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Item 1. Business

2022-01-26 compared with 2021-01-27 · 68 added, 64 removed, 249 unchanged (35% of the section changed)

United Rentals is the largest equipment rental company in the world, operates throughout the United States and Canada, and has a limited presence in Europe.

United Rentals is the largest equipment rental company in the world, operates throughout the United States and Canada, and has a limited presence in Europe, Australia and New Zealand.

The table below presents key information about our business as of and for the years ended December 31, 2021 and 2020.

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Total equipment rental revenue variance 14.9% (10.3)%

Pro forma equipment rentals variance components (4):

Year-over-year change in average OEC 4.9%

Assumed year-over-year inflation impact (1) (1.5)%

Fleet productivity (2) 0.6%

Contribution from ancillary and re-rent revenue (3) 0.1%

Total equipment rental revenue variance 4.1%

Key account percent of equipment rental revenue 72% 74%

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Fluid solutions equipment 7% 7%

Mobile storage equipment and modular office space (4)

LOCATIONS/PERSONNEL

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Approximate range of districts per region 4-9 5-10

Range of regions per division 2-6 3-4

Hourly employees 14,200 12,550

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Estimated North American market share (5) 15% 14%

Estimated North American equipment rental industry revenue (decline) growth (2) (12)% 5%

Estimated North American equipment rental industry revenue growth (decline) (2) (5) 4% (9)%

2022 projected North American industry equipment rental revenue growth 10%

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(2) Reflects the combined impact of changes in rental rates, time utilization, and mix that contribute to the variance in owned equipment rental revenue.

See note 3 to the consolidated financial statements for a discussion of the different types of equipment rentals revenue.

See note 3 to the consolidated financial statements for a discussion of the different types of

equipment rentals revenue.

Rental rate changes are calculated based on the year-over-year variance in average contract rates, weighted by the prior period revenue mix.

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Mix includes the impact of changes in customer, fleet, geographic and segment mix.

The negative fleet productivity for 2020 includes the impact of the novel coronavirus (“COVID-19”), which resulted in rental volume declines in response to shelter-in-place orders and other market restrictions, as discussed further below.

The positive fleet productivity for 2021 and the negative fleet productivity for 2020 include the impact of the novel coronavirus (“COVID-19”), which resulted in rental volume declines in response to shelter-in-place orders and other market restrictions, as discussed further below.

The COVID-19 volume declines were more pronounced in 2020 than 2021, and in 2021, we saw evidence of a continuing recovery of activity across our end-markets.

The 2020 decline in North American equipment rental industry revenue also includes the impact of COVID-19 (see "Industry Overview and Economic Outlook" below for further discussion).

(3) Reflects the combined impact of changes in the other types of equipment rentals revenue (see note 3 for further detail), excluding owned equipment rental revenue.

(4) We completed the acquisitions of BakerCorp International Holdings, Inc.

(“BakerCorp”) and Vander Holding Corporation and its subsidiaries ("BlueLine") in July 2018 and October 2018, respectively.

The pro forma information includes the standalone, pre-acquisition results of BakerCorp and BlueLine.

The pro forma components are not reflected above for 2020 versus 2019 because BakerCorp and BlueLine are fully reflected in our results for these periods.

(4) As discussed in note 4 to the consolidated financial statements, in May 2021, we completed the acquisition of General Finance Corporation (“General Finance”), which was a leading provider of mobile storage equipment and modular office space.

Prior to the General Finance acquisition, we did not rent material amounts of such equipment.

(5) As discussed below (see "Industry Overview and Economic Outlook"), North American equipment rental industry revenue is based on industry estimates from the American Rental Association ("ARA").

Subsequent to our prior disclosure of 2020 industry information, the ARA decreased its estimate of the size of the North American equipment rental industry.

As a result of this change, relative to our prior disclosures, our market share for 2020 increased and the size of the 2020 decline in North American equipment rental industry revenue decreased.

COVID-19 was first identified in people in late 2019.

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The COVID-19 pandemic has significantly disrupted supply chains and businesses around the world.

The extent and duration of the COVID-19 impact, on the operations and financial position of United Rentals, and on the global economy, is uncertain.

See "Industry Overview and Economic Outlook" below for a discussion of market performance in 2020.

The health and safety of our employees and customers remains our top priority, and we have also engaged in extensive contingency planning to manage the business impact of the pandemic.

