EQPT

Hello everyone. Thank you for joining us and welcome to the EquipmentShare.com Inc. Q2 earnings. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Rhett Butler, V.P. of Investor Relations. Please go ahead.

Good morning, and welcome to EquipmentShare's second quarter 2026 financial results conference call. Joining me today are Jabbok Schlacks, founder and Chief Executive Officer, Willy Schlacks, founder and President, Mark Wopata, Chief Data Officer and Executive Vice President of Finance, and David Marquardt, Chief Financial Officer and Chief Accounting Officer. Last night, we issued our earnings press release and posted an earnings presentation to our investor relations website. We encourage you to review those materials alongside today's remarks. Please be advised that the call is being recorded. Comments made on today's call and responses to your questions may contain forward-looking statements within the meaning of applicable securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our earnings press release, presentation, and SEC filings for a discussion of those risks.

EquipmentShare has no obligation to update or revise forward-looking statements made on this call. We will also reference certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are included in our earnings press release. With that, I'll turn the call over to Jabbok.

Thank you, Rhett, and good morning, everyone. EquipmentShare delivered another exceptional quarter, supported by healthy customer demand, continued market share gains and disciplined execution across the business. Rental segment revenue increased more than 39% year-over-year, and mature rental locations generated 55% trailing 12-month margins. Mature locations now represent 56% of our rental network. Adjusted core EBITDA grew to $531 million. This is the metric we use to compare our performance with the rest of the rental industry that own and finance equipment entirely on the balance sheet. We also expanded our fleet under management to nearly $10 billion of OEC. These results reflect the strength and durability of our growth model. Approximately 91% of rental segment revenue comes from national and regional customers supporting some of the largest and most complex construction projects in the country.

As we expand into new markets, approximately 75% of first-year rental segment revenue comes from customers already doing business with EquipmentShare. We believe this reflects the strength of our customer relationships and creates significant embedded earnings power as today's growth locations become tomorrow's mature markets. With our existing footprint, we believe at maturity, this is already a $4 billion core EBITDA business. Our capital allocation decisions also reflect the strength of the business and our long-term outlook. On July 9th, our board authorized a $500 million share repurchase program through December 31st, 2028, providing flexibility to act on compelling opportunities or market dislocations while remaining within our leverage and liquidity targets. While we believe that authorization is a prudent tool to have, our priority remains investing in the significant organic growth opportunities ahead and continuing to transform the industry. Moving to our updated outlook.

The midpoint of our rental segment revenue guidance implies approximately 33% growth for the full year. To put the second half in context, our guidance implies approximately 28% rental segment revenue growth in the back half against a second half of 2025 that itself grew approximately 36% year-over-year as large-scale mega projects began ramping across our network. While the full-year guide implies some conservatism in the back half of 2026, it represents very strong growth against an exceptionally strong prior year comparison. There's also some timing to consider. Our 39% growth in the second quarter represented significant outperformance as fleet absorption ran ahead of plan due to accelerated mega project wins and our ability to deploy against that demand. In Q2 alone, we put more than $750 million of new fleet on rent for the first time, including fleet we had originally expected to deploy in Q3.

Importantly, the underlying demand environment remains strong. Our mega project pipeline continues to expand. We're seeing upward pressure on rental rates, and we have substantial new fleet coming into the business. We're excited about the momentum heading into the second half of the year and believe the investments we have made set the stage for strong performance in 2027. Moving down the P&L, we also continue to expect modest rental segment margin expansion in the second half, as our network matures, fleet absorption improves, and we realize additional operating efficiencies. Taken together, we believe our guidance reflects conservative assumptions for the second half. At the midpoint, we're guiding to approximately 28% growth against a prior year period that grew approximately 36%.

Given the demand visibility, deployed fleet, and continued strength in our mega project pipeline, we believe the second half of the year is de-risked, and we see a meaningful opportunity to outperform. Moving to the story of the quarter. The construction environment remains one of the strongest backdrops I've experienced in over 25 years in construction. Demand across our core non-residential and industrial markets continues to be supported by large, multi-year investments in data centers, advanced manufacturing, healthcare, energy and transportation infrastructure. These large, complex projects require dependable service, coordinated execution, and long-term customer partnerships, areas where EquipmentShare continues to differentiate itself. Against that backdrop, we believe that EquipmentShare continues to grow substantially faster than the broader rental market while maintaining pricing at or above our rental competitors, demonstrating that our growth is being driven by the value we deliver rather than competing on price.

That outperformance is driven by three factors. First, we continue to win with national and regional customers, which represented approximately 91% of our trailing 12-month revenue as of June 30, 2026. These customers increasingly want larger strategic partners that can consistently support projects across multiple markets through one integrated platform. Second, we are expanding our geographic network in response to identifiable customer demand. We have opened 39 full-service rental locations year to date and remain on pace to meet our full-year expectations. Importantly, more than 75% of first-year revenue at new locations comes from customers already doing business with EquipmentShare elsewhere in our network. That customer pull is what gives us confidence to enter new markets and provides a strong foundation for those locations to scale. Third, T3 continues to deepen customer relationships by improving equipment visibility, reducing downtime, and helping customers manage increasingly complex job sites.

We continue to have strong visibility into customer demand and the project pipeline, reinforcing our confidence in the industry outlook. This is a different rental industry today. Projects are larger, longer duration, and more complex, giving us greater visibility into demand and confidence to continue investing beyond the opportunity. One recent customer relationship illustrates how these advantages come together. Earlier this quarter, I visited one of the largest healthcare construction projects underway in the U.S., where EquipmentShare was selected as the sole source equipment partner across core fleet, industrial tooling, fueling, temporary power, and job site technology. What stood out wasn't just the scale of the project. It was the depth of the partnership. The customer dedicated approximately five acres on the site to an EquipmentShare operations yard, complete with a full-service operations and maintenance facility built specifically for our team.

Walking the job site, the customer talked about the visibility, service, and coordination we provide. But what impressed me most was that they were already planning to expand our relationship as they develop additional campuses around the country. To me, that reflects a much broader trend. Whether it's healthcare, advanced manufacturing, data centers, energy or transportation infrastructure, customers increasingly want a partner that can support the entire job site, not just provide equipment. That's exactly where EquipmentShare continues to win, allowing us to support more of our customers' equipment needs while capturing a greater share of their spend. Before turning the call over, I'd also like to briefly provide an update on our corporate governance initiatives and an update regarding our related party transactions wind down plan. We have enhanced our board with the appointment of Damian and Harley as independent directors.

Damian also joined our audit committee and brings significant public company and audit committee experience, including serving on the audit committee of a Nasdaq-listed public company. Harley brings deep knowledge of EquipmentShare, having previously served on our board during an important period of the company's growth. Historically, EquipmentShare entered into certain related party arrangements involving the founders, primarily through participation in the OWN program and property leases. About a year ago, we began substantially reducing those arrangements, and we have made meaningful progress. As of the end of the second quarter, less than $1 million of the $5.5 billion OWN program fleet remained owned by these related parties. Our remaining related party arrangements involving the founders primarily relate to certain real estate used in our operations, for which we have paid just under $5 million in lease payments year to date.

We remain committed to substantially reducing these related party arrangements by the end of 2026, with the objective of transitioning off of these related party transactions as we enter 2027. I will now turn it over to Willy to discuss T3.

Thanks, Jabbok. Turning to T3, we continue to see meaningful progress across all three ways the platform creates value for EquipmentShare: improving our internal operations, deepening customer relationships in rental, and expanding our standalone SaaS business. First, we run our rental business on T3.

Over the last several quarters, we have rolled out new capabilities across dispatch, hauling, fuel, and logistics. We use these tools every day, and they are improving route planning, increasing recovery rates, and helping offset some of the fuel and logistics pressures that we are seeing across the broader market. More broadly, T3 and the AI tools we are developing and deploying into the field are helping us operate more efficiently. As we scale, SG&A has continued to decline as a percentage of rental revenue. That reflects a business that is getting more done with less through technology-enabled execution. Second, T3 is an important driver of rental growth.

Large regional and national customers increasingly expect real-time access, fleet visibility, and control across their job sites. We provide T3 with every rental, and customers who engage with the platform spend approximately six times more with us than customers who do not. That customer value proposition, combined with our fleet, branch network, and service model, continues to deepen relationships and drive demand, which shows up in our growth in rental margins. The last thing I would highlight on T3 is that we are starting to see the platform mature beyond the rental experience. Increasingly, larger customers are looking at T3 as a platform to manage more of their business, their mixed fleet service, logistics, field operations, and over time, broader ERP workflows. The scope of those conversations and the size of commitments are changing.

As an example, my team has worked closely with a customer spending over $1 million in annual recurring SaaS revenue on T3. The most important thing for that customer was seeing T3 as a platform they can run their business on and not simply a technology layer around EquipmentShare rental. With that, I will turn it over to Mark to discuss the OWN program.

Thanks, Willy. The OWN program is a managed asset program that allows us to scale our fleet to meet our customer demand at a cost of capital competitive with our on-balance-sheet financing. As a reminder, OWN is just one component of our diversified funding strategy. Alongside asset-backed financing options and access to high-yield markets, we have ample sources of capital to fund the fleet growth and meet customer demand. Through the first half of the year, we are ahead of our OWN program execution plan due to continued excess demand across the platform. Turning to Slide 6 on our investor presentation, this page shows how the capital supporting the OWN program has evolved over the past two and a half years. In 2023, OWN represented approximately one-third of our fleet under management, and participants were primarily high-net-worth individuals and family offices.

Beginning in 2024, we expanded into institutional capital while continuing to develop our footprint across all three channels. Since then, approximately 45% of the net OEC growth within the program has been funded through institutional buyers. That includes the four ABS transactions completed with large institutional investors. We introduced this as a new product to the ABS market, and as the program has scaled, it has generated significant investor interest and gained meaningful credibility in the market. Across all channels, when we evaluate diversification and counterparty exposure within OWN, we focus on the owners of the equipment. Whether the participants access the program directly, through an institutional structure, or through a buying group, the underlying equipment owners are who provide the capital and hold title to the equipment. Each of the OWN channels remains multiple times oversubscribed.

