What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-01-25 compared with 2022-01-26 · 239 added, 252 removed, 1184 unchanged (29% of the section changed)

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Valuation of Goodwill

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Auditing management’s annual goodwill impairment test was complex and highly judgmental due to the significant estimations required to determine the fair value of the reporting units.

In particular, the fair value estimates were sensitive to significant assumptions, including the discount rates, revenue growth rates, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margin, capital expenditures, long-term growth rates and market multiples, all of which are affected by expectations about future operational, rental industry market or economic conditions.

In particular, the fair value estimates were sensitive to significant assumptions, including the discount rates, revenue growth rates, and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margin, all of which are affected by expectations about future operational, rental industry market or economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s development and review of the significant assumptions described above and review of the reasonableness of the data utilized in the Company’s valuation analysis.

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Cash and cash equivalents $ 106 $ 144

Accounts receivable, net of allowance for doubtful accounts of $ 112 at December 31, 2021 and $ 108 at December 31, 2020

Accounts receivable, net 2,004 1,677

Inventory 232 164

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Retained earnings 9,656 7,551

Treasury stock at cost— 42,013,509 shares at December 31, 2021 and December 31, 2020

Treasury stock at cost— 45,401,527 and 42,013,509 shares at December 31, 2022 and December 31, 2021, respectively

( 4,957 ) ( 3,957 )

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Interest expense, net 445 424 669

Other expense (income), net 7 ( 8 ) ( 10 )

Other (income) expense, net ( 15 ) 7 ( 8 )

Income before provision for income taxes 2,802 1,846 1,139

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Fixed price diesel swaps — 1 —

Other comprehensive income (loss) (1) ( 25 ) 40 51

Other comprehensive (loss) income (1) ( 93 ) ( 25 ) 40

Comprehensive income $ 2,012 $ 1,361 $ 930

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Foreign currency translation adjustments 40

Fixed price diesel swaps 2

Stock compensation expense, net 1 70

Exercise of common stock options — 1

Shares repurchased and retired ( 40 )

Tax withholding for share based compensation ( 29 )

Repurchase of common stock ( 3 ) 3 ( 257 )

Balance at December 31, 2020 72 $ 1 $ 2,482 $ 6,165 42 $ ( 3,957 ) $ ( 146 )

See accompanying notes.

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(In millions)

Common Stock Additional Treasury Stock Accumulated

Shares Amount Paid-in

Capital Retained Earnings Number of

Shares Amount Comprehensive

(Loss) Income

Balance at December 31, 2019 74 $ 1 $ 2,440 $ 5,275 39 $ ( 3,700 ) $ ( 186 )

Net income 1,386

Foreign currency translation adjustments ( 26 )

Fixed price diesel swaps 1

Stock compensation expense, net — 119

Exercise of common stock options — 1

Shares repurchased and retired ( 29 )

Repurchase of common stock ( 3 ) 3 ( 257 )

Balance at December 31, 2020 72 $ 1 $ 2,482 $ 6,165 42 $ ( 3,957 ) $ ( 146 )

See accompanying notes.

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(In millions)

Common Stock Additional Treasury Stock Accumulated

Shares Amount Paid-in

Capital Retained Earnings Number of

Shares Amount Comprehensive

(Loss) Income (1)

Tax withholding for share based compensation ( 34 )

Balance at December 31, 2021 72 $ 1 $ 2,567 $ 7,551 42 $ ( 3,957 ) $ ( 171 )

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Foreign currency translation adjustments ( 93 )

Fixed price diesel swaps 1

Stock compensation expense, net — 127

Shares repurchased and retired ( 34 )

Tax withholding for share based compensation ( 68 )

Repurchase of common stock ( 3 ) 3 ( 1,000 )

Balance at December 31, 2022 69 $ 1 $ 2,626 $ 9,656 45 $ ( 4,957 ) $ ( 264 )

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Increase (decrease) in deferred taxes 537 268 ( 121 )

Changes in operating assets and liabilities, net of acquisitions:

Changes in operating assets and liabilities, net of amounts acquired:

(Increase) decrease in accounts receivable ( 329 ) ( 300 ) 218

Decrease (increase) in inventory 9 ( 5 ) ( 8 )

Decrease (increase) in prepaid expenses and other assets 248 ( 228 ) ( 59 )

Increase (decrease) in accounts payable 307 10 ( 86 )

Increase (decrease) in accrued expenses and other liabilities 87 2 ( 91 )

(Increase) decrease in inventory ( 25 ) 9 ( 5 )

(Increase) decrease in prepaid expenses and other assets ( 164 ) 248 ( 228 )

Increase in accounts payable 304 307 10

Increase in accrued expenses and other liabilities 238 87 2

Net cash provided by operating activities

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Proceeds from the exercise of common stock options

Common stock repurchased

( 34 ) ( 286 ) ( 870 )

Net cash used in financing activities ( 140 ) ( 2,293 ) ( 1,305 )

Common stock repurchased, including tax withholdings for share based compensation ( 1,068 ) ( 34 ) ( 286 )

Net cash provided by (used in) financing activities 552 ( 140 ) ( 2,293 )

Effect of foreign exchange rates

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

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 Corporation (“General Finance”), which allowed for our entry into select markets in Australia and New Zealand.

In addition to renting equipment, we sell new and used rental equipment, as well as related contractor supplies, parts and service.

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We consolidate variable interest entities if we are deemed the primary beneficiary of the entity.

The novel coronavirus (“COVID-19”) was first identified in people in late 2019.

Global Economic Conditions and COVID-19

Our operations are impacted by global economic conditions, including inflation, increased interest rates and supply chain constraints, and we take actions to modify our plans to address such economic conditions.

In 2022, for example, we intentionally held back on sales of rental equipment to ensure we had sufficient capacity for our customers.

In 2022, revenue from sales of rental equipment was largely flat year-over-year, however the number of units sold decreased approximately 17 percent year-over-year, as we held on to fleet to serve strong customer demand and to ensure greater fleet availability in the event industry supply chain challenges persist or worsen.

While the volume of sales of rental equipment decreased year-over-year, gross margin from sales of rental equipment increased 14.2 percentage points, which primarily reflected strong pricing and improved channel mix.

To date, our supply chain disruptions have been limited, but we may experience more severe supply chain disruptions in the future.

Interest rates on our debt instruments have increased recently.

For example, in November 2022, URNA issued $ 1.5 billion aggregate principal amount of senior secured notes at a 6 percent interest rate, while URNA's immediately prior issuance in August 2021 of $ 750 aggregate principal amount of senior unsecured notes was at a 3 ¾ percent interest rate.

Additionally, the weighted average interest rates on our variable debt instruments were 3.3 percent in 2022 and 1.4 percent in 2021.

We have experienced and are continuing to experience inflationary pressures.

A portion of inflationary cost increases is passed on to customers.

The most significant cost increases that are passed on to customers are for fuel and delivery, and there are other costs for which the pass through to customers is less direct, such as repairs and maintenance, and labor.

The impact of inflation and increased interest rates may be significant in the future.

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

COVID-19 spread rapidly throughout the world and, in March 2020, the World Health Organization characterized COVID-19 as a pandemic.

COVID-19 is a pandemic of respiratory disease spreading from person-to-person that poses a serious public health risk.

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

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.

Business-Industry Overview and Economic Outlook" 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.”

Uncertainty remains regarding the potential impact of existing and emerging variant strains of COVID-19 on the operations and financial position of United Rentals, and on the global economy, which will be driven by, among other things, any resurgences in cases, the effectiveness of vaccines against COVID-19 (including against emerging variant strains), and the measures that may in the future be implemented to protect public health.

In March 2020, we first experienced rental volume declines associated with COVID-19, and the COVID-19 impact was most pronounced in 2020.

In 2021 and 2022, we saw evidence of a continuing recovery of activity across our end-markets.

The health and safety of our employees and customers has been, and remains, our top priority, and we also implemented a detailed COVID-19 response plan, which we believe helped mitigate the impact of COVID-19 on our results.

Our Annual Report on Form 10-K for the year ended December 31, 2020 and our Quarterly Reports on Form 10-Q filed in 2021 and 2020 include detailed disclosures addressing the COVID-19 impact.

We continue to assess the economic environment in which we operate and any developments relating to the COVID-19 pandemic, and take appropriate actions to address the economic and other challenges we face.

