What changed in this filing

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Item 1A. Risk Factors

2021-01-27 compared with 2020-01-29 · 137 added, 113 removed, 233 unchanged (52% of the section changed)

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Should any of these risks materialize, our business, results of operations, financial condition and future prospects could be negatively impacted, which in turn could affect the trading value of our securities.

Industry and Economic Risks

Our business is cyclical in nature.

An economic slowdown or a decrease in general economic activity could cause weakness in our end markets and have adverse effects on our revenues and operating results.

Economic slowdowns and decreases in general economic activity have in the past caused weakness in our end markets and had adverse effects on our revenues and operating results, and could do so again in the future.

Our general rental equipment and trench, power and fluid solutions equipment are used in connection with private non-residential construction and industrial activities, which are cyclical in nature.

Our industry experienced a decline in construction and industrial activity as a result of the economic downturn that commenced in the latter part of 2008 and continued through 2010.

The weakness in our end markets led to a decrease in the demand for our equipment and in the rates we realized.

In the past, weakness in our end markets has led to a decrease in the demand for our equipment and in the rates we realized.

Such decreases adversely affected our operating results by causing our revenues to decline and, because certain of our costs are fixed, our operating margins to be reduced.

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• a lack of availability of credit;

an overcapacity of fleet in the equipment rental industry;

• excess fleet in the equipment rental industry;

• a decrease in the level of exploration, development, production activity and capital spending by oil and natural gas companies;

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• a prolonged shutdown of the U.S.

• public health crises and epidemics, such as COVID-19;

• terrorism or hostilities involving the United States, Canada or Europe.

The COVID-19 pandemic and its impact on business and economic conditions have adversely affected, and may continue to adversely affect, our results of operations and financial position.

Those adverse effects could be material.

The scale and scope of the COVID-19 pandemic, the uncertainty around the distribution, acceptance and effectiveness of COVID-19 vaccines, and the impact that the COVID-19 pandemic and the various measures that have been implemented to protect public health have had on the economy and financial markets have adversely affected, and are expected to continue to adversely affect, our results of operations and financial position.

We have implemented business continuity and emergency response plans to continue to provide equipment rental services to our customers and to support our operations, while taking health and safety measures such as implementing worker distancing measures and using a remote workforce where possible.

There can be no assurance that the continued spread of COVID-19 and efforts to contain the virus (including, but not limited to, vaccination, social distancing policies, restrictions on travel and reduced operations and extended closures of many businesses and institutions, including our customers) will not materially impact our results of operations and financial position.

In particular, the continued spread of COVID-19 and efforts to contain the virus could:

• impact customer demand for equipment rentals;

• reduce the availability and productivity of our employees (including by requiring temporary branch closures in the event that positive tests for COVID-19 are identified);

• cause us to experience an increase in costs as a result of our emergency and business continuity measures, delayed payments from our customers and uncollectable accounts;

• impact our cost of, and ability to access, funds from financial institutions and capital markets on terms favorable to us, or at all;

• impact our ability to complete previously announced strategic plans, including our share repurchase program, on time, or at all;

• cause other unpredictable events.

The situation surrounding COVID-19 remains fluid and the likelihood of an impact on us that could be material increases the longer the virus impacts activity levels in the locations in which we operate.

In particular, a delay in wide distribution of a vaccine, or a lack of public acceptance of a vaccine, could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time.

Further, even if a vaccine is widely distributed and accepted, there can be no assurance that the vaccine will ultimately be successful in limiting or stopping the spread of COVID-19.

Even after the COVID-19 pandemic subsides, the U.S.

economy and other major global economies may experience a recession, and we anticipate our business and operations could be materially adversely affected by a prolonged recession in the U.S.

and other major markets.

Therefore, it remains difficult to predict the potential impact of the virus on our results of operations and financial position.

In addition, to the extent that COVID-19 adversely affects our results of operations or financial position, it may also heighten the other risks described in this Item 1A-Risk Factors.

Trends in oil and natural gas prices could adversely affect the level of exploration, development and production activity of certain of our customers and the demand for our services and products.

Demand for our services and products is sensitive to the level of exploration, development and production activity of, and the corresponding capital spending by, oil and natural gas companies, including national oil companies, regional exploration and production providers, and related service providers.

The level of exploration, development and production activity is directly affected by trends in oil and natural gas prices, which historically have been volatile and are likely to continue to be volatile.

