What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-01-24 compared with 2023-01-25 · 53 added, 68 removed, 269 unchanged (31% of the section changed)

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Total equipment rental revenue variance 19.3% 23.3%

Pro forma equipment rentals variance components (4):

Year-over-year change in average OEC 10.4%

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

Fleet productivity (2) 2.8%

Contribution from ancillary and re-rent revenue (3) (0.4)%

Total equipment rental revenue variance 11.3%

Key account percent of equipment rental revenue 67% 68%

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Fleet age in months 52.4 53.5

Percent of fleet that is current on manufacturer's recommended maintenance 77% 77%

Equipment rental revenue percent by fleet type:

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Estimated North American equipment rental industry revenue growth (5) 12% 14%

2023 projected North American industry equipment rental revenue growth 4%

CUSTOMERS/SUPPLIERS

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

Rental rate changes are calculated based on the year-over-year variance in average contract

rates, weighted by the prior period revenue mix.

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

Time utilization is calculated by dividing the amount of time an asset is on rent by the amount of time the asset has been owned during the year.

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

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

The COVID-19 volume declines were most pronounced in 2020, and in 2021 and 2022, we saw evidence of a continuing recovery of activity across our end-markets.

The positive fleet productivity for 2022 reflected strong demand across our end-markets.

The novel coronavirus (“COVID-19”), which resulted in rental volume declines in response to shelter-in-place orders and other market restrictions, had the most pronounced on our business in 2020.

Beginning in 2021 and continuing through 2023, we have experienced broad-based strength of demand across our end-markets.

See "Industry Overview and Economic Outlook" below for further discussion of our end-markets.

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

(4) The year-over-year increases in rental locations and employees include the impact of the December 2022 acquisition of assets of Ahern Rentals, Inc.

("Ahern Rentals"), which is discussed in note 4 to the consolidated financial statements.

(4) We completed the acquisition of Ahern Rentals, Inc.

("Ahern Rentals") in December 2022.

The pro forma information includes the standalone, pre-acquisition results of Ahern Rentals.

The pro forma components are not reflected above for 2022 versus 2021 because of the December 2022 acquisition date (Ahern Rentals did not materially impact the comparison of 2022 and 2021 equipment rentals).

The Ahern Rentals acquisition is discussed further in note 4 to the consolidated financial statements.

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

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Estimated North American market share as of December 31, 2022 includes the standalone, pre-acquisition revenue of Ahern Rentals.

Estimated North American market share as of December 31, 2021 does not include the pre-acquisition revenue of Ahern Rental because the acquisition was completed in 2022.

If the pre-acquisition revenue of Ahern Rental was included for 2021, estimated North American market share as of December 31, 2021 would have been approximately 16 percent.

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 million 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.

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

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.

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

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.

See "Industry Overview and Economic Outlook" below for a discussion of our end-markets, and Item 1A- Risk Factors for further discussion of the risks related to us and our business.

Subsequent to our prior disclosure of 2022 industry information, the ARA increased its estimate of the size of the North American equipment rental industry.

As a result of this change, relative to our prior disclosures, our market share as of December 31, 2022 decreased and the size of the 2022 growth in North American equipment rental industry revenue increased.

Human Capital

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To support these objectives, the Company’s human resources programs are designed to:

keep people safe

keep people safe and healthy;

enhance the Company’s culture through efforts aimed at making the workplace more inclusive;

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Approximately 63 percent of eligible employees participated in the program in 2023.

• Diversity, equity and inclusion (“DEI”) :

We believe that an inclusive and diverse team is key to the success of our culture.

Our commitment to DEI is demonstrated through many efforts including employee-led employee resource groups (“ERGs”);

company-wide DEI goals;

• Workplace inclusivity and diversity:

We believe that an inclusive and diverse team is key to the success of our culture, and we view diversity holistically through a framework that recognizes the importance of diversity in enabling our commercial strategy and continued business success.

Our commitment to diversity, equity and inclusion (“DEI”) is demonstrated through many efforts including employee-led employee resource groups (“ERGs”);

aspirational company-wide DEI goals;

and inclusive volunteering opportunities.

Our four ERGs aim to represent and support the diverse communities that make up our workforce by facilitating:

Our seven ERGs aim to represent and support the diverse communities that make up our workforce by facilitating:

networking and connecting with peers;

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and leadership and skill development.

