Q4 2025 Equipmentshare.Com Inc Earnings Call
Our full year 2025 financial results Conference call. My name is Jennifer and I'll be your moderator today.
All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question press star one on your telephone keypad.
I would now like to pass the conference over to Rhett Butler, Vice President of Investor Relations with equipment share.
Please proceed.
Good morning, and welcome to the equipment share fourth quarter and full year 2025 financial results Conference call. Joining me today are <unk> <unk> co founder and Chief Executive Officer, Willie <unk> co founder and President, Dave Mark <unk>, Chief Financial Officer, and Chief Accounting Officer.
And Mark <unk>, EVP of finance and Chief data Officer.
Yesterday, we issued our earnings press release and posted an earnings presentation on our Investor Relations website at IR equipment share Dot Com. We encourage you to review the presentation, which provides additional detail on our financial results.
Please be advised this call is being recorded before we begin I'd like to remind everyone that the company's earnings press release earnings presentation comments made on today's call and responses to your questions may contain forward looking statements within the meaning of applicable security laws.
These statements are based on current expectations and assumptions and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected.
Please refer to our earnings press release, our earnings presentation, and our SEC filings for a discussion of these risks and uncertainties you can access all of these documents and filings on our Investor Relations website.
Please note that equipment share has no obligation to update or revise forward looking statements that have been made to reflect events or circumstances that arise. After the date made or to reflect the occurrence of unanticipated events.
We will also reference certain non-GAAP financial measures non-GAAP financial measures should not be used as a substitute for the corresponding GAAP measures reconciliations to the most directly comparable GAAP measures are included in our earnings press release with that I will turn the call over to Jonathan.
Thank you Rod we're pleased to report strong fourth quarter and full year 2025 results as we continued executing against our operational and financial objectives. Our top priority is solving problems for customers.
<unk>, we experienced firsthand on the job, but as contractors for decades before starting point mature and.
And we build the company around our focus.
Driven by our differentiated tech empowered offering a strong demand environment and the end markets, we serve and a relentless focus on execution two.
2025 was a banner year for equipment sure.
I will start with a quick financial summary, before we step back and talk about what's driving the business full year 2025 highlights include rental segment revenue was $2 7 billion up 34% year over year.
We added 95 locations for a total of 385 locations at the end of 2025 adjusted core EBITDA was $1 7 billion up 32% year over year mature site rental segment adjusted EBITDA margin was 54% in line with our target of over 50%.
Sure size the return on invested capital was 16, 5%.
Our year end results focused on gross margin and ROIC set us up well for 2026, we continue to see strong customer demand and a significant opportunity to keep addressing industry pain points at the midpoint of our 2026 outlook, we expect rental segment revenue to grow approximately 27% year over year.
Yeah.
Supported by our differentiated offering and a constructive industry backdrop.
We continue to invest in organic growth because locations opened in response to customer demand have consistently generated strong returns and attractive unit economics as they mature in 2025, we incurred $252 million of one time, new market startup costs to support new site openings.
Those costs are concentrated in the first 12 months of a location and we believe they create a long term earnings generating asset within our network as those sites ramp and mature.
We expect them to contribute meaningfully to earnings and cash flow. We believe that is a highly efficient use of capital and a key driver of long term value creation.
To understand our performance it helps to start with how the industry is changing and what customers now require from our rental partner the equipment rental industry is a great industry and it forms the backbone of what gets built in this country, but it's also a fragmented industry page 10 of the presentation frames, both the size of the opportunity and the continued fragmentation.
<unk> of the rental market.
Today, the largest players only represent a minority of the total market, which creates a long runway for share gains for companies that can deliver at scale and solve increasingly complex job site needs to also have youre getting larger faster moving and more operationally demanding particularly across mega projects like data center.
Advanced manufacturing energy and infrastructure.
In page 22 shows the scale of the active and planned to Mega project opportunity already within our serviceable footprint at the high end of the market scale is a differentiator there are only a small number of companies globally that can deploy 3000, plus machine to a job site quickly and reliably based <unk>.
Three is a good illustration of what that looks like on a complex Mega project.
At that scale customers need a partner that can bring coordination.
Visibility control safety and uptime day after day across thousands of assets people and workflows.
<unk>, we believe that customers also want that from a more integrated partner across the job site, not just equipment, but service technology and specialty solutions. We saw that reflected in 2025 on our specialty division scaled 34% year over year in.
And revenue from tier three and our materials business grew over 100%.
That true Tech integrated one stop shop offering is what is driving our market share gains.
What do you see a 30% plus organic year over year revenue growth and a low single digit industry. It raises the obvious question what's driving it.
For us, it's not acquisition driven.
Customer driven we believe customers are consolidating spend with us because we deliver a differentiated solution on the job site.
And the way we do that is through an integrated model that combines three things first physical distribution at scale <unk>.
Delivering servicing and supporting equipment and job site solutions across a broad national footprint T. Three of the major differentiator, but this is still a job site business you have to deliver equipment in service of scale.
Second we bring operator, great experience as contractors. We've lived these job site for decades, and we've built the teams processes and technology designed for real constraints in the field.
Third.
Our proprietary technology platform <unk> is deeply integrated into how customers run their job site every day and it also powers, how we run our own operations that equipment here.
We built and own the full sensor to server technology stack, because we operate end to end, we're capturing a unique proprietary data set across equipment people.
Service workflows and job site operations that combination physics.
Physical distribution job site expertise and our proprietary operating system built on a decade of real job site data makeup the structural advantages that are driving our performance and.
And you can see the value showing up in customer behavior customers and meaningfully engage with our technology platform spend dramatically more with us and in fact as you can see on page 30 of the presentation.
National customers that are highly engaged with tier three spend roughly six times more in rental and rental customers, who don't use 231.
When we talk about which customers see the most value on tier three.
It's customers running large complex job sites across multiple locations, where downtime safety incidents and lack of visibility can translate into huge inefficiencies.
That retention and expansion is a key reason our growth is both organic and durable when we open a new location more than 75% of first year revenue comes from existing customers already renting from us and other markets that dynamic as illustrated on page 20 of the presentation you can see it in our results industry, leading or.
Unit growth.
Leading mature side margins and strong returns on capital, we pair that growth with discipline, we expand sites in response to customer demand and manage the business against those key metrics I mentioned gross margins and ROIC.
As context, I will turn the call over to willing to talk more about T. Three interconnected job site Mark will then walk through our unit economics in the owned program.
And Dave will take you through the financial results balance sheet and capital allocation in more detail willing over to you.
Thank you Jack.
Many of you are already familiar with <unk>, our proprietary technology platform and the differentiated value it creates for both our customers and our operations.
Core <unk> III connects the downside from with assessors of server environment and create this unified.
Data cross people machines and job sites and there's really two sides of that platform first it powers, how we operate.
That connectivity gives us operational intelligence from a monitoring predictive maintenance preventative alerts real time visibility across our fleet and it helps us run the business more efficiently and deliver better uptime for our customers second that same connected dataset.
However, as the insights customers get it helps them answer basic questions quickly like what's on the job where is it how is it being utilized and helps identify.
Opportunities to improve productivity across machine categories and across the job site Holistically.
That includes critical assets like generators and security systems of our connectivity matters for things like license safety energy for that job site.
Our vision continues to push towards a fully connected environment, where the effort to gain insight becomes friction less because the answers are isolate your fingertips everything is generating in real time.
