United Rentals’ revenue set a record in the fourth quarter of 2023 as equipment rental demand persisted and the acquisition of Ahern Rentals bolstered operations.
BY THE NUMBERS: United Rentals finished 2023 with increased equipment rental and sales revenue, which resulted in full-year growth for both segments. According to its earnings release:
- Q4 rental revenue was $3.1 billion, up 13.5% year over year;
- Full-year rental revenue reached $12.1 billion, up 19.3% YoY;
- Q4 rental equipment sales increased to $438 million, up 7.1% YoY;
- Full-year rental equipment sales were $1.6 billion, up 63.1% YoY;
- Q4 new equipment sales totaled $52 million, up 33.3% YoY;
- Full-year new equipment sales grew to $218 million, up 41.6% YoY; and
- Q4 pro forma fleet productivity, which measures the impact of changes in rental rates, time utilization and mix on owned equipment rental revenue, increased 2.4% YoY.
Rental revenue to outpace sales
United Rentals projects total revenue of between $14.7 billion and $15.2 billion in 2024, according to the earnings presentation.
The company’s 2024 outlook indicates a decline in equipment sales and growth in equipment rental, William Grace, executive vice president and chief financial officer, said during today’s earnings call.
“Within total revenue, I’ll note that our used sales guidance is implied at roughly $1.5 billion, down mid-single-digits year-on-year on a percentage basis, which implies slightly better growth within our core rental revenue,” he said.
STATE OF PLAY: Strong demand was seen across several sectors as infrastructure projects continued to bolster United Rentals’ growth in the fourth quarter, President and Chief Executive Matthew Flannery said during the call.
“We continue to see broad-based demand across geographies, verticals and customer segments,” he said. “Within our construction markets, both infrastructure and [non-residential] continued to show solid growth year over year as our customers kicked off new projects across a diverse range of markets. These include battery plants, semiconductor-related jobs, power, infrastructure, as well as data centers.”
NOTEWORTHY: United Rentals acquired Ahern Rentals in December 2022, which was United Rentals’ second-largest acquisition, Flannery said.
The integration of people and systems was completed by yearend 2023, he said. “We’re pleased to say that all that work has been done. We’ll continue to get efficiencies out of that business as some of those legacy Ahern facilities continue to adopt our processes and our technology.”
MARKET REACTION: Shares of United Rentals (NYSE: URI) were up 12.96% or $74.74 from market open to $651.64 as of market close today. United Rentals has a market capitalization of $39.1 billion.
THE BOTTOM LINE: United Rentals expects revenue growth and fleet productivity to be positive in 2024, Flannery said.
“There’ll be a positive rate environment and we think the industry is showing good discipline,” he said. “There’s still demand in the markets that we serve. … We feel good about positive fleet productivity throughout 2024.”
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