The Company has internal goals for overall workforce diversity and for specific positions, and we have disclosed a goal to increase the percentage of diverse employees in sales and management roles, reflecting our commitment to increase diverse representation in our talent pipeline.

There has been positive progress in these goals, as reflected in an over four-percentage point increase in diverse employees in sales and management roles from 29.1 percent in 2019 to 33.5 percent in 2022.

In addition, the Company has made hiring, promotion, and fair inclusion of veterans a priority, through its veterans ERG and external partnerships that support this goal.

The Company also engaged in a Company-wide volunteering initiative in 2022 for employees to make a positive impact for their teams, communities and customers.

The Company has

disclosed an aspirational goal to increase the percentage of racially or gender diverse employees in sales and management roles, reflecting our commitment to increase diverse representation in our talent pipeline.

There has been positive progress in this aspirational goal, as reflected in an over five percentage point increase in diverse employees in sales and management roles from 29.5 percent in 2020 to 34.7 percent in 2023.

As part of its diversity efforts, the Company is committed to supporting our military veterans and believes that diversity in experience is an asset to the business.

To that end, the Company has made the fair inclusion of veterans a priority, through its veterans ERG and external partnerships.

• Compensation programs and employee benefits:

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

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

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

Additionally, we have conducted four company-wide stock grant programs for employees since 2014 – the most recent grant took place in 2022 and was in honor of our 25 th anniversary.

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Our 2023 employee experience survey showed strong results with average responses ranging from 8.4 to 9.2 out of 10 in each of our four survey categories:

Engagement (8.5), Diversity & Inclusion (8.7), Health & Wellbeing (8.4) and Safety Commitment (9.2), which placed us in the top 10 percent of the Peakon Benchmark for Commercial and Professional Services Companies for each survey category.

Engagement (8.5), Diversity & Inclusion (8.6), Health & Wellbeing (8.4) and Safety Commitment (9.2).

Our 2023 results were consistent with our strong 2022 results, with scores in three categories flat year-over-year and our Diversity & Inclusion score decreasing slightly from 8.7 to 8.6.

Our results placed us in the top 10 percent of the Peakon Benchmark for Commercial and Professional Services Companies for the Engagement and Health & Wellbeing categories and in the top 25 percent of the Diversity & Inclusion category;

there is no benchmark reference for our Safety category.

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

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

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

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

In addition, as we did in 2023, we aim to regularly develop new training programs, launch pilot programs and expand leadership opportunities for our employees.

In 2023, our employees enhanced their skills through approximately 825,000 hours of training, including safety training, sales and leadership training and equipment-related training from our suppliers.

Although we still deliver some training virtually, we pivoted back to in-person training in 2022 (most training was delivered virtually during 2021 and 2020, primarily due to COVID-19).

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

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We utilize a proprietary software application, Total Control ® , which provides our key customers with a single in-house software application that enables them to monitor and manage all their equipment needs.

Total Control ® is a unique customer offering that enables us to develop strong, long-term relationships with our larger customers.

Total Control ® is a unique customer offering

that enables us to develop strong, long-term relationships with our larger customers.

Our digital capabilities, including our Total Control ® platform, allow our sales teams to provide contactless end-to-end customer service;

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• The continued expansion and cross-selling of adjacent specialty and services products, which enables us to provide a "one-stop" shop for our customers .

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

We believe that the expansion of our specialty business, as exhibited by our acquisition of General Finance Corporation (“General Finance”) in May 2021, as well as our tools and onsite services offerings, will further position United Rentals as a single source provider of total jobsite solutions through our extensive product and service resources and technology offerings;

• The pursuit of strategic acquisitions to continue to expand our core equipment rental business, as exhibited by our recently completed acquisition of assets of Ahern Rentals, which is discussed in note 4 to the consolidated financial statements.

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

We estimate that, based on industry estimates from the ARA, 2022 North American equipment rental industry revenue grew approximately 11 percent year-over-year.

In 2022, our full year rental revenue increased by 23.3 percent year-over-year, which included the impact of the General Finance acquisition that was completed in May 2021 and the Ahern Rentals acquisition that was completed in December 2022, both of which are discussed in note 4 to the consolidated financial statements.