Prices for oil and natural gas are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty, and a variety of other economic factors that are beyond our control.

Any prolonged reduction in oil and natural gas prices will depress the immediate levels of exploration, development and production activity, which could have an adverse effect on our business, results of operations and financial condition.

Even the perception of longer-term lower oil and natural gas prices by oil and natural gas companies and related service providers can similarly reduce or defer major expenditures by these companies and service providers given the long-term nature of many large-scale development projects.

Additionally, potential climate change regulation, including a potential carbon tax, could adversely affect the level of exploration, development and production activity of certain of our customers and the demand for our services and products.

Our industry is highly competitive, and competitive pressures could lead to a decrease in our market share or in the prices that we can charge.

The equipment rental industry is highly fragmented and competitive.

Our competitors include small, independent businesses with one or two rental locations, regional competitors that operate in one or more states, public companies or divisions of public companies, and equipment vendors and dealers who both sell and rent equipment directly to customers.

We may in the future encounter increased competition from our existing competitors or from new competitors.

Competitive pressures could adversely affect our revenues and operating results by, among other things, decreasing our rental volumes, depressing the prices that we can charge or increasing our costs to retain employees.

Increases in fuel costs or reduced supplies of fuel could harm our business.

We believe that one of our competitive advantages is the mobility of our fleet.

Accordingly, our business in the past has been, and in the future could be, adversely affected by limitations on fuel supplies or significant increases in fuel prices that result in higher costs to us for transporting equipment from one branch to another branch.

Although we have used, and may continue to use, futures contracts to hedge against fluctuations in fuel prices, a significant or protracted price fluctuation or disruption of fuel supplies could have a material adverse effect on our financial condition and results of operations.

Additionally, potential climate change regulation, including a potential carbon tax, could increase the overall cost of fuel to us and have a material adverse effect on us.

Risks Related to our Indebtedness and Liquidity

Our significant indebtedness exposes us to various risks.

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Our significant indebtedness could adversely affect our business, results of operations and financial condition in a number of ways by, among other things:

increasing our vulnerability to, and limiting our flexibility to plan for, or react to, adverse economic, industry or competitive developments;

• increasing our vulnerability to, and limiting our flexibility to plan for, or react to, adverse economic, industry or competitive developments, including adverse economic impacts from COVID-19;

• making it more difficult to pay or refinance our debts as they become due during periods of adverse economic, financial market or industry conditions;

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Even if we adopt an alternative strategy, the strategy may not be successful and we may continue to be unable to service our indebtedness and fund our operations.

We may not be able to refinance our indebtedness on favorable terms, if at all.

We may not be able to refinance our indebtedness on favorable terms, or at all.

Our inability to refinance our indebtedness could materially and adversely affect our liquidity and our ongoing results of operations.

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In addition, prevailing interest rates or other factors at the time of refinancing could increase our interest expense.

refinancing of our indebtedness could also require us to comply with more onerous covenants and further restrict our business operations.

A refinancing of our indebtedness could also require us to comply with more onerous covenants and further restrict our business operations.

Our inability to refinance our indebtedness or to do so upon attractive terms could materially and adversely affect our business, prospects, results of operations, financial condition and cash flows, and make us vulnerable to adverse industry and general economic conditions.

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A breach of any of the covenants or restrictions contained in these agreements could result in an event of default.

Such a default could allow our debt holders to accelerate repayment of the related debt, as well as any other debt to which a cross-

acceleration or cross-default provision applies, and/or to declare all borrowings outstanding under these agreements to be due and payable.

Such a default could allow our debt holders to accelerate repayment of the related debt, as well as any other debt to which a cross-acceleration or cross-default provision applies, and/or to declare all borrowings outstanding under these agreements to be due and payable.

If our debt is accelerated, our assets may not be sufficient to repay such debt.

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In addition, if certain of our lenders experience difficulties that render them unable to fund future draws on the facilities, we may not be able to access all or a portion of these funds, which could have similar adverse consequences.

If we are unable to obtain additional capital as required, we may be unable to fund the capital outlays required for the success of our business.

If the cash that we generate from our business, together with cash that we may borrow under the ABL facility and accounts receivable securitization facility, is not sufficient to fund our capital requirements, we will require additional debt and/or equity financing.

However, we may not succeed in obtaining the requisite additional financing or such financing may include terms that are not satisfactory to us.