What's particularly exciting today as lead AI Marsh language models can do on top of the data we've been collecting for more than a decade. When we started this company we never imagine tools this powerful.
But after years of building structured job site and machine data sets a lot of that value is now.
Getting unlocked with these models able to do the reason you're at scale and service inside to automatically it's really accelerated what can deliver.
<unk> to our customers.
Couple of important points about the platform itself first <unk>.
<unk> is OEM agnostic it and it was across equipment, regardless of manufacturer or machine type second.
Fans of full gradient of assets and categories from small inventory all the way up to large serialized machines and the system flexes to generate the right insights at any level of that categorization and increasingly the platform has evolved beyond simply tracking inventories. It's really designed to help customers manage job site resources more holistically Ebola.
Equipment and everything you would consider in that full spectrum of Resourcing, you would see whats under contract on a job site and that becomes incredibly valuable.
Larger and more complex.
The static environment like a mega site or any type of large infrastructure job site, and we're seeing strong demand for that capability across manufacturing and data centers energy and infrastructure projects, where thousands of machines and workers are operating simultaneously and the cost of downtime or lack of visibility within those environments is.
We'll finally, just connectivity doesn't just trade operational value. It also enables financial differentiation.
Programs like film program that are powered by the transparency and control that <unk> provides and with that I'll turn it over to Mark to give you a bit more insight into the old program and the unique in Opex and an update on that overall system.
Thanks Louis.
We closed out 2025, with very strong unit economics, and our rental locations deliver the growth margin and return profile that places us at the top of the industry in those categories.
I'll walk through the maturity curve and the economics that result, as locations mature pages 18 through 20 of the presentation walked through the unit economics maturity curve and organic side room.
Because we are a large scale equipment rental provider uniquely focused on organic growth understanding how a new site ramps to maturity and the unit economics.
<unk> produced through that process is critical to understanding our model.
When we think about what drives success for a new location.
It comes down to two things, creating demand through Q3 and operational excellence.
We opened locations in response to customer demand and our more than 350 organic brittle star since founding including 85, new rental locations in 2025 reflects a disciplined repeatable organic growth playbook.
When we open a new site. We typically has asked about $2 $5 million over the first 12 months expense through the P&L, which we report as new market startup cost.
Then new sites generally follow existing system or pattern in year, one they ramp in revenue as we invest in people property your fleet and your to a generally breakeven and by month 24, they'd become what we call mature and begin contributing meaningfully to the company's revenue mature type margin and ROIC.
These mature economics are driven by strong fleet performance operating leverage and the benefits of our proprietary <unk> technology platform, which helps us optimize equipment performance and redeploy assets efficiently across the network.
We primarily evaluate the performance of our organic growth strategy of using <unk> metrics rental segment revenue growth.
Mature site rental segment, adjusted EBIT margins and mature site return on invested capital.
As Joe mentioned at the top of the call in 2025 rental segment revenue grew 34% driven by strong customer demand our mature sites delivered 50% plus rental adjusted EBIT margins, reflecting the operating leverage embedded in the model at our location scale and in 2025 are mature Si ROIC was 65%.
Which puts us solidly in our near term target range and progressing towards a long term target of over 20% ROIC.
Furniture site as we continue building out a more complete job site platform.
And importantly.
Large portion of the network is already built.
Ramping sites mature, we expect them to contribute meaningfully and additional earnings and cash flow with limited incremental investment. We believe that fact maturation should continue to support earnings growth and margin expansion over time, even if the pace of growth investment worth moderate.
Moving to the home program.
It remains a core pillar of our strategy pages 35 to 40 of the presentation provided useful overview of the old program and how it fits into our model.
We closed out 2025 with over $4 $9 billion of OCC in the home program compared to $3 4 billion in 2024.
As a reminder, the old program works that follows equipment share purchases of new equipment industry, leading prices from our top Oems.
Our rental fleet and begin generating revenue.
We then sell equipment into the on program at <unk>.
The asset management and revenue sharing agreements with participants.
The equipment is rented service and maintain just like our on balance sheet fleet.
Rental revenues are then shared with participants and reflected his own program payouts within cost of goods on the P&L and then at the end of the term we have the option, but not the obligation to purchase the equipment at the appraised value or to help re marketed for sale.
We believe that the lifetime economics of the <unk> program are comparable to our on balance sheet.
While allowing us to meet customer demand and a disciplined capital efficient way.
Participants in the program include high net worth individuals family offices.
The appraised value of the home programs as of year end was $4 1 billion.
For the full year of 2025 rental segment revenue reached more than $2 7 billion, an increase of 34% versus the prior year.
Total consolidated revenue for the fourth quarter was more than one 5 billion roughly flat year over year.
Fourth quarter total revenue reflects a 22% year over year decrease in equipment sales into the <unk> program, which we execute opportunistically and selectively.
We continue to see high market demand for neon program, well in excess of our sourcing needs.
For the full year 2025, total revenue was nearly $4 4 billion up 16% year over year.
Net income for the fourth quarter was $65 million as compared to $50 million in the fourth quarter of 2024 and for the full year 2025 was $40 million has.
As compared to $3 million in the prior year.
Adjusted core EBITDA reflects our underlying operating performance by excluding items unique to our organic growth and through sourcing strategy.
Most notably on program payoffs and new markets startup costs associated with our organic growth strategy.
On program payouts are unique to equipment sure.
An alternative form of sourcing equipment for our rental fleet.
New markets startup costs reflect the upfront investments required to support our continued geographic expansion.
We believe that adjusted core EBITDA as a key measure of our underlying financial performance.
Provides a clearer view of the earnings power of our core operations and enhances comparability with industry peers.
For simplicity.
Just the core EBITDA as the sum of our segment adjusted EBITDA for the rental and sales business segment.
And gentlemen, please hold for a brief moment.
Ladies and gentlemen, please hold for a brief moment to technical difficulties.
Ladies and gentlemen.
I will now pass the call back over to Capex.
Hey, Thank you so much.
We had a few technical difficulties. So we'll finish out with our 2026 outlook and then open it up for questions. So if you look at our 2026 outlook.
Page 47 of the presentation.
For the full year ended December 31 2026.
We expect rental segment revenue of $3 3 billion to $3 6 billion.
Presenting 27% year over year growth at the midpoint, but we see a 10 billion to $11 billion.
All surface vessel locations or 421 to 429.
Total revenue of 5 billion to $5 5 billion adjusted EBITDA of $1 8 billion to $1 9 billion.
With Capex of $2 1 billion to $2 3 billion net rental capex of $759 million.
$839 million, one program payouts of $891 million to 947.
As we look ahead, our approach remains the same scale with discipline, while maintaining balance sheet strength.
Expanding in response to customer demand.
We're managing the business against the key metrics, we talked about throughout the call growth margins and returns on capital.
We closed out 2025 of strong execution against those priorities and we intend to carry that momentum into 2026 customer demand remained strong, particularly across large national infrastructure driven projects and we believe our integrated model positions us well to continue taking share in 2026.
And importantly, our growth is discretionary if demand softens, we are clear lever some moderate investment below the pace of expansion and prioritize cash flow generation, while protecting returns on capital.
In summary.
We believe equipment built for where the industry is headed where job sites are larger more complex and require a partner that can deliver equipment in service at scale.
With the visibility and control that only an integrated technology platform can provide.
