________________
(1)Represents non-cash compensation expense for stock option and other stock-based awards.
Other Key Financial Metrics
Equipment Rental Segment Adjusted EBITDA and Equipment Rental Segment Adjusted EBITDA Margin.
Equipment Rental Segment Adjusted EBITDA and Equipment Rental Segment Adjusted EBITDA Margin are key
performance metrics used by management and our Board to assess the financial performance of our Equipment
Rental and Services Operations segment. Equipment Rental Segment Adjusted EBITDA is the profitability measure
used by management to evaluate our Equipment Rental and Services Operations segment, disclosed in accordance
with the requirements of ASC Topic 280, Segment Reporting. Equipment Rental Segment Adjusted EBITDA
Margin is Equipment Rental Segment Adjusted EBITDA divided by Equipment Rental and Services Operations
Segment total revenues.
The below table presents our Equipment Rental Segment Adjusted EBITDA and Equipment Rental Segment
Adjusted EBITDA Margin for each of the periods indicated.
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||
|
2026
|
2025
|
2026
|
2025
|
||||
|
(In millions)
|
|||||||
|
Equipment Rental Segment
Adjusted EBITDA(1) ............
|
$491
|
$324
|
$1,204
|
$807
|
|||
|
Equipment Rental Segment
Adjusted EBITDA
Margin ..............................
|
44%
|
43%
|
43%
|
41%
|
|||
__________________
(1)Equipment Rental Segment Adjusted EBITDA includes direct operating costs (excluding equipment and vehicle operating lease expense)
and selling, general, and administrative expenses (excluding depreciation expense related to our property and other fixed assets). Equipment
and vehicle operating lease expense was $6 million and $7 million for the three months ended September 30, 2026 and 2025, respectively,
and $18 million and $19 million for the nine months ended September 30, 2026 and 2025, respectively. Depreciation expense related to our
property and other fixed assets was $16 million and $11 million for the three months ended September 30, 2026 and 2025, respectively, and
$43 million and $29 million for the nine months ended September 30, 2026 and 2025, respectively. Equipment Rental Segment Adjusted
EBITDA also excludes operating expenses related to OWN Program payouts, depreciation expense on rental equipment, and amortization
expense on capitalized software and intangible assets. OWN Program payouts, depreciation expense on rental equipment, and amortization
expense on capitalized software and intangible assets was $254 million, $100 million, and $9 million, respectively, for the three months
ended September 30, 2026, and $704 million, $272 million, and $26 million, respectively, for the nine months ended September 30, 2026,
and $185 million, $79 million, and $6 million, respectively, for the three months ended September 30, 2025, and $512 million, $218
million, and $14 million, respectively, for the nine months ended September 30, 2025. For additional information, see Note 18. Segment
Information in this Form 10-Q, for the three and nine months ended September 30, 2026.
OEC Under Management. A substantial portion of our overall value is in our rental fleet equipment, including
support vehicles and trailers. The OEC of our owned rental equipment at September 30, 2026 and September 30,
2025 was $4,816 million and $3,767 million, respectively, or approximately 45% and 47%, respectively, of total
equipment rental OEC under our management. At September 30, 2026, the appraised value of the rental equipment
owned by OWN Program participants was $4,213 million. Our broader managed equipment rental fleet from which
we support and generate our equipment rental revenue as of September 30, 2026 consisted of 302,865 units having
an OEC of $10,663 million and an average age of 31 months, and as of September 30, 2025 consisted of 235,044
units having an OEC of $8,053 million and an average age of 30 months.
Fleet Composition. Our equipment rental fleet from which we support and generate our equipment rental
revenue is summarized in the tables below:
|
September 30, 2026
|
|||||||
|
% of
|
OEC
|
% of
|
|||||
|
Units
|
Total
|
(In millions)
|
Total
|
||||
|
EquipmentShare Owned ...............................
|
208,390
|
69%
|
$4,816
|
45%
|
|||
|
OWN Program ..............................................
|
93,478
|
31%
|
5,765
|
54%
|
|||
|
Operating Lease ............................................
|
-%
|
1%
|
|||||
|
Total ............................................................
|
302,865
|
100%
|
$10,663
|
100%
|
|||
|
September 30, 2025
|
|||||||
|
% of
|
OEC
|
% of
|
|||||
|
Units
|
Total
|
(In millions)
|
Total
|
||||
|
EquipmentShare Owned ...............................
|
164,168
|
70%
|
$3,767
|
47%
|
|||
|
OWN Program ..............................................
|
69,337
|
29%
|
4,160
|
52%
|
|||
|
Operating Lease ............................................
|
1,539
|
1%
|
1%
|
||||
|
Total ............................................................
|
235,044
|
100%
|
$8,053
|
100%
|
|||
|
December 31, 2025
|
|||||||
|
% of
|
OEC
|
% of
|
|||||
|
Units
|
Total
|
(In millions)
|
Total
|
||||
|
EquipmentShare Owned ...............................
|
170,704
|
68%
|
$3,740
|
43%
|
|||
|
OWN Program ..............................................
|
80,482
|
32%
|
4,942
|
56%
|
|||
|
Operating Lease ............................................
|
1,066
|
-%
|
1%
|
||||
|
Total ............................................................
|
252,252
|
100%
|
$8,780
|
100%
|
|||
|
December 31, 2024
|
|||||||
|
% of
|
OEC
|
% of
|
|||||
|
Units
|
Total
|
(In millions)
|
Total
|
||||
|
EquipmentShare Owned ...............................
|
134,394
|
69%
|
$3,021
|
46%
|
|||
|
OWN Program ..............................................
|
58,360
|
30%
|
3,437
|
52%
|
|||
|
Operating Lease ............................................
|
1,708
|
1%
|
2%
|
||||
|
Total ............................................................
|
194,462
|
100%
|
$6,601
|
100%
|
|||
The diversity of equipment in our rental fleet is monitored and carefully balanced to give us the ability to
relocate equipment across regions to support increased regional industrial or construction activity and enhance our
overall utilization. For example, certain categories of our equipment supporting industrial construction can
efficiently be re-located to infrastructure projects. As of September 30, 2026 and December 31, 2025, 83% and 85%
of our rental fleet consists of general rental construction equipment, which includes our core rental equipment of
boom lifts, telehandlers, earth moving, scissor lifts, and excavators, respectively, and 17% and 15% of our rental
fleet consists of specialty equipment, which includes advanced solutions, industrial tooling, and other non-core
rental equipment, respectively.
The rental equipment mix among our general rental and specialty equipment categories was largely consistent in
each year as a percentage of total units available for rent and as a percentage of OEC.
For the net book value of our rental equipment, see Note 5. Rental Equipment, Net in this Form 10-Q, for the
nine months ended September 30, 2026.