Summary of Significant Accounting Policies

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We consider all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents.

Our cash equivalents at December 31, 2021 and 2020 consist of direct obligations of financial institutions rated A or better.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts.

Allowance for Credit Losses

We maintain allowances for credit losses.

These allowances reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectibility.

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Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method.

The range of estimated useful lives for property and equipment is two to 39 years.

The range of estimated useful lives for property and equipment is three to 40 years.

Ordinary repair and maintenance costs are charged to expense as incurred.

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Rental equipment is valued utilizing either a cost, market or income approach, or a combination of certain of these methods, depending on the asset being valued and the availability of market or income data.

Goodwill is calculated as the excess of the cost of the acquired business over the net of the fair value of the assets acquired and the liabilities assumed.

The intangible assets that we have acquired are non-compete agreements, customer relationships and trade names and associated trademarks.

The estimated fair values of these intangible assets reflect various assumptions about discount rates, revenue growth rates, operating margins, terminal values, useful lives and other prospective financial information.

Goodwill is calculated as the excess of the cost of the acquired business over the net of the fair value of the assets acquired and the liabilities assumed.

Non-compete agreements, customer relationships and trade names and associated trademarks are valued based on an excess earnings or income approach based on projected cash flows.

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assignment of goodwill to reporting units;

determination of the fair value of each reporting unit;

determination

of the fair value of each reporting unit;

and an assumption as to the form of the transaction in which the reporting unit would be acquired by a market participant (either a taxable or nontaxable transaction).

When conducting the goodwill impairment test, we are required to compare the fair value of our reporting units (which are our regions) with the carrying amount.

As discussed in note 5 to our consolidated financial statements, as of December 31, 2021, our divisions were our operating segments.

We conducted the goodwill impairment test as of October 1, 2021 at the reporting unit level, which is one level below the operating segment level.

We conducted the goodwill impairment test as of October 1, 2020 at the same reporting unit level, although at that time, the reporting unit was also the operating segment (see note 5 for further discussion of our segment structure).

As discussed in note 5 to our consolidated financial statements, our divisions are our operating segments.

We conduct the goodwill impairment test at the reporting unit level, which is one level below the operating segment level.

Financial Accounting Standards Board ("FASB") guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

We estimate the fair

value of our reporting units using a combination of an income approach based on the present value of estimated future cash flows and a market approach based on market price data of shares of our Company and other corporations engaged in similar businesses as well as acquisition multiples paid in recent transactions.

We estimate the fair value of our reporting units using a combination of an income approach based on the present value of estimated future cash flows and a market approach based on market price data of shares of our Company and other corporations engaged in similar businesses as well as acquisition multiples paid in recent transactions.

We believe this approach, which utilizes multiple valuation techniques, yields the most appropriate evidence of fair value.

In connection with our goodwill impairment test that was conducted as of October 1, 2022, we bypassed the optional qualitative assessment for each reporting unit and quantitatively compared the fair values of our reporting units with their carrying amounts.

Our goodwill impairment testing as of this date indicated that all of our reporting units, excluding our Mobile Storage reporting unit, had estimated fair values which exceeded their respective carrying amounts by at least 37 percent.

As discussed in note 4 to the consolidated financial statements, in May 2021, we completed the acquisition of General Finance.

All of the assets in the Mobile Storage reporting unit were acquired in the General Finance acquisition.

The estimated fair value of our Mobile Storage reporting unit exceeded its carrying amounts by eight percent.

As all of the assets in the Mobile Storage reporting unit were recorded at fair value as of the May 2021 acquisition date, we expected the percentage by which the fair value for this reporting unit exceeded the carrying value to be significantly less than the equivalent percentages determined for our other reporting units.

In connection with our goodwill impairment test that was conducted as of October 1, 2021, we bypassed the optional qualitative assessment for each reporting unit and quantitatively compared the fair values of our reporting units with their carrying amounts.

Our goodwill impairment testing as of this date indicated that all of our reporting units, excluding our Mobile Storage and Mobile Storage International reporting units, had estimated fair values which exceeded their respective carrying amounts by at least 59 percent.

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As all of the assets in the Mobile Storage and Mobile Storage International reporting units were recorded at fair value as of the May 2021 acquisition date, we expected the percentages by which the fair values for these reporting units exceeded the carrying values to be significantly less than the equivalent percentages determined for our other reporting units.

In connection with our goodwill impairment test that was conducted as of October 1, 2020, we bypassed the optional qualitative assessment for each reporting unit and proceeded directly to the first step of the goodwill impairment test.

We considered the impact of COVID-19 when performing the test, and it did not have a material impact on the test results.

Our goodwill impairment testing as of this date indicated that all of our reporting units, excluding our Fluid Solutions Europe reporting unit, had estimated fair values which exceeded their respective carrying amounts by at least 42 percent.

As discussed above, in July 2018, we completed the acquisition of BakerCorp.

All of the assets in the Fluid Solutions Europe reporting unit were acquired in the BakerCorp acquisition.

The estimated fair value of our Fluid Solutions Europe reporting unit exceeded its carrying amount by 22 percent.

As all of the assets in the Fluid Solutions Europe reporting unit were recorded at fair value as of the July 2018 acquisition date, we expected the percentage by which the Fluid Solutions Europe reporting unit’s fair value exceeded its carrying value to be significantly less than the equivalent percentages determined for our other reporting units.

Restructuring Charges

Costs associated with exit or disposal activities, including lease termination costs and certain employee severance costs associated with restructuring, branch closings or other activities, are recognized at fair value when they are incurred.

Other Intangible Assets

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The non-compete agreements are being amortized on a straight-line basis over initial periods of approximately 5 years.

The customer relationships are being amortized either using the sum of the years' digits method or on a straight-line basis over initial periods ranging from 5 to 15 years.

The customer relationships are being amortized either using the sum of the years' digits method or on a straight-line basis over initial periods generally ranging from 5 to 15 years.

The trade names and associated trademarks are being amortized using the sum of the years' digits method over initial periods of approximately 5 years.

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As discussed in note 3 to our consolidated financial statements, we recognize revenue in accordance with two different accounting standards:

1) Topic 606 (which addresses revenue from contracts with customers) and 2) Topic 842 (which

addresses lease revenue).

1) Topic 606 (which addresses revenue from contracts with customers) and 2) Topic 842 (which addresses lease revenue).

As discussed in note 3, most of our revenue is accounted for under Topic 842.

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The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

Significant estimates impact the calculation of the allowance for doubtful accounts, depreciation and amortization, income taxes and reserves for claims.

Significant estimates impact the calculation of the allowance for credit losses, depreciation and amortization, income taxes and reserves for claims.

Actual results could materially differ from those estimates.

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We recognize forfeitures of stock-based compensation as they occur.

Accounting/Disclosure Guidance Adopted in 2021

Simplifying the Accounting for Income Taxes.

In December 2019, the FASB issued guidance intended to simplify the accounting for income taxes.

The guidance removes the following exceptions:

1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, 2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, 3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary and 4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.

Additionally, the guidance simplifies the accounting for income taxes by:

1) requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, 2) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which

the book goodwill was originally recognized and when it should be considered a separate transaction, 3) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements (although the entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority), 4) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date and 5) making minor improvements for income tax accounting related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method.

Different components of the guidance required retrospective, modified retrospective or prospective adoption.

We adopted this guidance in the first quarter of 2021, and the impact on our financial statements was not material.

Amendments to Management's Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information .

In February 2021, a Securities and Exchange Commission ("SEC") rule intended to modernize, simplify, and enhance certain financial disclosure requirements became effective.

We have adopted this rule in this Form 10-K, and the impact on our financial statements was not material, although several disclosures were updated.

The primary disclosure changes we made associated with this rule were to remove:

1) discussions comparing 2020 and 2019 results, as such disclosures were included in our prior SEC filings, 2) selected financial data for the preceding five years and 3) the tabular disclosure of contractual obligations, although we continue to provide disclosures addressing the most significant categories of our short-term and long-term needs for cash.

Revenue Recognition

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1) Topic 606 (which addresses revenue from contracts with customers) and 2) Topic 842 (which addresses lease revenue).

Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties.

Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales

incentives and amounts collected on behalf of third parties.

A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account under Topic 606.