We're excited about what's in front of US. We appreciate your continued partnership and support.
Operator, if you can open the line for questions.
Thank you.
If you would like to ask a question. Please press star followed by one on your telephone keypad. If your question has been answered or you. Mr. Lee for your question. Please press Star followed by Tim again to ask a question press Star one.
You are using a speakerphone. Please pick up your handset before asking your question, we will pause here to briefly ask questions of registry.
Our first question comes from the line of Jerry Revich with Wells Fargo Securities. Your line is now open.
Which we believe provide a compelling case for embedded earnings growth potential in the coming years.
Yes, hi, good morning, everybody.
I'm wondering if I could just ask you to expand on the conversation on the mature site performance in the quarter and nice Seahawks hearing numbers out of the gate.
Turning now to the balance.
Can we just unpack, what's the core pricing dollar you'd look like from a mature sorry in.
In the fourth quarter and what are you folks expected.
Into 2006, if you could comment on the first quarter that'd be helpful. As well. Thank you.
Hi, Jerry Thanks for the question, yes. So in 2025 in Q4 as well we saw strong performance from our mature sites.
As we talked about growth strong growth and maturation of those sites.
Margins at 54% for the year for our size over 24 months and then also at 15, 5% ROIC.
Yield that we're getting on the equipment plus the margin profile driven by the strong customer demand.
What we saw through 'twenty five and then into 2020, we continue to see a strong demand backdrop.
From our customers a stable pricing environment.
Strong demand because of the differentiated operating will provide and so embedded in that guide.
Similar performance to for mature sites that we saw in 2035.
Welcome to your conference call after the falling tone, you will be connected to the other participants.
Okay Super and then.
Time of the IPO you folks had really helpful disclosures on that.
Balance sheet and our liquidity at the end of 2025, our liquidity was approximately $1 3 billion.
Differentiation mature sites financial profile between years two through five could you just talk to us about how.
And we ended the year with net leverage ratio of 3.2 churns well.
Cohort developments have played out over the past three months what are you folks seeing.
Sorry to go from two years three years three to four relative to what you folks lay.
Ladies and gentlemen, please hold for a brief moment as we are experiencing technical difficulties.
Laid out in the past.
Yes, so on the first of all of US here at 24, we actually saw in our in our growth.
The growth of those immature sites.
Faster ramp than usual at $25.
With that performance and then that years two through five.
That data set is pretty similar across the board and we see that.
What we've seen consistently below 50 of EBITDA margin production.
We're happy with where those kind of mature four year plus super mature sites are operating so we showed that 54%, but inside of that inside of that disclosure at a really consistent.
Performance from the different vintages.
Throughout.
Greater than 24 months.
Sure.
Okay. Thank you.
Thank you.
Our next question comes from Murray.
Ritchie with Goldman Sachs. Your line is now open.
Hey, good morning, guys.
Congrats on.
Getting out of your first earnings call.
Can you maybe just start on the debt.
Cadence for new rental site locations. So I think that the midpoint of your guidance for 2006, Youre expecting I guess roughly 73 is that supposed to be linear as we progressed through the year or are you going to try to front end loaded like maybe just talk a little bit about your plans for 2026.
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No.
Okay.
Yes, absolutely. Good question. So the 73 it is linear.
That's how they actually open.
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Opening a site doesn't happen overnight.
Looking and we May have talked before years in advance as we prepare for the <unk>.
The visibility is incredibly strong.
So the entire rest of the year, but the actual opening cadence is linear in nature.
Okay, Great. That's helpful. And then secondly, as you think about the equipment rental margins and any progress you're expecting expansion for 2026 I'm curious like is most of that margin expansion is going to come from the economics and the mix getting better.
And took it public and you will be connected to the ACA participated.
Okay.
For our mature versus growth rental I think we're expecting.
Okay.
<unk> sites to be maybe greater greater than 60% of the next by the end of the year, if any any comments around the margin opportunity. This year on that side of the business.
Okay.
Okay.
Yes.
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Yeah.
Yes, I think it's a really good point.
As you go more than 50% on actually mature stores do you have that massive margin accretion across the entire company.
As we're opening those 73 that your stores continue to open stores as.
As the market.
Ability that we have that visibility going forward youre going to have a majority of sorts being mature.
Which will improve dramatically across the entire company.
In the future of the margin profile.
Okay, great. Thank you very much.
Welcome to your conference call.
After the following tone, you will be connected to the other participants.
Thank you.
Our next question comes from the line of Rob Wertheimer with Melius research.
Every year growth at the midpoint, we see 10 billion to $11 billion full service lateral locations at 421 to 429.
Your line is now open.
Hey, good morning, I apologize I was out for a second.
Total revenue of 5 billion to $5 5 billion adjusted core EBITDA of $1 8 billion to $1 9 billion.
So.
The first question I wanted to ask two one on how you operate and one just on the market and obviously, there's been a surge in mega projects Theres been kind of a flattening out of the overall construction market as the rest of the decline just how are you seeing.
Gross capex of $2 1 billion to $2 3 billion net rental capex of $759 million.
The rest of the year. Your revenue outlook is quite strong do you feel like the smaller markets have bottomed as electric gaining enough share in mega projects more than offset that maybe just talk about that per se.
$839 million.
One program payoffs of $891 million to 947 months.
Okay.
Regarding the market.
The last name.
Right.
Okay.
Yeah.
Yes, I think we see from the macro Mega projects are leading a construction Serge.
Yes.
The nature of the equipment, we provide and the data we have and we're embedded in customer workflows many of our customers work on.
Different types of projects, both industrial Mega projects smaller midsize and some large projects in the world. So that visibility, we both give our customers.
But also that <unk> tech stack, we use ourselves allow us some mobility to go across that stack. When you think of the size of projects so absolutely a tailwind the industry.
That we all see but it's important to note we have the flexibility because of the type of equipment and the visibility we have the market to actually take advantage and good times.
And one times to actually change and then Rob the only thing I would add is.
Going to page 21 of the deck what are the dynamics.
There on why larger parties are driving growth is 80, 990% of our revenue in 2025 was driven by national and regional customers and so that's really where that 27% growth coming from.
Welcome to your conference call. After the following tone, you will be connected to the other.
Depends.
Equipment and service at scale.
Following that same sort of customer segmentation mix ended 2040.
With the visibility and control that only an integrated technology platform can provide worksite.
We're excited about what's in front of US. We appreciate your continued partnership and support.
Alright, perfect. Thank you and then Jessica I don't think I've asked you. This one exactly but we're all trying to understand some of your differentiation you guys talked a lot about Q3.
Operator, you cannot open the line for questions.
Data flow and so forth on the call, which is great. You also have a little bit of a different structure in your sites, where they're larger than some and I wonder. If you can kind of just talk about where you see efficiencies being driven whether you experiment with that.
Thank you.
If you would like to ask a question. Please press star followed by one on your telephone keypad. If your question had been answered or you wish to remove your question. Please press star followed by two again to ask a question Press Star. One if you were using a speakerphone. Please pick up your handset before asking your question.
What are your sites are coming up to productivity fast I mean, just talk about kind of that aspect of operations and I'll stop there. Thanks.
We will talk to you briefly ask questions are registered.
Yes, great question Rob.
I think a big part of it is if you think of the organic growth.
Our first question comes from the line of Jerry Revich with Wells Fargo Securities. Your line is now open.
