United Rentals recorded total revenue of $2.279 billion in the fourth quarter of 2020, compared to $2.456 billion in the fourth quarter of 2019, a decline of 7.2 percent. Rental revenue was $1.854 billion for the quarter compared to $2.062 billion in the fourth quarter of 2019, a 10.1-percent plunge. Obviously, the decline in revenues was caused primarily by the COVID-19 pandemic.
For the full year 2020, total revenue was $8.530 billion compared to $9.351 billion in 2019, a drop of 8.8 percent. Rental revenue declined from $7.964 billion in 2019 to $7.140 billion in 2020, a 10.3-percent slide.
Used equipment sales in the quarter generated $275 million of proceeds at a GAAP gross margin of 37.1 percent and an adjusted gross margin of 42.5 percent; compared with $244 million at a GAAP gross margin of 36.5 percent and an adjusted gross margin of 43.4 percent for the fourth quarter in 2019. Used equipment proceeds in the quarter were about 49.5 percent of OEC compared to 51.6 percent in Q419.
Net income for the quarter decreased 12.1 percent year-over-year to $297 million, while net income margin decreased 80 basis points to 13.0 percent. Rental gross margin decreased 120 basis points year-over-year, with 40 basis points of the margin decline because of depreciation expense, which decreased 8 percent year-over-year, but increased as a percentage of revenue. The decrease in rental gross margin excluding depreciation was primarily due to increased insurance costs, which included the impact of hurricane activity in the fourth quarter of 2020. Selling, general and administrative expense and non-rental depreciation and amortization decreased slightly year-over-year but increased as a percentage of revenue. The fourth quarter of 2020 also included increased charges associated with the restructuring program that began in 2020. The net income margin impact of these items was partially offset by lower interest expense, reflecting decreases in both average debt and the average cost of debt.
Adjusted EBITDA for the quarter decreased 10.1 percent year-over-year to $1.037 billion, while adjusted EBITDA margin decreased 150 basis points to 45.5 percent.
“I want to thank our employees for safely supporting our customers in 2020 and delivering an exceptional performance despite unprecedented challenges,” said CEO Matthew Flannery. “Results for the fourth quarter exceeded our expectations, driven by stronger rental volume and robust used equipment sales. We are encouraged by the momentum this gives us going into 2021.
“Our guidance reflects an improvement in customer sentiment as the economy continues to heal, and our own confidence in our ability to execute. After lapping a challenging comp in the first quarter, we expect to pivot back to growth through the remainder of the year, which, together with continued cost discipline, will deliver strong profitability. We anticipate another robust year of free cash flow generation, after significantly increasing our capex to support growing demand.”
United Rentals guidance is for total revenue in the range of $8.625 billion to $9.025 billion in 2021. It projects adjusted EBITDA of $3.925 billion to $4.125 billion. And the company expects net rental capital expenditures in the range of $1.15 billion to $1.45 billion.
In the general rentals segment, equipment rental revenue declined 11.1 percent in the fourth quarter from $1.610 billion in Q419 to $1.432 billion in the just concluded quarter. For the full year, segment rental revenue dropped 11.8 percent, from $6.202 billion in 2019 to $5.472 billion in 2020.
Decline was less in the trench, power and fluid solutions segment, dropping 6.6 percent in the fourth quarter from $452 million in 2019 to $422 million in Q429. For the full year, the decline was 5.3 percent, from $1.762 billion in 2019 to $1.668 in 2020.
Headquartered in Stamford, Conn., United Rentals is No. 1 on the RER 100.
