EquipmentShare.com (EQPT) Q2 2026 earnings call transcript

I will now hand the conference over to Rhett Butler, VP of Investor Relations. Please go ahead. Good morning and welcome to equipment shares second quarter, 2026 Financial Results Conference Call. Joining me today are Jabick Schlax, Founder and Chief Executive Officer, Willie Schlax, Founder and President, Mark Wapata, Chief Data Officer and Executive Vice President of Finance, and Dave Marquart, 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. Equipment share has no obligation to update or revise forward-looking statements made on this call. We will also reference certain non-GAP financial measures. Reconciliations to the most directly comparable GAP measures are included in our earnings press release.

With that, I'll turn the call over to Jabick.

Thank you Rhett and good morning everyone. Equipment share 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, adjustable even to grew to 531 million. This is the metric we use to compare performance with the rest of the rental industry that own and finance equipment entirely on balance sheet. We also expand 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 expanded to new markets, approximately 75% of first-year rental segment revenue comes from customers already doing business with equipment share. 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 four billion dollar core unit of business. Our capital allocation decisions also reflect the strength of the share repurchase program through December 31, 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 guide and supplies 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-of-a-year as large scale mega projects began ramping across our network. So 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. A 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 the rest 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 equipment share continues to differentiate itself.

Against that backdrop, we believe that equipment share 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 our 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 30th, 2026. These customers increasingly want larger strategic partners that can consistently support projects across multiple markets through one integrated platform.

Second, we're expanding our geographic network in response to identifiable customer demand. We've 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 equipment share elsewhere in our network. That customer poll 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, producing 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 confident 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 United States, where equipment share 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 equipment share operations yard, complete with the 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 equipment share continues to win, allowing us to support more of our customer's equipment, need 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've enhanced our board with the appointment of Damien and Harley as independent directors. Damien 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 equipment share, having previously served on our board during an important period of the company's growth. Historically, equipment share 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 owned 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 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 transaction as we enter 2027.

I'll now turn it over to Willie to discuss T3.

Thanks, Javik. Turning to T3, we continue to see meaningful progress across all three ways of platform creates value for equipment share, 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've rolled out new capabilities across dispatch, hauling fuel and logistics. We use these tools every day and they're improving route planning, increasing recovery rates, and helping offset some of the fuel and logistics pressures that we're seeing across the broader market. More broadly, T3 and the AI tools we're 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 it 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. And the last thing I'd highlight on T3 is that we're 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 customers 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 equipment share rental. And with that, I will turn 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 back 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 access demand across the platform. Turning to slide six 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 in 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 the 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, equipment share has no obligation to repurchase the equipment. There is no put right to equipment share and no guaranteed residual value.

These are long-duration agreements. If an owned 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 party's 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 equipment share. At the end of certain agreements, equipment share may also serve as the remarketing agent. Our scale equipment expertise and relationships with OEMs and Envires can help maximize the disposition value of those assets. That can benefit the equipment owner while also helping protect the brand value of equipment share 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 equipment share to repurchase the equipment.

Now, turning to the cost of funding for own on slide seven. 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 lease back 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 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%. Equipment share 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 eight 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 eight 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 meant to just 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 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 Dave.

Thank you, Mark. The operating trends we've 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 and increase of 26% year over year. Rental segment revenue was 908 million and 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 produce 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 onto 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 and an 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, Fitsha's signed equipment chair, its first issuer credit rating of double B minus 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. That rental capital expenditures during the quarter were 321 million after gross purchases of 689 million.

With that, I'll turn the call back over to Javic.

Thanks, Dave. Wrapping up today's call, our second quarter results reinforce the strength of the equipment chair model. As customer products 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 our equipment chair. Operator, we're now ready to take your questions.

Hi, Javik. You mentioned a couple interesting things on the demand environment in your comments. I think you characterized it as one of the strongest 15 decades and also with improving rate. My question is 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 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. Where is rate trending? Is it stronger on mega projects than just in general? Could you talk to that topic? Thank you. Absolutely.