Business Segments
We operate our business through the following reportable segments: (i) Equipment Rental and Services
Operations, comprised of recurring activity performed at our full-service branch locations, such as equipment rentals
and related services (including allocated telematics revenue related to rental customer access to the T3 platform),
and sales of parts, supplies and maintenance services to construction contractors and others, and (ii) Equipment
Sales, comprised of sales by us of new or used equipment made at any of our branch locations and dealership sites,
including equipment sales to participants in the OWN Program. All other business activities include telematics SaaS
subscriptions, software applications, and related telematics devices purchased by customers for their owned fleet, as
well as building materials and hardware supplies. These segments are based upon how we allocate resources and
assess performance. For additional information about our business segments, see Note 18. Segment Information in
this Form 10-Q, for the three and nine months ended September 30, 2026.
Equipment Rental and Services Operations
Our core service is the rental of equipment to customers on a daily, weekly, and monthly basis, enabled by our
T3 platform. The equipment we rent includes (i) company-owned equipment, and (ii) equipment that is leased to us
under month-to-month or longer-term arrangements from participants in our OWN Program. We generate rental
revenue by renting equipment owned by us or owned by others and re-renting the equipment to our customers.
In addition to equipment rental revenue, we also generate revenue from the sale of RPP services designed to
protect our customers from potential damage or loss to the equipment during the rental period, environmental fees
assessed on the rental asset, and fuel recovery fees that we charge to our rental customers.
As an integral part of our Equipment Rental and Services Operations segment, we sell equipment parts and
supplies and provide maintenance and repair services to customers, as well as the owners of equipment who are
participants in our OWN Program. We generate revenue from the provision of ad hoc and preventative maintenance
and repair services to our customers. We also provide warranty repair services on behalf of OEMs in order to fulfill
the warranty extended by the OEMs to customers. Revenue that we generate from warranty repair services
represents compensation for the service performed by us.
Our principal costs and expenses associated with the Equipment Rental and Services Operations segment
include (i) segment direct operating costs incurred across our 408 full-service branch locations and 9 dealership sites
as of September 30, 2026, excluding operating expenses related to OWN Program payouts and equipment and
vehicle operating lease expense; and (ii) segment selling, general and administrative expenses, excluding
depreciation expense related to the property and other fixed assets. Direct operating costs include the costs incurred
at our rental branch locations that collectively support our Equipment Rental and Services Operations segment,
including, but not limited to, wages and related benefits, service costs in connection with our rental equipment, site
operating costs, pickup and delivery expenses in connection with rental equipment, maintenance, fuel, parts, and
supplies.
Equipment Sales
Through our Equipment Sales segment, we manage retail processes to sell new and used equipment. We sell
used equipment assets to participants in our OWN Program, including third parties who have financed equipment
purchases through the issuance of ABS. We also sell new and used equipment to others through a variety of
channels, including retail sales, wholesalers, brokered sales, and auctions. Our principal costs and expenses
associated with the Equipment Sales segment include the OEC, or purchase cost, of the equipment that we sell when
we act as the principal in the transaction. When we act as the agent in the transaction, the purchase cost of the
equipment that we sell is presented net of the equipment sales revenue.
All Other
All other business activities, which include telematics SaaS subscriptions, software applications, and the design,
manufacture, and sale of custom electronic components, including telematics devices and cloud-based access control
keypads purchased by customers for their owned fleet, as well as building materials and hardware supplies, are
included in "All Other."
The following tables present information about our reportable segments for the three months ended September
30, 2026 and 2025 (in millions):
|
Three Months Ended September 30, 2026
|
|||||||
|
Equipment
Rental and
Services
Operations
|
Equipment
Sales
|
All Other
|
Total
|
||||
|
Equipment rental, parts, supplies, and services ...........
|
$1,107
|
$-
|
$-
|
$1,107
|
|||
|
Equipment sales ...........................................................
|
-
|
-
|
|||||
|
Telematics ...................................................................
|
-
|
||||||
|
Sales of building materials, small tools, and
hardware supplies ....................................................
|
-
|
-
|
|||||
|
Total revenues ...........................................................
|
$1,113
|
$294
|
$61
|
$1,468
|
|||
|
Significant expenses:
|
|||||||
|
Segment cost of revenues .......................................
|
|||||||
|
Segment selling, general and administrative
expenses ..............................................................
|
|||||||
|
Segment Adjusted EBITDA(1) .................................
|
$491
|
$44
|
$(6)
|
||||
|
Three Months Ended September 30, 2025
|
|||||||
|
Equipment
Rental and
Services
Operations
|
Equipment
Sales
|
All Other
|
Total
|
||||
|
Equipment rental, parts, supplies, and services ...........
|
$742
|
$-
|
$-
|
$742
|
|||
|
Equipment sales ...........................................................
|
-
|
-
|
|||||
|
Telematics ...................................................................
|
-
|
||||||
|
Sales of building materials, small tools, and
hardware supplies ....................................................
|
-
|
-
|
|||||
|
Total revenues ............................................................
|
$746
|
$167
|
$32
|
$945
|
|||
|
Significant expenses: ...................................................
|
|||||||
|
Segment cost of revenues .......................................
|
|||||||
|
Segment selling, general and administrative
expenses ..............................................................
|
|||||||
|
Segment Adjusted EBITDA(1) ..................................
|
$324
|
$30
|
$(2)
|
||||
__________________
(1)Segment Adjusted EBITDA includes cost of revenues and selling, general, and administrative expenses for each segment. Cost of revenues
for the Equipment Rental and Services Operations segment includes direct operating costs, excluding equipment and vehicle operating lease
expense. Equipment and vehicle operating lease expense was $6 million and $7 million for the three months ended September 30, 2026 and
2025 respectively. Cost of revenues for the Equipment Sales segment includes the cost of equipment sales. Cost of revenues for all other
activities includes platform expenses. Segment Adjusted EBITDA also excludes operating expenses related to OWN Program payouts,
depreciation expense on rental equipment, and amortization expense on capitalized software and intangible assets. These excluded expenses
are significant: OWN Program payouts, depreciation expense on rental equipment, and amortization expense on capitalized software and
intangible assets was $254 million, $100 million, and $9 million, respectively, for the three months ended September 30, 2026, $185
million, $79 million, and $6 million, respectively, for the three months ended September 30, 2025. Selling, general and administrative
expenses for each segment exclude depreciation expense related to our property and other fixed assets. Depreciation expense related to our
property and other fixed assets was $16 million and $11 million for the three months ended September 30, 2026 and 2025, respectively. For
additional information, see Note 18. Segment Information in this Form 10-Q, for the three and nine months ended September 30, 2026.