We may not be able to obtain additional debt financing as a result of prevailing interest rates or other factors, including the presence of covenants or other restrictions under the ABL facility and/or other agreements governing our debt.

In the event we seek to obtain equity financing, our stockholders may experience dilution as a result of the issuance of additional equity securities.

This dilution may be significant depending upon the amount of equity securities that we issue and the prices at which we issue such securities.

If we are unable to obtain sufficient additional capital in the future, we may be unable to fund the capital outlays required for the success of our business, including those relating to purchasing equipment, growth plans and refinancing existing indebtedness.

Risks Related to our Strategic Transactions and Investments

Our growth strategies may be unsuccessful if we are unable to identify and complete future acquisitions and successfully integrate acquired businesses or assets.

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Our failure to address these risks or other problems encountered in connection with any past or future acquisition could cause us to fail to realize the anticipated benefits of the acquisitions, cause us to incur unanticipated liabilities and harm our business generally.

results of operations, financial condition, cash flows, our ability to introduce new services and products and the market price of our stock.

In addition, if we are unable to successfully integrate our acquisitions with our existing business, we may not obtain the advantages that the acquisitions were intended to create, which may materially and adversely affect our business, results of operations, financial condition, cash flows, our ability to introduce new services and products and the market price of our stock.

We would expect to pay for any future acquisitions using cash, capital stock, notes, other indebtedness and/or assumption of indebtedness.

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We may not be successful in implementing all of the processes that are necessary to support any of our growth initiatives, which could result in our expenses increasing disproportionately to our incremental revenues, causing our operating margins and profitability to be adversely affected.

If we determine that our goodwill has become impaired, we may incur impairment charges, which would negatively impact our operating results.

At December 31, 2020, we had $5.2 billion of goodwill on our consolidated balance sheet.

Goodwill represents the excess of cost over the fair value of net assets acquired in business combinations.

We assess potential impairment of our goodwill at least annually.

Impairment may result from significant changes in the manner of use of the acquired assets, negative industry or economic trends and/or significant underperformance relative to historic or projected operating results.

For a discussion of our goodwill impairment testing, see “Critical Accounting Policies-Evaluation of Goodwill Impairment” in Part II, Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Risks Related to our Securities

Our operating results may fluctuate, which could affect the trading value of our securities.

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• changes in the size of our rental fleet and/or in the rate at which we sell our used equipment;

an overcapacity of fleet in the equipment rental industry;

• excess fleet in the equipment rental industry;

• changes in private non-residential construction spending or government funding for infrastructure and other construction projects;

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Share repurchases could also increase the volatility of the price of our common stock and could diminish our cash reserves.

In January 2020, our Board of Directors authorized a new share repurchase program.

In January 2020, our Board of Directors authorized a share repurchase program, which commenced in the first quarter of 2020 and was intended to run for 12 months.

Under the program, we are authorized to repurchase shares of common stock for an aggregate purchase price not to exceed $500 million, excluding fees, commissions and other ancillary expenses.

As of December 31, 2019 , we have completed all repurchases under the prior $1.25 billion program.

Through March 18, 2020, when the program was paused due to the COVID-19 pandemic, we repurchased $257 million of common stock under the program.

We are currently unable to estimate when, or if, the program will be restarted, and we expect to provide an update at a future date.

Although the Board of Directors has authorized the share repurchase program, the share repurchase program does not obligate the Company to repurchase any specific dollar amount or to acquire any specific number of shares.

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Although our share repurchase program is intended to enhance long-term stockholder value, there is no assurance that it will do so and short-term stock price fluctuations could reduce the program’s effectiveness.

Our charter provisions, as well as other factors, may affect the likelihood of a takeover or change of control of the Company.

Although our Board elected not to extend our stockholders’ rights plan upon its expiration in 2011, we still have in place certain charter provisions that may have the effect of deterring hostile takeovers or delaying or preventing changes in control or management of the Company that are not approved by our Board, including transactions in which our stockholders might otherwise receive a premium for their shares over then-current market prices.

We are also subject to Section 203 of the Delaware General Corporation Law which, under certain circumstances, restricts the ability of a publicly held Delaware corporation to engage in a business combination, such as a merger or sale of assets, with any stockholder that, together with affiliates, owns 15 percent or more of the corporation’s outstanding voting stock, which similarly could prohibit or delay the accomplishment of a change of control transaction.