That competitive demand has allowed us to continue improving the economics of the program, which we will show more directly in the following slide. On the right side of the page, we provide a reminder of how OWN works and the contractual protections built into the program. There are no minimum lease payments and no utilization guarantees. If the equipment does not generate rental revenue, no lease payment is owed. At the end of the lease term, which is generally six to seven years, EquipmentShare has no obligation to repurchase the equipment. There is no put right to EquipmentShare and no guaranteed residual value. These are long-duration agreements. If an OWN participant wants to remove equipment before the end of the agreement, significant early removal penalties of up to 50% of the equipment's OEC or purchase price apply. Those provisions align the parties' economic interests.

Given the magnitude of the penalties and the underlying economics, we view voluntary early removal as a remote outcome. Were it to occur, the contractual payment would provide meaningful economic protection to EquipmentShare. At the end of certain agreements, EquipmentShare may also serve as the remarketing agent. Our scale, equipment expertise, and relationships with OEMs and end buyers can help maximize the disposition value of those assets. That can benefit the equipment owner while also helping protect the brand value of EquipmentShare and our OEM partners. In most agreements, we also have the right of first offer and right of first refusal at the market value of the equipment, typically supported by a third-party appraisal. That gives us the option to purchase equipment and bring it onto our balance sheet when doing so makes economic sense. But it is an option, not an obligation, and remains entirely at our discretion.

So, to reiterate, OWN has no minimum lease payments, no utilization guarantees, no residual value guarantees, and no obligation for EquipmentShare to repurchase the equipment. Now turning to the cost of funding for OWN on Slide 7. For transactions completed during the first half of 2026, the expected economics imply a balance sheet equivalent cost of capital of approximately 7%, making OWN a competitive and attractive source of long-duration fleet capital. To be clear, OWN does not create a fixed payment obligation or financing liability. OWN is structured as a sale-leaseback with variable payments, enabling us to calculate an equivalent implied cost of capital based on the expected cash flows over the life of the agreement. To walk through the math, during the first half of the year, we received approximately $728 million of gross sale proceeds from equipment sold into the OWN program.

Using historical utilization assumptions, we expect to make approximately $649 million of net payments over the seven-year term. Those payments are net of the fees that we retain and the insurance and tax costs that are borne by the equipment owners rather than EquipmentShare. Using standard industry depreciation curves, we estimate that the equipment will have a residual value of approximately $338 million at the end of the term. Calculating the implicit interest rate based on the upfront proceeds, expected monthly payments, and estimated terminal value produces an equivalent cost of capital of approximately 7%. EquipmentShare has no obligation to repurchase the equipment at the end of the agreement. The estimated residual value is included solely to calculate the implied economics of the transaction, not because it represents a future obligation.

Taken together, we believe OWN provides an efficient, scalable source of long-duration fleet capital, which is why we continue to target a balanced mix between OWN-funded and company-owned fleet. Finally, turning to the earnings contribution from the OWN program on Slide 8, with additional supporting data in the appendix on Slide 56. Along with being a balance sheet light source of fleet capital, OWN is also a meaningful contributor to the earnings of our rental business. As I just mentioned in the previous slide, the all-in cash flows from the OWN program are substantially similar to our on-balance sheet equipment. Importantly, the analysis on Slide 8 excludes the gain recognized when equipment is initially sold into the OWN program, as well as any future remarketing fees we may earn at the end of the agreements. Those amounts are reported separately within our equipment sales segment.

As earlier OWN program vintages mature and newer transactions with improved economics become a larger portion of the portfolio, we believe the profitability and cash flow profile from the OWN-funded equipment can expand even further. The broader takeaway is straightforward. OWN not only provides balance sheet flexibility, but it also generates meaningful recurring earnings and cash flow similar to balance sheet-funded equipment while supporting continued organic growth. I'll now hand the call over to David.

Thank you, Mark. The operating trends we have discussed so far are clearly reflected in our financial performance. Strong customer demand continued geographic expansion, and the increasing earnings power of our mature rental locations drove another quarter of exceptional growth while reinforcing the scalability of our business model. For the second quarter, total revenue was $1.4 billion, an increase of 26% year-over-year. Rental segment revenue was $908 million, an increase of more than 39% as compared to the prior year. Rental segment adjusted EBITDA was $449 million for the quarter, including approximately $60 million of new market startup costs. Our mature rental locations produced 55% trailing 12-month rental segment EBITDA margins. Margins for the rental segment overall were up year-over-year, driven primarily by our maturing market footprint and customer relationships, despite an approximately 50 basis point headwind due to increased fuel costs.

We were able to preserve margins through our ability to pass price on to customers and through efficiency and cost savings initiatives. We accomplished this while producing industry-leading growth and substantially expanding our customer reach. Equipment sales revenue for the second quarter was $483 million, including $428 million of equipment sales into the OWN program. Equipment sales segment adjusted EBITDA was $82 million, reflecting disciplined and selective sales into the OWN program, which, as Mark discussed, continues to be oversubscribed across each funding channel. Adjusted core EBITDA for the second quarter was $531 million, increasing 34% year-over-year. That growth rate is driven by the margin mix between rental and sales segments. You can also see the mix difference implied in the full year guidance. Adjusted core EBITDA is intended to reflect our underlying operating performance by excluding items unique to our organic growth and fleet sourcing strategy.

Most notably, OWN program payouts and new market startup costs. Turning now to our capital allocation strategy, we remain focused on supporting customer demand while maintaining substantial liquidity and financial flexibility. At the end of the quarter, total available liquidity was $2.8 billion, consisting of $443 million of cash on hand, $980 million of availability under our ABL facility, and on a pro forma basis, the $1.35 billion bond offering that closed on July 1. The notes carry a 7.8% coupon and mature in 2034, providing us with attractive long-term financing while further extending the maturity profile of our capital structure. We use the net proceeds primarily to repay outstanding borrowings under our ABL facility and for general corporate purposes, increasing our available liquidity and financial flexibility. Prior to the bond offering, Fitch assigned EquipmentShare its first issuer credit rating of BB- with a stable outlook.

We believe this rating reflects the strength of our balance sheet, the quality of our rental fleet, and our enhanced financial flexibility. At the end of the quarter, net leverage was 3.0 turns, as compared to 3.4 turns a year ago. Net rental capital expenditures during the quarter were $321 million after gross purchases of $689 million. With that, I will turn the call back over to Jabbok.

Thanks, Dave. Wrapping up today's call, our second quarter results reinforce the strength of the EquipmentShare model. As customer projects become larger and more complex, we're continuing to take share by combining equipment, technology, and service through one integrated platform. That is driving durable rental segment growth today, and we believe it will create embedded earnings power and attractive returns on invested capital for years to come. We're pleased with our performance in the first half, remain confident in our outlook, and continue to see a significant long-term opportunity ahead for EquipmentShare. Operator, we're now ready to take your questions.

Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from the line of Rob Wertheimer with Melius Research. Rob, your line is open. Please go ahead.

Thank you. Hi, Jabbok. You mentioned a couple interesting things on the demand environment in your comments. I think you characterized it as one of the strongest you've seen in decades, and also with improving rate. My question's going to be around rate and mega projects and where rate is improving. Because there's been this perception that mega projects might not be as profitable, and yet you just kind of went through a lot of the value add that you can uniquely, and maybe some of the other leaders, but certainly you uniquely can add. So, where is rate trending? Is it stronger on mega projects? Just in general, could you talk to that topic? Thank you.

Yeah, absolutely. Thank you, Rob. I think if you look at the 91% mix of the regional and national customers, that exposure of EquipmentShare is to larger projects, these complex projects. So, when you see the rate pressure that we're seeing going up, that is really 91% due to the complex projects and large projects we talked about, the healthcare, the sports stadiums, the data centers, the power. So, that's really where we're seeing it. We do see some, again, if you think of the 9% smaller customers, localized customers, we still do see some there as well, and that's more of a pull-through when you have a limited environment of actual fleet. When you have a massive demand in that fleet, it's all ships rise with the rise of the tide. So, we see that, but our real visibility is within that 91%.

Where are your customers at in the mega projects in kind of seeing the value there? So, rental maybe 10, 20 years ago was you order up a piece of equipment and get it, now you're providing a more holistic service with breadth of fleet, but also just the analytics, the manageability, all the things you kind of talked about in the presentation. Are people sort of seeing that value, do you have a pathway to sort of continue improving margins as you somehow charge for that systematic value? I'll stop there.

Yeah, I think on the bigger customers, the projects are more complex today than they've ever been. I know we've repeated that a bunch of times, but it definitely bears notice when you're managing projects that are $10 billion, $20 billion in nature. If you talk to any of the customers that we deal with, if you had five, seven years ago, a $2 billion or $3 billion project, that was a really significant project for a huge amount of customers, the largest in the world. Now you hear every day, $5 billion, $10 billion, $20 billion, $30 billion, and we're on a huge portion of those projects. Many times, we are the sole source provider, that first source they go for with equipment.

Exactly what you're saying, billing, when you have technology, when you think of everything else that a customer of ours deals with every day, that might seem just like, okay, well, bill should be correct. When you think of construction, and when you're managing 3,000, 4,000 machines, 6,000 to 10,000 people, getting that right every single day, getting that accuracy is incredibly important. That is driven by having a platform, having an operating system, stuff that we talk over and over. You've heard us talk about it, and you've seen that in action. So, that is really important. But the output of what we're solving for is incredibly important to understand. At the end of the day, you do make more money. You do get a better return on capital, and we see that with ours with that 16.5% as well.

Thank you.

Your next question comes from the line of Jamie Cook with Truist. Jamie, your line is now open. Please go ahead.

Hi. Congratulations on a nice quarter. I guess just my first question, obviously the market seemed fairly robust. While you raised your guidance when you pre-announced, you kept it the same today. At the same time, on your slides, you are saying you expect, it sounds like there is a lot of opportunity for upside. Can you just walk me through if there is upside, where you see the biggest opportunities, and would it be more third quarter related or fourth quarter related? Then I guess my second question, it also sounds like you expect the rental segment margins to improve in the back half of the year. If you could just provide a little more color around that. Thank you.

Yeah. Thanks for the first part of that. We do see significant opportunity on the upside of that guide. As a company, we want to always be conservative. We do think, as we discussed, that has really de-risked the guide. Mark, I will pass it over to you to add a little more color on the second part.

