United Rentals set several revenue records in the fourth quarter of and full year 2023, and created a strong buzz on Wall Street by topping the market’s expectations.
To start with the fourth quarter produced $3.728 billion of total revenue, compared to $3.296 billion in the fourth quarter of 2022, a 14.7-percent increase. United posted $3.119 billion in equipment rental revenue in the fourth, compared to $2.747 billion in the fourth quarter of 2022, a 13.5-percent jump. Sales of used rental equipment totaled $438 million compared to $409 million in the year-ago quarter, a 7.1-percent increase. Sales of new equipment jumped 33.3 percent from $39 million to $52 million. Revenue from contractor supplies sales stepped up 12.5 percent from $32 million to $36 million, and service and other revenues hiked 20.2 percent from $69 million to $83 million.
For the full year United Rentals set an industry record going from $11.642 billion in total revenue in 2022 to $14.332 billion for the full year of 2023. Equipment rentals totaled $12.064 billion compared to $10.116 billion in 2022, a 19.3-percent uptick. Sales of used rental equipment was brisk for 2023 at $1.574 billion compared to $965 million in 2022, a 63.1-percent incline, with sales of new equipment also growing at a strong clip from $154 million to $218, a 41.6-percent hike. Clearly the market was strong for companies seeking to own equipment, whether new or used.
The contractor supply market also jumped from $126 million to $146 million, a 15.9-percent step. Service and other revenues totaled $330 million compared to $281 million in 2022, a 17.4-percent increase.
“We entered 2023 with the goal of raising the bar and I’m incredibly pleased with the team’s performance,” said Matthew Flannery, United Rentals CEO. “Our fourth quarter results capped a year of new records across revenue, profits, and returns driven by a relentless commitment to serving our customers, while staying laser focused on safety and operational excellence. We are now excited to deliver on the growth we expect in 2024, supported by our strength on large projects.
“Our guidance reflects the opportunities we see across our business as we leverage our competitive advantages to support our customers and outpace the market. We continue to execute on our long-held strategy to deliver profitable growth, strong free cash flow and exceptional returns. Our new leverage targets and 2024 capital allocation plans are further evidence of our commitment to driving shareholder value.”
Great expectations
United has strong expectations for 2024. It expects total revenue to be somewhere between $14.650 billion and $15.150 billion, with adjusted EBITDA somewhere between $6.900 billion and $7.150 billion. It expected net rental capital expenditures to fall between $1.9 billion and $2.2 billion.
Adjusted EBITDA for the quarter increased 9.8 percent year over year to a fourth quarter record of $1.809 billion, while adjusted EBITDA margin decreased 150 basis points to 48.5 percent. On a pro forma basis, fourth quarter adjusted EBITDA margin decreased 90 basis points year over year, including the impact of used equipment sales and ongoing integration costs. The decrease in the company’s reported adjusted EBITDA margin primarily reflected the impact of Ahern Rentals on gross margin from rental revenue, excluding depreciation and stock compensation expense.
In the general rentals segment, rental revenue increased 13.1 percent year over year, including the impact of the Ahern Rentals acquisition, to a fourth quarter record of $2.289 billion. On a pro forma basis, fourth quarter rental revenue for general rentals increased 5.2 percent year over year. Rental gross margin decreased by 250 basis points year over year because of the impact of higher depreciation expense related to the Ahern Rentals acquisition.
The specialty rentals segment once again outpaced the general rentals segment. Specialty rental revenue increased 14.6 percent year over year to a fourth quarter record of $830 million. Rental gross margin decreased by 210 basis points year over year to 47.2 percent, primarily because of a higher proportion of revenue from certain lower margin ancillary revenues, and increases in certain operational expenses in 2023. For the full year, rental gross margin in the specialty segment increased by 50 basis points year over year to 48.9 percent.
Based in Stamford, Conn., United Rentals remains No. 1 on the RER 100, the largest equipment rental company in the world.