In addition, under each of the ABL facility and the term loan facility, a change of control (as defined in the applicable credit agreement) constitutes an event of default, entitling our lenders to terminate the ABL facility or the term loan facility, as applicable, and require us to repay outstanding borrowings.

A change of control (as defined in the applicable agreement) is also a termination event under our accounts receivable securitization facility and generally would require us to offer to repurchase our outstanding senior notes.

As a result, the provisions of the agreements governing our debt also may affect the likelihood of a takeover or other change of control.

Operational Risks

If we are unable to collect on contracts with customers, our operating results would be adversely affected.

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Further, delinquencies and credit losses generally would be expected to increase if there was a worsening of economic conditions.

If we are unable to obtain additional capital as required, we may be unable to fund the capital outlays required for the success of our business.

However, we may not succeed in obtaining the requisite additional financing or such financing may include terms that are not satisfactory to us.

In the event we seek to obtain equity financing, our stockholders may experience dilution as a result of the issuance of additional equity securities.

This dilution may be significant depending upon the amount of equity securities that we issue and the prices at which we issue such securities.

If we determine that our goodwill has become impaired, we may incur impairment charges, which would negatively impact our operating results.

At December 31, 2019 , we had $5.2 billion of goodwill on our consolidated balance sheet.

Goodwill represents the excess of cost over the fair value of net assets acquired in business combinations.

We assess potential impairment of our goodwill at least annually.

Trends in oil and natural gas prices could adversely affect the level of exploration, development and production activity of certain of our customers and the demand for our services and products.

Factors affecting the prices of oil and natural gas include:

the level of supply and demand for oil and natural gas;

governmental regulations, including the policies of governments regarding climate change and the exploration for, and production and development of, oil and natural gas reserves;

weather conditions and natural disasters;

worldwide political, military and economic conditions;

the level of oil production by non-OPEC countries and the available excess production capacity within OPEC;

oil refining capacity and shifts in end-customer preferences toward fuel efficiency and the use of natural gas;

the cost of producing and delivering oil and natural gas;

potential acceleration of the development of alternative fuels.

We have a holding company structure and depend in part on distributions from our subsidiaries to pay amounts due on our indebtedness.

Certain provisions of law or contractual restrictions could limit distributions from our subsidiaries.

We derive substantially all of our operating income from, and hold substantially all of our assets through, our subsidiaries.

The effect of this structure is that we depend in part on the earnings of our subsidiaries, and the payment or other distribution to us of these earnings, to meet our obligations under our outstanding debt.

Provisions of law, such as those requiring that dividends be paid only from surplus, could limit the ability of our subsidiaries to make payments or other distributions to us.

Furthermore, these subsidiaries could in certain circumstances agree to contractual restrictions on their ability to make distributions.

Distributions from our subsidiaries may also be limited by restrictive covenants in our debt agreements.

We are exposed to a variety of claims relating to our business, and our insurance may not fully cover them.

We are in the ordinary course exposed to a variety of claims relating to our business.

These claims include those relating to (i) personal injury or property damage involving equipment rented or sold by us, (ii) motor vehicle accidents involving our vehicles and our employees and (iii) employment-related claims.

Currently, we carry a broad range of insurance for the protection of our assets and operations.

However, such insurance may not fully cover these claims for a number of reasons, including:

our insurance policies, reflecting a program structure that we believe reflects market conditions for companies our size, are often subject to significant deductibles or self-insured retentions;

our director and officer liability insurance policy has no deductible for individual non-indemnifiable loss, but is subject to a deductible for company reimbursement coverage;

we do not currently maintain Company-wide stand-alone coverage for environmental liability (other than legally required coverage), since we believe the cost for such coverage is high relative to the benefit it provides;

certain types of claims, such as claims for punitive damages or for damages arising from intentional misconduct, which are often alleged in third party lawsuits, might not be covered by our insurance.

We establish and semi-annually evaluate our loss reserves to address casualty claims, or portions thereof, not covered by our insurance policies.

To the extent that we are subject to a higher frequency of claims, are subject to more serious claims or insurance coverage is not available, we could have to significantly increase our reserves, and our liquidity and operating results could be materially and adversely affected.

It is also possible that some or all of the insurance that is currently available to us will not be available in the future on economically reasonable terms or at all.

Our charter provisions, as well as other factors, may affect the likelihood of a takeover or change of control of the Company.