The impact of these acquisitions on our equipment rentals revenue is primarily reflected in the year-over-year increase in average OEC of 13.6 percent for the year ended December 31, 2022.

Our estimated North American market share of approximately 17 percent as of December 31, 2022, which included the standalone, pre-acquisition revenue of Ahern Rentals, increased from 15 percent as of December 31, 2021,which did not include the pre-acquisition revenue of Ahern Rentals, as the acquisition was completed in 2022.

In 2023, based on our analyses of industry forecasts and macroeconomic indicators, we expect that North American industry equipment rental revenue will increase approximately 4 percent.

Based on industry estimates from the ARA, 2023 North American equipment rental industry revenue grew an estimated 12 percent year-over-year.

In 2023, our full year rental revenue increased by 19.3 percent year-over-year, which included the impact of the Ahern Rentals acquisition that was completed in December 2022 and is discussed in note 4 to the consolidated financial statements.

The impact of the Ahern Rentals acquisition on our equipment rentals revenue is primarily reflected in the year-over-year increase in average OEC of 21.9 percent for the year ended December 31, 2023.

On a pro forma basis including the pre-acquisition results of Ahern Rentals, year-over-year, equipment rentals revenue increased 11.3 percent, primarily reflecting an increase in average OEC of 10.4 percent.

Our estimated North American market share of approximately 15 percent as of December 31, 2023 did not change materially from our market share as of December 31, 2022, which included the pre-acquisition revenue of Ahern Rentals as the acquisition was completed in 2022.

Competitive Advantages

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The general rentals segment includes the rental of construction, aerial and industrial equipment, general tools and light equipment, and related services and activities.

The general rentals segment’s customers include construction and industrial

companies, manufacturers, utilities, municipalities and homeowners.

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

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

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

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

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

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

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Advertising .

We promote our business through local and national advertising in various media, including television, trade publications, yellow pages, the internet, radio and direct mail.

We also regularly participate in industry trade shows and conferences and sponsor a variety of local and national promotional events.

We promote our business through local and national advertising across marketing channels, including digital media (including organic and paid search), customer engagement (lifecycle marketing and direct mail), television (connected and linear), trade publications (digital and print), earned media, tradeshows and sponsorships.

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

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

This approach is designed to ensure that the terms

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

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

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

As the largest equipment rental company in the industry, we estimate that we have an approximate 17 percent market share, which includes the standalone, pre-acquisition revenue of Ahern Rentals, in North America based on 2022 total equipment rental industry revenues as measured by the ARA.

Estimated market share is calculated by dividing our total 2022 North American rental revenue, plus the standalone, pre-acquisition revenue of Ahern Rentals, by ARA’s forecasted 2022 industry revenue.

As the largest equipment rental company in the industry, we estimate that we have an approximate 15 percent market share in North America based on 2023 total equipment rental industry revenues as measured by the ARA.

Estimated market share is calculated by dividing our total 2023 North American rental revenue by ARA’s forecasted 2023 industry revenue.

Our competitors primarily include small, independent businesses with one or two rental locations;

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

See "Industry Overview and Economic Outlook" above for a discussion of our end-markets, as well as projected market performance in 2023.

See "Industry Overview and Economic Outlook" above for a discussion of our end-markets.

Environmental and Safety Regulations

Our operations are subject to numerous laws governing environmental protection and occupational health and safety matters.

These laws regulate issues such as wastewater, stormwater, solid and hazardous wastes and materials, and air quality.

These laws regulate issues such as wastewater, storm water, solid and hazardous wastes and materials, and air quality.

Our operations generally do not raise significant environmental risks, but we use and store hazardous materials as part of maintaining our rental equipment fleet and the overall operations of our business, dispose of solid and hazardous waste and wastewater from equipment washing, and store and dispense petroleum products from storage tanks at certain locations.

Under environmental and safety laws, we may be liable for, among other things, (i) the costs of investigating and remediating contamination at our sites as well as sites to which we send hazardous wastes for disposal or treatment, regardless of fault, and

(ii) fines and penalties for non-compliance.

We incur ongoing expenses associated with the performance of appropriate investigation and remediation activities at certain locations.

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

What changed 10-K

Item 1. Business