Three Months Ended September 30, 2026 Compared with Three Months Ended September 30, 2025
Equipment Rental and Services Operations. Revenue for our Equipment Rental and Services Operations
segment was $1,113 million for the three months ended September 30, 2026, compared to $746 million for the three
months ended September 30, 2025, an increase of $367 million, or 49%. Approximately $215 million of the increase
is attributed to the growth in fleet OEC under our management from $8,053 million as of September 30, 2025 to
$10,663 million as of September 30, 2026, and the corresponding increase in our fleet size from 235,044 units to
302,865 units of equipment under our management as of September 30, 2025 and 2026, respectively. The increase in
fleet OEC under our management, connected to our T3 platform, drove an increase in equipment rental revenue,
primarily from national and regional customers. Fleet OEC under our management includes equipment we own and
lease, as well as equipment owned by third parties and leased through our OWN Program that we rent to customers
from our full-service branch locations, which also increased from 342 as of September 30, 2025, to 408 as of
September 30, 2026. Revenue from sales of equipment parts and supplies and services from mature branch locations
and new branch locations open less than 24 months contributed $31 million and $21 million, respectively, to the
increase in equipment rental and related services revenue and changes in the mix of equipment rented and price
changes increased equipment rental and related services revenue by $98 million.
Segment Adjusted EBITDA for our Equipment Rental and Services Operations segment was $491 million for
the three months ended September 30, 2026, compared to $324 million for the three months ended September 30,
2025, an increase of $167 million, or 52%. The increase in Segment Adjusted EBITDA was primarily due to an
increase in segment total revenues of $367 million from equipment rentals and the sale of parts, supplies and
services, attributed to our organic growth initiatives, including the maturation of our existing sites and incremental
growth sites, and an increase in equipment rental fleet OEC under our management, from $8,053 million as of
September 30, 2025 to $10,663 million as of September 30, 2026, and the corresponding increase in our fleet size
from 235,044 units to 302,865 units of equipment under our management as of September 30, 2025 and 2026,
respectively, driven by OWN Program demand. The increase in segment total revenues was offset by increases of
$139 million in segment cost of revenues and $61 million in segment selling, general and administrative expenses.
Equipment Sales. Revenue for our Equipment Sales segment was $294 million for the three months ended
September 30, 2026, compared to $167 million for the three months ended September 30, 2025, an increase of $127
million, or 76%. The increase was primarily due to increased sales of construction equipment, primarily to existing
and new participants in the OWN Program, as presented in the following table (in millions):
|
Three Months Ended September 30,
|
|||||||
|
2026
|
2025
|
$ Change
|
% Change
|
||||
|
Equipment sales to OWN Program participants(1) .......
|
$243
|
$104
|
$139
|
134%
|
|||
|
Other new equipment sales ..........................................
|
(17)
|
(39)%
|
|||||
|
Other used equipment sales .........................................
|
26%
|
||||||
|
Total revenues - equipment sales .............................
|
$294
|
$167
|
$127
|
76%
|
|||
|
Cost of equipment sold to OWN Program
participants ...............................................................
|
$201
|
$77
|
$124
|
161%
|
|||
|
Cost of other new equipment sales ..............................
|
(12)
|
(33)%
|
|||||
|
Cost of other used equipment sales .............................
|
6%
|
||||||
|
Total cost of revenues - equipment sales .................
|
$243
|
$130
|
$113
|
87%
|
|||
__________________
(1)For the three months ended September 30, 2026 and 2025, equipment sales to OWN Program participants included net revenue of $9
million and $15 million, respectively, recognized on an agent basis, with overall transaction values of $62 million and $118 million,
respectively.
The increase in equipment sales of $127 million is primarily attributed to higher sales of $139 million in
construction equipment to existing and new participants in our OWN Program. Sales of new equipment from our full
service branch locations to contractors and other end users decreased by $17 million.
Segment Adjusted EBITDA for our Equipment Sales segment was $44 million for the three months ended
September 30, 2026, compared to $30 million for the three months ended September 30, 2025, an increase of $14
million, or 47%. The increase in Segment Adjusted EBITDA for Equipment Sales was primarily due to an increase
in segment total revenues of $127 million offset by increases of $113 million in segment cost of revenues.
All Other. Revenue for all other activities was $61 million for the three months ended September 30, 2026,
compared to $32 million for the three months ended September 30, 2025, an increase of $29 million, or 91%. This
increase was primarily due to an increase of $19 million in revenues related to the sale of custom electronic
components following our September 2025 acquisition of the controlling interest in Morey, a business that designs,
manufactures, and sells custom electronic components, including telematics tracker devices and cloud-based access
control keypads, as well as an increase of $10 million in sales of building materials, small tools, and hardware
supplies due to our expansion of 9 hardware stores during the trailing twelve months. Segment loss for our all other
activities was $6 million for the three months ended September 30, 2026, compared to Segment loss of $2 million
for the three months ended September 30, 2025, an increase of $4 million, or 200%, primarily due to an increase of
$9 million in selling, general and administrative expenses, including employee compensation, technology costs,
professional service fees, and insurance expenses which were allocated to all other activities based on employee
headcount, partially offset by the higher revenue previously discussed.
The following tables present information about our reportable segments for the nine months ended September
30, 2026 and 2025 (in millions):
|
Nine Months Ended September 30, 2026
|
|||||||
|
Equipment
Rental and
Services
Operations
|
Equipment
Sales
|
All Other
|
Total
|
||||
|
Equipment rental, parts, supplies, and services ...........
|
$2,770
|
$-
|
$-
|
$2,770
|
|||
|
Equipment sales ...........................................................
|
-
|
-
|
|||||
|
Telematics ...................................................................
|
-
|
||||||
|
Sales of building materials, small tools, and
hardware supplies ....................................................
|
-
|
-
|
|||||
|
Total revenues ...........................................................
|
$2,785
|
$955
|
$165
|
$3,905
|
|||
|
Significant expenses:
|
|||||||
|
Segment cost of revenues .......................................
|
|||||||
|
Segment selling, general and administrative
expenses ..............................................................
|
|||||||
|
Segment Adjusted EBITDA(1) .................................
|
$1,204
|
$150
|
$(8)
|
||||
|
Nine Months Ended September 30, 2025
|
|||||||
|
Equipment
Rental and
Services
Operations
|
Equipment
Sales
|
All Other
|
Total
|
||||
|
Equipment rental, parts, supplies, and services ...........
|
$1,942
|
$-
|
$-
|
$1,942
|
|||
|
Equipment sales ...........................................................
|
-
|
-
|
|||||
|
Telematics ...................................................................
|
-
|
||||||
|
Sales of building materials, small tools, and
hardware supplies ....................................................
|
-
|
-
|
|||||
|
Total revenues ............................................................
|
$1,953
|
$790
|
$65
|
$2,808
|
|||
|
Significant expenses: ...................................................
|
|||||||
|
Segment cost of revenues .......................................
|
|||||||
|
Segment selling, general and administrative
expenses ..............................................................
