0001709682-25-000039
SEC filingRevenue grew 7.8% in Q3 2025 driven by rental and equipment sales, but net loss narrowed to $5.8M.
For the three months ended September 30, 2025, total revenue increased 7.8% to $482.1 million from $447.2 million in the same period of 2024. The growth was driven by a 17.4% increase in rental revenue to $127.1 million and a 4.9% increase in equipment sales to $320.6 million. Gross profit rose 9.7% to $100.8 million, with gross margin improving to 20.9% from 20.5%, aided by a higher mix of rental revenue. Operating income surged 41.6% to $32.6 million, reflecting operating leverage. Net loss narrowed to $5.8 million from $17.4 million, primarily due to higher operating income. The effective tax rate was 14.7% for the quarter, driven by state tax rules.
The Equipment Rental Solutions (ERS) segment posted revenue of $169.1 million, up 12.1% year-over-year, driven by a 17.7% increase in rental revenue to $123.9 million. Fleet utilization improved to 79.3% from 73.2%, and average OEC on rent rose 16.6% to $1.26 billion. Gross profit for ERS increased 18.2% to $50.3 million. The Truck and Equipment Sales (TES) segment saw equipment sales rise 6.0% to $275.4 million, but gross profit was flat at $41.4 million due to pricing pressures and mix. The Aftermarket Parts and Services (APS) segment grew total revenue 3.0% to $37.5 million, with gross profit up 22.9% to $9.1 million, driven by higher-margin rental revenue.
Management highlighted strong demand for vocational vehicles and rental equipment, but noted a 29.3% decline in sales order backlog to $279.8 million as of September 30, 2025, which may signal future revenue headwinds. The company expects annual cash taxes to remain consistent with prior years. No formal guidance was provided for future periods.
As of September 30, 2025, the company held $13.1M in cash and equivalents, a significant increase from $3.8M at year-end 2024. Total debt stood at $1.67B, up from $1.55B, driven by net borrowings under the ABL facility and floor plan payables. Shareholders' equity decreased to $784.7M from $861.3M, primarily due to net losses and share repurchases. Inventory remained high at $1.04B, with whole goods inventory of $910.1M.
The notes disclose that all purchase agreements with manufacturers and suppliers are cancellable within a specified notification period; therefore, the company has no material non-cancellable purchase commitments as of September 30, 2025.
During the nine months ended September 30, 2025, the company repurchased 8.1M shares from an affiliate for $32.6M at a 23% discount. Total share repurchases were $32.6M, leaving $1.9M remaining under the program. Capital expenditures totaled $372.5M, representing 26.3% of sales, with $348.9M for rental equipment. Debt increased by $118.7M net, primarily through the ABL facility.
Segment data reveals the Equipment Rental Solutions (ERS) segment generated $169.1M in Q3 2025 revenue, up 12.1% YoY, with a gross margin of 29.7%. Truck and Equipment Sales (TES) contributed $275.4M, up 6.0%, and Aftermarket Parts and Services (APS) added $37.5M, up 3.0%. Geographically, the U.S. accounted for 98% of total revenue ($472.3M in Q3), while Canada contributed $9.7M.
The company generated $262.8M in operating cash flow for the nine months ended September 30, 2025, a significant improvement from $39.9M in the prior-year period. This was achieved despite a net loss of $51.9M, reflecting large non-cash charges including $195.0M of depreciation and amortization, $7.4M provision for losses on accounts receivable, and $6.3M share-based compensation. The primary driver of the increase was a reversal of working capital outflows: inventories consumed $213.5M in 2024 but contributed $15.8M in 2025, while floor plan payables – trade added $36.7M versus $175.6M a year ago. Accounts payable and accrued expenses also shifted from headwinds to tailwinds.
Capex intensity was high: purchases of rental equipment ($348.9M) and non-rental property and cloud computing arrangements ($23.6M) totaled $372.5M, exceeding operating cash flow by $109.7M. The company partially funded this gap by proceeds from sales of rental equipment ($138.7M) and net borrowings under revolving credit facilities ($125.6M). Share repurchases of $32.6M were funded through debt. The company did not pay dividends. Overall, cash flow quality is moderate; strong non-cash adjustments and working capital management masked underlying operating losses, while capex continues to absorb all internally generated cash.