Yeah. Thanks, Jamie. Like Jabbok said, we view the guide as conservative. We mentioned in the call that we had a lot of fleet absorption in Q2. Over $750 million of new equipment that had never been rented before, rented in Q2. That flows through, obviously, into the back half. Then we saw a lot of volume in Q2 and some pricing upward pressure. We see even more upward pricing pressure from rental in the back half and beyond. Then on the guide math, as Jabbok mentioned, the rental segment implied back half is about 28% with the rental segment even actually growing about 29%. What we see there is even a growing at a faster rate than revenue already implied in the guide, but with additional tailwinds in terms of volume, customer divisibility, and also upper pricing pressure in the second half.

So, all of those are really where you would see if there is opportunity to outperform, those are the main areas where we see it.

Thank you.

Your next question comes from the line of Mig Dobre with Baird. Mig, your line is now open. Please go ahead.

Thank you, and good morning, gentlemen. Maybe the first thing, I really appreciate all the additional disclosure surrounding the OWN program. And your comment here on how the OWN program has evolved and the increased participation from institutional investors. I guess one of the things that we have heard from investors was speculation that as you are accessing this institutional channel, the cost of capital is going up. You have provided an example of what the cost of capital has been year to date. And I think I have heard Mark talk about the fact that as these vintages, in terms of who is involved in the OWN program evolved, the economics actually get better. So, I guess my question is, can you comment at all as to how this shifting mix towards institutional is impacting the cost of capital?

Whether that concern that you're going to operate with higher cost of capital is valid or not? In general, how we should think about OWN going forward.

Yeah. Thanks, Mig. Mark, you want to go ahead?

Yeah. Thanks, Mig, for the question. As you mentioned, first half deals, which we saw that $729 in gross proceeds, equivalent cost of capital is approximately 7%. If you do the math, as we showed on the slide, that's a mix of institutional, family office and high-net-worth channels. As we mentioned in the prepared remarks, some of the older vintages that were more focused, and even before 2024, entirely focused on the high-net-worth and family office channels carried a higher equivalent cost of capital. As those roll off, we expect those to improve. When we think about the competitive and oversubscribed nature of the OWN program today, when we're selecting deals, we see relatively equivalent cost of capital between the first panels that we have.

We are cost of capital optimizers, so when we decide to mix between an institutional, family office or high-net-worth channel, they're going to have relatively similar cost of capitals around that 7%, which is why you've seen that continue to compress in our favor as we've gotten a higher institutional mix and as the other channels have also matured.

That's great. Then I guess my follow-up, going to Jabbok's comments on governance. Appreciate the wind down of the interest in the OWN program as well as the real estate component. Can you comment on what the policies of the companies are currently on a go-forward basis in terms of how related transactions are being reviewed and evaluated, what the thresholds are? Really the mechanisms that the board currently has put in place. Thank you.

Yeah. I think there's a helpful governance doc which is consistent with how we and any other company that's public does governance. On our website, it absolutely points to that. But that is a consistent governance policy that we have. Even before going public, that governance policy was consistent, so through the private transition to a public company. But absolutely, that will be on our website. And I can give you to David, and David can give a little more color on that as well.

Yeah. Our policy is that all related party transactions go through an approval process, where we evaluate the contractual terms, the economics of the transaction, and the accounting treatment. All related party transactions are also approved by our audit committee. Again, as Jabbok mentioned, there's more discussion about our governance practices and policies on the investor website. I would point you to there for more information.

Appreciate it.

Your next question is from the line of Jerry Revich with Wells Fargo. Jerry, your line is now open. Please go ahead.

Yes. Hi, good morning, everyone. Jabbok, I wonder if you just talk about the dollar utilization acceleration that you folks saw at 2Q versus 1Q, how broad-based was that? Was there any difference in performance of mature sites versus growing sites? If you could just comment on the magnitude of rate pickup that you're seeing in an upcycle. Normally, we see half a point to a point of sequential rate pickup per month. Are we at a point where we're seeing that type of pickup in the market? Thanks.

Yeah. Thank you, Jerry, for the question. I'll talk to the first part and then pass it to Mark for the other. We do see, as I said in the prepared remarks and what we see today, really a significant demand environment, which is causing across all cohorts. The cohorts specifically for us are the 1 through 12 and then the 13 through 24, and then the mature stores. On all cohorts, we're seeing significant increase in demand and upward pricing pressure. That's a huge thing across, and then we talked to that quite a bit in the prepared remarks. I'll give you to Mark for additional color on the other question.

On the revenue side for the quarter, it was driven by both volume and some pricing pressure upward. Mostly volume in the second quarter, as we saw the higher fleet absorption. There was just so much fleet going on rent that that's what's going to drive a lot of the values there. A little bit of pricing pressure upward. We think that the upward pricing pressure, if those trends continue, we would see more in the back half of this year and in the later periods. But the mix is a lot of volume with more room to go on the pricing side.

Super clear. Just to shift gears in terms of the margin cadence. Gross margins, excluding DD&A and OWN program, were down a touch, even though obviously the profitability growth was really strong. Can you just talk about how much of that is diesel pass-through versus site mix? Should we be thinking about a sequential improvement in percent margins like we typically do seasonally for you folks?

Yeah, great question. So, as David mentioned in the prepared remarks, we did see approximately 50 basis point headwind on the fuel side. We also passed through a lot of those increases on the pricing side. Plus, there's a mix of ancillary services and other services that we're providing on these mega sites that produce strong gross margin growth dollars and ROIC, but the margin mix is a little bit different as well. That being said, as you mentioned from an SG&A leverage perspective and on our ability to operate the business efficiently, we've seen total margin expansion over time. As you've mentioned in the past too, the sequentials into Q3 are typically strong, and we wouldn't expect anything different from a gross margin perspective.

Thank you.

Your next question is from the line of Joe Ritchie with Goldman Sachs. Joe, your line is now open. Please go ahead.

Hey, guys. Good morning. You referenced upward pricing pressure a few times on this call already. I guess what I am trying to understand into the second half of the year, how much of that is contractually committed? Are you expecting a mix benefit on the equipment that is going to be utilized, given that you are working on all these complex projects and have line of sight?

Yeah, I think it is both. If you think of mix as a really important thing in our industry. We have about 3,000 classes, and there is a different dollar utilization or financialization on each class. Depending on the project, you will have excess demand and limited availability nationwide for certain products, which means you have an associated pricing pressure upward. I really think it is both. We have long-term contracts, and those contracts are driven by the need of our customers. When there is less supply and more demand, pricing within some of those classes of equipment absolutely have upward pressure.

Then just to follow on to that a little bit. Jabbok mentioned how the back half of the year is de-risked. If you think about the long-term nature of these projects, as we are winning these projects, we have good visibility on where price will be for a good amount of our projects in the back half of the year and beyond, which also gives us confidence in the trends of the industry.

Got it. That is helpful. Then just a quick question on capital allocation. You mentioned the buyback authorization earlier. Clearly, number one priority is organic growth. But I am curious, under what conditions would you maybe get more aggressive with the buyback and potentially increase authorizations going forward?

Yeah, as we talked about in the prepared remarks, we want to be opportunistic. If there is a severe dislocation on something none of us control, which is stock price. We want to be absolutely opportunistic. Governance is important to us, so we wanted to make sure this went through the proper processes as a board and governance, and that's where the $500 million was authorized. If and when that does happen, a dislocation, that the company can act upon that in an efficient way. Again, that's through 2028 for that $500 million. David can talk a little bit more about some of the details.

Yeah, I would just add that our intention is to operate the buyback authorization in an opportunistic way, but with in mind of our net leverage and liquidity goals that we'll continue to maintain as we go forward.

Yeah. Thank you.

Makes sense. Thank you.

Your next question is from the line of Shawn Wandrack with Deutsche Bank. Shawn, your line is now open. Please go ahead.

Hey, good morning. A really great quarter. I was curious if you could talk about some of the pockets of growth you're seeing in different areas of the country, maybe where you're seeing construction pick up more than others.

Yeah, thank you. Great question. I think this is pretty clear. We're seeing it universally, and we are a growth company. We're growing almost 40% year-over-year, so that's in every segment. Areas that we started earlier or earlier in that growth curve, you're going to see from a percentage basis a much faster growth. Areas that were more mature, which would be more the Midwest and the Texas area, still incredible growth, but just on a pure dollar percentage, that's going to be a little bit growth curve. We're really seeing it across the U.S.

All right. That's it for me. Thank you.

Your next question is from the line of Ken Newman with KeyBanc Capital Markets. Ken, your line is open. Please go ahead.

Hey, good morning, guys. Thanks for taking the question. Maybe for my first one, I think some of your other public peers this quarter have cited a tighter supply chain at the OEMs, making it maybe slightly more challenging to further ramp fleet growth. Obviously, it doesn't seem like it, just given the OEC growth that you're guiding to, but just curious if you have any colors on what you're hearing from the OEMs and your ability to kind of ramp fleet even further if you wanted to.

Yeah. We're confident in our guide on our CapEx, and really that confidence is driven by years of working with our customers and working with our supply partners. Those supply partners, we're planning years in advance. We talked about really the significant growth curve that we were seeing. This is three years ago. When we do that, we have incredible visibility because of the tech stack and the visibility on the job site. Yeah, we're confident in our guide. With that said, this is more reminiscent of 2021 and 2022. We've all kind of lived through that, less so in 2023, 2024, 2025. There is a severe demand, which again, we talk about pricing pressure, that's a good thing. There's upward pressure on rental rates. So, we see that improving not only for us, but again, with the industry as a whole.

Got it. No, that makes sense. For my follow-up, I'm a little surprised that the appraised value on the OWN fleet seems sequentially flat versus the last quarter, even though the OWN OEC is up 10% quarter-over-quarter. Is that driven by the mix of equipment? Maybe, just as a follow-on to that, is there a way to help us think about the right way to model the appraised value as percent of OEC as we exit the year? I'd imagine it just comes up just given the fact that you're saying that there's going to be upward pressure on rental rates. It seems like the fleet is not over-fleeted. There's still some tightness in the chain. Just how do you think about that as we think about modeling out the end of this year?

It's a great question. Mark, you want to take that?

Yeah. Thanks for the question, Ken. To remind you how the process works, this is a third-party appraised value of the fleet. What we're seeing in the actual appraisal numbers is lagging the total market dynamics that we're seeing as well. There's just normal depreciation in there first, which was a little bit higher than regular, but it wasn't really out of control. What we do expect is, given the supply chain constraints, given the demand environment, that you'll start seeing the appraised value of the fleet go the opposite direction as the market dynamics change. There's just normal depreciation built in there, plus a little bit of adds obviously in the new OWN program. There's a lagging. We see right now that the equipment fleet valuations are a lagging indicator compared to what we're seeing in the market.