We've 99, 9% of what we do is organic growth and to grow organically I've got to get the right sites that gives us a huge advantage that can choose them I don't inherit them I've got to get the right people on the team and our guidance right.
Yes, hi, good morning, everybody.
I'm wondering if I could just ask you to expand on the conversation on the mature site performance in the quarter nice to see folks hitting numbers out of the gate can we just unpack.
Because we have more data transparency across manufacturers from a tech stack embedded directly onto the machines themselves through the can bus.
What the core pricing and dollar you'd look like for the mature sites and in the fourth quarter and what are you folks expecting.
The more data to actually allow us to grow organically.
<unk> proven throughout the growth and then growth needs to come with US we talk a lot about margins.
226, if you could comment on the first quarter that'd be helpful. As well. Thank you.
Look at our margins highest in the industry are at 54% on a mature stores at the end of the day that invested capital the ROIC being at that 65% again highest in the industry that structure really has to be driven from.
Hey, Gary Thanks for the question so in 2025 and in Q4 as well we saw strong performance from our mature sites.
As we talked about growth are.
From a data driven approach and because the same text that we use is also what our customers' view of embedded in the workflows that gives our customers a unique advantage on the job site and it gives us unique advantage.
Strong growth in mismatch racing to those sites.
And that 54% for the year for our sites over 24 months and then also that 16, 5% of our IC. So the yield that we're getting on the equipment plus the margin profile driven by that strong customer demand.
Spent a lot of time, they're happy to happy to do it but really the tech stack and powers.
What we do and drive that organic growth and helps us serve customers better.
But what we saw <unk> 25, and then into 2020, because we continue to see a strong demand backdrop.
Okay.
Thank you.
From our from our customers a stable pricing environment.
Thank you.
And strong demand because of the differentiated operating will provide and so embedded in that guide is a symbol is similar performance to for our mature sites that we saw in 2025.
Our next question comes from the line of Eric Katzman with citizens. Your line is now open.
Great. Thank you guys.
The first one during the prepared remarks, you mentioned physical distribution job site expertise and the proprietary operating system and associated decade of data is generated as reasons customers choose equipment share can.
Okay Super and then at the time of the IPO you folks had really helpful disclosures on.
The differentiation the mature sites.
Actual profile between years two through through five can you just talk to us about how the cohort developments have played out over the past three months. What are you folks seeing a sites go from two years to three years three to four relative to what you folks here.
Can you talk a little bit about the durability of the most you see for Q3 and why it's so hard for some of you are well capitalized competitors to emulate whether it's your largest rental peer reasonably partnering with the leading construction software provider of software players specializing in telematics trying to parts of what you're doing construction or.
Laid out and in the past.
Are the Oems potentially trying to capture some of the data off their machines Linda Thank you.
Yes, so on the first of this year at 24, we actually saw in our in our growth of those immature sites with a little bit faster ramp than usual 25. So we were pleased that performance and then that years two through five.
Yeah, Great question, So I've been in the industry at 35 years and the reason we started mature was most of the companies that youre kind of rubbing thing also providing.
A degree of a disparate technology might be the best way to put it.
That dataset is pretty similar across the board and we see that.
But the necessity to be OEM agnostic and to be full stack, but vertically integrated but horizontal across all manufacturers is absolutely important we've been developing this technology for over a decade and it is truly a sensor to server environments. You actually have to have the hardware that is embedded in the machine.
What we've seen consistently is a low 50 of EBIT margin production and so we're we're happy with where those kind of mature to you know four year plus supervision of our sites are operating and so yeah. We showed that 54% by inside of that inside of that disclosure is a really consistent.
You have to have a library from workflows and you have to have the front end.
Performance for the different vintages of.
A site throughout.
We're excited about the industry is actually talking about it.
Greater than 24 months a cohort.
Again, we started it because we are historically as an industry one of the most unproductive industries and construction. We are in some cases some of the on state. Some net we need safety improvements when your productivity activity improvements were dramatically leading the industry.
Thank you.
Thank you.
Our next question comes from the line of Joe Ritchie with Goldman Sachs. Your line is now open.
Hey, good morning, guys and congrats on that.
From a technology standpoint, but it never can only be one player. So we're excited that we're talking about it again, we're about a decade ahead from a development of that for sensor to service that.
Getting out on your first earnings call.
Can you maybe just start on the the cadence for that new rental St location can I think at the midpoint of your guidance for 'twenty six youre expecting against roughly 73 is that supposed to be linear as we progress through the year, you're going to try to front end loaded like maybe just talk a little bit about your plans for 2026.
I would also add.
I would just say this is willie.
You layer on the Capex.
Helane there.
There is a.
Theres a way you run your business in a physical dimension and there has to be a way you represent that in the digital world.
Yes, absolutely Joe Thanks for question. So the 73 it is linear.
Think of how they actually open but opening a site doesn't happen overnight. So we're looking and we may have talked before years in advance as we prepare for.
These modern day and the choice of the industry and our peers, it's very clear they've got systems.
That are built in the 1990, then they're off the shelf and Thats totally okay.
So the Venezuela de visibility is incredibly strong broad for the entire rest of the year, but the actual opening cadence is linear in nature.
Sentences.
By and large most companies they would choose existing off the shelf products at <unk>.
Difference and one of the core months that we have as we built our platform from the ground up and like we were talking in the remarks earlier there is a dual nature to that that's how we operate our company and that's how we extend value to our customers, but it's the thinking of our platform.
Okay, Great. That's helpful. And then and then secondly, as you think about the equipment rental margins and note any progression youre expecting expansion for 2026 I'm curious like is most of that margin expansion just going to come from the economics and the mix getting better.
You get the tremendous benefit of singularity of data non duplication and all the way down to the scheme and level of our platform.
For mature versus growth rental I think we're expecting in our mature sites to be maybe grady greater than 60% of the mix by the end of the year, if any any comments around the margin opportunity. This year on that side of the business.
You extend this value adds to the simplicity the lack of friction and then you move to the hardware side and you have the exact same benefit where we built from the ground up all the way to the embedded code such that a server environment. The data we collected leverage so.
Yes. He is a really good point al.
As you go more than 50% on actually mature stores do you have that massive margin accretion across the entire company.
Theres a lot of.
It is the sum of the parts and if you look at the industry.
It's a great industry.
So as we're opening those 73 this year stores continue to open stores.
And because of that there has been in our products had been built decades ago from the 90 days and there's still work and there is no real reason to change it they still work from People's perspective. However.
As the market visibility that we have that visibility going forward youre going to have a majority of stores being mature.
Which will improve dramatically across the entire company in the future of the market profile.
If you drive value to your customers you have to start underground out, but now we've got a decade of doing that and when you consider mode.
Okay, great. Thank you very much.
It is not just one singular thing that really creates a moat in my mind is a sum of the parts and as the decade of effort building that out and the fact that this is <unk>.
Thank you.
Our next question comes from the line of Rob Wertheimer with Melius research.
Vertical stack and platform.
We have and can extend this value to customers that no one else has.
Your line is now open.
Hey, good morning, and apologies that I was out for a second so just the first question I wanted to ask two one on how you operate and one just on the market and obviously, there's been a surge in mega projects Theres been kind of a flattening out of the overall construction market as the rest has declined just how are you seeing you know the rest of the year. Your revenue outlook is quite strong.