|
|||||||
|
Segment Adjusted EBITDA(1) ..................................
|
$807
|
$115
|
$(11)
|
||||
__________________
(1)Segment Adjusted EBITDA includes cost of revenues and selling, general, and administrative expenses for each segment. Cost of revenues
for the Equipment Rental and Services Operations segment includes direct operating costs, excluding equipment and vehicle operating lease
expense. Equipment and vehicle operating lease expense was $18 million and $19 million for the nine months ended September 30, 2026
and 2025 respectively. Cost of revenues for the Equipment Sales segment includes the cost of equipment sales. Cost of revenues for all
other activities includes platform expenses. Segment Adjusted EBITDA also excludes operating expenses related to OWN Program payouts,
depreciation expense on rental equipment, and amortization expense on capitalized software and intangible assets. OWN Program payouts,
depreciation expense on rental equipment, and amortization expense on capitalized software and intangible assets was $704 million, $272
million, and $26 million, respectively, for the nine months ended September 30, 2026, $512 million, $218 million, and $14 million,
respectively, for the nine months ended September 30, 2025. Selling, general and administrative expenses for each segment exclude
depreciation expense related to our property and other fixed assets. Depreciation expense related to our property and other fixed assets was
$43 million and $29 million for the nine months ended September 30, 2026 and 2025, respectively. For additional information, see Note 18.
Segment Information in this Form 10-Q, for the nine months ended September 30, 2026.
Nine Months Ended September 30, 2026 Compared with Nine Months Ended September 30, 2025
Equipment Rental and Services Operations. Revenue for our Equipment Rental and Services Operations
segment was $2,785 million for the nine months ended September 30, 2026, compared to $1,953 million for the nine
months ended September 30, 2025, an increase of $832 million, or 43%. Approximately $558 million of the increase
is attributed to the growth in fleet OEC under our management from $8,053 million as of September 30, 2025 to
$10,663 million as of September 30, 2026, and the corresponding increase in our fleet size from 235,044 units to
302,865 units of equipment under our management as of September 30, 2025 and 2026, respectively. The increase in
fleet OEC under our management, connected to our T3 platform, drove an increase in equipment rental revenue,
primarily from national and regional customers. Fleet OEC under our management includes equipment we own and
lease, as well as equipment owned by third parties and leased through our OWN Program that we rent to customers
from our full-service branch locations, which also increased from 342 as of September 30, 2025, to 408 as of
September 30, 2026. Revenue from sales of equipment parts and supplies and services from mature branch locations
and new branch locations open less than 24 months contributed $47 million and $42 million, respectively, to the
increase in equipment rental and related services revenue and changes in the mix of equipment rented and price
changes increased equipment rental and related services revenue by $181 million.
Segment Adjusted EBITDA for our Equipment Rental and Services Operations segment was $1,204 million for
the nine months ended September 30, 2026, compared to $807 million for the nine months ended September 30,
2025, an increase of $397 million, or 49%. The increase in Segment Adjusted EBITDA was primarily due to an
increase in segment total revenues of $832 million from equipment rentals and the sale of parts, supplies and
services, attributed to our organic growth initiatives, including the maturation of our existing sites and incremental
growth sites, and an increase in equipment rental fleet OEC under our management, from $8,053 million as of
September 30, 2025 to $10,663 million as of September 30, 2026, and the corresponding increase in our fleet size
from 235,044 units to 302,865 units of equipment under our management as of September 30, 2025 and 2026,
respectively, driven by OWN Program demand. The increase in segment total revenues was offset by increases of
$284 million in segment cost of revenues and $151 million in segment selling, general and administrative expenses.
Equipment Sales. Revenue for our Equipment Sales segment was $955 million for the nine months ended
September 30, 2026, compared to $790 million for the nine months ended September 30, 2025, an increase of $165
million, or 21%. The increase was primarily due to increased sales of construction equipment, primarily to existing
and new participants in the OWN Program, as presented in the following table (in millions):
|
Nine Months Ended September 30,
|
|||||||
|
2026
|
2025
|
$ Change
|
% Change
|
||||
|
Equipment sales to OWN Program participants(1) .......
|
$773
|
$615
|
$158
|
26%
|
|||
|
Other new equipment sales ..........................................
|
(14)
|
(16)%
|
|||||
|
Other used equipment sales .........................................
|
25%
|
||||||
|
Total revenues - equipment sales .............................
|
$955
|
$790
|
$165
|
21%
|
|||
|
Cost of equipment sold to OWN Program
participants ...............................................................
|
$628
|
$509
|
$119
|
23%
|
|||
|
Cost of other new equipment sales ..............................
|
(8)
|
(10)%
|
|||||
|
Cost of other used equipment sales .............................
|
26%
|
||||||
|
Total cost of revenues - equipment sales .................
|
$783
|
$654
|
$129
|
20%
|
|||
__________________
(1)For the nine months ended September 30, 2026 and 2025, equipment sales to OWN Program participants included net revenue of $47
million and $45 million, respectively, recognized on an agent basis, with overall transaction values of $298 million and $358 million,
respectively.
The increase in equipment sales of $165 million is primarily attributed to higher sales of $158 million in
construction equipment to existing and new participants in our OWN Program. Sales of used equipment from our
full service branch locations to contractors and other end users increased $21 million, primarily attributed to our site
expansions.
Segment Adjusted EBITDA for our Equipment Sales segment was $150 million for the nine months ended
September 30, 2026, compared to $115 million for the nine months ended September 30, 2025, an increase of $35
million, or 30%. The increase in Segment Adjusted EBITDA for Equipment Sales was primarily attributed to higher
gross margins on equipment sales.
All Other. Revenue for all other activities was $165 million for the nine months ended September 30, 2026,
compared to $65 million for the nine months ended September 30, 2025, an increase of $100 million, or 154%. This
increase was primarily due to an increase of $62 million in revenues related to the sale of custom electronic
components following our September 2025 acquisition of the controlling interest in Morey, a business that designs,
manufactures, and sells custom electronic components, including telematics tracker devices and cloud-based access
control keypads, as well as an increase of $38 million in sales of building materials, small tools, and hardware
supplies due to our expansion of 9 hardware stores during the trailing twelve months. Segment loss for our all other
activities was $8 million for the nine months ended September 30, 2026, compared to $11 million for the nine
months ended September 30, 2025, a decrease of $3 million, or 27%, primarily due to the higher revenue as
previously discussed, partially offset by an increase of $29 million in selling, general and administrative expenses,
including employee compensation, technology costs, professional service fees, and insurance expenses which were
allocated to all other activities based on employee headcount.
Liquidity and Capital Resources
Overview
Our primary liquidity needs include funding our growth, payment of operating expenses, purchases of rental
equipment to be used in our operations, servicing of debt, share repurchases, and funding acquisitions.