From a full year perspective, we expect there to be some offsetting trends in terms of the appraisals picking up with the market dynamics over time.

Understood. Very helpful. Thanks.

Your next question comes from the line of Seth Weaver with BNP Paribas. Seth, your line is open. Please go ahead.

Hi, guys. Good morning. Thanks for taking my question. I guess, the CapEx raise that you announced last month, can you just talk to, is that kind of consistent with your rental fleet mix, or are you starting to ramp up and add more specialty equipment as you're catering to these bigger projects? I saw specialty ticked up just a little bit as a percentage of mix, but do you think that specialty will get a larger portion of your CapEx going forward? Thank you.

Yeah. I think it's consistent with the cohorts. We're seeing significant demand across our core fleets, our advanced solution, which we call our specialty, our site solutions. So, we're seeing very good growth across all those segments. We have one of the fastest-growing specialty business in the world, but that is paired up very closely with one of the fastest-growing core business in the world in the rental space. So, we do see that being somewhat consistent because the demand is very consistent as far as a high-demand environment. Then again, we talk about that increase in pricing on the fleet, and that is consistent across core and specialty as well. So absolutely, you will see some growth in specialty, but it will be relatively consistent across the board as the company grows.

Got it. Okay, thanks. I just wanted to go back to your comments about the mega projects. Asking about your comments around share gains. Can you just sort of frame that? Do you feel like you're taking share on the mega projects from other national operators, or is it more just the local regional operators that are ceding share here to all of the bigger national players on these big mega projects? Thanks.

Great question. What we are doing now, and this was not true a decade ago when we started, but these customers that have been with us for years and years are awarding us at the outset. It is not that we are taking it from somebody else. Just to put it in context, there is really only four companies in the world that can deploy in the U.S. market, 3,000 to 4,000 machines in a six to eight-week period.

That is it. In that 91%, or the vast majority of what we are doing, it is a very limited cohort of actual companies that can provide it. We are winning an outsized share of these projects on national and regional, and it is because of everything we talked about. I know we have not talked about it as much in this call, but it is going to the core of what these customers need.

It is that transparency, it is that technology. It is the basics, like getting billing right, doing the right thing, giving visibility on who is using the machine, what they are doing. That translates, you have heard us talk about a lot, too, us winning more jobs. It is not necessarily taking from somebody else; it is winning day one. I talked about one of the projects, which is one of many projects that we have. This is not necessarily We talk about data centers, we talk about power, but this is healthcare. These are sports stadiums. They need the same transparency, and we are winning on those projects as well. Again, that is 91% is that regional and national cohort.

Got it. Thank you, guys. Appreciate the color.

Your next question comes from the line of Scott Schneeberger with Oppenheimer. Scott, your line is now open. Please go ahead.

Thanks very much, and good morning, everyone. I wanted to ask around mature location, adjusted EBITDA margins, say 55% in the first half of 2026, and that's up from end of last year. Long-term guide greater than 50%. Are we seeing the potential to hit new levels given this demand? How long sustained do we need to see this demand to maybe think about a new level there being achieved? Thanks.

Yeah. Mark, do you want to dig in on this one?

Yeah. Scott, thanks for the question. Yeah. As you mentioned, trailing 12 months at 630, 55% mature site rental segment, EBITDA margins, which we're happy to see. We think that there is obviously a strong environment. Some of the things we've mentioned today give us an opportunity to outperform against that. As you mentioned, our long-term goal is that 50%. I would pair that with our over 20% ROIC target. The reality is that we put 50% on there because, if we decide to go into these sorts of ancillary and other services mixes that might have a little bit of a margin mix based on the nature of the services, but high ROICs. That gives us the ability to continue to manage in that over 50% zone, but doing so would be on a higher revenue, higher bottom line contribution, and a higher ROIC basis.

That's kind of how we think about being a full service provider, especially with the site solutions and advanced solutions business that we have as well. But on the basis that you're talking of for the 55%, we see that a sustainable opportunity to outperform, and we think that'll be stable over these next couple of years.

Thanks, Mark. For a follow-up. It's smaller, but rapidly growing. Six building material locations in the start of the year, and other revenue growing rapidly. Just curious, how is that being rolled out and scaled? Is that just attachment to mega projects that you're working on, or is that strategic locations? Just curious where that updated thoughts on where that might go over the next few years. Thank you.

Yeah, thanks for the question on that side. Really, when you're starting a new division, you're starting in the middle market, and then you go both up mega projects and down to smaller customers. So, when you see that the verticals that we're starting that are very supportive of our customers, we're starting very strategically within that middle market and then growing from there. You see that in the building materials. The difference there is probably the other divisions when you think of T3 and the technology. That's really the core of what the largest companies in the world utilize, and then it gives them that transparency, the things we talked about, the details that they actually need. So, that would be a little bit of a divergence. The other verticals you see as we add on throughout that wheel, those are going to start within the middle market.

Okay. Thanks.

Your next question comes from the line of Steven Fisher with UBS. Steven, your line is now open. Please go ahead.

Thanks. Good morning. Just wanted to follow up on Seth's question before. In terms of the market share on these mega projects, how do you see your role on these large projects involving? We understand that on these really big mega projects, there's often a primary and then a secondary rental provider, sometimes more. Just curious, how many primary assignments have you gotten recently? Are you seeing that pick up? And kind of where are you best positioned for those primary assignments?

Yeah. The vast majority that we talk about, we are the primary. We are the primary, and I think as you know in the industry, when you have 3,000 classes, it's rare they're going to provide 100% of every single class of equipment. So, when we discuss primary, you're usually ranging from 85% to 95% of every single machine on that project. And on the vast majority, very close to all, but the vast majority of the projects, we are the primary.

Okay. That's helpful. And then on the OWN program, I think the activity tends to be higher in Q2 and Q4. You can correct me on that if that's not right. This quarter, the gains on sales to the OWN program contributed about 20% of your gross profit for the quarter. And it sounds like demand was maybe more than you expected. So, I would think generally you'd see a bit of a reduction in that activity and contribution in Q3. But given that demand remains pretty strong and elevated. Just how should we frame the expectations for those contributions from the OWN program in Q3? Thank you.

Yeah. So, Mark will address that.

Yeah. Thanks, Steve. You are right about that. So, in Q2 and Q4 is when we typically concentrate the sales. We had a lot of strong demand through our institutional high net worth channels. Q3, we would expect, especially given prior years and this year as well, less contribution margin in Q3, and then a step up in Q4 because we like to concentrate those sales in Q2 and Q4 to create the competition that drives down the price and gives us good allocation. Then, on the actual OWN program pacing, we are slightly ahead of the total OWN program contribution. For the year, we have raised the guide by about $11 million since the beginning of the year. So, we would call ourselves slightly ahead, but kind of right on schedule from the Q2 and Q4 perspective.

Thank you very much.

Your next question comes from the line of Aaron Kimson with Citizens JMP. Aaron, your line is open. Please go ahead.

Great. Thank you. I consistently get investor questions on how EquipmentShare would manage in a potential downturn. I think Slide 50 in the deck does a good job showing how two peers cut CapEx amidst lower demand to produce more cash in the great financial crisis before reinvesting into the recovery. But where a lot of investors get hung up is on the OWN program, given its novelty in the industry. So, to build on Mark's prepared remarks, can you walk us through whether you think the OWN program will be a net positive or negative relative to peers in a macro downturn? And who ultimately has recourse on the OWN equipment if OWN program participants default and you may have to try and collect the early removal fees?

Hey, Mark, you want to give color on that?

Yeah. Yeah. Thanks, Aaron, for the question. On a broader perspective, we have all the levers that traditional rental companies have. We, plus a few that are specific to us. Because we're an organic grower, we delay our, we stop our site openings in a downturn. We reduce our growth CapEx. Our equipment age is significantly younger than the rest of the industry and our target, and so we have more time to age the fleet, which is obviously capital positive, which are all positive. And then also we can still sell our on-balance-sheet fleet to generate cash flow. And so we, in our models in a downturn, we generate significant free cash flow quite quickly within a couple of months if we stop our growth. On the OWN program dynamics specifically, we are not at recourse in any macro environment for the equipment.

And so, what happens, these are variable payments, and so if there's less revenue to share, there's less payments to make. And then for the actual participants themselves, they are the at-risk capital owners of the equipment. They have the UCC filings, it's their title, and we are the managers of the equipment. I also mentioned in the prepared remarks that the actual voluntary removal penalties are so high that we consider those possibilities remote, and even if they did, it would be an economic advantage for EquipmentShare, so we're all aligned from that perspective. But we see the OWN program as giving us additional protections in a downside, while also giving, we also have the traditional levers to produce free cash flow in a downturn that the other rental companies would have as well.

Got it. That's really helpful. And then as a follow-up, it seems like at least once a week, there's a headline on potential data center moratoriums or restrictions at the state or local level. The governor here in N.Y. just signed an executive order last month putting a moratorium on new data center builds for hyperscalers. I know EquipmentShare is under-indexed in the Northeast and has a diversified pipeline beyond data centers. But given that you specialize in mega projects and data centers constitute a lot of those projects right now, how closely do you consider potential state and local data center attitudes when prioritizing branch expansion locations today, if at all?

Yeah. That's a great question. The one thing I'd like to point out is we talk a lot about data centers, but this is really a very, very diverse environment from a tailwind's perspective. You've got stadiums, healthcare, things we talked about, power infrastructure. Even without data centers, there's a huge, huge demand for a company like EquipmentShare in our sector. With that said, the comment on data centers, I think it's really important to understand the permitting process around this. Many of these are four or five-year permitting process and have already been in place. You're not pulling a permit that has already been issued, it's already been approved. The projects that we're being awarded, these sole source projects that we're seeing all over the country, those are not going away anytime soon. As we know, regulatory environments change.

We have visibility years and years and years in the future because that permitting is already done.

Got it. Thank you.

There are no further questions at this time. I will now turn the call back to Jabbok Schlacks for closing remarks.