Got it. Thank you both for that and then as a follow up maybe for Willy can you walk us through what you view as the most important key milestones for <unk> launched in 2016, and maybe the top one or two things. The platform can do today that you want it to be able to do a year from now.
Yes, Keith.
<unk> do you feel like a smaller market had bottomed and good luck, you're gaining enough share in mega projects to more than offset that they may be just talk about that for a second.
Since we launched.
Way back when we started with the visibility of the dual visibility between.
Tenants, meaning that we as a seller in the exact same dataset and visibility as the buyer and that visibility was anchored on a native operating system. So there is no human who had to go in and extend that Mike Hey, This company wants to see this data can we have our it department gives them access that question.
Thank you.
Yes, I think we see from the macro Mega projects are leading a construction Serge.
The the nature of the equipment, we provide and the data we have because we're embedded in customer workflows many of our customers work on.
Different types of projects, both industrial and Mega projects smaller mid size and some of the large projects in the world. So that visibility, we both give our customers.
And necessity was never a reality for us because it was always embedded a native inside of the platform. We launched this in the early days. So so that was sort of the ground shift for us when we when our growth starts to take off because we.
But also that T. Three tech stack, we use ourselves allow us some mobility to go across that stack. When you think of the size of projects. So absolutely a tailwind for the industry.
We can focus efforts on operations technology did not ironically enough the technology enabled us to focus more on operations and the data that are delivered and all that but in parallel as we build our technology with their technology teams. The things that I can't tell you today that I am very excited about the roadmap of what we're launching.
That we all see but it's important to note we had the flexibility because of the type of equipment and the visibility we have in the market to actually take advantage and good times.
And when times do actually change and then Ravi anything I would add as you can see on page 21 of the deck one of the dynamics there.
There on why larger partners are driving growth is 80, 990% of our revenue in 2040 batteries driven by national and regional customers and so that's really where that 27% growth guide coming Gram is following that same sort of customer segmentation mix into 2020 section.
Is the extension of the operating system into the industry. So we've done this for rental we know what it looks like to really differentiate.
Value and extend value from a data perspective visibility in all of the problems that can fall.
It will be what we speculate about and what we're excited about is as that exact same pattern starts to emerge into the rest of the industry. So if you think about rental as a transaction type.
Alright, perfect. Thank you and then Jeff I don't think I've asked you. This one exactly but we're all trying to understand some of your differentiation you guys talked a lot about tea tree.
All together elements, where you have distribution of sale of goods and services.
Data flow and so forth on the call, which is great. You also have a little bit of a different structure in your sites, where they're larger than some and I wonder. If you can kind of just talk about where you see efficiencies being driven whether you experiment with that.
And that operating system, the ability to handle that flow is quite a bit quite a bit different from a scale of that when you think about the rental industry.
What are your sites are coming up to productivity fast I mean, just talk about kind of that aspect of operations and I'll stop there. Thanks.
Thank you.
Thank you.
Our next question comes from the line of Nick Dupre with R. W. Baird. Your line is now open.
Yeah, a great question Rob.
I think a big part of this is if you think of the organic growth.
Hey, good morning, guys have struggled on for Mig This morning.
We used 99.9% of what we do is organic growth and to grow organically I've got to get the right sites that gives us a huge advantage that can choose them I don't inherit them I've got to get the right people on the team and our Geiger radically.
Yeah.
I wanted to start out with your commentary on the industry backdrop sounds pretty positive and I realize a lot of the demand is being driven by mega projects that have been on the planning board for several years, but just wondering if youre seeing any change in customer sentiment since the start of the war and the resultant impact on interest rates.
Because we had lower data transparency across manufacturers from a tech stack embedded directly onto the machines themselves through the camp, but it gives us more data to actually allow us to grow organically.
Oil prices.
It's proven throughout our growth and our growth needs to come with US we talk a lot about margins.
Okay.
Yes, so where are we absolutely support the energy sector here in the U S. But what's really interesting is we've been through ups and downs the markets before I've been in the industry at 35 years.
We look at our margin highest in the industry at that 54% on the mature stores at the end of the day that invested capital. The ROIC date being at that 16, 5% again highest in the industry that structure really has to be driven.
But here at equivalent there.
When there is pressure in the market and that could be oil prices commodity price of tariffs, what's really interesting we've seen that happen, it's really where efficiencies matters on job sites.
From a data driven approach.
Because the same text that we use is also what our customers use embedded in the workflows that gives our customers a unique advantage on the job site and it gives us unique advantage. So I could spend a lot of time, they're happy to happy to do it but really the tech stack empowers.
Our efficiency matters companies and contractors suite of equipment. There. So that's really what we've seen happen in the past and we'll say it again.
Really when there is a disconnect or a pressure in the markets.
What we do and drive that organic growth and helps to serve customers better.
I have a general rule right now we are not seeing.
On a macro pressures from our customers.
Thank you.
Yes.
Even with recent developments, but at that point.
Thank you.
Our next question comes from the line of Aaron Kimpton with citizens. Your line is now open.
When there is pressure.
Customers choosing corporates are more because of the efficiency that we provide.
Got it okay, great. That's very helpful. And then my follow up question kind of somewhat related.
Great. Thank you guys.
For the first one during the prepared remarks, he mentioned physical distribution job site expertise and the proprietary operating system and associated decade of data is generated as reasons customers choose equipment sure.
How do higher diesel prices impact your P&L, if they remain elevated.
Yes, I think it's because we support.
Can you talk a little bit about the durability of the most you see for tier three and why it's so hard for some of your well capitalized competitors to emulate whether it's your largest rental peer recently partnering with a leading construction software provider of software players specializing in telematics trying to do parts of what you're doing construction or the Oems potentially trying to capture some of the data off their machines one day.
And again, we've been through a 100 year oil before.
When you have pricing disparity you got on both sides. So one you are paying more for oil you are also supporting an energy sector and again Thats where data when we when we talk about data really dug into a little bit there we have that sort of environment. So we have data in a cab. So we know exactly how thats functioning.
Thank you.
We know it on the job site, we know how accurate your opex being powered for that data allows us not only us because we use the same software hardware and our business is the same software and hardware customers.
Yeah, no great question, so I've been in the industry at 35 years and the reason we started from a share was most of the companies that youre kind of rubbing thing also existed providing.
A degree of disparate technology might be the best way to put it.
How's us to run more efficiently.
But the necessity to be OEM agnostic and to be full stack, but vertical integrated but horizontal across all manufacturers is absolutely Gordon we've been developing this technology for over a decade and it is truly a sensor to server environment you actually have to have the hardware that is embedded in the machine.
And when everything when there is no disconnect in the market is not as important efficiency when there is that drive towards efficiency.
<unk> seen that massively in the past.
We will see again as Mark said, we do not see.
Impact today, but it will drive efficiency, which is driving you to equipment share both from an internal operations and for our customers.
You have to have the libraries and workflows and you have to have the front end.
Okay.
Okay, great. Thank you.
And what we're excited about the industry is actually talking about it. So again, we started it because we are historically as an industry one of the most unproductive industries and construction. We are in some cases some of the unsafe summit, we need safety improvements, we need productivity activity improvements were dramatically leading the industry.
Thank you.
Our next question comes from the line of Jamie Cook with <unk> Securities. Your line is now open.
Hi, good morning, and congrats.
On a nice quarter just sorry. Another question just as you think about visibility into 2026 versus history or a normal year, how much visibility do you have and you know.