Thank you, Rob. I think if you look at the 91% mix of the regional and national customers, that exposure of equipment share is to larger projects, these complex projects. So when you see the rate pressure that we are seeing going up, that is really 91% to to the complex projects and large projects to talk 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 ride with the rise of the tide.

So we see that, but our real visibility is within that 91%. And then where are your customers at and the mega projects in kind of seeing the value of this? So rental maybe 10, 20 years ago was you order up a piece of equipment and get it. And now you're providing a more holistic service with breath of fleet, but also just the analytics, the manageability.

Yeah, I think I have a bigger customers. The project are more complex today than they've ever been. I know you repeated that a bunch of times, but it's definitely bears notice when you're managing projects that are 10 billion, 20 billion in nature. And if you talked to any of the customers that we deal with, if you had five, seven years ago, a two, three billion to our project, that was a really significant project for a huge amount of customers, the largest in the world. Now you hear every day, five, 10, 20, 30 billion. And we're on a huge portion of the project. And many times we are the sole source provider that first source they go for with equipment.

And 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 see just seem just like, okay, well, it should be correct. When you think of construction, and when you have your managing three, four thousand machines, six to 10,000 people, getting that right every single day, getting that accuracy is incredibly important. And that is driven by having a platform, having an operating system stuff that we talk over and over that, you've heard us talk about it, you've, 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. We see that with ours with that six and a half percent as well. Thank you.

Thank you. Yeah, thanks for part of that. We do see significant opportunity on the outside of that guy. As a company, we want to always be conservative. And we do think, as we discussed, that it's really de-risked the guy. And Mark, I'll pass the view to you guys a little more color on that.

Yeah, thanks. Yeah, thanks, Jamie. Like David said, we view the guy that's conservative. And we mentioned in the call that we had a lot of fleet absorption in Q2, you know, over $750 million of new equipment that had never been rented before, rented in Q2. That flows through, obviously, into the back half. And then we, we saw a lot of volume in Q2 and at the pricing upward pressure, we see even more upward pricing pressure from rental in the back half and beyond. And then all the guide map, as Jeff has mentioned, the rental segment implied back half is about 28%, with the rental segment, even a margin, even actually growing about 29%. And so 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 upward pricing pressure in the second half. So all of those are really where you would see if there's opportunity to outperform those are the main areas where we see it.

Thank you.

Yeah, thanks, Meg. I think thanks for the question. As you mentioned, first half of those, which we saw that $720 million in the first proceeds, equivalent cost of capital is approximately 7%. If you do the math, as we showed on the slide, that's a mix of institutes building the Office of High Network Channels. And then as we mentioned in the prepared remarks, some of the older vintages that were more focused and even before 24, entirely focused on the high net worth of family office channels carried higher equivalent cost of capital. So as those roll off, we expect those to improve. When we think about the competitive and oversubscribed nature of the OAM program today, when we're selecting deals, we see relatively equivalent cost of capital between the first channels that we have.

And so we are cost of capital optimizers. And so we decide to mix between an institutional, family officer, high net worth channel. They're going to have relatively similar cost of capital around that 7%, which is why you've seen that continue to compress in our favor, as we've got the higher institutional mix and as the other channels have also occurred.

Yeah, I think there's a helpful governance doc, which is consistent with how we and any other company that public does governance on a website. I'd absolutely point you 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 the name and they can get a little more color on that as well. Yeah, so our policy is that all related party transactions go to 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. So again, as Janet 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.

Yeah, thank you, Jerry, for the question. I'll talk to the first part in the past of the remarks with them. So 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. And the cohort specifically for us are the 1 through 12, and then the 13 through 24, and then a mature source. So on all cohorts, we're seeing significant increase in demand and upward pricing pressure. So that's a huge thing across. And then we talk to that quite a bit in the prepared remarks.

I'll give you the mark for additional color on the other questions. And then on the revenue side for the quarter, it was driven by both volume and the pricing pressure upward, mostly volume in the second quarter. As we saw the higher fleet absorption, there's just so much going on, right? That's what's going to drive a lot of dyes there. A little bit of pricing pressure upward. We think that the upper pricing pressure, if it's transcended, we would see more in the back half of the year and in the later periods.