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Revenues by reportable segment and geographical market are presented in note 5 of the consolidated financial statements using the revenue captions reflected in our consolidated statements of operations.

The majority of our revenue is recognized in

our general rentals segment and in the U.S.

The majority of our revenue is recognized in our general rentals segment and in the U.S.

(for the year ended December 31, 2022, 74 percent and 90 percent, respectively).

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We had deferred revenue (associated with both Topic 842 and Topic 606) of $ 131 and $ 83 as of December 31, 2022 and 2021, respectively.

The increase in 2021 primarily reflects the impact of the General Finance acquisition discussed in note 4 to the consolidated financial statements.

As noted above, we are unsure of when the customer will return rented equipment.

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We manage credit risk associated with our accounts receivables at the customer level.

Because the same customers generate the revenues that are accounted for under both Topic 606 and Topic 842, the discussions below on credit risk and our allowances for doubtful accounts address receivables arising from revenues from both Topic 606 and Topic 842.

Because the same customers generate the revenues that are accounted for under both Topic 606 and Topic 842, the discussions below on credit risk and our allowance for credit losses address receivables arising from revenues from both Topic 606 and Topic 842.

Concentration of credit risk with respect to our receivables is limited because a large number of geographically diverse customers makes up our customer base.

Our largest customer accounted for less than one percent of total revenues in each of 2022, 2021, and 2020.

Our customer with the largest receivable balance represented approximately one percent and two percent of total receivables at December 31, 2021 and 2020, respectively.

Our customer with the largest receivable balance represented approximately one percent of total

receivables at December 31, 2022 and 2021.

We manage credit risk through credit approvals, credit limits and other monitoring procedures.

Our allowance for doubtful accounts reflects our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectibility.

Our allowance for credit losses reflects our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectibility.

Our estimate could require change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers.

Accordingly, we may be required to increase or decrease our allowances.

Accordingly, we may be required to increase or decrease our allowance.

Trade receivables that have contractual maturities of one year or less are written-off when they are determined to be uncollectible based on the criteria necessary to qualify as a deduction for federal tax purposes.

Write-offs of such receivables require management approval based on specified dollar thresholds.

See the table below for a rollforward of our allowance for doubtful accounts.

In 2020, we adopted accounting guidance that requires companies to present certain financial assets net of the amount expected to be collected.

Adoption of this guidance did not materially impact our financial statements.

See the table below for a rollforward of our allowance for credit losses.

The measurement of expected credit losses is based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectibility.

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Substantially all of our non-lease trade receivables are due in one year or less.

As discussed above, most of our equipment rental revenue is accounted for as lease revenue (such revenue represented 77 percent of our total revenues for the year ended December 31, 2021), and these revenues account for corresponding portions of the $ 1.677 billion of net accounts receivable and the associated allowance for doubtful accounts of $ 112 reported on our consolidated balance sheet as of December 31, 2021.

As discussed above, most of our equipment rental revenue is accounted for as lease revenue (such revenue represented 79 percent of our total revenues for the year ended December 31, 2022), and these revenues account for corresponding portions of the $ 2.004 billion of net accounts receivable and the associated allowance for credit losses of $ 134 as of December 31, 2022.

As discussed above, most of our equipment rental revenue is accounted for under Topic 842.

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We manage credit risk associated with our accounts receivables at the customer level.

The rollforward of our allowance for doubtful accounts (in total, and associated with revenues arising from both Topic 606 and Topic 842) is shown

The rollforward of our allowance for credit losses (in total, and associated with revenues arising from both Topic 606 and Topic 842) is shown below.

Year ended December 31,

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(1) Reflects bad debt expenses recognized within selling, general and administrative expenses (associated with Topic 606 revenues).

(2) Primarily reflects doubtful accounts associated with lease revenues that were recognized as a reduction to equipment rentals revenue (primarily associated with Topic 842 revenues).

(2) Primarily reflects credit losses associated with lease revenues that were recognized as a reduction to equipment rentals revenue (primarily associated with Topic 842 revenues).

(3) Primarily represents write-offs of accounts, net of immaterial recoveries and other activity.

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Our contracts do not generally include a significant financing component.

For certain products or services and customer types, we require payment before the products or services are delivered to the customer.

For certain products or services and

customer types, we require payment before the products or services are delivered to the customer.

Our contracts with customers do not generally result in significant obligations associated with returns, refunds or warranties.

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We monitor and review our estimated standalone selling prices on a regular basis.

General Finance Acquisition

On May 25, 2021, we completed the acquisition of General Finance.

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Its network served diverse end-markets, including construction, commercial, industrial, retail, transportation, petrochemical, consumer, natural resources, governmental and education.

As of March 31, 2021, General Finance’s rental fleet consisted of approximately 100,000 units at an original cost of approximately $ 650 .

For the 12 months ending December 31, 2020, General Finance had revenues of $ 342 (such amount represents General Finance’s historic revenue presented in accordance with our revenue mapping).

The acquisition is expected to:

• Complement our leading positions in general construction and industrial rentals and specialty rentals, which will further differentiate us through our ability to deliver value as a one-stop-shop for customers;

• Create immediate cross-sell opportunities, and allow us to introduce mobile storage and modular office solutions in service areas that previously were not served by General Finance;

• Provide entry into Australia and New Zealand, with an established platform run by a seasoned management team, and with a strong growth strategy already in place.

The acquisition:

• Complemented our leading positions in general construction and industrial rentals and specialty rentals, which further differentiated us through our ability to deliver value as a one-stop-shop for customers;

• Created immediate cross-sell opportunities, and allowed us to introduce mobile storage and modular office solutions in service areas that previously were not served by General Finance;

• Provided entry into Australia and New Zealand, with an established platform run by a seasoned management team, and with a strong growth strategy already in place.

The aggregate consideration paid to acquire General Finance was $ 1.032 billion.

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The following table summarizes the fair values of the assets acquired and liabilities assumed.

The purchase price allocations for these assets and liabilities are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period, although we do not expect material future changes.

Cash and cash equivalents $ 13

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We estimated that $ 6 would be uncollectible.

(2) The following table reflects the fair values and useful lives of the acquired intangible assets identified based on our preliminary purchase accounting assessments:

(2) The following table reflects the fair values and useful lives of the acquired intangible assets identified based on our purchase accounting assessments:

Fair value Life (years)

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(3) All of the goodwill was assigned to our specialty segment.

We have not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed, although we do not expect material future changes.

Once finalized, we expect that the goodwill that results from the acquisition will be primarily reflective of General Finance's going-concern value, the value of General Finance's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that would not be available to other market participants.

The level of goodwill that resulted from the acquisition is primarily reflective of General Finance's going-concern value, the value of General Finance's assembled workforce and new customer relationships expected to arise from the acquisition.

$ 28 of goodwill is expected to be deductible for income tax purposes.

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It is not practicable to reasonably estimate the amounts of revenue and earnings of General Finance since the acquisition date, primarily due to the movement of fleet between URI locations and the acquired General Finance locations, as well as our corporate structure and the allocation of corporate costs.

Ahern Rentals Acquisition

On December 7, 2022, we completed the acquisition of assets of Ahern Rentals, which was accounted for as a business combination.

Ahern Rentals was the eighth largest equipment rental company in North America and served customers primarily in the construction and industrial sectors across 30 states.

The acquisition is expected to:

• Increase capacity in key geographies, with concentrations on both U.S.

coasts and in the Gulf region;

• Increase availability of high-demand aerial and material handling equipment for our customers;

• Create immediate cross-sell opportunities to an expanded customer base.

The aggregate consideration paid to acquire Ahern Rentals was $ 2.012 billion.

The acquisition and related fees and expenses were funded through the issuance of $ 1.5 billion principal amount of 6 percent Senior Secured Notes (see note 12 to the consolidated financial statements for further information) and drawings on our ABL facility.

The following table summarizes the net book values of the assets acquired and liabilities assumed as of the acquisition date.

The initial accounting for the acquisition is incomplete, principally related to finalizing 1) the measurement of the acquired net working capital, 2) the valuation of the acquired rental equipment (inclusive of the completion of our usual and customary procedures to validate the existence of the acquired rental fleet) and intangible assets, 3) the impact of lease

accounting and 4) the associated income tax considerations.