Although our Board elected not to extend our stockholders’ rights plan upon its expiration in September 2011, we still have in place certain charter provisions, such as the inability for stockholders to act by written consent, that may have the effect of deterring hostile takeovers or delaying or preventing changes in control or management of the Company that are not approved by our Board, including transactions in which our stockholders might otherwise receive a premium for their shares over then-current market prices.

As a result, the provisions of the agreements governing our debt also may affect the likelihood of a takeover or other change of control.

While delinquencies and credit losses did not materially increase during 2020, they may increase in the future if economic conditions worsen as a result of the COVID-19 pandemic or otherwise.

Turnover of members of our management and our ability to attract and retain key personnel may adversely affect our ability to efficiently manage our business and execute our strategy.

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Our operational and cost reduction strategies may not generate the improvements and efficiencies we expect.

We have been pursuing a strategy of optimizing our field operations in order to improve sales force effectiveness, and to focus our sales force’s efforts on increasing revenues from our national account and other large customers.

We have been pursuing a strategy of reducing core operating expenses, including overtime and temporary labor costs, in response to the COVID-19 pandemic.

In addition, we have been pursuing a general strategy of optimizing our field operations in order to improve sales force effectiveness, and to focus our sales force’s efforts on increasing revenues from our national account and other large customers.

We are also continuing to pursue our overall cost reduction program, which resulted in substantial cost savings in the past.

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Furthermore, changes in customer demand could cause certain of our existing equipment to become obsolete and require us to purchase new equipment at increased costs.

Our industry is highly competitive, and competitive pressures could lead to a decrease in our market share or in the prices that we can charge.

The equipment rental industry is highly fragmented and competitive.

We may in the future encounter increased competition from our existing competitors or from new competitors.

Disruptions in our information technology systems or a compromise of security with respect to our systems could adversely affect our operating results by limiting our ability to effectively monitor and control our operations, adjust to changing market conditions, implement strategic initiatives or support our online ordering system.

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If any of these breaches of security occur or are anticipated in the future, we could be required to expend additional capital and other resources, including costs to deploy additional personnel and protection technologies, train employees and engage third-party experts and consultants.

During the COVID-19 pandemic, we face increased cybersecurity risks due to our reliance on internet technology and the number of our employees who are working remotely, which could strain our technology resources or create additional opportunities for cybercriminals to exploit vulnerabilities.

In addition, because our systems sometimes contain information about individuals and businesses, our failure to appropriately maintain the security of the data we hold, whether as a result of our own error or the malfeasance or errors of others, could lead to disruptions in our online ordering system or other data systems, unauthorized release of confidential or otherwise protected information or corruption of data.

Our failure to appropriately maintain the security of the data we hold could also violate applicable privacy, data security and other laws and subject us to lawsuits, fines and other means of regulatory enforcement.

For example, the General Data Protection Regulation (Regulation (EU) 2016/679) (the “GDPR”), which took full effect on May 25, 2018, has caused European Union (“EU”) data protection requirements to be more stringent and provides for greater penalties.

For example, the General Data Protection Regulation (Regulation (EU) 2016/679) (the “GDPR”) has caused European Union (“EU”) data protection requirements to be more stringent and provides for greater penalties.

Non-compliance with the GDPR can trigger fines of up to €20 million or 4 percent of annual worldwide revenue, whichever is higher.

Such failures could lead to lower revenues, increased costs and other material adverse effects on our results of operations.

In addition, the requirements

of the GDPR may necessitate changes to our existing business practices in order to comply with the GDPR or to address the concerns of our customers or business partners relating to the GDPR.

In addition, the requirements of the GDPR may necessitate changes to our existing business practices in order to comply with the GDPR or to address the concerns of our customers or business partners relating to the GDPR.

In addition, countries such as the United Kingdom (the “UK”) have implemented the GDPR through their own legislation, for example, the UK Data Protection Act 2018.

Complying with any new regulatory requirements could force us to incur substantial expenses or require us to change our business practices in a manner that could harm our business.

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Although we maintain insurance coverage for various cybersecurity risks, there can be no guarantee that all costs or losses incurred will be fully insured.

Our rental fleet is subject to residual value risk upon disposition, and may not sell at the prices or in the quantities we expect.

The market value of any given piece of rental equipment could be less than its depreciated value at the time it is sold.

The market value of used rental equipment depends on several factors, including:

• the market price for new equipment of a like kind;

• wear and tear on the equipment relative to its age and the performance of preventive maintenance;

• the time of year that it is sold;

• the supply of used equipment on the market;

• the existence and capacities of different sales outlets;

• the age of the equipment at the time it is sold;

• worldwide and domestic demand for used equipment;

• general economic conditions.

