United Rentals posted equipment rental revenue of $2.277 billion in the third quarter of 2021 compared to $1.861 billion in the third quarter of 2020, a 22.4-percent year-over-year increase. Total revenue was $2.596 billion in third quarter of 2021 compared to $2.187 billion in the year-ago quarter, an 18.7-percent hike.
The rental revenue increase reflects the pronounced impact of COVID-19 in the third quarter of 2020, in addition to the continuing recovery of activity across the end-markets served by the company. Fleet productivity increased 13.5 percent year-over-year, in large part because of better fleet absorption.
Sale of used equipment was $183 million during the quarter compared to $199 million in the same quarter a year ago, an 8-percent decrease, suggesting that United Rentals was holding on to machines longer in the wake of longer lead times. Gross margins were 45.9 percent compared to 38.2 percent a year ago, because of stronger pricing, which rose sequentially for the fourth consecutive quarter. Used equipment proceeds in the quarter were 60 percent of original equipment cost, compared to 51 percent of OEC in the third quarter of 2020.
“We were very pleased with our third quarter performance, with rental results coming in ahead of expectations as our team serviced our customers in a safe and efficient manner through the busiest part of our year,” said United Rentals CEO Matthew Flannery. “Importantly, the momentum we’ve experienced from the broad-based recovery of our end-markets supports our raising full year guidance for both total revenue and adjusted EBITDA. Our update also includes an increase to rental capex, reflecting incremental fleet we plan to purchase in the fourth quarter as we look to support growth next year.
“While early in our planning process, virtually all key indicators point to a sustained recovery. At this same time, the industry has remained disciplined and our strategic partnerships with key suppliers will benefit the company as we invest in fleet to support our customers. Combined, this should position us to deliver strong growth, improved margins and attractive returns in 2022.”
Net income for the quarter increased 96.6 percent year over year to $409 million, while net income margin increased 630 basis points to 15.8 percent, primarily reflecting improved gross margins from rental revenue and used equipment sales, decreased non-rental depreciation and amortization as a percentage of revenue, and a $146 million, or 53 percent reduction in net interest expense, including the impact of debt redemption losses.
United’s general rentals segment had a 17.6-percent year-over-year increase in rental revenue to $1.636 billion for the quarter. Rental gross margin increased by 70 basis points to 39.7 percent, primarily because of a reduction in depreciation expense as a percentage of revenue.
However, the specialty rentals segment’s rental revenue increased 36.4 percent year over year, including the impact of the recent acquisition of General Finance Corp., to $641 million for the quarter. On a pro forma basis, including the pre-acquisition revenues of General Finance, specialty rental revenue increased 23 percent. Rental gross margin increased by 170 basis points to 51.5 percent.
For the first nine months of 2021, United Rentals reported rental revenue of $5.895 billion compared to $5.286 billion for the first nine months of 2020, an 11.5-percent increase. Total revenue for the first nine months was $6.940 billion compared to the first nine months a year ago with $6.251 billion in revenue, an 11-percent hike.
United Rentals is based in Stamford, Conn., and is No. 1 on the RER 100. The company has an integrated network of 1,278 rental locations in North America, 11 in Europe, 28 in Australia and 18 in New Zealand. In North America, the company operates in 49 states and every Canadian province.