Yeah. Thank you, everyone. Really appreciate spending time with us today. We're looking forward to talking again next quarter. Have a great day.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, everyone. Thank you for joining us, and welcome to EquipmentShare Q1 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Rhett Butler, Vice President of Investor Relations. Rhett, please go ahead.

Good morning, and welcome to the EquipmentShare First Quarter 2026 Financial Results Conference Call. Joining me today are Jabbok Schlacks, Founder and Chief Executive Officer, Willy Schlacks, Founder and President, Mark Wopata, Chief Data Officer and EVP of Finance, and Dave Marquardt, Chief Financial Officer and Chief Accounting Officer. Last night, we issued our earnings release and posted an earnings presentation to our Investor Relations website at ir.equipmentshare.com. We encourage you to review the presentation alongside today's remarks. Please be advised this call is being recorded. Comments made on today's call and responses to your questions may contain forward-looking statements within the meaning of applicable securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our earnings release, presentation, and SEC filings for a discussion of those risks.

EquipmentShare has no obligation to update or revise forward-looking statements made on this call. We will also reference certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are included in our earnings release. With that, I'll turn the call over to Jabbok.

Thank you, Rhett, and good morning, everyone. We delivered a strong first quarter and are raising our 2026 outlook across the board. The headline is not just the financial performance, but the durability of what is driving it. Strong demand in our core end markets, continued share gain with large customers, and the distinct value proposition of T3. I'll start with a macro backdrop and demand environment. Willy will cover the T3 platform advantage. Mark will walk through site performance and the OWN Program. Dave will cover financial performance, and I will close with our updated 2026 outlook. A few headline numbers before we dive in. Rental segment revenue was $764 million, up 37% year-over-year. Adjusted core EBITDA was $399 million, up 39% year-over-year.

We opened 22 new locations and ended the quarter with 407 operational locations. On a trailing 12-month basis, we are now generating $1.78 billion of Adjusted core EBITDA and mature rental locations Adjusted EBITDA margins were 55%. Based on that strong start to the year and what we are seeing in customer demand, we are raising guidance. Rental segment revenue guidance now implies 29% year-over-year growth at the midpoint, up from 27% in our prior guide. The equipment rental market remains large, fragmented, and under-penetrated by technology. The U.S. equipment rental industry is approximately $84 billion, and the largest providers still represent only a minority of the total market. That gives us a long runway for share gains, particularly with customers who need scale, reliability, and better operating visibility. What matters in this environment is no longer just fleet availability.

Customers are choosing partners who can mobilize quickly, support complex job sites, reduce downtime, and help them execute against compressed schedules. That is where EquipmentShare is winning. Our mix reflects that demand. Industrial and non-residential end markets account for 87% of our rental revenues in 2025, and that mix has held in the first quarter. These are customers building factories, data centers, power and grid infrastructure, and large public projects. That mix is translating into growth well above the market. While the broader industry is growing at low single digits, our rental segment revenue grew 37% in the first quarter. The difference is simple. We are not just renting equipment. We are lowering the cost to execute. That gives EquipmentShare pricing power while delivering a better economic outcome for the customers. Mega projects are the clearest expression of this demand.

Data centers, advanced manufacturing, energy, and infrastructure are all moving towards larger sites, tighter timelines, and higher execution risk. At that scale, customers need more than fleet. They need a partner that can mobilize thousands of machines quickly, keep them running, and give operators real-time visibility and control. That is where EquipmentShare creates clear separation. Data centers show the magnitude of the shift. Rack densities have moved from roughly 8 kW-12 kW a decade ago to more than 100 kW today, with next generation designs reaching as high as 600 kW. That is driving major investment in power, cooling, and new facilities, all areas where we are not only active, but excel. The same pattern is playing out in advanced manufacturing, where onshoring is driving semiconductor, battery, automotive, and defense-related construction.

In energy, grid constraints are increasing demand for mobile and modular power, an area where we have built a leading position. In federal and state infrastructure, public spend continues to flow into roads, bridges, water system, and ports where our footprint continues to expand. One customer example captures the broader trend. A top 50 ENR customer running one of the largest renewable power projects in the world had previously chosen another rental partner because our geographic reach was not yet developed enough to support them. Earlier this year, that customer moved 100% of their spend to EquipmentShare.

The reasons were specific: access control, predictive maintenance, the depth of our service technical network, and the ability to manage thousands of machines through a single platform. We are seeing that pattern repeat across the customer base. T3 is what makes that possible. It turns scale into a measurable operating advantage for our customers. I'll now turn it over to Willy to talk more about the T3 platform.

Thanks, Jabbok. At its core, EquipmentShare is not simply a rental company with software attached. We have spent more than a decade building the operating system for our industry, from machine hardware to data infrastructure, the application and intelligence layers which customers use every day. The contractors we serve are not just asking for more equipment. They're asking for fewer delays, better visibility, safer job sites, higher utilization, and more predictable execution. T3 is how we deliver that. It is why customers are consolidating more spend with EquipmentShare. The capabilities customers often value most, things like access control, predictive maintenance, technician coverage, and the ability to manage thousands of machines through one platform, these are not standalone features. They're the output of a vertically owned technology stack that we have built in-house.

On page seven, we compare that integrated stack against industry software providers, rental peers, and manufacturers at every layer: hardware, data, and application. EquipmentShare designs it, we build it, own it, and of course, consistently improve it. Starting with hardware, we design and build and deploy our own sensors and embedded systems across manufacturers' equipment and our own fleet. This creates a rich real-time digital twin foundation that fundamentally is different from legacy rental software and environments, which are built around static records, machines, contract to location, analog service tickets, et cetera. These are useful, often backward-looking and manually updated. Versus T3, which continuously captures live operating signals from equipment, job sites, and workflows enabled by that foundational digital twin, so customers and our teams can see what is actually happening in real-time in the field.

That data then flows into the own data environment, capturing things like utilization, service faults, history, access events, et cetera. These operating patterns are across hundreds of manufacturers and thousands of equipment classes. The platform is where real-time data becomes shared workflows, insights, and predictive intelligence for both EquipmentShare and our customers. Because we own the full stack, the customer is not looking through some limited portal while we operate in an entirely different environment. Our teams and our customers work in one integrated multi-tenant environment on the same data model with the same real-time context. That is the opposite of the fragmented environment that drove us to start EquipmentShare. In the legacy model, contractors are forced to manage their business across this disconnected landscape of vendors and systems instead of one platform built around how the job site and industry actually work. T3 collapses that fragmentation.

It allows customers to manage their resources with the same real-time operating context that our own teams use to support them. That structure also creates our AI advantage. The breakthrough is not adding AI on top of the platform. It is embedding intelligence into the operating layer of the job site itself with the level of visibility, context, and control that fragmented systems cannot replicate. That vertical ownership is the point. Every machine engagement and data flows through technology we built and control, creating a closed-loop operating system that improves with scale and gives customers a level of visibility, uptime, and efficiency that is difficult to match. This is showing up in the business. T3 is not a feature. It is the operating layer connecting our fleet, service network, customers, and job sites. It helps us deliver measurable customer value while driving loyalty and pull-through demand across the network.

With that, I will turn the call over to Mark.

Thanks, Willy. What Willy just walked through is exactly what we are seeing in the business. Customer demand remained strong in Q1, supported by an increase in construction activity, our expanded geographic footprint, growth in fleet OEC under management, and the value customers are seeing from T3. That demand showed up clearly in the Q1 results. New fleet absorption was strong across the network, and customers continued to pull more of our T3-enabled equipment and on-site services into their job sites. That is an important point. In stark contrast to the industry, our organic site and revenue expansion is being driven by customers who are growing with us because they value the integrated EquipmentShare model. A new organic rental location works when two things come together: customer demand created through T3 and strong execution on the ground. We continue to see both in Q1.

Our mature rental locations delivered 55% rental segment adjusted EBITDA margins on a trailing 12-month basis. Those are very strong site economics, and they reflect the operating efficiency, pricing discipline, and customer stickiness we believe T3 helps create. As expected, our newer rental sites continue to ramp at a healthy pace, supported by pull-through demand from national and regional customers. As a reminder, when we open a new location, a significant majority of first-year revenue comes from existing EquipmentShare customers already renting from us in other markets. Roughly 90% of our revenue as a company comes from national and regional contractors. We opened 19 full-service rental locations in Q1, so we are slightly ahead of our original guide.

Based on that progress and the demand we are seeing, we are raising our full-year guidance for full-service rental locations to a range of 427-435 by year-end, or 431 at the midpoint. That implies 79 new rental locations in 2026 at the midpoint. We continue to be disciplined in new site selection to support customer demand. During Q1, fleet absorption was strong, mature locations continued to perform at a high level, and newer cohorts continued to ramp with healthy demand behind them. That all shows up in the embedded earnings power of the network as those growth sites mature over time. Turning to the OWN Program. OWN remains a core part of how we fund our growth. Demand for OWN remains very strong.

The OWN Program is a differentiated platform that opens equipment ownership to a broader pool of capital and allows us to operate equipment at a cost of capital similar to funding on the balance sheet. In Q1, we executed $102 million of equipment sales into the OWN Program. As a reminder, OWN Program transactions do not occur evenly quarter to quarter. We typically see larger clusters of activity in Q2 and Q4. Q1 was consistent with how we expected the year to begin. We continue to be multiple times oversubscribed across high net worth, family office, and institutional channels, and we are on pace to meet our OWN Program targets for the year based on the current CapEx plan. That demand reflects the quality of the asset class and the differentiated visibility that T3 provides participants in the program.

With that, I'll turn it over to Dave.

Thanks, Mark. We're excited to report our results for the first quarter as customer demand continues to drive our organic growth and continued positive momentum. While our financial results for the quarter provide measures of our business for the year-to-date period, we also believe it is meaningful to evaluate our operating performance over the trailing twelve-month period, which we have provided in our earnings release. For the first quarter, our total revenue was $989 million, reflecting a year-over-year increase of 38%. Our rental segment revenue grew 37% to $764 million, and rental segment adjusted EBITDA was $323 million, both driven by continued footprint expansion and growth of our managed fleet.