Ari.
From a technology standpoint, but it never can only be one player. So works out if you are talking about it again, we're about a decade ahead from a development of that full sensor to server sac.
When you think about the opportunity for upside do you think that would come more from you doing opening greenfield locations quake or market share versus what you have factored in for any potential macro recovery on that small local staff understanding that's not a big part of your business, but like the bigger Oems like cat and Deere being much more positive.
It's really also antigen.
Oh I was excited to Willy I, just say you layer on mechanics.
Duane there.
There is a.
Is the way you run your business in a physical dimension and there has to be a whether you represent that in the digital world.
On the construction outlook. So just how to think about that and then I guess.
My second question I'm not to not to nitpick, but your longer term oishi targets of $20 billion. It's now 20 billion versus I think around the IPO was $20 billion plus anything to read into that thank you.
And these modern days and the choice of the industry and our peers is very clear they've got systems that.
<unk> built in the 1990 than in other off the shelf and that's totally okay that Betsy acceptance of buying.
I'll start with the last one first nothing nothing to read into that.
By and large most companies who would choose existing off the shelf products a difference and one of the core months that we have as we built our platform from the ground up.
I would.
Yes.
There's targeted.
Targeted.
Or more so it's still the best.
And like we were talking in the remarks earlier, there's a dual nature to that that's how we operate our company and how we extend value to our customers, but it's a singular platform.
Silver target.
On the growth what's driving the growth. So first thing I think it's helpful to note operationally.
27% growth year over year is.
You get a tremendous benefit of singularity of data non duplication and all the way down to the scheme and level of our platform.
Something we've done or in excess of four glass for the last decade. So our operational cadence on growth continued to be a disciplined grower in response to customer demand. So the first driver of why we grow is always customer demand and then site openings complete expansion are.
You extend this value adds to the simplicity the lack of friction and then you move to the hardware side and you have the exact same benefit where we've built from the ground up all the way to the embedded code essentially the server environment. The data we collect elaborate so.
Or a knock on effect of that customer demand and so the baseline for our visibility into 2007, obviously, we're three months into 2020.
There's a lot of it is the sum of the parts and if you look at the industry.
It's a great industry and because of that there has been in our products had been built decades ago from the nine days and is still hurt and there's no real reason to change it they still work from most People's perspective. However.
We're three months into 'twenty six already but the baseline for that visibility is the current customer demand that we have right now the site footprint in the macro backdrop, what would what would what continues to drive that and if there's more customer demand.
If you drive value to your customers you have to start from the ground up but now we've got a decade of doing that and when you consider modes.
Flows through obviously in our discretionary fleet expansion and Greenfield openings, but the main driver of customer demand. The operational outputs of that are more greenfield and more more fleet capex and so we feel strong about it we feel that we see a strong macro backdrop and then Michael.
It is not just one singular thing that really creates a moat in my mind aided a sum of the parts and etsy the decade of anchor of building that out and the fact that this is a vertical stack and platform Oh ash that we have.
We have said before operationally this is the cadence that we've been executing on for the last decade or so.
And can extend the society customers that no one else has.
Got it. Thank you both for that and then as a follow up maybe for Willy can you walk us through what you view as the most important key milestones for T. Three since it launched in 2016 and maybe the top one or two things the platform can't in today that you wanted to be able to do a year from them.
Our network has more than enough capacity to absorb that demand.
Thank you.
Thank you.
Our next question comes from the line of Ken Newman with Keybanc. Your line is now open.
Yes, a key thing since we launched.
Way back when we started with the visibility of the Doe visibility between.
Hey, good morning, guys. Thanks for squeezing me in.
Maybe for my first one just a really quick one maybe it was in Dave's opening comments. So sorry, if I missed this but any help on what you guys are assuming for new market start up costs. This year.
Tenants, meaning that we are a seller in the exact same dataset and visibility as the buyer and that visibility was anchored on a native operating system that there was no human who had to go in and extend that it wasn't like Hey, This company wants to see this data can we have our it department give them access to that question.
Yes, so we.
It's in the deck.
We see about <unk>.
$2 $5 million per new market, another way to back into that as the guide midpoint of the guidance by 73, new rental locations.
And necessity was never a reality for us because it was always embedded a native inside the platform. When we launched this in the early days, so that was sort of the ground shift.
The last 2025.
<unk>.
85, new relocation so call it 15%, 15% wasn't that you can also back into the new market sort of felt that way, but as a general rule two $5 million per theres. Some timing, obviously when you start markets, but you can back into that two and a half ish or.
For us when we when our growth starts to take off because.
We could focus efforts on operations technology did not ironically enough the technology enabled us to focus more on operations and the data that is delivered and all that.
In parallel as we built our technology with their technology teams the things that I cant do today that I am very excited about the roadmap and where we're launching.
Kind of pegged the growth of new market compared to the new market startup costs and 25.
To understand kind of how we're thinking about the new markets or across investment through the P&L 'twenty for myself.
Is the extension of the operating system into the industry. So we've done this for rental we know what it looks like to really differentiate.
Yes, Okay got it thats helpful.
And then for the follow up here.
The value and extend value from a data perspective and ability and all the problems that can solve.
I didn't really hear any color on expectations for the revenue growth of the margins out of your building products business in 2026, I know, we've got 24 building materials locations as of as of the end of 2025.
We'll be we'll be speculate about and what we're excited about is as that exact same pattern starts to emerge into the rest of the industry. So if you think about rental as a transaction type thing about all together elements, where you have distribution of sale of goods and services.
Maybe just give a little bit of color on what your expectations are for that business then.
What's the visibility towards that 100 building materials locations and when you think you can get there.
And that operating system, the ability to handle that flow is quite a bit quite a bit different from a scale that guess when you think about the rental industry.
Great, Yes, I'll, let Kevin take the.
Materials looking at also one more follow up on the startup costs and I know we've talked about this a lot that investment on that $2 5 million or so of her new market. The reason we call that out is because the organic growth story and the organic growth ROIC. If you get to that one time investment is is significantly higher than that.
Thank you.
Thank you. Our next question comes from the line of make debris with R. W. Baird.
Your line is now open.
Hey, good morning, guys, it's Joe Grabowski on for Mig This morning.
The thing that we've seen on the M&A strategy. So we just want to continue to call that out but that numerous doctors at one time investment that that flows through and very high ROIC return on that capital compared to which is why we are an organic grower versus versus M&A. Because if you have the demand. It is a far more efficient use of capital, but maybe just talk.
I wanted to start off given your commentary on the industry backdrop sounds pretty positive and I realize a lot of that the demand is being driven by mega projects that have been on the planning board for several years, but just wondering if you've seen any change in customer sentiment since the start of the war and the resultant impact.
Ill.
Just briefly on the yes.
On interest rates and crude oil prices.
So as you see we are solving and we're very disciplined grower.
Yeah, So where are we absolutely support the energy sector here in the U S. But what's really interesting is we've been through ups and downs of markets before I've been in this industry 35 years, but here at equipment here.
On the rental base. So a large portion of the revenue is coming from Russell. If you think of what the customer actually needs is having been in the industry. They do need that one stop shop that actually solves.
All of their problems ideally.
Really when there is pressure in the market and that could be oil prices commodity prices tariffs, what's really interesting we've seen this happen.