Prior to mid-March 2020, our results were largely in line with expectations.

Uncertainty remains regarding the ongoing impact of existing and emerging variant strains of COVID-19 on the operations and financial position of United Rentals, and on the global economy.

Uncertainty also remains regarding the length of time it will take for the COVID-19 pandemic to ultimately subside, which will be impacted by the effectiveness of vaccines against COVID-19 (including against emerging variant strains), and by measures that may in the future be implemented to protect public health.

See "Industry Overview and Economic Outlook" below for a discussion of market performance in 2021 and 2020.

The health and safety of our employees and customers remains our top priority, and we also implemented a detailed COVID-19 response plan, which is explained in more detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and which we believe helped mitigate the impact of COVID-19 on our results.

We began to experience a decline in revenues in March 2020, when rental volume declined in response to shelter-in-place orders and other market restrictions.

The volume declines were more pronounced in 2020 than 2021, and we have seen recent evidence of recovery across our construction and industrial markets, as well as encouraging gains in end-market indicators, as reflected in our 2022 forecast.

COVID-19 is discussed in more detail throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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We also recognize outstanding safety behaviors through our annual awards program.

Importantly, during the COVID-19 pandemic, our continuing focus on health and safety enabled us to preserve business continuity without sacrificing our commitment to keeping our colleagues safe.

• Employee wellness:

The Company’s Live Well, Safe & Healthy program is a comprehensive approach to wellness that encourages healthy behaviors and is intended to raise morale, productivity and overall employee engagement.

The program includes a biometric screening at work or off-site, a health assessment, a paid day off to be used for a wellness exam or day of service, tobacco cessation support, and participation incentives.

Additionally, employees and family members can participate in biannual virtual health challenges to encourage daily activity.

The program includes a biometric screening at work or off-site, a health assessment, a paid day off to be used for a

wellness exam or day of service, tobacco cessation support, and participation incentives.

Additionally, employees and family members can participate in virtual health challenges to encourage daily activity.

Approximately 50 percent of eligible employees participated in the program in 2021.

• Inclusion and diversity (“I&D”):

We believe that an inclusive and diverse team is key to the success of our culture and aim to drive I&D initiatives through many efforts, including sponsoring three employee-led employee resource groups (“ERGs”) that represent and support the diverse communities that make up our workforce.

facilitate networking and connecting with peers, outreach and mentoring, and leadership and skill development.

The Company has internal goals for overall workforce diversity and additional goals for specific positions at the Company.

• Diversity, equity and inclusion (“DE&I”):

We believe that an inclusive and diverse team is key to the success of our culture and aim to drive DE&I initiatives through many efforts, including sponsoring four employee-led employee resource groups (“ERGs”) that represent and support the diverse communities that make up our workforce.

The ERGs facilitate networking and connecting with peers, outreach and mentoring, and leadership and skill development.

The Company has internal goals for overall workforce diversity and additional goals for specific positions at the Company, and there has been positive progress in diverse representation at the Company, as reflected in a four percentage point increase in diverse employees in sales and management roles, which increased from 27 percent in 2018 to 31 percent in 2021.

In addition, the Company has made hiring and supporting veterans a priority through its veterans ERG and working with organizations that support the veteran community.

Importantly, in 2020, one of our ERGs co-hosted a series of internal conversations with senior leadership that focused on racial inequality and injustice to spark dialogue among employees and leaders in an effort to build a more inclusive, diverse and empowered culture at the Company.

Importantly, in 2021, we conducted a Company-wide culture workshop with all employees designed to continue our dialogue on racial justice and social equity by focusing on three important keys of our culture:

safety and wellness, DE&I, and trust and communication.

• Compensation programs and employee benefits:

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In addition to competitive base salaries, the Company provides a variety of short-term, long-term and commission-based incentive compensation programs to reward performance relative to key financial, human capital and customer experience metrics.

We offer comprehensive benefit options including retirement savings plans, medical insurance, prescription drug benefits, dental insurance, vision insurance, accident and critical illness insurance, life and disability insurance, health savings accounts, flexible spending accounts, legal insurance, auto/home insurance and identity theft insurance.

Additionally, we have conducted three company-wide stock grant programs for employees since 2014 – the most recent grant program took place in 2020 and was in recognition of our employees’ special efforts during the COVID-19 pandemic.