All amounts below could change, potentially materially, as there is significant additional information that we must obtain to finalize the valuations of the assets acquired and liabilities assumed, and to establish the value of the potential intangible assets, primarily because of the proximity of the acquisition date to the balance sheet date of December 31, 2022.

Inventory $ 44

Rental equipment 1,352

Property and equipment 171

Other assets 8

Total identifiable assets acquired 1,575

Current liabilities ( 33 )

Total liabilities assumed ( 33 )

Net identifiable assets acquired 1,542

Goodwill (1) 470

Net assets acquired $ 2,012

(1) Goodwill was primarily assigned to our general rentals segment.

As noted above, we have not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed, primarily because of the proximity of the acquisition date to the balance sheet date of December 31, 2022.

As such, we expect that goodwill will change materially from the amount noted above.

Once finalized, we expect that the goodwill that results from the acquisition will be primarily reflective of Ahern Rentals' going-concern value, the value of Ahern Rentals' assembled workforce and new customer relationships expected to arise from the acquisition.

All of the goodwill is expected to be deductible for income tax purposes (because this is a purchase of assets, the goodwill that is deductible for income tax purposes equals the total acquired goodwill.

As noted above, we expect that goodwill will change materially from the amount above).

The debt issuance costs associated with the issuance of debt to fund the acquisition are reflected, net of amortization subsequent to the acquisition date, in long-term debt in our consolidated balance sheets.

It is not practicable to reasonably estimate the amounts of revenue and earnings of Ahern Rentals since the acquisition date, primarily due to the movement of fleet between URI locations and the acquired Ahern Rentals locations, as well as our corporate structure and the allocation of corporate costs.

Pro forma financial information

The pro forma information below gives effect to the General Finance acquisition as if it had been completed on January 1, 2020 (the "pro forma acquisition date”).

The pro forma information is not necessarily indicative of our results had the acquisition been completed on the above date, nor is it necessarily indicative of our future results.

The pro forma information reflects General Finance’s historic revenue presented in accordance with our revenue mapping, does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisition, and also does not reflect additional revenue opportunities following the acquisition.

The pro forma information includes adjustments to record the acquired assets and liabilities of General Finance at their respective fair values based on available information and to give effect to the financing for the acquisition.

The pro forma adjustments reflected in the table below are subject to change as additional analysis is performed.

The purchase price allocations for the assets acquired and liabilities assumed are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period, although we do not expect material future changes.

The pro forma information below gives effect to 1) the General Finance acquisition as if it had been completed on January 1, 2020 and 2) the Ahern Rentals acquisition as if it had been completed on January 1, 2021.

The tables below present unaudited pro forma consolidated income statement information as if the General Finance and Ahern Rentals acquisitions had been included in our consolidated results for the entire periods reflected.

The pro forma information is not necessarily indicative of our revenue results had the acquisitions been completed on the above dates, nor is it necessarily indicative of our future results.

The pro forma revenue information reflects the historic revenues of General Finance and Ahern Rentals presented in accordance with our revenue mapping, and does not include any additional revenue opportunities following the acquisitions.

Ahern Rentals’ historic revenue only includes revenue associated with the purchased assets.

For Ahern Rentals, pro forma revenue information is presented below but pro forma income information is not presented, as we expect that there will be material adjustments to the values of the assets acquired, including establishing the value of the potential intangible assets, and liabilities assumed, and, as such, we cannot presently provide meaningful pro forma income information.

The acquisition measurement period for General Finance has ended and the values assigned to the General Finance assets acquired and liabilities assumed are final.

The opening balance sheet values assigned to the Ahern Rentals assets acquired and liabilities assumed are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period.

We expect that such valuation changes could be material, primarily because of the proximity of the acquisition date to December 31, 2022.

Increases or decreases in the estimated fair values of the net assets acquired may impact our statements of income in future periods.

We expect that the values assigned to the assets acquired and liabilities assumed will be finalized during the one-year measurement period following the acquisition date.

The table below presents unaudited pro forma consolidated income statement information as if General Finance had been included in our consolidated results for the entire periods reflected:

In future periods, we expect to provide pro forma revenue and income information for Ahern Rentals.

General Finance is excluded from the 2022 presentation below because it was included in our results for the entire year ended December 31, 2022.

United Rentals historic revenues $ 11,642 $ 9,716

General Finance historic revenues — 144

Ahern Rentals historic revenues 827 842

Pro forma revenues $ 12,469 $ 10,702

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Intangible asset amortization (3) ( 11 )

Goodwill impairment (4) — 14

Interest expense (4) ( 6 )

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(3) Intangible asset amortization was adjusted to include amortization of the acquired intangible assets.

(4) The goodwill impairment charge that General Finance recognized during the year ended December 31, 2020 was eliminated.

If the acquisition had occurred as of the pro forma acquisition date, this impairment charge would not have been recognized (instead, we would have tested for goodwill impairment based on the post-acquisition reporting unit structure).

(4) As discussed above, we funded the General Finance acquisition using drawings on our ABL facility.

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(5) Historic interest on debt that is not part of the combined entity was eliminated.

The adjustment for the year ended December 31, 2021 includes a debt redemption loss of $ 12 .

The adjustment includes a debt redemption loss of $ 12 .

(6) Merger related costs primarily comprised of financial and legal advisory fees associated with the General Finance acquisition were eliminated as they were assumed to have been recognized prior to the pro forma acquisition date.

The adjustment for the year ended December 31, 2021 includes $ 9 of merger related costs recognized by General Finance prior to the acquisition.

The adjustment includes $ 9 of merger related costs recognized by General Finance prior to the acquisition.

(7) General Finance historically recognized changes in the valuation of bifurcated derivatives in convertible notes in its statements of operations.

These historic changes were eliminated because the bifurcated derivatives are not part of the combined entity.

In addition to the General Finance acquisition discussed above, during 2021, we completed a series of acquisitions which were not significant individually or in the aggregate.

See the consolidated statements of cash flows for the total cash outflow for purchases of other companies, net of cash acquired, which includes General Finance and the other completed acquisitions, and see note 10 to our consolidated financial statements for a rollforward showing the goodwill acquired associated with these acquisitions.

The intangible assets acquired in the General Finance acquisition are discussed above, and $ 66 of intangible assets were acquired in 2021 associated with the other acquisitions.

In addition to the General Finance and Ahern Rentals acquisitions discussed above, during 2022 and 2021, we completed a series of acquisitions which were not significant individually or in the aggregate.

See the consolidated statements of cash flows for the total cash outflow for purchases of other companies, net of cash acquired, which includes General Finance, Ahern Rentals and the other completed acquisitions, and see note 9 to our consolidated financial statements for rollforwards showing the goodwill acquired associated with these acquisitions.

Segment Information

Our reportable segments are i) general rentals and ii) specialty (formerly "trench, power and fluid solutions").

In the fourth quarter of 2021, following a realignment of certain of our divisions and regions, and changes in leadership roles and responsibilities, we updated our analysis of operating segments and concluded that our divisions now represent our operating segments.

Prior to the fourth quarter of 2021, our regions were our operating segments.

While this update reflects a change in operating segments, it did not result in any changes to the rental locations in each reportable segment (see Item 2—Properties for detail on the locations in each reportable segment), and, as a result, there were no changes to the historically reported segment financial information.

Our reportable segments are i) general rentals and ii) specialty.

Prior to the fourth quarter of 2021, our regions

were our operating segments.

While this update reflects a change in operating segments, it did not result in any changes to the rental locations in each reportable segment, and, as a result, there were no changes to the historically reported segment financial information.

As noted below, we evaluate segment performance primarily based on segment equipment rentals gross profit.

The primary change resulting from the change in segment presentation is to our ongoing review of segment equipment rentals margins, which we monitor on a quarterly basis to assess margin similarity between operating segments.

Because of the change in operating segments, this margin analysis is now conducted at the division level, while it was historically performed at the region level.

Because of the change in operating segments, this margin analysis is now conducted at the division level, while it was historically (prior to the realignment in the fourth quarter of 2021) performed at the region level.

As discussed further in note 2 to our consolidated financial statements ("Evaluation of Goodwill Impairment"), we test for goodwill impairment at the reporting unit (the region, which is one level below the operating segment (division)) level, and the change in the segment structure did not impact our goodwill impairment testing.