And there is a delta there is a huge benefit for appointment here in providing that especially with a tech stack. The basket. So we are following the disciplined growth of Russell, but as we can add other than failure things to the customer.
It's really where efficiencies matters on job sites.
Water efficiency matters companies and contractors used equipment share. So that's really what we've seen happen in the past and we'll say it again really.
Solve their problems and it dramatically increases ROI state that's incredibly good from a return on capital standpoint.
Really when there is a disconnect or a pressure in the markets.
And the associated as it really supports our customers. So that will follow the growth of disciplined growth of the rental business.
As a general right now we are not seeing kind of macro pressures from our customers.
Okay.
Even with recent developments, but as Eric's point, Jerry point, when there is pressure, we see customers choosing liquid corporate share more because of the efficiency that we provide.
Okay got it I appreciate that.
Thank you.
Our next question comes from the line of Avi <unk> with UBS. Your line is now open.
Sure.
Got it okay, great. That's very helpful. And then my follow up question kind of somewhat related.
Higher diesel prices impact your P&L, if they remain elevated.
Hey, good morning, Thank you guys.
Just want to understand the strategy for staff from new branches understanding that especially technique.
Yes, I think it's because we support the I mean again, we've been through 100 your oil before.
Technicians mechanics labor is tight.
To what extent are you able to now leverage the footprint that you already have for staffing the new branches.
When you have pricing disparity you got on both sides. So one you are paying more for oil you're also supporting an energy sector and again, that's where data when we when we talk about data Willie dug into a little bit there we have a central server environment. So we have data in a cab. So we know exactly how that's functioning we.
Yes.
It's a good question, what we do again for OSB open site, they've got to get the right properties, they've got to get people on board and I have to get equipment on the people aspect we.
We know it on the job site, we know how actually Joss <unk> main power to that data allows not only us because we use the same software hardware and our business into the same software hardware customers use that allows us to run more efficiently.
A different approach the same tools that we're building for our customers were using internally and we have our entire tech the building tools that technicians can actually do their jobs better and serve customers better and we have a massive influx of applicants to join equipment share.
And when everything when there is no disconnect in the market is not as important efficiency. When there is that drives you towards efficiency. So we've seen that massively in times past.
Which allows us to be.
Intelligent about who is actually serving our customers and to your point there. It does get us with more stores the ability to deploy forward deploy technicians to actually serve.
We'll see again as Mark said, we do not see an impact.
Impact today, but it will drive efficiency, which is drives you to equipment share our both our internal operations and for our customers.
In many cases, a large job sites in the world.
Okay, great. Thank you.
Okay, I appreciate that and if I can ask a follow up on.
Some of the expectations that our underlying guidance.
Thank you.
Our next question comes from the line of Jamie Cook with <unk> Securities. Your line is now open.
What are you anticipating for equipment sales this year and what kind of margin do you have embedded on those.
Hi, good morning, and congrats.
To understand how that splits out versus the profitability on the rental side of the business.
On a on a nice quarter just sorry. Another question just as you think about visibility into 2026 versus history or a normal year, how much visibility do you have and.
Yeah. Great question. So you can kind of think of the guide we show total revenue and we break up the equipment rental revenue.
You know when you think about the opportunity for upside do you think that would come more from you know you do a opening greenfield locations Quaker market share versus what you have factored in for any potential macro recovery on that small local stuff understanding that's not a big part of your business, but like that bigger oes like cat and deere being much more positive.
On the equipment sale of the two main drivers on our bills are obviously, our used equipment in the <unk> program.
Used equipment.
Margins, you can kind of see in the historical for 235 and only one program. What we want to continue to note first that the old program was significantly oversubscribed and we have.
We have a lot of demand and it's all our discretion based on her kind of financing capex decisions on how we how we wanted to find a video program. Although its own program margins are typically about 10% to 15% and then and then.
On the construction outlook. So just how to think about that and then I guess.
And my second question I'm, not to not to nitpick, but the out year longer term oishi targets of $20 billion. It's now 20 billion versus I think around the IPO was 20 billion plus anything to read into that thank you.
That's one of the.
Obviously, the drivers of the contribution to the sales segment. So you can kind of see that through the guide of the rest obviously the rest of the most of the revenue and the guide is coming from the sales segment.
Also elevated with the last one first nothing nothing to read into the net but on balance I would.
Yes.
There's 20 billion targeted.
You can see the historical sales of about 10% to 15% will be on programs on the total on the total margin contribution there.
Or more so is still the still the target.
On the growth what's driving the growth. So first thing I figured that's helpful to note operationally that the 27% growth year over year is something we've done or in excess of gorilla glass for the last decade. So our operational cadence on growth is continued to be a disciplined grower in response to <unk>.
Okay I appreciate the color. Thank you for the time.
Yeah.
Thank you.
Our next question comes from the line of Scott Schneeberger with Oppenheimer. Your line is now open.
Thanks, very much and congrats on the first call.
<unk> demand. So the first driver of why we grow is always customer demand and then site openings and fleet expansion or.
First question for me, it's very impressive that you all when about three quarters of your revenue.
Our knock on effect of that customer demand and so the baseline for our visibility into 27, obviously, we're three months into 'twenty one to be targeted towards Victor we're three months into 'twenty six already but the baseline for that visibility is the current customer demand that we have right now the site footprint in the macro backdrop, what would what would what continues to drive that and if there is more.
And new sites coming from existing customers.
Retail does that model have in your view and could you. Please discuss your approach to obtaining.
Customers that you don't win that way somewhat of a marketing question and go to market question. Thanks.
Yes, so in reality gets better. So if you think that 75% as we add more locations that feedback loop gets.
Customer demand.
Closed through obviously in our discretionary fleet expansion and Greenfield openings, but the main drivers customer demand the operational outputs of that are more greenfield and more more fleet capex and so we feel strong about the result that we see a strong macro backdrop and then Michael.
Gets better and better and better. So you have an increase of existing customers and if you think of what we're doing from a marketing and advertising. We have hundreds of thousand machines. These machines have equipment share branding on them really customers are driving through that organic adoption.
<unk> said before operationally this is the cadence that we've been executing on over the last decade, and so where our network has more than enough capacity to absorb that demand.
And coming to equipment share and then that drives that feedback loop that flywheel. So if you look at the page 30, what's really interesting is as they start using <unk> three and sometimes Q3 is forward deployed so that's deployed on sites that equipment here has not located in that city yet.
Thank you.
Thank you.
We have customers using Q3 than they are using appear.
Our next question comes from the line of Ken Newman with Keybanc. Your line is now open.
Appears that and Theyre demanding equivalent share start in that market. So we have actually massive demand pull through and it gives us insight to the space. Let me start and when you look at that page 36 times more spend with customers that actually use T. Three do you have that pull through many times it started as a commodity.
Hey, good morning, guys. Thanks Suzanne.
Maybe for my first one just a really quick one maybe it was in Dave's opening comments. So sorry, if I missed this but any help on what you guys are assuming for new market startup costs. This year.
They start using T. Three it empowers the adoption of what Theyre doing their job site and something that rental is 3% to 5% of the job site, but many times. It causes 20% of the cost because you have old equipment. It doesn't work if all inherent problems.
Yes, so we and it's in the deck, we see about $2 $5 million per new market. Another way to back into that as you know the guide midpoint of the guide implies 73, new rental locations.
The last point 25.