Sales segment revenue was $179 million for the first quarter, up 23% year-over-year, with equipment sales to the OWN Program of $102 million, up 7% year-over-year. Sales segment adjusted EBITDA was $26 million, reflecting disciplined and selective sales into the OWN Program, which as Mark mentioned, continues to be oversubscribed. Our first quarter operating results include $17 million of non-cash stock-based compensation expense related to previously disclosed equity awards granted by our board to the founders in connection with our recently completed IPO. The IPO founders awards comprise five tranches of performance stock units which only vest and become issuable when the company's stock price achieves certain defined hurdles, with the last tranche becoming issuable upon achieving a $90 billion market capitalization.

For accounting purposes, the fair value of the award will be recognized as non-cash stock-based compensation expense over the performance period. More information will be provided in the footnotes to our financial statements. Adjusted core EBITDA for the first quarter was $399 million, up 39%. Growth was driven by continued expansion of our full-service rental location footprint and maturing of our existing rental sites. Adjusted core EBITDA reflects our underlying operating performance by excluding items unique to our organic growth and fleet sourcing strategy, most notably OWN Program payouts and new market startup costs. For reconciliations to our operating measures, please refer to the details provided in our earnings release.

Turning to the balance sheet, liquidity, and cash flows, our total available liquidity was $1.6 billion as of March 31st, comprised of $329 million in cash on hand and $1.3 billion of availability under our ABL facility. As a reminder, we replaced our prior ABL facility during the fourth quarter of last year with a new facility led by Wells Fargo, extending the maturity of outstanding borrowings to 2030 and at a meaningful reduction in our total cost of capital. Net leverage decreased to 2.8x turns as compared to 3.2x turns a year ago, reflecting the use of proceeds from the IPO to pay down a portion of outstanding borrowings. Cash used in operating activities reflects our organic site expansion strategy, along with increased working capital corresponding to the growth in our revenues and the timing of payments.

Net rental CapEx for the first quarter was $213 million after gross purchases of $328 million. In response to customer demand, we intend to invest discretionary cash flow into further site expansion, increasing fleet under our management. Organic growth initiatives. We believe the investments we are making in expanding our footprint with T3 provide the best return on invested capital. Finally, with our average fleet age of approximately 30 months, we have meaningful operational flexibility throughout industry cycles, including the ability to moderate fleet purchases, pause new site openings, and age the fleet if conditions warrant those actions. With that, I'll turn the call back over to Jabbok.

Thanks, Dave. Based on the strength of first quarter and what we're seeing in customer demand, we are raising our full year 2026 outlook. The updated ranges are as follows: OEC of $10.15 billion-$11.2 billion. Full service rental locations of 427-435. Total revenue of $5.15 billion-$5.58 billion. Rental segment revenue of $3.37 billion-$3.64 billion. Approximately 29% growth at the midpoint. Adjusted core EBITDA of $1.88 billion-$2 billion. This includes $221 million of sales segment EBITDA at the midpoint, a new disclosure to provide additional segment-level transparency.

OWN Program payouts of $906 million-$962 million, gross rental CapEx of $2.28 billion-$2.5 billion. Net rental CapEx of $819 million-$899 million. We continue to expect OWN Program OEC at 55%-60% of total OEC under management at year-end, and over 260 mature rental site locations. Looking further out, we continue to plan towards approximately 700 full-service rental locations by 2030, opened organically and informed by customer demand. Construction productivity has been stagnant since the 1940s. Not for lack of demand, but because the industry was built on fragmentation. Our thesis is simple: if contractors can run their job sites on a single technology platform, they will.

That was true 40 years ago, it is true today, and it will be true a decade from now. Our approach stays the same. We scale with discipline. We build a technology platform that creates customer value. We use OWN to fund outsized demand without straining the balance sheet, and we manage to gross margins and ROIC. EquipmentShare is built for where the industry is going. Bigger job sites, more complex work, and customers who need one partner delivering at scale. We appreciate your continued partnership and support. Operator will now open the line for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from the line of Rob Wertheimer with Melius Research. Rob, your line is open. Please go ahead.

Thank you. Good morning, guys. My first question is on revenue, where, you know, you obviously had very strong revenue performance. We've seen in the past, you've grown fleet a bunch, you've grown locations a bunch. Rental revenue doesn't always outstrip fleet. In this quarter it did by a wide margin. I'm just curious, did things go much more right than you expected in the quarter? Or is this just kind of maturation of some of the stores kind of starting to deliver? How would you characterize that outperformance?

Hey, Rob. Thanks for the question. It's, as you mentioned, it's a number of things. It was a particularly, you know, good quarter as we would expect in this macro backdrop. There's good fleet absorption. We're growing with customer demand, that obviously drives the fleet absorption I just mentioned. Also site maturation as well. All those things together is what drives the revenue growth, especially when you pair it with the OEC.

All right. Perfect. Then, I'd like to ask just a bigger picture one, which you addressed pretty well in your opening comments. I think investors are still trying to grapple with, you know, what is T3, what are the biggest benefits, you know, how differentiated is it in different spots and so on. I wonder if you could kind of just give a couple examples of that concept of multi-tenant database and your customers all looking at the same data and their ability to manage fleet differently and better, just to make it a little bit more tangible for us. I'll stop there. Thank you.

Yeah. This is Willy. When we use the term multi-tenant and, you know, a singular data structure, it really is speaking to you wanna think about what is this, you know, the legacy environment. In the old world, you've got fragmented systems, you know, analog process. You've got ERPs that a rental provider might be using and then the customer might be using. Interoperability between those was really manual phone calls, you know, emails, and best case scenario, maybe a multi-year API integration. Then you contrast that with EquipmentShare. T3 enables if we rent gear, that custody follows the contract. There is no manual effort. At its core, there's this ledger that understands custody of that resource and that digital twin.

There's no effort that we have to do to actually extend the value in that digital twin to our clients. There's no effort they have to do to actually consume that. It's all available within T3. That is extremely unique. I think it is a good question you're asking because a lot of folks will look at the surface and the edges of the platform, and they look at, you know, telemetry data and how you use it and how it can implicate things like utilization and insights, et cetera. The real challenge is actually getting that data at scale to be driven and the access to it to be custody driven without human intervention, and that's what we have solved. Of course, we earn the right then to deliver that insight at scale.

These terms, you know, I think will be more common as we move into the AI world because it only compounds its value. Now, instead of just a human being able to look at this, you suddenly have reasoning capability where there's deterministic structured data at scale, versus if you're in the old world, you're still stuck 'cause there's no way to actually create that deterministic extension of data to your clients or, you know, a multi-tenant environment. It's one to many. It's not just like one provider sees it, the bank sees it, the insurance company sees it, the renting company sees it, the sub-renter sees it, the EquipmentShare sees it. You know, the fueling company might have access to it. There's this really complex orchestration of data that is natively solved with T3.

Thank you.

Your next question comes from the line of Mig Dobre with Baird. Mig, your line is open. Please go ahead.

Hey, thank you guys, and congrats on really strong start to the year. Maybe I wanna follow on that discussion with Rob there. You know, you talked about the big win that you had with a top 50 contractor. I guess I'm sort of curious, when you're delivering these kinds of wins, you know, what is sort of like the value proposition, the framework that really kinda comes out of this? One of the concerns that I think a lot of investors had was pricing, and that being the tool that you're using to win this business.

Maybe comment on whether or not that perception is accurate and comment how you think about industry conditions and your ability to really capture the value that it seems that you're bringing to the table through pricing or any other means.

Yeah. As we mentioned, jobs are getting bigger and more complex. Like I was saying before, with our ability to natively extend data to any party, without human intervention, it is a very unique value proposition. If you think about the practical examples of what that might mean. Say you have a massive job site with, you know, hundreds of companies on that job and thousands of machines and, amidst that chaos, you then try to determine who has access to the digital twin, the real-time data of all this activity. Our platform handles that natively. When you practically think about that, you have questions like, "Well, can this human use this machine?" Again, think about the thousands of humans that are on a job and the thousands of machines.

Our platform answers that in real time, so there's no phone call, there's no fax, there's no, you know, scurrying around and the chaos of that or even over-renting a machine. Instead of going, "Well, I can't use that machine, so I need to call someone else to get another machine." You suddenly have this real-time ability to grant access or understand custody and access. Even if we sort of narrow the scope just down to this pragmatic environment of, you know, folks in the field trying to utilize these machines, 'cause the machines are how they do work. If you think about building, it doesn't matter if it's a, you know, a highway, a data center, an office building, you've got humans and you have machines, and that's how you construct this stuff.

Being able to have all of that suddenly reduce the chaos and you have this controlled environment, that T3 brings means that, you know, if you're a big client and you're about to encounter that chaos, who are you gonna choose to be your partner? Now, we're not big enough to meet 100% of demand, and I don't know if we'll ever be big enough to meet 100% of demand. What we do get is we get that first call, and that is absolutely an advantage we have because then, of course, instead of trying to gain market share by cutting prices, we gain market share because we give value. Of course, we wanna give a good value to our clients.

I believe they need to rent fewer machines if they use us because suddenly you don't have this duplication of, you know, one sub is using an aerial boom lift and then the other sub can't share it, so he has to rent his own boom lift, and then the other sub can't share it, so and so on, you sort of see how that can propagate and create complexity and, you know, lower utilization, unsafe environment and all that. We help solve those problems, and because we help solve those problems, the demand is there. I think the numbers speaks of itself. I mean, I, we ourselves look at the demand we've had for the last 10 years and, you know, outside of M&A, nobody's seen this, and that's really because of the differentiation we bring. Jabbok can speak to maybe the pricing.

Thanks for the question. If what's changed for EquipmentShare over the last decade, a decade ago, we had one store. We now have the scale that we can deliver across the U.S., and we use that example. Customers have realized not only do we have the scale, but we have the sophistication as well we talked about from a technology standpoint, and this is built on a tech stack that actually solves our customers' problems. They hear about tech. We all understand AI is changing fundamentally how work is done, but we're still in a very physical industry. You still have to have access control. You still have to have visibility of your machines.

You still have to have job sites where when you use EquipmentShare, you can run the safest job sites, you can run the most productive job sites. At the end of the day, our customers are in this. They have businesses. They need to make money. When you use our tech stack, when you use T3, that unlocks value. As we talk about growth, we talk about margins. We have the highest margins in the industry and net return on capital. That's also for our customers because of the value we actually provide from technology.