Our future contractual obligations are further discussed in "-Contractual Obligations and Commitments"
below. Our primary sources of liquidity have been cash and cash equivalents, cash flows from our operations and
our ability to borrow under our existing asset-based lending facility (the "ABL Credit Facility"), other financing
arrangements, including lines of credit, and the issuances of perpetual preferred, common stock, and convertible
preferred stock, as well as debt securities.
As of September 30, 2026, our liquidity consisted of cash and cash equivalents of $359 million and net excess
availability of $1,939 million under our ABL Credit Facility. See "-ABL Credit Facility-Borrowing Capacity"
below.
On July 1, 2026, we issued $1,350 million in an aggregate principal amount of 7.125% Senior Secured Second
Lien Notes due 2034 (defined below) and used proceeds primarily to repay outstanding borrowings under the ABL
Credit Facility, enhancing our liquidity.
Our strategy is to maintain enough liquidity from both cash from operations and our availability under our debt
facilities to maintain sufficient headroom to finance our growth, as well as mitigate the impact that any adverse
financial market conditions might have on our operations in the future. We believe that cash generated from
operations, together with amounts available under the ABL Credit Facility or other financing arrangements, will be
sufficient to meet working capital requirements, debt payments, and anticipated capital expenditures, as well as meet
other strategic uses of cash, if any, over the next twelve months and beyond. We aim to maintain at least
$500 million in liquidity at all times.
To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business
activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional
equity would result in additional dilution to shareholders. In addition, we continuously monitor the capital markets
and our capital structure, and, from time to time, we seek to refinance, amend or otherwise restructure our
outstanding debt on an opportunistic basis and can also choose to raise incremental liquidity as part of such
transactions. Such repurchases, refinancings, amendments, exchanges or other transactions, if any, will be upon such
terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity
requirements, the availability of authorized share capital, contractual restrictions and other factors. The incurrence of
debt financing would result in debt service obligations and the instruments governing such debt could provide for
operating and financing covenants that may restrict our operations. There can be no assurances that we will be able
to raise additional capital on terms that are attractive to us or at all. The inability to raise capital would adversely
affect our ability to achieve our business objectives.
We sell equipment to third party OWN Program participants some of which have financed equipment purchases
through the issuance of ABS. Under the terms of the ABS, if the appraised value of the equipment declines below
specified amounts, these vehicles may require the third-party owner to liquidate some or all of their equipment,
which would make it unavailable to us and may require us to expend cash to obtain replacement equipment in order
to supply our customers with rental equipment.
On July 9, 2026, the Board approved a share repurchase program with authorization to purchase up to an
aggregate of $500 million of our Class A common stock with an expiration date of December 31, 2028. Repurchases
under the program may be made from time to time in the open market at prevailing market prices, in privately
negotiated transactions, in block trades and through other legally permissible means, with the amount and timing of
repurchases to be determined at our discretion, depending on market conditions and corporate needs. This program
does not obligate us to acquire any particular amount of Class A common stock and may be modified, suspended or
terminated at any time at the discretion of the Board. As of September 30, 2026, no shares had been repurchased
under this authorization.
Cash Flows
Significant factors driving our liquidity position include cash flows generated from operating and financing
activities, as well as investing activities. We have generated and expect to continue to generate positive cash flow
from our operations. Our ability to fund our capital needs will be affected by our ongoing ability to generate cash
from operations and access to capital markets.
The following table summarizes the change in cash and cash equivalents for the periods shown:
|
Nine Months Ended September 30,
|
|||
|
2026
|
2025
|
||
|
(In millions)
|
|||
|
Net cash used in operating activities ..............................................
|
$(179)
|
$(14)
|
|
|
Net cash used in investing activities ...............................................
|
(1,357)
|
(978)
|
|
|
Net cash provided by financing activities ......................................
|
1,589
|
||
|
Net increase (decrease) in cash and cash equivalents ..............
|
$53
|
$(5)
|
|
Net Cash Used in Operating Activities
For the nine months ended September 30, 2026 and 2025, net cash used in our operating activities was $179
million and $14 million, respectively, and was in each period primarily due to the expansion of our business,
increased working capital corresponding to the growth in our revenues, and the timing of certain payments. Net cash
used in operating activities also reflects an increase in cost of revenues of $736 million, selling, general and
administrative expenses of $268 million, and interest expense of $24 million for the nine months ended September
30, 2026, as compared to the nine months ended September 30, 2025, associated with the growth of our revenues
and other changes in working capital.
Net Cash Used in Investing Activities
For the nine months ended September 30, 2026 and 2025, net cash used in our investing activities was $1,357
million and $978 million, respectively, an increase of 39%, and was primarily due to an increase in cash used for the
purchases of rental equipment, which was $1,839 million for the nine months ended September 30, 2026, and $1,297
million for the nine months ended September 30, 2025 and an increase in cash used for the purchases of investments
in equity and debt securities which was $55 million for the nine months ended September 30, 2026, and $27 million
for the nine months ended September 30, 2025.
Net Cash Provided by Financing Activities
For the nine months ended September 30, 2026, net cash provided by financing activities was $1,589 million,
compared to $987 million for the nine months ended September 30, 2025, an increase of 61%. Net cash provided by
financing activities was positively impacted by net proceeds of $3,767 million from the issuance of long-term debt
for the nine months ended September 30, 2026, and net proceeds of $1,365 million from the issuance of long-term
debt for the nine months ended September 30, 2025, and proceeds of $706 million from the issuance of Class A
common stock upon the initial public offering, net of underwriting discount and commissions for the nine months
ended September 30, 2026. This was offset partially by using $2,810 million in cash to repay long-term debt for the
nine months ended September 30, 2026 and $315 million in cash to repay long-term debt for the nine months ended
September 30, 2025.
Capital Expenditures
Our capital expenditures relate largely to purchases of rental equipment, with the remaining portion representing
purchases of and deposits on property and other fixed assets and investments in internally developed software
primarily associated with the development of our proprietary T3 platform and related software applications. We
offset capital expenditures related to our rental equipment fleet through our sales of rental equipment to contractors
and to OWN Program participants, including high net worth individuals and family offices who have financed
equipment purchases through the issuance of ABS.