But the mix is a lot of volume, but more room to go on pricing on the pricing side.

Can you just talk about how much of that is diesel passed through versus site makes? And should we be thinking about a sequential improvement in percent margins, like we typically do seasonally for you folks?

A great question. So, yeah, as Dave mentioned in the prepare remarks, we did the approximately 50 basis points headwind on the on the fuel side. We also passed through pass through a lot of those increases on the pricing side, plus there's a mix of employee services and other services that we're providing on these mega sites that produce strong gross margin dollars and ROIC, but the margin that, as you mentioned, from an SG&A leverage perspective and our ability to operate this business efficiently, we've seen total margin expansion over time. And then, as you mentioned the path to that the sequential into Q3 are typically strong, and we wouldn't expect anything different from a course larger perspective.

Thank you.

So, I really think it's both. So, we have long-term contracts and those contracts are driven by the need of our customers. And when there's less supply and more demand, pricing within some of those class of equipment absolutely have upper pressure.

And then just to follow on to that a little bit, Jeff, it's mentioned how the back half of the year is to you rest. If you think about the long-term nature of these projects, as we're winning these projects, we have good visibility on kind of 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 transit industry.

Clearly, number one priority is organic growth. But I'm curious, under what conditions would you maybe get more aggressive with the buyback and potentially increase authorizations going forward?

Yeah, as we talked about the prior remarks, we want to be opportunistic if there is a severe dislocation on something none of us control, which is stock price. So we want to be absolutely opportunistic. Government 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. And again, that threw 2028 to that $500 million.

So Dave can talk a little bit more about some of the details. Yeah, I would just add that our attention is to operate the buyback authorization in an opportunistic way. But with in mind of our net leverage and liquidity goals, that will continue to maintain as we go forward.

Yeah, thank you. Great question. I think this is pretty clear. We're seeing it universally and we're at our growth company. We're growing almost 40% year over year. So that's in every segment. Areas that we started earlier, we're earlier in that growth curve. You're going to see from percentage basis, a much faster growth areas that were more mature, which would be more than Midwest in the Texas area is still incredible growth. But just on a pure dollar percentage, that's going to be a little bit of a growth curve.

But just curious if you have any colors on what you're hearing from the OEMs and, you know, your ability to kind of ramp fleet even further if you wanted to.

Yeah, we're comping our guys on our CapEx and really that confidence is driven by years of working with our customers and working with our supply partners and those supply partners. We're planning years in advance. We talked about really the significant growth curve that we were saying. This is three years ago. And when we do that, we have incredible visibility become the tech stack and the visibility on the job site. So yeah, we're confident in our guide.

With that said, this is more reminiscent of 21 and 22. We've all kind of lived through that. Less though, 23, 24, 25. There is a severe demand, which again, we talked 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.

It's a great question, Mark. Thanks for the question, Ken. To remind you how the process works, this is the third party appraised value of the fleet. And what we're seeing in the actual kind of appraisal numbers is lagging the total market dynamics that we're seeing as well. So there's just normal depreciation in there first, which was a little bit higher than regular, but it wasn't really out of control. And then 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. But yeah, there's just normal depreciation built in there, plus a little bit of ads, obviously, in the new old program.

And there's a lagging, we see right now that the equipment these fleet valuations are lagging indicators compared to what we're seeing in the market. So from a full year perspective, we expect there to be some offsetting trends in terms of their faithfuls picking up at the market dynamics over time.

Yeah, I think it's consistent with a cohort. We're seeing significant demand across our core fleets, our advanced solution, which is all our specialty, our site solutions. So we're seeing very, very good growth across all those segments. We have one of the fastest growing, especially business in the world, but that is paired up very closely with one of the fastest growing core business in the world in a rental space. So we do that and see that being somewhat consistent because the demand is very consistent as far as a high demand environment. And 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.