We offer comprehensive benefit options including paid time off, retirement savings plans, medical and prescription drug benefits, dental and vision benefits, accident and critical illness insurance, life and disability insurance, health savings accounts, flexible spending accounts, legal coverage, auto/home insurance, identity theft insurance and tuition assistance.

Additionally, we have conducted three company-wide stock grant programs for employees since 2014 – the most recent grant was in recognition of our employees’ special efforts during the COVID-19 pandemic, and initially took place in 2020, with an update in 2021 recognizing the contributions of newly hired employees since the 2020 grant date.

• Employee experience and retention:

To evaluate our employee experience and retention efforts, we monitor a number of employee measures, such as employee retention, internal promotions and referrals.

For example, total employee turnover, which represents voluntary and involuntary terminations during the year divided by average headcount during the year, was 15.4 percent, 11.9 percent and 14.4 percent for 2021, 2020 and 2019, respectively.

We also conduct an annual employee experience survey, which provides valuable information on drivers of engagement and areas where we can improve.

For instance, we learned through our 2020 survey process that 92 percent of our team members intend to stay with the Company to continue building and growing their careers.

To provide an open and frequent line of communication for all employees, we host town hall meetings and quarterly all employee conference calls, and utilize Workplace by Facebook to engage with our full team.

Our 2021 employee experience survey showed year-over-year increases in most categories and no declines in any category.

Additionally, when we asked employees how likely they are to continue with the Company beyond 6 months, the average response was 9.2 out of 10, which was consistent with the average response in 2020.

We believe this question assesses our employees’ commitment to United Rentals, and that the response is consistent with our strong employee retention.

To provide an open and frequent line of communication for all employees, we host town hall meetings and quarterly all employee conference calls, and utilize Workplace to engage with our full team.

The Company also sponsors the United Compassion Fund, an employee-funded 501(c)(3) charity that provides financial assistance to fellow employees in need.

In 2020, employees voluntarily donated over $1.4 million to the fund, and employees received 356 grants totaling over $750,000.

In 2021, employees voluntarily donated approximately $1.3 million to the fund, and employees received 403 grants totaling approximately $875,000.

• Training and development:

The Company is committed to the continued development of its people.

We aim for all applicable new hires to attend Center of Excellence training within 90 days of hire, which training was delivered virtually during most of 2020.

Additionally, we offer a wide array of training solutions (classroom, hands-on and e-learning) for our people.

The Company is committed to the continual development of its employees.

We aim for all new hires to attend JumpSTART, a new hire orientation, to quickly acclimate them to our culture, as well as applicable new hires to attend Center of Excellence (job related) training within 90 days of hire.

We offer a wide array of training solutions (classroom, hands-on, e-learning and experience maps) for further development of our employees to help them achieve their career goals.

In addition, as we did in 2021, we aim to regularly develop new training programs, launch pilot programs and expand leadership opportunities for our employees.

In 2021, our employees enhanced their skills through approximately 460,000 hours of training, including safety training, sales and leadership training and equipment-related training from our suppliers.

Our employee training hours declined significantly relative to prior years because we paused in-person trainings beginning in March 2020 due to the COVID-19 pandemic.

While we were able to resume with virtual trainings in some cases, we did not resume many of those trainings until June and we were unable to provide certain types of training in a virtual format.

Additionally, we had fewer new hires and did not gain employees through acquisitions, reducing the need for new hire and acquisition training.

We also offer an undergraduate tuition assistance program.

Our performance process encourages performance and development check-ins throughout the year to provide for development at all levels across the Company.

The majority of our training was delivered virtually during 2021 and 2020.

Our performance process encourages employee check-ins throughout the year to discuss performance and career goals, as well as development opportunities at all levels across the Company.

For the past several years, we have executed a strategy focused on improving the profitability of our core equipment rental business through revenue growth, margin expansion and operational efficiencies.

In particular, we have focused on customer segmentation, customer service differentiation, rate management, fleet management and operational efficiency.

We are currently managing the impact of COVID-19, as discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our general strategy focuses on profitability and return on invested capital, and, in particular, calls for:

We are continuing to manage the impact of COVID-19, as discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our general strategy focuses on profitability and return on invested capital, and, in particular, calls for:

• A consistently superior standard of service to customers , often provided through a single lead contact who can coordinate the cross-selling of the various services we offer throughout our network.