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The specialty segment is a single division that is both an operating segment and a reportable segment.

We believe that the divisions that are aggregated into our reportable segments have similar economic characteristics, as each region is capital intensive, offers similar products to similar customers, uses similar methods to distribute its products, and is subject to similar competitive risks.

We believe that the divisions that are aggregated into our reportable segments have similar economic characteristics, as each division is capital intensive, offers similar products to similar customers, uses similar methods to distribute its products, and is subject to similar competitive risks.

The aggregation of our divisions also reflects the management structure that we use for making operating decisions and assessing performance.

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( 445 ) ( 424 ) ( 669 )

Other (expense) income, net ( 7 ) 8 10

Other income (expense), net 15 ( 7 ) 8

Income before provision for income taxes $ 2,802 $ 1,846 $ 1,139

___________________

(1) Primarily reflects transaction costs associated with the General Finance acquisition discussed in note 4 to the consolidated financial statements.

(1) Reflects transaction costs associated with the General Finance acquisition discussed in note 4 to the consolidated financial statements.

Merger related costs only include costs associated with major acquisitions that significantly impact our operations.

For additional information, see "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-Other costs/(income)-merger related costs" below.

(2) Primarily reflects severance and branch closure charges associated with our restructuring programs.

For additional information, see note 6 to the consolidated financial statements.

(2) Primarily relates to branch closure charges and severance costs associated with our closed restructuring programs.

As of December 31, 2022, there were no open restructuring programs.

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

In July 2018, we completed the acquisition of 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.

Our presence in Europe, Australia and New Zealand is limited, and the foreign information in the table below primarily reflects Canada.

The foreign information in the table below primarily reflects Canada.

The following table presents geographic area information for the years ended December 31, 2022, 2021 and 2020, except for balance sheet information, which is presented as of December 31, 2022 and 2021:

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Total revenue $ 7,797 $ 733 $ 8,530

Restructuring and Asset Impairment Charges

Restructuring charges primarily include severance costs associated with headcount reductions, as well as branch closure charges.

We incur severance costs and branch closure charges in the ordinary course of our business.

We only include such costs that are part of a restructuring program as restructuring charges.

Since the first such program was initiated in 2008, we have completed five restructuring programs and have incurred total restructuring charges of $ 352 .

Closed Restructuring Programs

Our closed restructuring programs were initiated either in recognition of a challenging economic environment or following the completion of certain significant acquisitions.

As of December 31, 2021, the total liability associated with the closed restructuring programs was $ 9 .

As of December 31, 2021, we have incurred total restructuring charges under the closed restructuring programs of $ 335 , comprised of $ 194 of branch closure charges and $ 141 of severance and other costs.

2020-2021 Cost Savings Restructuring Program

In the fourth quarter of 2019, we initiated a restructuring program associated with the consolidation of certain common functions, the relocation of our shared-service facilities and certain other cost reduction measures.

We did not recognize material costs associated with this program in 2019, which is excluded from the table below.

We closed this program in the first quarter of 2022 and do not expect to expect to recognize significant future costs under the program.

The table below provides certain information concerning our restructuring charges under the 2020-2021 Cost Savings restructuring program:

Description Beginning

Reserve Balance

Expenses (1) Payments

and Other Ending

Reserve Balance

Year Ended December 31, 2020:

Branch closure charges $ — $ 7 $ ( 4 ) $ 3

Severance and other — 8 ( 6 ) 2

Total $ — $ 15 $ ( 10 ) $ 5

Year Ended December 31, 2021:

Branch closure charges $ 3 $ — $ ( 2 ) $ 1

Severance and other 2 1 ( 3 ) —

Total $ 5 $ 1 $ ( 5 ) $ 1

________________

(1) Reflected in our consolidated statements of income as “Restructuring charge” (such charge also includes activity under our other restructuring programs).

The restructuring charges are not allocated to our segments.

As of December 31, 2021, we have incurred total restructuring charges under the 2020-2021 Cost Savings restructuring program of $ 17 , comprised of $ 8 of branch closure charges and $ 9 of severance and other costs.

Asset Impairment Charges

In addition to the restructuring charges discussed above, during the years ended December 31, 2021, 2020 and 2019, we recorded asset impairment charges of $ 14 , $ 36 and $ 5 , respectively, primarily in our general rentals segment.

The 2020 asset impairment charges, which were not related to COVID-19, are primarily reflected in depreciation of rental equipment in our consolidated statements of income and principally relate to the discontinuation of certain equipment programs.

Prepaid Expenses and Other Assets

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(1) Reflects refundable deposits on expected purchases, primarily of rental equipment, pursuant to advanced purchase agreements.

Such deposits are presented as a component of our cash flow from operations when paid.

The decrease in 2021 primarily reflects purchases of equipment that we had placed deposits on as of December 31, 2020.

Such deposits are presented as a component of cash flows from operations when paid.

(2) Reflects reimbursements due for advertising that promotes a vendor’s products or services.

See note 2 ("Advertising Expense") for further detail.

(3) The year-over-year increase in the income tax assets primarily relates to tax depreciation benefits associated with the Ahern Rentals acquisition discussed in note 4 to the consolidated financial statements.

The tax depreciation deductions generated by the Ahern Rentals acquisition resulted in an income tax receivable associated with U.S.

federal and state tax payments made prior to the acquisition (we expect that this receivable will reduce the cash paid for income taxes in 2023).

(4) Includes multiple items, none of which are individually significant.

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_________________

(1) As discussed above, disciplined management of capital expenditures and fleet capacity is a component of our COVID-19 response plan.

(1) Disciplined management of capital expenditures and fleet capacity is a component of our COVID-19 response plan.

In 2020, when we significantly reduced capital expenditures largely due to COVID-19, net rental equipment declined $ 1.082 billion.

The increase in net rental equipment in 2021 primarily reflects net rental capital expenditures (purchases of rental equipment less proceeds from sales of rental equipment) that exceeded historic (pre-COVID-19) levels, as well as the impact of the General Finance acquisition discussed in note 4 to the consolidated financial statements.

Net rental capital expenditures were $ 2.030 billion, $ 103 and $ 1.301 billion in 2021, 2020 and December 31, 2019, respectively.

Capital expenditures in 2022 and 2021 have exceeded historic (pre-COVID-19) levels.

The increase in net rental equipment in 2022 primarily reflects net rental capital expenditures (purchases of rental equipment less proceeds from sales of rental equipment) that exceeded historic levels, as well as the impact of the Ahern Rentals acquisition discussed in note 4 to the consolidated financial statements.

Net rental capital expenditures were $ 2.471 billion, $ 2.030 billion and $ 103 in 2022, 2021 and 2020, respectively.

Property and Equipment

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(2) Includes goodwill adjustments for the effect on goodwill of changes to net assets acquired during the measurement period, which were not significant to our previously reported operating results or financial condition.

(3) For additional detail on the May 2021 acquisition of General Finance, which was assigned to our specialty segment and accounted for most of the goodwill related to acquisitions in 2021, and on the December 2022 acquisition of Ahern Rentals, which was primarily assigned to our general rentals segment and accounted for most of the goodwill related to acquisitions in 2022, see note 4 to our consolidated financial statements.

The negative goodwill related to acquisitions for the Specialty segment in 2022 primarily reflects measurement period adjustments associated with the General Finance acquisition, partially offset by other acquisition activity.

Other intangible assets were comprised of the following at December 31, 2022 and 2021:

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Amortization Net

Non-compete agreements 51 months $ 65 $ 13 $ 52

Non-compete agreements 3 years $ 69 $ 22 $ 47

Customer relationships 5 years $ 2,349 $ 1,949 $ 400

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Amount Accumulated

Non-compete agreements 35 months $ 12 $ 6 $ 6

Customer relationships 6 years $ 2,252 $ 1,614 $ 638

Trade names and associated trademarks 4 years $ 8 $ 4 $ 4

Our other intangibles assets, net at December 31, 2021 include the following assets associated with the acquisition of General Finance discussed in note 4 to our consolidated financial statements.

No residual value has been assigned to these assets, which are being amortized using the sum of the years' digits method, which we believe best reflects the estimated pattern in which the economic benefits will be consumed.

The intangible asset values are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period, although we do not expect material future changes.