What equipment fair does it solve those problems and that's why you see that massive massive growth in that pull through once they start using the technology and then they actually use and start renting for Obamacare.
Woods.
85, new relocation so call it 15% a little bit 15% wasn't that you can also back into the new market sort of cost that way, but as a general rule two $5 million per theres. Some timing, obviously when you start markets, but you can back into that two and a half ish or.
Great. Thanks, and then.
Specialty rental how do you see that evolving in 2026 and beyond for that matter what asset categories are you most interested in expanding in and potentially moving into beyond what you currently operate thanks.
Kind of pegged the growth of new markets compared to the new market started processing 25 to.
To understand kind of how we're thinking about the new marker start across investment through the P&L in 2020 Soc.
Sure.
Yes, great question, especially extremely important we grew one of the largest specialty divisions in the world, 34% year over year. If you look at the numbers and the Cat class we're looking at.
Yep, Okay got it that's helpful.
And then for the follow up here.
Did I didn't really hear any color on expectations for the revenue growth of the margins out of your building products business in 2026, I know, we've got 24 building materials locations as of as of the end of 2025.
So from an energy support standpoint. This is in our specialty solutions group and you have HVAC support systems, you've got pump, where one of the largest electric pump fleet in the world, but I'm curious.
Maybe just give a little bit of color on what the expectations are for that business then.
Andrew looking at compressed Air and then the site solutions really everything for a contractor connected in a core ecosystem with T. Three so it's a very important again one of the fastest growing segments in the world.
What's the visibility towards that hundred building materials locations and when you think you can get there.
Great Yeah, I'll, let Derek take the the materials looking at also one more follow up on the Charlotte Austin I know, we've talked about this a lot that investment on the two and a half million or so per new market. The reason, we called that out as he took the organic growth story and the organic growth rois fee that you get to that one.
Thanks.
Thank you.
That will conclude the question and answer your question I will pass the call back over to Brett Butler for closing remarks.
Thank you Jennifer I appreciate it. Thank you everyone for joining the call.
Our investment is is significantly higher than anything that we've seen on the M&A strategy. So we just want to continue to call that out because that numerous doctors at one time investment that we that that flows through and very high ROIC return on that capital compared to which is why we're an organic grower versus versus M&A, because if you have the demand.
That concludes today's call. Thank you for your participation you may now disconnect your lines.
It is a far more efficient use of capital, but Jeff maybe you could talk about.
Just briefly on the older layoffs. So as you see we are solving and we're very disciplined grower on the rental space. So a large portion of the revenue per carload from Russell. If you think of what a customer actually needs is having been in the industry. They do need that one stop shop that actually solves.
All of the problems ideally.
And Theres, a publishing is a huge benefit for equipment share and providing that especially with a text back to market. So we are following the disciplined growth of Russell, but as we can add other than failure things to the customer.
It solves their problem and it dramatically increases ROIC makes us incredibly good from a return on capital standpoint and.
And the associated is that really supports our customers. So that will follow the growth of disciplined growth of the rental business.
Uh huh.
Okay got it I appreciate that.
Thank you.
Our next question comes from the line of Avi Duress for weeks with UBS. Your line is now open.
Hey, good morning, Thank you guys.
Just want to understand the strategy for staffing new branches understanding that especially technique.
Ignitions mechanics labor is tight at to what extent are you able to now leverage the footprint that you already have for staffing the new branches.
Yes, I think it's a.
It's a good question, what we do again, if aro as we open sites I got to get the right properties, they've got to get people on board and I have to get equipment on the people aspect we.
We take a different approach the same tools that we're building for our customers were using internally and we have our entire tech team is building tools. The technicians can actually do their jobs better and serve customers better and we have a massive influx of applicants to join equipment here.
Which allows us to be very intelligent about who is actually serving our customers and to your point there. It does give us with more stores the ability to deploy four deploy technicians to actually serve.
In many cases, a large job sites in the world.
Okay, I appreciate that and if I can ask a follow up on.
Some of the expectations that our underlying guidance.
Just what are you anticipating for equipment sales this year and what kind of margin do you have embedded on those just trying to understand how that splits out versus the profitability on the rental side of the business.
Yeah. Great question. So you can kind of see in the guide here with total revenue and we break up the equipment rental revenue.
On the on the equipment sale of the two main drivers article detailed our obviously our used equipment in the renal program.
The used equipment.
Margins, you can kind of see the historical for 235 and on the old program. What we want to continue to developers the beyond program is significantly oversubscribed and we have we.
We have a lot of demand and it's all our discretion based on our kind of financing capex decisions on how we how we wanted to find a video program are those old program margins are typically about 10% to 15% and then.
And then that.
That's one of the main target were drivers of the contribution to the sales segment. So you can kind of see that through the guide of the rest obviously the rest of US most of the revenue and the guide is coming from the sales segment and then you can you can see the historical sort of use the alba about 10% to 15% with yonker ramps from a total on the total margin contribution there.
Okay I appreciate the color. Thank you for the time.
Thank you. Our next question comes from the line of Scott Schneeberger with Oppenheimer. Your line is now open.
Thanks, very much and congrats on the first public call.
First question for me, it's very impressive that you all Wayne about three quarters of your revenue.
They add new sites coming from existing customers, how long a tail does that model have in your view and could you. Please discuss your approach to obtaining custer.
Customers that you don't win that way, but it's somewhat of a marketing question and go to market question. Thanks.
Yes, so in reality get better. So if you think that 75% as we add more locations that feedback loop.
It's better and better and better. So you have an increase of existing customers and if you kind of if you think of what we're doing from a marketing and advertising we have hundreds of thousand machines. These machines have equipment share branding on them really customers are driving through that organic adoption.
And coming to equivalent share and then that drives that feedback loop that flywheel. So if you look at the page 30, what's really interesting is as they start using G. Three and sometimes Q3 is forward deployed so that's deployed on sites that equipment here has not located in that city yet.
We have customers using T. Three then they're using.
Appear said and theyre demanding equivalent share start in that market. So we have actually massive demand pull through and it gives us insight to the spice of restart and when you look at that page 36 times more spend with customers that actually use T. Three do you have that whole through many time to start its commodity.
They start using T. Three it empowers led adoption of what theyre going to job site and something that rental was 3% to 5% of the job site, but many times. It causes 20% of the cost because you have old equipment. It doesn't work if all are inherent problems.
What equipment share does it solve those problems and that's why you see that massive massive growth in that pull through once they start using technology and then they actually use and start renting Brooklyn mature.
Great. Thanks, and then.
Specialty rental how do you see that evolving in 2026 and beyond for that matter what asset categories are you most interested in in expanding in and potentially moving into beyond what you currently operate.
Sure.
Yeah, Great question. So special extremely important we grew when our largest specialty divisions in the world, 34% year over year. If you look at the numbers and the Cat class we're looking at.
Matthew from an energy support standpoint. This is in our specialty solutions group and you have HVAC support systems, you've got pumps, where we are largest electric pump fleet in the world in quadrature sleep Andy.
Andrew looking at compressed air identify solutions really everything for on broker connected in a core ecosystem, which is T. Three so it's a very important again one of the fastest growing segment in the world.
Thanks.
Thank you.
That will conclude the question and answer session I will pass the call back over to Rhett Butler for closing remarks.
Thank you Jennifer appreciate it thank you everyone for joining the call.
That concludes today's call. Thank you for your participation you may now disconnect your lines.