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We believe these efforts will lead to even better service of our target accounts, primarily large construction and industrial customers, as well as select local contractors.

Our fleet team's analyses

are aligned with these objectives to identify trends in equipment categories and define action plans that can generate improved returns;

Our fleet team's analyses are aligned with these objectives to identify trends in equipment categories and define action plans that can generate improved returns;

• A continued focus on “Lean” management techniques, including kaizen processes focused on continuous improvement .

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and improving the effectiveness and efficiency of our repair and maintenance operations;

• The continued expansion of our trench, power and fluid solutions footprint, as well as our tools and onsite services offerings, and the cross-selling of these services throughout our network .

We believe that the expansion of our trench, power and fluid solutions business, as well as our tools and onsite services offerings, will further position United Rentals as a single source provider of total jobsite solutions through our extensive product and service resources and technology offerings;

• The continued expansion of our specialty footprint, as well as our tools and onsite services offerings, and the cross-selling of these services throughout our network .

We believe that the expansion of our specialty business, as exhibited by our acquisition of General Finance discussed in note 4 to the consolidated financial statements, as well as our tools and onsite services offerings, will further position United Rentals as a single source provider of total jobsite solutions through our extensive product and service resources and technology offerings;

• The pursuit of strategic acquisitions to continue to expand our core equipment rental business .

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and residential construction, which includes remodeling.

In July 2018, we completed the acquisition of BakerCorp, which allowed for our entry into select European markets (the acquisition added 11 European locations in France, Germany, the United Kingdom and the Netherlands to our branch network).

In July 2018, we completed the acquisition of BakerCorp International Holdings, Inc.

(“BakerCorp”), which allowed for our entry into select European markets.

As discussed in note 4 to the consolidated financial statements, in May 2021, we completed the acquisition of General Finance, which allowed for our entry into select markets in Australia and New Zealand.

See Item 2—Properties for further geographical detail on our rental network.

In 2021, based on an analysis of our charge account customers’ Standard Industrial Classification (“SIC”) codes:

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• Residential rentals represented approximately four percent of our rental revenue, primarily reflecting rentals of equipment for the construction and renovation of homes.

We estimate that, based on industry estimates from the American Rental Association ("ARA"), 2020 North American equipment rental industry revenue decreased approximately 12 percent year-over-year, with similar declines in the U.S.

In 2020, our full year rental revenue decreased by 10.3 percent year-over-year.

We estimate that our North American market share of approximately 13 percent increased slightly in 2020.

As discussed in more detail throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, the decline in rental revenue includes the impact of the novel coronavirus (“COVID-19”), which resulted in rental volume declines in response to shelter-in-place orders and other market restrictions.

In 2021, based on our analyses of industry forecasts and macroeconomic indicators, we expect modest market recovery following the declines experienced in 2020, which included the pronounced impact of COVID-19.

Specifically, we expect that North American industry equipment rental revenue will increase approximately 2 percent, with higher growth expected in Canada than the U.S.

We estimate that, based on industry estimates from the ARA, 2021 North American equipment rental industry revenue grew approximately 4 percent year-over-year.

In 2021, our full year rental revenue increased by 14.9 percent year-over-year, which included the impact of the General Finance acquisition that was completed in May 2021 and is discussed in note 4 to the consolidated financial statements.

As discussed in more detail throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, the increase in rental revenue includes the significant impact in 2020 of COVID-19, which resulted in rental volume declines in response to shelter-in-place orders and other market restrictions.

Our estimated North American market share of approximately 15 percent in 2021 increased from 14 percent in 2020.

In 2022, based on our analyses of industry forecasts and macroeconomic indicators, we expect a continuation of the market recovery experienced in 2021, following a market decline in 2020, which included the pronounced impact of

Specifically, we expect that North American industry equipment rental revenue will increase approximately 10 percent in 2022.

Competitive Advantages

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Geographic and Customer Diversity .

We have 1,165 rental locations in the U.S., Canada and Europe.

We primarily operate in the United States and Canada, and have a limited presence in Europe, Australia and New Zealand, and our global branch network includes 1,345 rental locations.

See Item 2—Properties for further geographical detail on our branch network.