The table below sets forth the capital expenditures related to our rental equipment fleet, net of proceeds from the
sale of rental equipment, and investments we are making to the T3 platform and other internally developed software
for each of the periods presented.
|
Nine Months Ended September 30,
|
|||
|
2026
|
2025
|
||
|
(In millions)
|
|||
|
Purchases of rental equipment ...........................................................
|
$1,839
|
$1,297
|
|
|
Proceeds from sale of rental equipment(1) ..........................................
|
(715)
|
(604)
|
|
|
Net rental equipment capital expenditure ....................................
|
$1,124
|
$693
|
|
|
Investments in internally developed software(2) .................................
|
|||
|
Net rental equipment & software expenditure .............................
|
$1,149
|
$723
|
|
__________________
(1)Proceeds from sale of rental equipment reported as investing activities within the consolidated statements of cash flows exclude (i) gross
profit on such sales of equipment of $125 million and $91 million for the nine months ended September 30, 2026 and 2025, respectively;
(ii) other new equipment sales of $74 million and $73 million for the nine months ended September 30, 2026 and 2025, respectively; (iii)
net revenue from equipment sold on an agent basis of $47 million and $45 million for the nine months ended September 30, 2026 and 2025,
respectively; and (iv) offset by changes in accounts receivable and other of $6 million and $23 million for the nine months ended September
30, 2026 and 2025, respectively.
(2)Represents expenditures in connection with developing and maintaining our information technology, including our T3 platform, as well as
related software applications that generate platform revenue.
Net rental equipment capital expenditures were $1,124 million for the nine months ended September 30, 2026,
compared to $693 million for the nine months ended September 30, 2025, an increase of 62%, as we continued to
grow our fleet and site locations in connection with our geographical expansion.
ABL Credit Facility
Borrowing Capacity
On November 26, 2025, we refinanced existing borrowings under an asset-based lending facility (the "ABL
Facility") by entering into the ABL Credit Facility. The ABL Credit Facility has a stated maturity date of November
26, 2030. The ABL Credit Facility provides available "borrowing capacity" (the maximum borrowing permitted,
assuming there is sufficient collateral as identified under the ABL Credit Facility) up to $2.75 billion. Borrowings
under the ABL Credit Facility will bear interest at a rate (at our election) equal to either (i) the SOFR plus a spread
between 112.5 to 137.5 basis points or (ii) the greatest of (a) 0%, (b) the Federal Funds Rate in effect on such day
plus 50 basis points, (c) the SOFR for a one month tenor in effect on such day (to the extent ascertainable), plus 100
basis points, and (d) the Prime Rate plus (y) a spread between 12.5 basis points and 37.5 basis points.
The ABL Credit Facility provides for the majority of our borrowing capacity and availability. Creditors under
the ABL Credit Facility have a first-priority security interest in specific pools of assets identified as collateral
therein. Our ability to borrow under the ABL Credit Facility is a function of, among other things, the value of the
assets in the relevant collateral pool. We refer to the amount of debt we can borrow given a certain pool of assets as
the "Borrowing Base," which includes our accounts receivable, unbilled accounts receivable, eligible rental
equipment, eligible rolling stock and eligible inventory.
Under the ABL Credit Facility, we are required to maintain control agreements on deposit accounts where,
(x) proceeds of collateral from customers and other obligors or (y) proceeds of sales of the collateral, are deposited.
During a Cash Dominion Period (as defined below), all amounts in such deposit accounts are swept into a collection
account maintained with the ABL Credit Facility Agent and used to repay borrowings under the ABL Credit
Facility. A cash dominion period ("Cash Dominion Period") begins from the occurrence of (a) any specified event of
default or (b) specified availability being less than the greater of (i) 10% of the maximum borrowing amount and
(ii) $175 million, for five consecutive business days and ends when (a) no specified event of default exists and (b)
specified availability has been greater than the greater of (i) 10% of the maximum borrowing amount and (ii) $175
million, for twenty consecutive days.
As of September 30, 2026, we calculated a Borrowing Base, as defined under the ABL Credit Facility, of
$2,750 million. We determine "Net Excess Availability" as the amount of additional debt we could borrow based on
the existing borrowing base. As of September 30, 2026, we had Net Excess Availability of $1,939 million under the
ABL Credit Facility. We determine "Remaining Capacity" as defined under the ABL Credit Facility as the
maximum principal amount of debt permitted to be outstanding under the facility (i.e., the amount of debt we could
borrow assuming we possessed sufficient assets as collateral) less the principal amount of debt then-outstanding
under the facility. We calculate "Availability Under Borrowing Base Limitation" as the lower of Remaining
Capacity or the Borrowing Base less the principal amount of debt then-outstanding under the ABL Credit Facility, or
the amount of debt we could borrow given the collateral we possess at such time, up to payment conditions. As of
September 30, 2026, we calculated Remaining Capacity of $1,939 million and our "Availability Under Borrowing
Base Limitation" was $1,664 million. Under the ABL Credit Facility, "Remaining Capacity" and "Availability
Under Borrowing Base Limitation" are calculated and defined in the same way as under the ABL Facility.
As of September 30, 2026, $6 million of standby letters of credit were issued and outstanding with a third-party
financial institution.
Covenants
Our ABL Credit Facility contains a number of covenants that, among other things, limit or restrict our ability to
dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay certain indebtedness, make
certain restricted payments (including paying dividends, redeeming stock or making other distributions), create liens,
make investments, make acquisitions, engage in mergers, fundamentally change the nature of our business, or
engage in certain transactions with certain affiliates. Under the terms of our ABL Credit Facility, we are not subject
to ongoing financial maintenance covenants; however, under the ABL Credit Facility, failure to maintain certain
levels of liquidity will subject us to a contractually specified fixed charge coverage ratio of not less than 1:1 for the
four quarters most recently ended. As of September 30, 2026, the appropriate levels of liquidity have been
maintained; therefore this financial maintenance covenant is not applicable. Additional information on the terms of
our ABL Credit Facility is included in Note 9. Long-Term Debt and Lines of Credit in this Form 10-Q.
The ABL Credit Facility is secured on a first-priority basis by liens on substantially all of our and any
guarantor's assets, subject to permitted liens and certain exceptions. As of the date of this Form 10-Q, the ABL
Credit Facility is not guaranteed by any of our subsidiaries.
Certain of the restrictive covenants under the ABL Credit Facility utilize adjusted EBITDA, as defined in the
related credit agreement, as a primary component of the compliance metric governing our ability to undertake
certain actions otherwise proscribed by such covenants. The adjusted EBITDA metric is calculated under the ABL
Credit Facility as net income before the income tax provision, net financing charges, restructuring and impairment
costs, allocation for support functions and other costs, and intangible asset amortization and depreciation, and new
market start-up costs attributable to new locations less than twelve months old subject to a specified cap calculated
as a percentage of the adjusted EBITDA metric. For the three and nine months ended September 30, 2026, new
market start-up costs attributed to our Equipment Rental and Services Operations segment were $59 million and
$168 million, respectively. For the three and nine months ended September 30, 2025, new market start-up costs
attributed to our Equipment Rental and Services Operations segment were $70 million and $186 million,
respectively.