We include in income from operations the difference between the sales price and the depreciated value of an item of equipment sold.

Changes in our assumptions regarding depreciation could change our depreciation expense, as well as the gain or loss realized upon disposal of equipment.

Sales of our used rental equipment at prices that fall significantly below our projections and/or in lesser quantities than we anticipate will have a negative impact on our results of operations and cash flows.

We have operations outside the United States, in Canada and Europe.

As a result, we may incur losses from the impact of foreign currency fluctuations and have higher costs than we otherwise would have due to the need to comply with foreign laws.

Our operations in Canada and Europe are subject to the risks normally associated with international operations.

These include (i) the need to convert currencies, which could result in a gain or loss depending on fluctuations in exchange rates and (ii) the need to comply with foreign laws and regulations, as well as U.S.

laws and regulations applicable to our operations in foreign jurisdictions.

See Item 7A—Quantitative and Qualitative Disclosures About Market Risk for additional information related to currency exchange risk.

In addition, effective December 31, 2020, the UK officially withdrew its membership from the European Union (“Brexit”).

The long-term effects of Brexit are uncertain and may include, among other things, greater restrictions on imports and exports between the UK and EU countries, a fluctuation in currency exchange rates and additional regulatory complexity.

Our operations in the UK and Europe, as well as our North American operations, could be impacted by the global economic uncertainty caused by Brexit or the actual withdrawal by the UK from the EU.

If we are unable to manage any of these risks effectively, our business could be adversely affected.

Our operations in the EU represented an immaterial part of our business as of December 31, 2020.

Climate change, climate change regulations and greenhouse effects may materially adversely impact our operations and markets.

Climate change and its association with greenhouse gas emissions is receiving increased attention from the scientific and political communities.

federal government, certain U.S.

states and certain other countries and regions have adopted or are considering legislation or regulation imposing overall caps or taxes on greenhouse gas emissions from certain sectors or facility categories, among other matters.

Such new laws or regulations, or stricter enforcement of existing laws and regulations, could increase the costs of operating our businesses, reduce the demand for our products and services and impact the prices we charge our customers, any or all of which could adversely affect our results of operations.

Failure to comply with any legislation or regulation could potentially result in substantial fines, criminal sanctions or operational changes.

Moreover, even without such legislation or regulation, increased awareness of, or any adverse publicity regarding, the effects of greenhouse gases could harm our reputation or reduce customer demand for our products and services.

Additionally, as severe weather events become increasingly common, our or our customers’ operations may be disrupted, which could result in increased operational costs or reduced demand for our products and services.

While we have invested in administration of programs and physical loss prevention improvements to mitigate the risk of natural disasters causing disruption to our ability to serve our customers and communities in times of need, extended periods of disruptions could have an adverse effect on our results of operations.

We have a holding company structure and depend in part on distributions from our subsidiaries to pay amounts due on our indebtedness.

Certain provisions of law or contractual restrictions could limit distributions from our subsidiaries.

We derive substantially all of our operating income from, and hold substantially all of our assets through, our subsidiaries.

Provisions of law, such as those requiring that dividends be paid only from surplus, could limit the ability of our subsidiaries to make payments or other distributions to us.

Furthermore, these subsidiaries could in certain circumstances agree to contractual restrictions on their ability to make distributions.

Distributions from our subsidiaries may also be limited by restrictive covenants in our debt agreements.

Legal and Regulatory Risks

We are exposed to a variety of claims relating to our business, and our insurance may not fully cover them.

We are in the ordinary course exposed to a variety of claims relating to our business.

Currently, we carry a broad range of insurance for the protection of our assets and operations.

However, such insurance may not fully cover these claims for a number of reasons, including:

• our insurance policies, reflecting a program structure that we believe reflects market conditions for companies our size, are often subject to significant deductibles or self-insured retentions;

• our director and officer liability insurance policy has no deductible for individual non-indemnifiable loss, but is subject to a deductible for company reimbursement coverage;

• we do not currently maintain Company-wide stand-alone coverage for environmental liability (other than legally required coverage), since we believe the cost for such coverage is high relative to the benefit it provides;

• certain types of claims, such as claims for punitive damages or for damages arising from intentional misconduct, which are often alleged in third party lawsuits, might not be covered by our insurance.