Our North American network operates in 49 U.S.

states and every Canadian province, and serves customers that range from Fortune 500 companies to small businesses and homeowners.

The acquisition of BakerCorp in July 2018 added 11 European locations in France, Germany, the United Kingdom and the Netherlands to our branch network.

We believe that our geographic and customer diversity provides us with many advantages including:

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Segment Information

We have two reportable segments– (i) general rentals and (ii) trench, power and fluid solutions.

We have two reportable segments– general rentals and specialty (formerly "trench, power and fluid solutions").

Segment financial information is presented in note 5 to our consolidated financial statements.

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The general rentals segment’s customers include construction and industrial companies, manufacturers, utilities, municipalities and homeowners.

The general rentals segment comprises eleven geographic regions—Carolinas, Gulf South, Industrial (which serves the geographic Gulf region and has a strong industrial presence), Mid-Atlantic, Mid Central, Midwest, Northeast, Pacific West, South, Southeast and Western Canada—and operates throughout the United States and Canada.

We periodically review the size and geographic scope of our regions, and have occasionally reorganized the regions to create a more balanced and effective structure.

The trench, power and fluid solutions segment includes the rental of specialty construction products and related services.

The trench, power and fluid solutions segment is comprised of (i) the Trench Safety region, which rents trench safety equipment such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers and line testing equipment for underground work, (ii) the Power and HVAC region, which rents power and HVAC equipment such as portable diesel generators, electrical distribution equipment, and temperature control equipment including heating and cooling equipment, and (iii) the Fluid Solutions and (iv) Fluid Solutions Europe regions, both of which rent equipment primarily used for fluid containment, transfer and treatment.

The trench, power and fluid solutions segment’s customers include construction companies involved in infrastructure projects, municipalities and industrial companies.

This segment operates throughout the United States and in Canada and Europe.

The general rentals segment is comprised of four geographic divisions—Central, Northeast, Southeast and West—and operates throughout the United States and Canada.

The specialty segment includes the rental of specialty construction products such as (i) trench safety equipment, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers and line testing equipment for underground work, (ii) power and HVAC equipment, such as portable diesel generators, electrical distribution equipment, and temperature control equipment, (iii) fluid solutions equipment primarily used for fluid containment, transfer and treatment, and (iv) mobile storage equipment and modular office space.

The specialty segment’s customers include construction companies involved in infrastructure projects, municipalities and industrial companies.

This segment primarily operates in the United States and Canada, and has a limited presence in Europe, Australia and New Zealand.

Products and Services

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fluid solutions equipment;

mobile storage equipment and modular office space;

and general tools and light equipment.

Sales of Rental Equipment .

We routinely sell used rental equipment and invest in new equipment in order to manage repairs and maintenance costs, as well as the composition and size of our fleet.

We routinely sell used rental equipment and invest in new equipment in order to manage repair and maintenance costs, as well as the composition and size of our fleet.

We also sell used equipment in response to customer demand for the equipment.

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Our strategic approach with respect to our suppliers is to maintain the minimum number of suppliers per category of equipment that can satisfy our anticipated volume and business requirements.

This approach is designed to ensure that the terms

we negotiate are competitive and that there is sufficient product available to meet anticipated customer demand.

This approach is designed to ensure that the terms we negotiate are competitive and that there is sufficient product available to meet anticipated customer demand.

We utilize a comprehensive selection process to determine our equipment vendors.

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We believe we have sufficient alternative sources of supply available for each of our major equipment categories.

For a discussion of the risks associated with potential supply chain disruptions, see Item 1A- Risk Factors (“Operational Risks- Disruptions in our supply chain could result in adverse effects on our results of operations and financial performance ").

We primarily operate in the United States and Canada, and have a limited presence in Europe, Australia and New Zealand.

The North American equipment rental industry is highly fragmented and competitive.

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The fragmented nature of the industry and our relatively small market share, however, may adversely impact our ability to mitigate rental rate pressure.

See "Industry Overview and Economic Outlook" above for a discussion of market performance in 2020, which included the pronounced impact of COVID-19, as well as projected performance in 2021.

See "Industry Overview and Economic Outlook" above for a discussion of market performance in 2021 and 2020, which included the pronounced impact of COVID-19, as well as projected performance in 2022.

Environmental and Safety Regulations

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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 1. Business