United Rentals Profit Rises on Ahern Deal, Demand Tailwind

United Rentals Inc. reported net income of $591 million in the second quarter of 2023, an increase of 19.9% from $493 million in the year-ago period, the company said.

Already among the largest equipment rental companies in the U.S., United said Q2 results were bolstered to record levels by the acquisition of Ahern Rentals Inc., a deal that closed in December 2022. United saw adjusted Q2 earnings per share of $9.88, compared with $7.86 per share in the year-ago period. The EPS result beat consensus analyst expectations, which Zacks Equity Research pegged at $9.23 per share.

Stamford, Conn.-based United reported total Q2 revenue of $3.554 billion, compared with $2.771 billion in the year-earlier period, which also beat analyst expectations. Zacks analysts had a consensus estimate of $3.43 billion.

United said Q2 rental revenue totaled $2.981 billion, compared with $2.462 billion in the year-ago period. Rental revenue with the Ahern acquisition stripped out totaled $2.653 billion, it said.

United expects strong performance for the rest of the year. “Looking at the balance of 2023, we remain encouraged by the momentum we are carrying into the busiest part of our season as well as our customers’ continued optimism,” CEO Matthew Flannery said in a July 26 statement accompanying the results.

During the company’s July 27 analyst earnings call, Flannery said United was outpacing its rivals and that retail markets remain robust. He added that 2023 was on track to be a record year across a number of key performance indicators.

Given this momentum, United front-loaded its fleet capital expenditure for the year, spending 60% of its expected $3.35 billion to $3.55 billion in gross purchases in the first six months of 2023, Flannery said.

Flannery noted that United would have spent more on purchases if it could have, but continued supply chain problems prevented this. “The supply chain is getting better, but is not there yet,” he said.

United is trying to get ahead of the demand curve, the company’s top executive added, as are its competitors. “The dynamics of the industry are really good … supply/demand is in good shape,” Flannery said.

In particular, he said customers who have felt the crunch of supply chain constraints over the past few years want the equipment they need for the infrastructure mega-projects set to begin under the Biden administration’s signature Inflation Reduction Act.

Used equipment sales in the second quarter soared 132.9% year-over-year to $382 million from $164 million, largely reflecting a normalization of volumes and the impact of the Ahern acquisition, the company said.

United ranks No. 12 on the Transport Topics Top 100 list of the largest private carriers in North America and No. 1 on the top equipment rental carriers list.