Understood. My follow-up, one of the metrics that stood out to me from the quarter was the dollar utilization. I know you guys don't specifically talk to this, but by my own math, this metric expanded something like 150 basis points year-over-year. If you were willing to comment at all, I'm curious what's behind that. Is it better utilization of fleet relative to a year ago? Is it maybe a little bit of help from the previous discussion we had on price? Is it fair to expect continued improvement on a year-over-year basis in this metric as 2026 progresses? Thank you.

Yeah, thanks for the question. Like, you know, as we said before, we don't really comment on seasonality, but what we can say, when you look at our customer base at about 90% being national and regional co-contractors, T3 created the most value on mega projects and large job sites. Those are really long duration projects with not the sort of fleet turnover that you see in the local market. We definitely do see that as a tailwind in the actual yield that we're getting off of the fleet and our utilization in the market. I'll let Jabbok kind of talk about what we're looking at for the rest of the year and talk about the guide a little bit more on 2026.

Yeah, I think when we look at the guide, we upped it from 27% to midpoint to 29%. If we kind of take a step back for EquipmentShare today, in an industry at the scale we have, that's never happened in history from organic growth. It really reflects, like Willy talked about, that customer demand driven by a differentiated solution. You see that demand. We're seeing unprecedented demand across mega projects, data centers, manufacturing, infrastructure, really across every sector that we're serving as a customer. With that said, we don't want to get over our skis. We're a very disciplined company. We're only one full quarter into the year, and that's why we raised it from 27% to 29%. If you think of our organic sites, they're maturing. We're seeing really good customer demand.

For us, we really like what we're seeing as far as today and where we're actually going.

Thank you, guys.

Your next question comes from the line of Gary Liebowitz with Wells Fargo Securities. Gary, your line is open. Please go ahead.

Yes, hi, good morning. This is Gary Liebowitz. I was hoping to jump in on the rental gross margin performance. It was a really good performance there, depending on the metric, you know, up about 200 basis points year-over-year. I'm wondering if you folks can comment on what was performance on a same store, like for like basis for mature sites. And, you know, if you're willing to comment on what was the tailwind from new starts as a percent of total, you know, declining as your footprint grows and the denominator gets larger here. Thanks.

Hey, Gary. Thanks for the question. On the gross margin side, if you kinda can compare the equivalent rental segment revenues against the direct COGS, we saw a nice lift in gross margin and also the leverage on the SG&A side. Both of those were good tailwinds on top of the volume. We do break out the segment cohorts. We did that at the year-end, and we'll do that again for you periodically. At a high level, we're seeing growth across our segments. Like I said in the prepared comment, the cohorts of sites. Like I said in my prepared comments, our new sites are ramping nicely.

If you kinda think about the same store from a margin perspective, that's 55% TTM for the greater than 24 months. Those mature sites was 55%. We saw strong, you know, strong performance against those, plus the growth of the new sites is what drove the performance in Q1.

Okay. Then, can we just go back to the dollar utilization part of the conversation? Looks like for the industry, dollar utilization was a nice tailwind versus normal seasonality in the first quarter. You know, the market had been oversupplied from aerials. I know for you folks it's a bit different, but can you just comment on the pricing trends that you're seeing in the market? It feels like, from checks that for the first time in, I don't know, 18 months, two years, we're getting nice pickup in rental rate heading into the construction season for the industry overall. I'm wondering if you can comment and talk about if that's what you're seeing in your markets as well.

Great. Aerials is obviously part of the growth, all across the core and Advanced Solutions and Site Solutions, we're seeing strong demand. From a pricing perspective, as we've said in our, you know, as we said before, we see a really stable pricing backdrop right now. There's a lot of demand, a lot of good customers with a lot of activity. We've seen a stable pricing backdrop for on our end. You know, given the T3 capabilities and our customer relationships, we've been able to command the right kind of price and at or above the industry, which is where we target for our customers.

Thank you.

Your next question comes from the line of Joe Ritchie with Goldman Sachs. Joe, your line is open. Please go ahead.

Thank you. Good morning, everybody. I know that you guys typically don't comment on seasonality, but historically, margins improve in 2Q and 3Q really through the prime construction season. Can you maybe just provide a little bit of color on margins going forward as the year progresses?

Yeah, Joe, thanks for the question. As Jabbok mentioned into the rest of the year, we, on the, on the revenue growth or the equipment rental revenue, we grew, you know, we upped the guide at, from 27% to 29% at the midpoint. We had a strong quarter for Q1, as you mentioned. Like you mentioned, there is a lot of strong backdrop in the industry right now through the rest of the year, which we, which we view as a positive sign. You can kind of see in the guide where we're implying for margins through the rest of the year. We think that the, you know, the rest of 2026 is a really strong backdrop, especially for the customers that we serve.

We're, you know, we think that's a positive development.

Okay, great. Look, there's obviously a lot of concern in the market right now regarding inflation, you know, geopolitical events of the last quarter. I guess it doesn't seem like you guys are seeing any change in customer behavior, you know, through the quarter or into Q2. Just any comments on like, whether things are getting delayed from a project perspective at all, or as your suppliers are talking about supply, you know, the supply chain environment today. Anything changing, lead times changing? Just any color around that would be helpful.

Yeah. I think, it's Jabbok. I think as we discussed before, we're seeing unprecedented demand across all the sectors from all our customers. One of the advantages we have, and the largest buyers in the world for manufacturers, we have very, very strong relationships. Those relationships kind of cross over the ups and downs from economic cycles, and that preserves our ability to maintain through the years those relationships and that pricing from a consistency standpoint. If you think of rental, which is different than some of the other sub-sectors, we already have our $9+ billion worth of fleet. We're already monetizing that fleet. That is if you think of inflation and tariffs and things like that fleet is already owned. It's already our fleet.

I'm able to monetize that, and that is when you have excess demand and limited supply, and when there's a little bit of dislocation in the market, that gives pricing power to this industry if you think of the macro. There's something where the largest players do absolutely have an advantage in times like this.

Helpful. Thank you.

Your next question comes from the line of Aaron Kimson with Citizens. Aaron, your line is open. Please go ahead.

Great. I wanted to start with a macro question as well. From your vantage point, has there been a noticeable change in the commercial construction macro since you reported in mid-March? if so, what are the main drivers?

It's actually an interesting question. You think of, just from a recovery from an economic, standpoint, I would look at this more from a macro, like a K-type recovery. You've got unprecedented demand across from onshoring manufacturing, data center mega projects. What's loosely associated, you'll see how we report our customers, when you think of residential and commercial, that's kind of stable, but in some areas and some geographical locations, those are actually going down. When you think of that, what's really fascinating about a company with our scale and with the tech stack, we have mobile fleet. We can optimize the best customers that we serve them with the highest returns. To answer your question, we're saying we bucket that as about 11%.

I think the type of customers we serve, if we're looking at the, call it the commercial residential, and that's stable, but in some geographical segments you actually see a little bit of, even less than stable. Like I said, more of a K-type recovery.

Okay. That's helpful. Thank you. As a follow-up, Willy, can you talk about how the pace of product development for T3 has been changing with recent model advancements? Whether you see the lowered barriers to building technology as a net threat to the ten-year tech gap y'all have talked about EquipmentShare having versus the industry, or potentially giving you a chance to compound your tech advantage relative to peers.

Yeah. It's pretty exciting. The pace of development has grown by an order of magnitude, and I think that's true of any forward-thinking tech environment, where it's a software, you know, only stack. The advantage we have is that, you know, from a moat perspective. We get the tailwind and this whole new environment of, you know, software development has changed, and there's really no barrier in the software world of building something, say in a year. Like you can, if you can imagine it, you can build it.

Where the barrier is and really our moat is when you start getting down to that stack into embedded layers and hardware and integrations and then, you know, whether you think about ultimately then the IP associated with things like our access control and then, you know, manufacture installs, et cetera. That's where you're in multi-year, you know, fairly complex, challenging environments to actually build that technology stack. We start from the ground up. You know, we build our own sensors. We write our own embedded software. We own that IP, and that's not just like one simple thing.

You have thousands of, you know, machine product categories and hundreds of manufacturers and integrations that is required. All of that's necessary to then feed into a structure and a, you know, a structured environment of data that then, like I described before, where you need the capability then to deliver that data to many parties based on custody. There, there's a whole ecosystem there that has to develop. If you're only looking at software and building, you know, if somebody is building a simple software platform, that is, you know, that is not hard to really duplicate, and pace is really what matters now. Domain experience is what matter, context is what matters. When you think about EquipmentShare, what we have is we're not software only.

We have a deep, you know, thread all the way into the hardware world that is our IP that we own and then connects to, you know, machines in the whole environment. This spans from, you know, vision systems like security systems on job sites to machines and keypads, et cetera, all that. We really don't have time to go quite into all those details, but can individually. If you move to the software side, what that gives us, we have industry-leading industry. If you think about just me, you know, leading the technology side of this, I have the advantage of knowing what it means to build at scale in this environment, in the physical world and in the software world, and that is unique.

Like, when you think about our future competitors, when they may or may not turn up, they're gonna look a lot like us. They're gonna have these two worlds of data, software, hardware, et cetera, and then a whole world of operational excellence and distribution. Because then the humans who are leading that and have the view and the expertise of what should be built, which is the barrier in software, is simply what should be built. They have to have that domain expertise because LLMs and AI, there is no urge to build. They're directed by humans. Now it's really the advantage is not squarely in the box of outliers, differentiated companies, and companies that span both worlds of physical and distribution and hardware, but also on the software side.

Got it. Thank you both.

Your next question comes from the line of Jamie Cook with Truist Securities. Jamie, your line is open. Please go ahead.

Hi, good morning, and congratulations on a nice quarter and guidance rates. I guess if you could just frame, obviously we raised the guidance, nice start to the year. It sounds like the macro is picking up as well as you're doing a good job executing. Any way you could just help us frame, you know, what you have embedded in sort of like the high end and the low end of the guidance? If we were to raise, I guess, guidance again, do you think it'd be more reflective of just macro improving or just more sort of EquipmentShare specific, you know, initiatives in terms of opening more new stores?

I guess my second question is in terms of your CapEx guidance rates, can you just talk about like by equipment, like where the incremental demand is coming from? Thank you.

Hey, Jamie. Thanks for the question. I'll take that in a few parts here. On the ranges and the guide, we talked about the midpoint. What kind of has the flex on the high and low range is we can pause or slow down growth in the macro environment if we wanted to. All our obviously purchase orders, we can flex if needed. On the high side too, the opposite is true. We're quite flexible from a balance sheet and fleet growth perspective and new site openings, that is kind of embodied in the range there. What would drive, as you were saying, what would drive a beat is it's pretty simple. We execute well within a good macro backdrop, both those variables drive our performance.