December 31, 2021

Weighted-Average Remaining

Amortization Period Net Carrying

Non-compete agreements 4 years $ 65 $ 13 $ 52

Customer relationships 5 years $ 2,389 $ 1,835 $ 554

Trade names and associated trademarks 4 years $ 15 $ 6 $ 9

As discussed in note 4 to our consolidated financial statements, on December 7, 2022, we completed the acquisition of Ahern Rentals.

We have not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed, and to establish the value of the potential intangible assets, primarily because of the proximity of the acquisition date to the balance sheet date of December 31, 2022.

As such, we have not yet recorded, as of December 31, 2022, any intangible assets associated with the acquisition.

Amortization expense for other intangible assets was $ 219 , $ 233 and $ 250 for the years ended December 31, 2022, 2021 and 2020, respectively.

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$ 1,145 $ 881

(1) The increase from December 31, 2020 to December 31, 2021 was primarily due to a higher bonus accrual, which reflects increased profitability.

(2) Primarily relates to branch closure charges and severance costs.

See note 6 for additional detail.

_________________

(1) Primarily relates to branch closure charges and severance costs associated with our closed restructuring programs.

As of December 31, 2022, there were no open restructuring programs.

(2) Reflects amounts billed to customers in excess of recognizable revenue.

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The carrying amounts reported in our consolidated balance sheets for accounts receivable, accounts payable and accrued expenses and other liabilities approximate fair value due to the immediate to short-term maturity of these financial instruments.

The fair values of our ABL, accounts receivable securitization and term loan facilities and finance leases approximated their book values as of December 31, 2021 and 2020.

The fair values of our variable rate debt facilities and finance leases approximated their book values as of December 31, 2022 and 2021.

The estimated fair values of our other financial instruments, all of which are categorized in Level 1 of the fair value hierarchy, as of December 31, 2022 and 2021 have been calculated based upon available market information, and were as follows:

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Debt, net of unamortized original issue premiums and unamortized debt issuance costs, consists of the following:

Repurchase facility expiring 2023 (1) $ 100 $ —

Accounts receivable securitization facility expiring 2024 (1) 959 843

$ 3.75 billion ABL facility expiring 2024 (1)

Term loan facility expiring 2025 (1) 953 962

5 7 / 8 percent Senior Notes due 2026 (2)

$ 4.25 billion ABL facility expiring 2027 (1)

5 1 / 2 percent Senior Notes due 2027 (2)

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4 7 / 8 percent Senior Notes due 2028 (3)

6 percent Senior Secured Notes due 2029 (4)

5 1 / 4 percent Senior Notes due 2030

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(1) The table below presents financial information associated with our variable rate indebtedness as of and for the year ended December 31, 2022.

The repurchase facility is discussed further below (see "Short-term debt-Repurchase facility").

There is no borrowing capacity under the repurchase facility because it is an uncommitted facility.

We have borrowed the full available amount under the term loan facility.

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The average amount of debt outstanding under the term loan facility decreases slightly each quarter due to the requirement to repay a portion of the principal obligation.

ABL facility Accounts receivable securitization facility Term loan facility

ABL facility Accounts receivable securitization facility Term loan facility Repurchase facility

Borrowing capacity, net of letters of credit

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Weighted-average interest rate on average debt outstanding 3.2 % 2.7 % 3.8 % 4.1 %

1.3 % 1.0 % 1.9 %

Maximum month-end debt outstanding

1,621 1,097 968 100

The maximum outstanding debt under the ABL facility exceeded the average outstanding debt primarily due to the use of borrowings under the ABL facility to fund most of the cost of the General Finance acquisition discussed in note 4 to the consolidated financial statements.

(2) URNA redeemed all of its 5 7 / 8 percent Senior Notes in August 2021.

Upon redemption, we recognized a loss of $ 30 in interest expense, net, reflecting the difference between the net carrying amount and the total purchase price of the redeemed notes.

The maximum outstanding debt under the ABL facility exceeded the average outstanding debt primarily due to the use of borrowings under the ABL facility to fund the partial redemption of the 5 1 / 2 percent Senior Notes discussed below.

(2) In May 2022, URNA redeemed $ 500 principal amount of its 5 1 / 2 percent Senior Notes.

Upon redemption, we recognized a loss of $ 16 , which reflected the difference between the net carrying amount and the total purchase price of the redeemed notes.

(3) URNA separately issued 4 7 / 8 percent Senior Notes in August 2017 and in September 2017.

Following the issuances, we consummated an exchange offer pursuant to which most of the 4 7 / 8 percent Senior Notes issued in September 2017 were exchanged for additional notes fungible with the 4 7 / 8 percent Senior Notes issued in August 2017.

(4) In August 2021, URNA issued $ 750 aggregate principal amount of 3 3 / 4 percent Senior Notes due 2032.

Following the issuances, URNA consummated an exchange offer pursuant to which most of the 4 7 / 8 percent Senior Notes issued in September 2017 were exchanged for additional notes fungible with the 4 7 / 8 percent Senior Notes issued in August 2017.

As of December 31, 2022, the total above is comprised of two separate 4 7 / 8 percent Senior Notes, one with a book value of $ 1.659 billion and one with a book value of $ 4 .

(4) In November 2022, URNA issued $ 1.5 billion aggregate principal amount of 6 percent Senior Secured Notes due 2029.

See below for additional detail on the issued debt.

(5) As of December 31, 2022, short-term debt primarily reflected borrowings under the repurchase facility that is discussed further below and the short-term portion of our finance leases.

As of December 31, 2021, short-term debt primarily reflected borrowings under our accounts receivable securitization facility.

In June 2022, the accounts receivable securitization facility was extended to June 2024, and it was not a short-term debt instrument as of December 31, 2022.

The weighted average interest rates on our short-term debt, excluding finance leases, were 5.4 percent and 0.9 percent as of December 31, 2022 and 2021, respectively.

The increase in the weighted average interest rate on the short-term debt primarily reflects rising interest rates (see note 1 to the consolidated financial statements for a discussion of global economic conditions) and changes in the composition of short-term debt (as of December 31, 2022, short-term debt primarily reflected borrowings under the repurchase facility, while short-term debt at December 31, 2021 primarily reflected borrowings under the accounts receivable securitization facility).

See note 13 to the consolidated financial statements for further discussion on our finance leases.

Short-term debt

As of December 31, 2021, our short-term debt primarily reflects $ 843 of borrowings under our accounts receivable securitization facility.

As of December 31, 2022, our short-term debt primarily reflects borrowings under the repurchase facility and the short-term portion of our finance leases.

Repurchase facility.

In June 2022, URNA entered into an uncommitted repurchase facility pursuant to which it may obtain short-term financing in an amount up to $ 100 , secured by a subordinated note issued to URNA by our U.S.

special purpose vehicle which holds receivable assets relating to our accounts receivable securitization facility.

Any repurchase transaction will have a one-month maturity unless terminated earlier as a result of a termination event under the accounts receivable securitization facility or the occurrence of any other event of default under the repurchase facility.

The Company will guarantee the obligations of URNA under the repurchase facility.

The repurchase facility is scheduled to expire on June 23, 2023 unless extended by the mutual consent of the parties to the Repurchase Facility agreement.

Long-term debt

Accounts receivable securitization facility .

In 2021, the accounts receivable securitization facility was amended, primarily to increase the facility size and to extend the maturity date which may be further extended on a 364 -day basis by mutual agreement with the purchasers under the facility.

The amended facility expires on June 24, 2022 and has a facility size of $ 900 .

Borrowings under the facility are reflected as short-term debt on our consolidated balance sheets.

In 2022, the accounts receivable securitization facility was amended, primarily to increase the facility size, extend the maturity date and transition to an interest rate based on the Secured Overnight Financing Rate ("SOFR").

The facility expires on June 24, 2024, may be extended on a 364 -day basis by mutual agreement with the purchasers under the facility and has a facility size of $ 1.1 billion.

Key provisions of the facility include the following:

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See the table above for financial information associated with the accounts receivable securitization facility.

Long-term debt

ABL facility.

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The borrowing base is subject to certain reserves and caps customary for financings of this type.

All amounts borrowed under the credit agreement must be repaid on or before February 2024.

All amounts borrowed under the credit agreement must be repaid on or before June 2027.

