United reports “major tailwind” in business
By Lindsey Anderson26 January 2023
United Rentals ended 2022 with its fourth consecutive record-breaking quarter as well as its full-year results that exceeded the $11 billion mark for 2022.
United saw total revenues in the final quarter of $3.3 billion, including rental revenues of $2.7 billion, up 18.8% year-over-year.
Full year results for the period ending December 31, 2022 were $11.6 billion, up 19.8% over 2021’s total revenues of $9.7 billion.
Prior to 2021, United’s previous record-setting year was 2019 when the company’s total sales amounted to $9.3 billion.
Matthew Flannery, CEO of United Rentals, told investors on Jan. 26, “The diversity of demand that we pointed to a year ago turned out to be a major tailwind in our operating environment, and that continues to be true.
“Demand in our key verticals was broad-based, with total construction up 19% year-over-year and non-res up 22%; and industrial, up 11%. We leaned into that opportunity across the board and grew rental revenue by solid double digits in all of our general rental regions as well as all of our specialty businesses.
“Contractor backlogs are growing, and not surprisingly, the employment reports indicate that U.S. contractors continue to be in expansion mode. Industry indicators like Dodge Momentum Index show healthy growth trends in commercial construction, and this includes the planning trends for future projects. There’s also a strong institutional component to the trends which we see in our business. And a number of our multi-year projects are in sectors like healthcare and education.”
Speaking to the robust Q4 and year results, Flannery said, “Our fourth quarter results capped an outstanding year, during which we set records for revenue, profitability, margins and returns. These achievements are a testament to our team’s commitment to our customers. With the Ahern integration on track, and a world-class combination of people, process and technology, we’re positioned to raise the bar again in 2023.”
Flannery also noted the Ahern integration is “going very well.” The deal closed on Dec. 7 and by Dec. 16, United’s “new team members were already operating with the rest of the company on the same technology system. And this means our branches are sharing fleet and customer information seamlessly,” he added.
United is forecasting total revenues for 2023 of $13.7 billion to $14.2 billion, or increases of 18.1% to 22.4% when compared to 2022.
“Our guidance reflects our expectations for another year of strong growth, and our ability to convert this growth into compelling returns,” Flannery said.
Breaking down the fourth quarter, rental revenues were $2.747 billion, reflecting an increase of 18.8% year-over-year. United attributed the increase to “the broad-based strength of demand across the end-markets served by the company.”
Year-over-year, fleet productivity increased 5.9% while average original equipment at cost increased 14.2%. The increases in rental revenue, fleet productivity and average OEC include the impact of the December 2022 Ahern Rentals acquisition, the company said.
Used equipment sales in the quarter increased 26.2% year-over-year, generating $409 million of proceeds at a GAAP gross margin of 58.9% and an adjusted gross margin8 of 61.6%; this compares with $324 million at a GAAP gross margin of 49.4% and an adjusted gross margin of 52.2% for the same period last year.
United’s general rentals segment had an increase of 19.1% year-over-year in rental revenue to a fourth quarter record of $2.023 billion.
Specialty rentals saw rental revenue increase 18.1% year-over-year to a fourth quarter record of $724 million.
For 2022’s full year, United reported a total of 1,402 locations around the world, an increase of 4% from 2021. In the U.S. alone, United has 1,198 branches. United’s fleet size increased roughly 14% year-over-year, as well, from 2021’s 780,000 units to 2022’s 890,000.