As we continue to execute on mega projects with large customers, prove the tech differentiation to more and more customers and get adoption and drive value for our customers, that obviously will translate within a strong backdrop for the customers that we serve into stronger performance. On the CapEx side, you can see, you know, on the both the core and the advanced fleet, both are seeing great demand. We don't break that out specifically, but you can kind of see the split in our historical financials. I will also note even on especially Advanced Solutions space, we are the fastest growing Advanced Solutions organic business in the industry as well.

We've seen a lot of growth and good contribution in that part of the fleet business as well.

Thank you.

Your next question comes from the line of Ken Newman with KeyBanc Capital Markets. Ken, your line is open. Please go ahead.

Hey, thanks. Morning, guys. Nice type one beat this quarter. Wanted to just dive into the adjusted core EBITDA guide. You know, I think, it is adding back, call it $19 million in that stock-based comp this quarter. I think historically, that expense has been included in that calculation. Maybe a two-part question. First, just any color on why the change on that methodology versus last quarter? Second, you know, if we are going to start continuing to add back SBC to the adjusted core EBITDA for the rest of the year, is that gonna be similar to what we've seen this quarter? I'm just trying to get a sense of, you know, you raised the EBITDA guide by $70 million.

Is that primarily just being driven by the higher stock-based comp add backs or any help there?

Yeah, Ken. Let's talk about the stock-based comp for a second here. To compare SBC in 2025, $4 million was the SBC in 2025. The change in 2026 and going forward is almost entirely driven by the founder award PSU stock-based comp expense that was granted at the time of the IPO. Of the $19 million of SBC in Q1, $17 million of that is the founder awards. To remind you what the founder awards are as well, there's five tranches, and the last tranche is a $90 billion market capitalization for the company. For us, when we think about performance and the way that those are accrued from an accounting perspective, having, you know, those tranches up to $90 billion is not really reflective of the actual earnings power of the business, which is why we included that.

The raise, it's the actually original guide that we had didn't have that substantial amount of SBC in there in the first place. The SBC exclusion from adjusted core EBITDA is actually consistent from the year-over-year guide. That $70 million guide had no impact from the SBC gain that was driven by the founder awards. To answer your second question, the actual founder award expense impact in out years is noted in a footnote in the 10-Q, which is now available. You can actually go see the annual impact there, and you can derive your quarterlies accordingly.

Okay. Very helpful. I appreciate that. Maybe just for my follow-up here, and I was surprised to see in the deck that the appraised value on the own fleet came down a little bit from the fourth quarter, just given that, you know, we did see the OEC on the own fleet was up slightly. And I also think used equipment prices have continued to come up in the secondary market. Maybe just any help on why the appraised value is a little bit lower or just how to think about appraised value on a go-forward basis.

Yeah, that's just normal economic depreciation against the much larger OWN Program basis compared to the incremental add of new OWN Program OEC. That delta in OWN Program appraised value is entirely consistent with the normal economic depreciation that we expect that gets embedded inside of the appraised values. Well, that is not reflective of softening that we're seeing in the used market. If anything, we're actually seeing a stronger used equipment market, which to, you know, to your point, will track with the, those appraised values obviously will track with OWN Program equipment, but you have to factor in normal economic depreciation on that gear. When you do it's kind of a standard baseline comparing Q over Q, even with the new OWN Program additions.

Understood. Thanks.

Your next question comes from the line of Avi Jaroslawicz with UBS. Avi, your line is open. Please go ahead.

Good morning. Thank you. Just wanna address what you're seeing, the specific relevant markets that's telling you to accelerate the new openings this year and raise your CapEx. Is it more about the more activity in the market or more about you taking more share than you were previously thinking? Just I get that it's both, but wondering what you would say is the bigger driver here.

It is both, to answer the question. What we're seeing, and we talked about a lot. We have stores that are maturing. The stores themselves, again, we projected 27%. We raised that to 29%. If you think of the organic growth of what we're doing in this industry and the differentiator product, you're gonna see that accelerated. The stores start at zero and they ramp up. You're gonna see that add back. What's interesting, if you look at us, and I think we've talked about it before, we're at that over midpoint where there's more mature stores actually producing revenue and producing the associated EBITDA and earnings than there are actually stores that we're opening. As we do our path to 700, this is a massive industry, and we talked about that as well.

If you think of our place in the industry, this is $15 trillion. If you look at pundits who have studied it, we still lag the industry dramatically from a productivity level. That's what we're actually solving for. Large industry, growing incredibly good macro drivers in our industry for all of us who are in the industry, and then our unique position really drives that growth.

Okay. I guess just given the plans that you have through 2030, how should we think about how you're executing that plan? When we think of the locations that you're adding this year, is it more governed by what you think the market can support or just more governed by how quickly you can get these locations open?

Yeah. We're right on track. If you think of our guide, and we're slightly above the midpoint from the stores we actually opened, we're right on track. Because of the size of the industry, not to reiterate what we talked about before, this is in spite of the industry itself. The industry, again, there's one to two trillion that pundits say we lose, and I agree with them, because of just lack of basic productivity that our tech stack actually starts solving. We're intent on going there. We're intent on solving that. We think of the different verticals that we're turning on, besides just rental. Rental is the gateway into the industry. Allows us to actually broadcast that network, allows us to serve customers. Our customers need many, many more services.

What's fascinating is that customer acquisition cost goes to zero as we serve them in other segments of what they actually need. We are very, very focused. This is a physical industry. You can't just solve it with tech. Willy talked about that a bunch. You actually have to have physical distribution. Because we provide this product, because we have the scale now nationally, our customers drive that, differentiate, our customers drive that expansion. That's what we're seeing today, and we expect to see that through 2030.

All right. Appreciate the time. Thank you.

Your next question comes from the line of Scott Schneeberger with Oppenheimer. Scott, your line is open. Please go ahead.

Thank you very much. Good morning. For my first, you all increased the 2026 guidance for total revenue by $100 million, and guidance for the rental segment increased, I think it was about $55 million, and clearly very strong and congratulations. The remaining $45 million increase, is that primarily equipment shares? You kinda touched on that. Is other revenue going to be a sizable contributor? Just looking for what's behind that. Thanks.

The guide increase, if I understand the question, the guide increase was driven primarily by equipment rental and equipment sales revenue. Then Scott, just to call out, and Jabbok mentioned it in the prepared remarks, we now break out the equipment sales segment, EBITDA contribution in the guide, separately from the other, so you can kind of deconstruct those as well. It's the guide increase on revenue is getting driven by the rental segment itself.

Great. Thanks. Net leverage ratio decreased from the fourth quarter was 3.2x now down to 2.8x. I understand there's seasonality, and it's probably gonna increase in the middle of the year here, but making really nice progress there. How do you see that ending 2026? Are you tracking ahead with the strong EBITDA growth that you're driving?

Yeah. We're still on the same target for year-end in the low 3%. Because we have so much demand, because we're getting 60.5% mature side ROIC, our deployment of capital, you know, is obviously very favorable from a capital deployment perspective. From a leverage perspective, we're still targeting low 3% at year-end, mid to low 2%, trending the mid to low 2% in the medium to long term.

Great. Thanks. Congratulations.

Your next question comes from the line of Kyle Menges with Citigroup. Kyle, your line is open. Please go ahead.

Great. Thanks for taking my questions. I was hoping if you guys could just talk a little bit more about your power gen offerings for data centers and just anything you're maybe exploring to add in that area. Curious if there could be an opportunity to leverage the OWN Program with power gen for data centers.

Yeah, I think it's a great question. As Mark had mentioned earlier, our specialty division is the fastest-growing in our industry. As we've talked about, it's paired with our core, and the rest of the company is also growing at a very healthy amount in the industry. As we all see within the U.S. and really globally from a data center perspective, and I talked about it a little bit in the prepared remarks, you have 40-50 sq ft, which 10 years ago you used maybe 8 kW-12 kW of power. When you have today, and some are saying it's even up to a megawatt, but let's call it 500 kW-600 kW.

If you have Blackwell and some of the Vera Rubin, but some of the best chips are consuming in the same amount of square footage, sometimes 40x-50x more power and then associated cooling. If you think of the power demand, you think of the cooling demand. If you think of what, from if we're just focused on specifically data center, and there's a lot more with electric vehicles and trucks and everything else from a power consumption. Data centers, you need four things. You need a building, you need cooling, you need power, and you need the actual chipsets. Three of those things, we are very focused, and I would argue we say the best in the world at supporting when you have massive acceleration. We think it's a huge part of it.

Again, we're growing, we're a very disciplined company, but the fastest-growing in the specialty industry. Where does power come from? That's where you're seeing a lot of those microgrids. You're seeing natural gas in the U.S. specifically as a really good support. You're seeing turbines, you're seeing recips, you're seeing mobile modular because you have to spin up additional power and sometimes 40x-50x more power. You don't wanna strain the grid. It's something we squarely play in, and it's something that we, I would arguably say, are the best in the industry from a mobile modular.

That's helpful. I am curious your thoughts as well as you see maybe some other equipment rental companies signing partnerships with construction management software companies just, you know, as maybe more of your competitors do that in equipment rental. I'm curious just how T3 can still gain share in that environment and how T3 can differentiate.

Yeah. I don't think the future is really trying to cobble together a bunch of different fragmented legacy systems. I mean, it just pains me trying to think about the, you know, suffering through those types of integrations. AI has completely changed the landscape on time to value and in the software world. Like I described before, though, you know, software is no longer a moat. The moat, it can be present within users and, you know, depth of integrations, but that's quickly dissipating. The moat really becomes the integration to hardware in a physical world, and we have an extremely, you know, robust moat there. It translates then to what to build.

Like, you have to have a view on the industry, you have to have a vision because now the barrier to generating code is, you know, has gone from very high to it's almost gone. Yeah, I mean, I applaud any effort to create value for a customer. I just don't think those tools are legacy systems that get, you know, thrown together with some, you know, ancient APIs. Anyway.

All right. Thank you.

We have reached the end of the Q&A session. This concludes today's call. Thank you for attending EquipmentShare Q1 2026 earnings call. You may now disconnect