Thanks. And a great question. What we're doing now, and this was not true a decade ago, but these customers that have been with us for years and years and years are awarding me at the outset. So it's not that we're taking it from somebody else. And just to put in context, there's really only four companies in the world that can deploy in the United States markets, 3,000 to 4,000 machines in a six-day week period. That's it. So in that 91% or the vast majority of what we're doing, it's a very limited cohort of actual companies that could provide it. So we're winning an outside share of these projects on national and regional. And it's because of everything we talk about.

I know we haven't talked about as much in this call, but it's going to the core of what these customers need. It's that transparency, that technology, it's the basic, like getting billing right, doing the right thing, giving visibility on who's using machine, what they're doing. And that translates, you've heard us talk about a lot too, that's winning more jobs. It's not just like taking somebody else. It's 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 center, we talk about power, but this is health care. This are sports stadiums. They need the same transparency. And we're winning on those projects as well.

And again, that's 91%. Is that regional and national cohort?

To maybe think about a new level there being achieved, thanks. Yeah, Mark, do you want to say anything? Yeah, thanks for the question. Yeah. So, like you mentioned, trailing 12 months of 6.30, 55%, mature site, rental segment, UBITDA margins, which we're happy to see. We think that there is obviously a strong environment. Some of the things we mentioned today give us an opportunity to outperform against that. And 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 the sort of ancillary and other services, mixes that might have a little bit of a margin mix based on the nature of the services, the high ROIC.

That gives us the ability to continue to manage in an over 50% zone. So, doing so would be on a higher revenue, higher revenue, higher bottom line contribution in a higher ROIC basis. And so, that's kind of how we think about being a full service provider, especially with a site solution and advanced solution business that we have as well. But on the basis of you're talking up in the 55, we see that a sustainable opportunity to outperform, and we think that'll be stable over the next couple of years.

Yeah, thanks, questions 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 smart 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. And 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 can 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 divergent.

The other verticals that you see as we add on throughout that wheel, those are going to start within the middle market.

Yeah, the vast majority that we talk about, we are the primary. We're 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, we discuss primary. You're usually ranging from 85 to 95% of every single machine in that project.

And on the vast majority, very close to all the vast majority of projects, we are the primary.

Thank you. You're right about that. So, in Q2 and Q4, it's a little tip of the concentrate of sale. We had a lot of strong demands for institutional stimulus behind our work channels.

Q3, we would expect, especially given prior years and mature as well, left contribution margin of Q3, and then a step up in Q4, because we like to concentrate those sales in Q2, Q2, and Q4 to create kind of the competition that drives down the price and gives us good allocation. And then on the actual on-program pacing, we are slightly ahead of the total on-program contribution. For the year, we've raised a guy by about $1,000 since the beginning of the year. So, we call ourselves slightly ahead, but it's kind of right on schedule from the Q2 to the Q4 perspective.

Hey, Mark, you want to go? Yeah, thanks Aaron for the question. So, on a broader perspective, we have all the levers that traditional rental companies have. We, plus a few that are specific to us. So, because we're an organic grower, we delay our stuff. We stop our side opening in the 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 cash for positive, which are all positive. And also, we can still sell our on-down cheap 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 that we stop our growth.

On the own program dynamic 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, and then for the actual participants themselves, they are the at risk capital owners of the equipment. They have 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, those possibilities remote needed. If they did, it would be an economic advantage or equipment shares were all a lot in that perspective. But we see the own program as giving us additional protections in the downside, while also giving, we also have the traditional traditional laborers to produce free cash flow to downturn at the other rental companies would have as well.

So 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 perspective. You've got stadiums, health care, I think we talk about power infrastructure. Even without data centers, there's a huge, huge demand for a company like equipment share in our sector.

With that said, the common on data centers, I think it's really important to understand the permitting process around this. Many of these are for five-year permitting process and have already been in place. And you're not pulling a permit that has already been issued. It's already been approved. So the projects that were being awarded, these sole source projects that we're seeing all over the country, those are not going away anytime soon. And as we know, regulatory environments change, we have visibility years and years and years in the future because that permit is already done.

I will now turn the call back to Javick Schlax for closing remarks. Yeah, thank you, everyone. Really appreciate spending time with us today. I'm looking forward to talking again next quarter. Have a great day.