We establish and semi-annually evaluate our loss reserves to address casualty claims, or portions thereof, not covered by our insurance policies.

It is also possible that some or all of the insurance that is currently available to us will not be available in the future on economically reasonable terms or at all.

We are subject to numerous environmental and safety regulations.

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Our 1,018 branch locations in the United States are located in 49 states, and Puerto Rico, which exposes us to a host of different state and local regulations, in addition to federal law and regulatory and contractual requirements we face as a government contractor.

These laws and requirements address multiple aspects of our operations, such as worker safety, consumer rights, privacy, employee benefits and more, and there are often different requirements in different jurisdictions.

Changes in these requirements, or any material failure by our branches to comply with them, can increase our costs, affect our reputation, limit our business, drain management time and attention and otherwise impact our operations in adverse ways.

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We currently have no intention of withdrawing from any multiemployer plan.

However, there can be no assurance that we will not withdraw from one or more multiemployer plans in the future and be required to pay material amounts of withdrawal liability if one or more of those plans are underfunded at the time of withdrawal.

Fluctuations in fuel costs or reduced supplies of fuel could harm our business.

We believe that one of our competitive advantages is the mobility of our fleet.

Accordingly, our business could be adversely affected by limitations on fuel supplies or significant increases in fuel prices that result in higher costs to us for transporting equipment from one branch to another branch.

Although we have used, and may continue to use, futures contracts

to hedge against fluctuations in fuel prices, a significant or protracted price fluctuation or disruption of fuel supplies could have a material adverse effect on our financial condition and results of operations.

Our rental fleet is subject to residual value risk upon disposition, and may not sell at the prices or in the quantities we expect.

The market value of any given piece of rental equipment could be less than its depreciated value at the time it is sold.

The market value of used rental equipment depends on several factors, including:

the market price for new equipment of a like kind;

wear and tear on the equipment relative to its age and the performance of preventive maintenance;

the time of year that it is sold;

the supply of used equipment on the market;

the existence and capacities of different sales outlets;

the age of the equipment at the time it is sold;

worldwide and domestic demand for used equipment;

general economic conditions.

We include in income from operations the difference between the sales price and the depreciated value of an item of equipment sold.

Changes in our assumptions regarding depreciation could change our depreciation expense, as well as the gain or loss realized upon disposal of equipment.

We have operations outside the United States, including in Europe.

As a result, we may incur losses from the impact of foreign currency fluctuations and have higher costs than we otherwise would have due to the need to comply with foreign laws.

Our operations in Canada and Europe are subject to the risks normally associated with international operations.

laws and regulations applicable to our operations in foreign jurisdictions.

See Item 7A—Quantitative and Qualitative Disclosures About Market Risk for additional information related to currency exchange risk.

In addition, on March 29, 2017, the United Kingdom (the “UK”) government triggered article 50 of the Treaty on European Union (“Brexit”).

This officially confirmed the UK’s intention to withdraw its membership from the EU and the start of a two year negotiation process where the UK and the EU need to agree the terms of the withdrawal and potentially give consideration to the future of the relationship between the parties.

On November 14, 2018, the EU and the UK government agreed to the terms of a withdrawal agreement that required ratification by the UK and the European Parliament ahead of the UK’s withdrawal on March 29, 2019.

The deadline for UK’s withdrawal has been subsequently extended to January 31, 2020;

however it remains unclear whether the withdrawal agreement, or any alternative agreement, will be finalized and ratified ahead of this revised deadline.

Uncertainty over whether the UK will ultimately withdraw from the EU, the timing for such withdrawal, as well as the final outcome of the negotiations between the UK and the EU, could have an adverse effect on our business and financial results.

The long-term effects of Brexit will depend on the terms negotiated between the UK and the EU, which may take years to complete and may include, among other things, greater restrictions on imports and exports between the UK and EU countries, a fluctuation in currency exchange rates and additional regulatory complexity.

Our operations in the UK and Europe, as well as our North American operations, could be impacted by the global economic uncertainty caused by Brexit or the actual withdrawal by the UK from the EU.

If we are unable to manage any of these risks effectively, our business could be adversely affected.

Our operations in the EU represented an immaterial part of our business as of December 31, 2019 .

there can be no assurance that we will not withdraw from one or more multiemployer plans in the future and be required to pay material amounts of withdrawal liability if one or more of those plans are underfunded at the time of withdrawal.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors