United Rentals posted total revenue of $3.285 billion in the first quarter of 2023 compared to $2.524 billion in the first quarter of 2022, a 30.1-percent increase. United Rentals’ revenue was impacted by the addition of revenue from its acquisition of Ahern Rentals in December.
Rental revenue was $2.740 billion compared to $2.175 billion in the first quarter of 2022, a 26-percent hike. The increase reflects broad-based strength of demand across the end markets served by the company, as well as the impact of the Ahern Rentals acquisition. Year over year, fleet productivity increased 2 percent, while average original equipment at cost jumped 25.6 percent. On a pro forma basis, including the pre-acquisition results of Ahern Rentals, first quarter rental revenue increased 16.6 percent year over year, supposed by a 12.2 percent increase in average OEC and a 5.9 percent increase in fleet productivity.
“We're pleased with the start to 2023, as evidenced by the strength of our first quarter results across growth, profitability, and returns,” said Flannery. “As we enter our busy season, we are encouraged by the momentum we see throughout our business and our customers’ continued optimism. Our team remains focused on leveraging all of our competitive advantages to add value to both our customers and our investors.
“Our first quarter results position us to reaffirm our full-year guidance, supported by our visibility into our customers’ pipelines. The integrations of our recent acquisitions are on track, adding valuable capacity that will help us support our customers as they execute on a wide range of multi-year opportunities across infrastructure, industrial manufacturing, energy and power. We remain confident in our ability to leverage the growth we see ahead while ensuring we have the flexibility to adapt to all operating environments.”
Used equipment sales in the first quarter increased 83.9 percent year over year, primarily reflecting the normalization of volumes after the company intentionally held back on used equipment sales in 2022 to ensure that it had sufficient rental capacity for its customers. The increase also was impacted by the Ahern Rentals acquisition. Used equipment sales generated $388 million in proceeds at a GAAP gross margin of 49 percent, compared to $211 million at a GAAP gross margin of 55 percent in the year-ago period, the gross margin drop reflecting the impact of lower margin sales of equipment acquired in the Ahern Rentals transaction. Used equipment pricing remained strong in Q123.
Strong quarters for general and specialty rentals
Rental revenue increased 26.7 percent for the company’s general rentals segment, including the impact of the Ahern Rentals acquisition, to a first quarter record of $2.018 billion. On a pro forma basis, including the pre-acquisition results of Ahern Rentals, first quarter rental revenue for general rentals jumped 14.3 percent year over year. Rental gross margin dropped 320 basis points to 32.9 percent, primarily because of the impact of the Ahern acquisition.
Specialty rentals rental revenue jumped 24.1 percent year over year to a first quarter record of $722 million, with rental gross margin increasing 260 basis points to 47.1 percent, with better cost performance and fixed cost absorption on higher revenue.