Loans under the credit agreement bear interest, at URNA’s option:

(i) in the case of loans in U.S.

dollars, at a rate equal to the London interbank offered rate or an alternate base rate, in each case plus a spread, (ii) in the case of loans in Canadian dollars, at a rate equal to the Canadian prime rate or an alternate rate (Bankers' Acceptance Rate), in each case plus a spread, (iii) in the case of loans in Euros, at a rate equal to the London interbank offered rate or an alternate base rate, in each case plus a spread, (iv) in the case of loans in British pounds, at a rate equal to daily simple Sterling Overnight Interbank Average or an alternate base rate, in each case plus a spread or (v) in the case of loans in Australian Dollars or New Zealand Dollars, at a rate equal to the applicable bank bill rate or an alternate base rate, in each case plus a spread.

dollars, at a rate equal to the term SOFR or daily SOFR (in each case plus a 0.10 percent credit margin adjustment) or an alternate base rate, in each case plus a spread, (ii) in the case of loans in Canadian dollars, at a rate equal to the Canadian prime rate or an alternate rate (Bankers' Acceptance Rate), in each case plus a spread, (iii) in the case of loans in Euros, at a rate equal to the Euro interbank offered rate or an alternate base rate, in each case plus a spread, (iv) in the case of loans in British pounds, at a rate equal to the daily simple Sterling Overnight Interbank Average or an alternate base rate, in each case plus a spread or (v) in the case of loans in Australian Dollars or New Zealand Dollars, at a rate equal to the applicable bank bill rate or an alternate base rate, in each case plus a spread.

The interest rates under the credit agreement are subject to change based on the availability in the facility.

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As of December 31, 2022, availability under the ABL facility has exceeded the required threshold and, as a result, this financial covenant was inapplicable.

assets, (iii) repurchase, or pay dividends or make certain other restricted payments on, capital stock and certain other securities, (iv) prepay certain indebtedness and (v) make acquisitions and investments.

In addition, the credit agreement contains customary negative covenants applicable to Holdings, URNA and our subsidiaries, including negative covenants that restrict the ability of such entities to, among other things, (i) incur additional indebtedness or engage in certain other types of financing transactions, (ii) allow certain liens to attach to assets, (iii) repurchase, or pay dividends or make certain other restricted payments on, capital stock and certain other securities, (iv) prepay certain indebtedness and (v) make acquisitions and investments.

The borrowings under the credit agreement by URNA are secured by substantially all of our assets and substantially all of the assets of certain of our U.S.

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The term loan facility contains customary negative covenants applicable to URNA and its subsidiaries, including negative covenants that restrict the ability of such entities to, among other things, (i) incur additional indebtedness;

(ii) incur additional liens;

(ii) incur additional

(iii) make dividends and other restricted payments;

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In November 2016, URNA issued $ 750 aggregate principal amount of 5 1 / 2 percent Senior Notes which are due May 15, 2027 (the “5 1 / 2 percent Notes”).

In February 2017, URNA issued $ 250 aggregate principal amount of 2027 5 1 / 2 percent Notes as an add-on to the existing 2027 5 1 / 2 percent Notes, after which the aggregate principal amount of outstanding 2027 5 1 / 2 percent Notes was $ 1.0 billion.

In February 2017, URNA issued $ 250 aggregate principal amount of 5 1 / 2 percent Notes as an add-on to the existing 5 1 / 2 percent Notes.

As noted above, in May 2022, URNA redeemed $ 500 principal amount of the 5 1 / 2 percent Notes, and the aggregate principal amount of outstanding 5 1 / 2 percent Notes was $ 500 as of December 31, 2022.

The notes issued in February 2017 have identical terms, and are fungible, with the existing 5 1 / 2 percent Notes.

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The 3 7 / 8 percent Notes may be redeemed on or after November 15, 2022, at specified redemption prices that range from 101.938 percent in 2022, to 100 percent in 2025 and thereafter, in each case, plus accrued and unpaid interest, if any.

In addition, at any time on or prior to November 15, 2022, up to 40 percent of the aggregate principal amount of the 3 7 / 8 percent

Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 103.875 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any.

In addition, at any time on or prior to November 15, 2022, up to 40 percent of the aggregate principal amount of the 3 7 / 8 percent Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 103.875 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any.

The indenture governing the 3 7 / 8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens and (ii) mergers and consolidations, as well as a requirement to timely file periodic reports with the SEC.

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Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions.

In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the Initial 4 7 / 8 percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing.

Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing.

The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding Initial 4 7 / 8 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

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The effective interest rate on the Initial 4 7 / 8 percent Notes, which includes the impact of the original issue premium, is 4.86 percent.

6 percent Senior Secured Notes due 2029 .

In November 2022, URNA issued $ 1.500 billion aggregate principal amount of 6 percent Senior Secured Notes (the “6 percent Notes”) which are due December 15, 2029.

The 6 percent Notes are guaranteed by Holdings and certain domestic subsidiaries of URNA and are secured on a first-priority basis by liens on substantially all of URNA’s and the guarantors’ assets that secure the ABL facility and the term loan facility, subject to certain exceptions.

The 6 percent Notes may be redeemed on or after December 15, 2025, at specified redemption prices that range from 103.000 percent in 2025, to 100 percent in 2027 and thereafter, in each case, plus accrued and unpaid interest, if any.

Up to 10 percent of the aggregate principal amount of the 6 percent Notes may also be redeemed during each period from (i) the issue date to, but excluding, December 15, 2023, (ii) December 15, 2023 to, but excluding, December 15, 2024 and (iii) December 15, 2024 to, but excluding, December 15, 2025, at a redemption price equal to 103.000 percent plus accrued and unpaid interest, if any.

In addition, at any time on or prior to December 15, 2025, up to 40 percent of the aggregate principal amount of the 6 percent Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 106.000 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any.

The indenture governing the 6 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens and (ii) mergers and consolidations, as well as a requirement to timely file periodic reports with the SEC.

Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions.

In addition, the requirements to provide subsidiary guarantees, to give further assurances and to make an offer to repurchase the notes upon the occurrence of a change of control will not apply to URNA and its restricted subsidiaries during any period when the 6 percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing.

The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 6 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

5 1 / 4 percent Senior Notes due 2030.

In May 2019, URNA issued $ 750 aggregate principal amount of 5 1 / 4 percent Senior Notes (the “5 1 / 4 percent Notes”) which are due January 15, 2030.

The 5 1 / 4 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA.

The 5 1 / 4 percent Notes are unsecured and are guaranteed by

Holdings and certain domestic subsidiaries of URNA.

The 5 1 / 4 percent Notes may be redeemed on or after January 15, 2025, at specified redemption prices that range from 102.625 percent in 2025, to 100 percent in 2028 and thereafter, in each case, plus accrued and unpaid interest, if any.

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In August 2021, URNA issued $ 750 aggregate principal amount of 3 3 / 4 percent Senior Notes (the “3 3 / 4 percent Notes”) which are due January 15, 2032.

The 3 3 / 4 percent Notes are unsecured and are

guaranteed by Holdings and certain domestic subsidiaries of URNA.

The 3 3 / 4 percent Notes may be redeemed on or after July 15, 2026, at specified redemption prices that range from 101.875 percent in 2026, to 100 percent in 2029 and thereafter, in each case, plus accrued and unpaid interest, if any.

The 3 3 / 4 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA.

The 3 3 / 4 percent Notes may be redeemed on or after July 15, 2026, at specified redemption prices that range from 101.875 percent in 2026, to 100 percent in 2029 and thereafter, in each

case, plus accrued and unpaid interest, if any.

In addition, at any time on or prior to July 30, 2024, up to 40 percent of the aggregate principal amount of the 3 3 / 4 percent Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 103.750 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any.

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Loan Covenants and Compliance

As of December 31, 2021, we were in compliance with the covenants and other provisions of the ABL, accounts receivable securitization and term loan facilities and the senior notes.

As of December 31, 2022, we were in compliance with the covenants and other provisions of the ABL, accounts receivable securitization, term loan and repurchase facilities and the senior notes.

Any failure to be in compliance with any material provision or covenant of these agreements could have a material adverse effect on our liquidity and operations.

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Operating leases result in the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet.

ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease payments.

ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

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Total lease liabilities $ 976 $ 958

_________________

(1) The increases in 2021 include the impact of the General Finance acquisition discussed in note 4 to the consolidated financial statements.