Senior Secured Second Lien Notes due 2028
On May 9, 2023, we issued $640,000,000 in aggregate principal amount of 9.000% Senior Secured Second Lien
Notes due 2028 (the "Initial 2028 Notes"). On September 21, 2023, we issued an additional $400,000,000 in
aggregate principal amount of 9.000% Senior Secured Second Lien Notes due 2028 (the "Additional 2028 Notes"
and together with the Initial 2028 Notes, the "2028 Notes"). The 2028 Notes were issued pursuant to the indenture,
dated as of May 9, 2023, between us and Citibank, N.A., as trustee and notes collateral agent (the "2028 Notes
Indenture"). The 2028 Notes bear interest at a rate of 9.00% per year and interest on the 2028 Notes is payable semi-
annually in arrears on May 15 and November 15 of each year. The 2028 Notes will mature on May 15, 2028. The
2028 Notes rank pari passu in right of payment to all of our and any guarantor's existing and future senior
indebtedness, including indebtedness under the ABL Credit Facility, our 2032 Notes (as defined below), our 2033
Notes (as defined below) and our 2034 Notes (as defined below).
The 2028 Notes and any related guarantees are secured on a second-priority basis by liens on substantially all of
our and any guarantor's assets that secure any first-priority lien obligations (including the ABL Credit Facility),
subject to permitted liens and certain exceptions. There are certain situations where all or a portion of such collateral
may be automatically released.
The 2028 Notes are not currently guaranteed by any of our subsidiaries and, in the future, will be jointly and
severally guaranteed on a senior secured second lien basis by each of our current and future subsidiaries to the extent
such subsidiary guarantees our ABL Credit Facility, subject to certain limitations and exceptions. We may redeem
some or all of the 2028 Notes at the redemption prices set forth in the 2028 Notes Indenture.
The 2028 Notes Indenture contains certain covenants applicable to us and our restricted subsidiaries, including
limitations on: (1) liens; (2) indebtedness; (3) mergers, consolidations and acquisitions; (4) sales, transfers and other
dispositions of assets; (5) loans and other investments; (6) dividends and other distributions, stock repurchases and
redemptions and other restricted payments; (7) restrictions affecting subsidiaries; (8) transactions with affiliates; and
(9) designations of unrestricted subsidiaries. Each of these covenants is subject to a number of important exceptions
and qualifications. In addition, many of the restrictive covenants do not apply to us during any period when the 2028
Notes are rated investment grade by any two of Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Investors Ratings Services ("S&P") and Fitch Ratings ("Fitch") or, in certain circumstances, another rating agency
selected by us, provided at such time no default under the 2028 Notes Indenture has occurred and is continuing. In
the case of an event of default, the principal amount of the 2028 Notes plus accrued and unpaid interest would be
accelerated.
Senior Secured Second Lien Notes due 2032
On April 16, 2024, we issued $600,000,000 in aggregate principal amount of 8.625% Senior Secured Second
Lien Notes due 2032 (the "2032 Notes"). The 2032 Notes were issued pursuant to the indenture, dated as of
April 16, 2024, between us and Citibank, N.A., as trustee and notes collateral agent (the "2032 Notes Indenture").
The 2032 Notes bear interest at a rate of 8.625% per year and interest on the 2032 Notes is payable semi-annually in
arrears on May 15 and November 15 of each year. The 2032 Notes will mature on May 15, 2032. The 2032 Notes
rank pari passu in right of payment to all of our and any guarantor's existing and future senior indebtedness,
including indebtedness under the ABL Credit Facility, our 2028 Notes, our 2033 Notes (as defined below) and our
2034 Notes (as defined below).
The 2032 Notes and any related guarantees are secured on a second-priority basis by liens on substantially all of
our and any guarantor's assets that secure any first-priority lien obligations (including the ABL Credit Facility),
subject to permitted liens and certain exceptions. There are certain situations where all or a portion of such collateral
may be automatically released.
As of the date of this Form 10-Q, the 2032 Notes are not guaranteed by any of our subsidiaries. Going forward,
the 2032 Notes will be jointly and severally guaranteed on a senior secured second lien basis by each of our current
and future subsidiaries to the extent such subsidiary guarantees our ABL Credit Facility, subject to certain
limitations and exceptions. We may redeem some or all of the 2032 Notes at the redemption prices set forth in the
2032 Notes Indenture.
The 2032 Notes Indenture contains certain covenants applicable to us and our restricted subsidiaries, including
limitations on: (1) liens; (2) indebtedness; (3) mergers, consolidations and acquisitions; (4) sales, transfers and other
dispositions of assets; (5) loans and other investments; (6) dividends and other distributions, stock repurchases and
redemptions and other restricted payments; (7) restrictions affecting subsidiaries; (8) transactions with affiliates; and
(9) designations of unrestricted subsidiaries. Each of these covenants is subject to a number of important exceptions
and qualifications. In addition, many of the restrictive covenants do not apply to us during any period when the 2032
Notes are rated investment grade by any two of Moody's, S&P, and Fitch or, in certain circumstances, another rating
agency selected by us, provided at such time no default under the 2032 Notes Indenture has occurred and is
continuing. In the case of an event of default, the principal amount of the 2032 Notes plus accrued and unpaid
interest would be accelerated.
Senior Secured Second Lien Notes due 2033
On September 13, 2024, we issued $500,000,000 in aggregate principal amount of 8.000% Senior Secured
Second Lien Notes due 2033 (the "2033 Notes"). The 2033 Notes were issued pursuant to the indenture, dated as of
September 13, 2024, between us and Citibank, N.A., as trustee and notes collateral agent (the "2033 Notes
Indenture"). The 2033 Notes bear interest at a rate of 8.000% per year and interest on the 2033 Notes is payable
semi-annually in arrears on March 15 and September 15 of each year. The 2033 Notes will mature on March 15,
2033. The 2033 Notes rank pari passu in right of payment to all of our and any guarantor's existing and future
senior indebtedness, including indebtedness under the ABL Credit Facility, our 2028 Notes, our 2032 Notes and our
2034 Notes (as defined below).
The 2033 Notes and any related guarantees are secured on a second-priority basis by liens on substantially all of
our and any guarantor's assets that secure any first-priority lien obligations (including the ABL Credit Facility),
subject to permitted liens and certain exceptions. There are certain situations where all or a portion of such collateral
may be automatically released.
As of the date of this Form 10-Q, the 2033 Notes are not guaranteed by any of our subsidiaries. Going forward,
the 2033 Notes will be jointly and severally guaranteed on a senior secured second lien basis by each of our current
and future subsidiaries to the extent such subsidiary guarantees our ABL Credit Facility, subject to certain
limitations and exceptions. We may redeem some or all of the 2033 Notes at the redemption prices set forth in the
2033 Notes Indenture.
The 2033 Notes Indenture contains certain covenants applicable to us and our restricted subsidiaries, including
limitations on: (1) liens; (2) indebtedness; (3) mergers, consolidations and acquisitions; (4) sales, transfers and other
dispositions of assets; (5) loans and other investments; (6) dividends and other distributions, stock repurchases and
redemptions and other restricted payments; (7) restrictions affecting subsidiaries; (8) transactions with affiliates; and
(9) designations of unrestricted subsidiaries. Each of these covenants is subject to a number of important exceptions
and qualifications. In addition, many of the restrictive covenants do not apply to us during any period when the 2033
Notes are rated investment grade by any two of Moody's, S&P, and Fitch or, in certain circumstances, another rating
agency selected by us, provided at such time no default under the 2033 Notes Indenture has occurred and is
continuing. In the case of an event of default, the principal amount of the 2033 Notes plus accrued and unpaid
interest would be accelerated.