Lease cost Classification Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020

57 unchanged sentences

Change in federal valuation allowance 15 — ( 22 )

Foreign restructuring (1) ( 37 ) — —

Foreign tax rate differential 11 7 4

Total $ 697 $ 460 $ 249

_________________

(1) Reflects the impact of aligning the legal entity structure in Australia and New Zealand with our other foreign operations, which resulted in a tax depreciation benefit.

The components of deferred income tax assets (liabilities) are as follows:

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Net operating loss and credit carryforwards 171 175

Interest carryforward (1) 84 —

Operating lease assets 216 210

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_________________

(1) Relates to state net operating loss carryforwards and state tax credits that may not be realized.

(1) Relates to the limitation of deductible interest, and is primarily due to tax depreciation benefits associated with the Ahern Rentals acquisition (see note 6 to the consolidated financial statements for further detail).

(2) Relates to federal foreign tax credits, state net operating loss carryforwards and state tax credits that may not be realized.

We file income tax returns in the U.S., Canada and Europe.

11 unchanged sentences

Determination of the amount of unrecognized deferred tax liability on these unremitted earnings is not practicable.

We have net operating loss carryforwards (“NOLs”) of $ 475 for federal income tax purposes that expire from 2032 through 2037, $ 3 for foreign income tax purposes that expire from 2024 through 2030 and $ 621 for state income tax purposes that expire from 2022 through 2034.

We have net operating loss carryforwards (“NOLs”) of $ 344 for federal income tax purposes, $ 201 of which will expire in 2036 and 2037 (while the remaining federal NOLs have an indefinite life), $ 3 for foreign income tax purposes that expire from 2024 through 2030 and $ 659 for state income tax purposes that expire from 2023 through 2034.

Commitments and Contingencies

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We currently sponsor two defined contribution 401(k) retirement plans, which are subject to the provisions of the Employee Retirement Income Security Act of 1974.

We also sponsor a deferred profit sharing plan and a registered retirement savings plan for the benefit of the full-time employees of our Canadian subsidiaries.

We also sponsor a deferred profit sharing plan and a registered retirement savings plan for the benefit of the full-time employees of our Canadian subsidiaries, and also make contributions for employees in Australia and New Zealand.

Under these plans, we match a percentage of the participants’ contributions up to a specified amount.

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Holdings has not paid dividends on its common stock since inception.

As discussed in note 19 to the consolidated financial statements, our Board of Directors approved a quarterly dividend program in January 2023, and the first such dividend under the program is payable in February 2023.

The payment of any future dividends or the authorization of stock repurchases or other recapitalizations will be determined by our Board of Directors in light of conditions then existing, including earnings, financial condition and capital requirements, financing agreements, business conditions, stock price and other factors.

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Earnings per share—diluted (3) 2.80 4.02 5.63 6.61 19.04

(1) As discussed in note 1 to our consolidated financial statements, COVID-19 has significantly disrupted supply chains and businesses around the world.

(1) As discussed in note 1 to the consolidated financial statements, COVID-19 has significantly disrupted supply chains and businesses around the world.

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 most pronounced in 2020.

Beginning in 2021 and continuing through 2022, we have seen evidence of a continuing recovery of activity across our end-markets.

(2) As discussed in note 12 to the consolidated financial statements, in the fourth quarter of 2022, we issued $ 1.5 billion principal amount of 6 percent Senior Secured Notes due 2029.

The issued debt, together with drawings on our ABL facility, was used to fund the December 2022 Ahern Rentals acquisition that is discussed in note 4 to the consolidated financial statements.

There were no unusual or infrequently occurring items recognized in the fourth quarter of 2021 that had a material impact on our financial statements.

In the fourth quarter of 2020, we redeemed all of our 4 5 / 8 percent Senior Notes due 2025, and recognized a redemption loss of $ 24 in interest expense, net.

The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes.

(3) Diluted earnings per share includes the after-tax impacts of the following:

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For the year ended December 31, 2022:

Merger related costs (4) $ — $ ( 0.03 ) $ — $ — $ ( 0.03 )

Merger related intangible asset amortization (4) $ ( 0.52 ) $ ( 0.45 ) $ ( 0.44 ) $ ( 0.39 ) $ ( 1.79 )

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For the year ended December 31, 2021:

Merger related costs (10) $ — $ ( 0.03 ) $ — $ — $ ( 0.03 )

Merger related intangible asset amortization (4) ( 0.50 ) ( 0.48 ) ( 0.53 ) ( 0.47 ) ( 1.98 )

4 unchanged sentences

Loss on repurchase/redemption of debt securities (9) — — ( 0.31 ) — ( 0.31 )

(4) This reflects transaction costs associated with the General Finance acquisition discussed in note 4 to our consolidated financial statements.

Merger related costs only include costs associated with major acquisitions that significantly impact our operations (the "major acquisitions," each of which had annual revenues of over $ 200 prior to acquisition).

For additional information, see "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-Other costs/(income)-merger related costs".

(5) This reflects the amortization of the intangible assets acquired in the major acquisitions.

(4) This reflects the amortization of the intangible assets acquired in the major acquisitions that significantly impact our operations (the "major acquisitions," each of which had annual revenues of over $ 200 prior to acquisition).

(5) This reflects the impact of extending the useful lives of equipment acquired in certain major acquisitions, net of the impact of additional depreciation associated with the fair value mark-up of such equipment.

(6) This reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in certain major acquisitions that was subsequently sold.

(8) As discussed in note 6 to our consolidated financial statements, this primarily reflects severance costs and branch closure charges associated with our restructuring programs.

(7) This primarily reflects severance costs and branch closure charges associated with our restructuring programs.

As of December 31, 2022, there were no open restructuring programs.

(8) This reflects write-offs of leasehold improvements and other fixed assets.

As discussed in note 6 to our consolidated financial statements, the 2020 charges primarily reflect the discontinuation of certain equipment programs, and were not related to COVID-19.

(9) Reflects the difference between the net carrying amount and the total purchase price of the redeemed notes.

(10) This reflects transaction costs associated with the General Finance acquisition discussed in note 4 to our consolidated financial statements.

Merger related costs only include costs associated with major acquisitions.

Earnings Per Share

12 unchanged sentences

Diluted earnings per share $ 29.65 $ 19.04 $ 12.20

Subsequent Events

Our Board of Directors approved a quarterly dividend program on January 25, 2023.

Under the program, subject to quarterly approval and declaration by the Board of Directors, dividends will be payable on the fourth Wednesday of the second month of each calendar quarter to stockholders of record as of the second Wednesday of that same month.

The Board of Directors has declared a quarterly dividend of $ 1.48 (actual dollars) per share, payable on February 22, 2023 to stockholders of record as of the close of business on February 8, 2023.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

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Year Ended December 31, 2022:

Allowance for doubtful accounts $ 108 $ 5 (a) $ 31 (a) $ 32 (b) $ 112

Allowance for credit losses $ 112 $ 11 (a) $ 49 (a) $ 38 (b) $ 134

Reserve for obsolescence and shrinkage 11 42 — 35 (c) 18

1 unchanged sentence

Year Ended December 31, 2021:

Allowance for doubtful accounts $ 103 $ 9 (a) $ 25 (a) $ 29 (b) $ 108

Allowance for credit losses $ 108 $ 5 (a) $ 31 (a) $ 32 (b) $ 112

Reserve for obsolescence and shrinkage 8 37 — 34 (c) 11

1 unchanged sentence

Year Ended December 31, 2020:

Allowance for doubtful accounts $ 93 $ 8 (a) $ 34 (a) $ 32 (b) $ 103

Allowance for credit losses $ 103 $ 9 (a) $ 25 (a) $ 29 (b) $ 108

Reserve for obsolescence and shrinkage 10 34 — 36 (c) 8

3 unchanged sentences

(a) Amounts charged to cost and expenses reflect bad debt expenses recognized within selling, general and administrative expenses.

The amounts charged to revenue primarily reflect doubtful accounts associated with lease revenues that were recognized as a reduction to equipment rentals revenue.

The amounts charged to revenue primarily reflect credit losses associated with lease revenues that were recognized as a reduction to equipment rentals revenue.

(b) Primarily represents write-offs of accounts, net of recoveries and other activity.

(d) Represents payments.

(d) Primarily represents payments.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data