Senior Secured Second Lien Notes due 2034
On July 1, 2026, we issued $1,350,000,000 in aggregate principal amount of 7.125% Senior Secured Second
Lien Notes due 2034 (the "2034 Notes"). The 2034 Notes were issued pursuant to the indenture, dated as of July 1,
2026, between us and Citibank, N.A., as trustee and notes collateral agent (the "2034 Notes Indenture"). The 2034
Notes bear interest at a rate of 7.125% per year and interest on the 2034 Notes is payable semi-annually in arrears on
July 1 and January 1 of each year. The 2034 Notes will mature on July 1, 2034. The 2034 Notes rank pari passu in
right of payment to all of our and any guarantor's existing and future senior indebtedness, including indebtedness
under the ABL Credit Facility, our 2028 Notes, our 2032 Notes and our 2033 Notes.
The 2034 Notes and any related guarantees are secured on a second-priority basis by liens on substantially all of
our and any guarantor's assets that secure any first-priority lien obligations (including the ABL Credit Facility),
subject to permitted liens and certain exceptions. There are certain situations where all or a portion of such collateral
may be automatically released.
The 2034 Notes are not currently guaranteed by any of our subsidiaries and, in the future, will be jointly and
severally guaranteed on a senior secured second lien basis by each of our current and future subsidiaries to the extent
such subsidiary guarantees our ABL Credit Facility, subject to certain limitations and exceptions. We may redeem
some or all of the 2034 Notes at the redemption prices set forth in the 2034 Notes Indenture.
The 2034 Notes Indenture contains certain covenants applicable to us and our restricted subsidiaries, including
limitations on: (1) liens; (2) indebtedness; (3) mergers, consolidations and acquisitions; (4) sales, transfers and other
dispositions of assets; (5) loans and other investments; (6) dividends and other distributions, stock repurchases and
redemptions and other restricted payments; (7) restrictions affecting subsidiaries; (8) transactions with affiliates; and
(9) designations of unrestricted subsidiaries. Each of these covenants is subject to a number of important exceptions
and qualifications. In addition, many of the restrictive covenants do not apply to us during any period when the 2034
Notes are rated investment grade by any two of Moody's, S&P and Fitch or, in certain circumstances, another rating
agency selected by us, provided at such time no default under the 2034 Notes Indenture has occurred and is
continuing. In the case of an event of default, the principal amount of the 2034 Notes plus accrued and unpaid
interest would be accelerated.
Certain of the restrictive covenants under the indentures governing our outstanding notes utilize consolidated
total assets as a primary component of the compliance metric governing our ability to undertake certain actions
otherwise proscribed by such covenants.
In addition, certain liens and restricted payments are permitted subject to leverage ratios which are calculated
based on an adjusted EBITDA metric. Such adjusted EBITDA metric is calculated under the indentures governing
our outstanding notes as net income before income tax provision, net financing charges, restructuring and
impairment costs, allocation for support functions and other costs, and intangible asset amortization and
depreciation, and new market start-up costs attributable to new locations less than twelve months old subject to a
specified cap calculated as a percentage of the adjusted EBITDA metric.
Amendments to the Indentures Governing the 2028 Notes and the 2032 Notes
On July 17, 2025, the indentures governing the 2028 Notes and the 2032 Notes were amended to conform
certain covenants and related definitions for these notes to the indenture governing the 2033 Notes. Among other
things, the amendments increased certain limits on debt incurrence to align with the 2033 Notes and aligned certain
aspects of the lien covenant to the same terms in the 2033 Notes Indenture. In connection with these amendments to
the indentures, we paid $5 million in fees and expenses.
Share Repurchase Program
On July 9, 2026, the Board approved a share repurchase program with authorization to purchase up to an
aggregate of $500 million of our Class A common stock with an expiration date of December 31, 2028.
Repurchases under the program may be made from time to time in the open market at prevailing market prices,
in privately negotiated transactions, in block trades and through other legally permissible means, with the amount
and timing of repurchases to be determined at our discretion, depending on market conditions and corporate needs.
Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including
within the pricing and volume requirements of Rule 10b-18 under the Exchange Act. We may also, from time to
time, enter into Rule 10b5-1 plans to facilitate repurchases of our shares under this authorization. This program does
not obligate us to acquire any particular amount of Class A common stock and may be modified, suspended or
terminated at any time at the discretion of the Board. As of September 30, 2026, no shares had been repurchased
under this authorization.
Dividends
Dividends on our perpetual preferred accrue and accumulate daily in arrears on the then current accreted
liquidation preference of the outstanding perpetual preferred, whether or not declared, and, if not declared and paid,
will accrue at the applicable dividend rate and be compounded quarterly in arrears. Dividends on the perpetual
preferred will be payable, at our election, in cash at any time when, as and if declared by our Board or any duly
authorized committee of our Board, but only out of assets legally available. On June 7, 2026, the Board declared a
dividend to the holders of perpetual preferred stock in an aggregate amount of $37 million payable in cash. The
dividend was paid on June 26, 2026. As of September 30, 2026, the maximum potential dividend accumulated in
arrears on our perpetual preferred was approximately $150 million.
Contractual Obligations and Commitments
The following table summarizes our long-term contractual obligations and commitments as of September 30,
2026.
|
Payments Due by Period
|
|||||||||
|
Total
|
Less than
1 year
|
1 - 3
years
|
3 - 5
years
|
More than
5 years
|
|||||
|
(In millions)
|
|||||||||
|
Debt ...............................................................
|
$4,292
|
$2
|
$1,035
|
$806
|
$2,449
|
||||
|
Operating leases ............................................
|
1,126
|
||||||||
|
Finance leases ...............................................
|
|||||||||
|
Financing obligations (equipment) ...............
|
-
|
||||||||
|
Total contractual obligations ....................
|
$5,803
|
$105
|
$1,317
|
$1,123
|
$3,258
|
||||
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have a material current effect or are reasonably likely to have a
material future effect on our results of operations, financial condition, capital expenditures, liquidity or capital
resources.
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates are described in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our 2025 Form 10-K. There have been no material changes to our
critical accounting policies and estimates during the nine months ended September 30, 2026.
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