What changed in this filing

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Item 1A. Risk Factors

2024-01-24 compared with 2023-01-25 · 67 added, 41 removed, 337 unchanged (24% of the section changed)

17 unchanged sentences

• an increase in interest rates;

• instability in macroeconomic conditions;

• adverse weather conditions, which may temporarily affect a particular region;

3 unchanged sentences

• terrorism or hostilities involving the United States, Canada, Europe, Australia or New Zealand;

• geopolitical conflicts, such as Russia’s invasion of Ukraine, and the resultant sanctions and other measures imposed in response;

• geopolitical conflicts, such as Russia’s invasion of Ukraine and the conflict in the Middle East, and the resultant sanctions and other measures imposed in response;

• other unforeseen or catastrophic events.

8 unchanged sentences

See “Operational Risks– Climate change, climate change regulations and greenhouse effects may materially adversely impact our operations and markets .”

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

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

The equipment rental industry is highly fragmented and competitive.

1 unchanged sentence

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

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

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

Increases in fuel costs or reduced supplies of fuel have in the past harmed, and could in the future again harm, our business.

10 unchanged sentences

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

• requiring us to devote a substantial portion of our cash flow to debt service, reducing the funds available for other purposes, including funding working capital, capital expenditures, acquisitions, execution of our growth strategy and other general corporate purposes, or otherwise constraining our financial flexibility;

• requiring us to devote a substantial amount of our cash flow to debt service, reducing the funds available for other purposes, including funding working capital, capital expenditures, acquisitions, execution of our growth strategy and other general corporate purposes, or otherwise constraining our financial flexibility;

• restricting our ability to move operating cash flows to Holdings.

43 unchanged sentences

If we are unable to satisfy the financial covenant under the ABL facility or the financial tests under the accounts receivable securitization facility or comply with any of the other relevant covenants under the applicable agreement, the lenders could elect to terminate the ABL facility and/or the accounts receivable securitization facility and require us to repay outstanding borrowings.

In such event, unless we are able to refinance the indebtedness coming due and replace the ABL facility and/or the accounts receivable securitization facility, we would likely not have sufficient liquidity for our business needs and would be forced to adopt an alternative strategy.

our business needs and would be forced to adopt an alternative strategy.

Even if we adopt an alternative strategy, the strategy may not be successful and we may not have sufficient liquidity to service our debt and fund our operations.

22 unchanged sentences

As a result, our access to credit under our ABL facility is potentially subject to significant fluctuations depending on the value of the borrowing base of eligible assets as of any measurement date, as well as certain discretionary rights of the agent in respect of the calculation of such borrowing base value.

The inability to borrow under our

ABL facility, or limitations on the amounts we can borrow under our ABL facility, may adversely affect our liquidity, results of operations and financial position.

The inability to borrow under our ABL facility, or limitations on the amounts we can borrow under our ABL facility, may adversely affect our liquidity, results of operations and financial position.

We rely on available borrowings under the ABL facility and the accounts receivable securitization facility for cash to operate our business, which subjects us to market and counterparty risk, some of which is beyond our control.

69 unchanged sentences

• fluctuations in the prices of oil and natural gas;

• expectations regarding our share repurchase program;

• expectations regarding our share repurchase programs;

• changes in our dividend policy;

• the operating and stock performance of comparable companies or related industries.

2 unchanged sentences

As a result, the price of our common stock could fluctuate in the future without regard to our operating performance.

We cannot guarantee that we will repurchase our common stock pursuant to our share repurchase program or that our share repurchase program will enhance long-term stockholder value.

We cannot guarantee that we will repurchase our common stock pursuant to our share repurchase programs or that our share repurchase programs will enhance long-term stockholder value.

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

1 unchanged sentence

Under the program, we are authorized to repurchase shares of common stock for an aggregate purchase price not to exceed $1.25 billion, excluding fees, commissions and other ancillary expenses.

No repurchases were made as of December 31, 2022 under this program, which was paused through the initial phase of the integration of the Ahern Rentals acquisition that is discussed in note 4 to the consolidated financial statements.

We expect to resume repurchases under the program in the first quarter of 2023, and to repurchase $1.0 billion of common stock under the program in 2023.

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

We have completed $1.0 billion of repurchases under the program as of December 31, 2023, and expect to complete the program in the first quarter of 2024.

On January 24, 2024, our Board of Directors authorized a new $1.5 billion share repurchase program.

We plan to begin repurchases under the new program following the planned completion of the existing $1.25 billion share repurchase program in the first quarter of 2024, and intend to purchase $1.25 billion under the new program in 2024 and then complete the program by the end of the first quarter of 2025.

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

The timing and amount of repurchases, if any, will depend upon several factors, including market and business conditions, the trading price of the Company’s common stock and the nature of other investment opportunities.

In August 2022, Congress passed the Inflation Reduction Act, which imposes a new one percent tax on stock repurchases, subject to certain adjustments, after December 31, 2022 by publicly traded U.S.

In August 2022, Congress passed the Inflation Reduction Act, which imposes a one percent tax on stock repurchases, subject to certain adjustments, after December 31, 2022 by publicly traded U.S.

companies, including us, which may also impact our decision to engage in share repurchases.

Also, our ability to repurchase shares of stock may be limited by restrictive covenants in our debt agreements.

The repurchase program may be limited, suspended or discontinued at any time without prior notice.

In addition, repurchases of our common stock pursuant to our share repurchase program could affect our stock price and increase its volatility.

The repurchase programs may be limited, suspended or discontinued at any time without prior notice.

In addition, repurchases of our common stock pursuant to our share repurchase programs could affect our stock price and increase its volatility.

The existence of a share repurchase program could cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock.

Additionally, our share repurchase program could diminish our cash reserves, which may impact our ability to finance future growth, to continue to pay a dividend and to pursue possible future strategic opportunities and acquisitions.

Additionally, our share repurchase programs could diminish our cash reserves, which may impact our ability to finance future growth, to continue to pay a dividend and to pursue possible future strategic opportunities and acquisitions.

There can be no assurance that any share repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased shares of stock.

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

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

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

We have in place certain charter provisions that may have the effect of deterring hostile takeovers or delaying or preventing changes in control or management of the Company that are not approved by our Board, including transactions in which our stockholders might otherwise receive a premium for their shares over then-current market prices.

We are also subject

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

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

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

2 unchanged sentences

We cannot make any guarantees with respect to payment of dividends on our common stock.

In January 2023, our Board of Directors approved the declaration of a dividend on our common stock.

The Board of Directors will regularly evaluate our capital allocation strategy and dividend policy, and any future determination to continue to pay dividends, and the amount of such dividends, will be at the discretion of the Board of Directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements and contractual restrictions, including the requirements of the agreements governing our indebtedness.

3 unchanged sentences

One of the reasons some of our customers find it more attractive to rent equipment than own that equipment is the need to deploy their capital elsewhere.

This has been particularly true in industries with recent high growth rates such as the construction industry.

However, some of our customers may have liquidity issues and ultimately may not be able to fulfill the terms of their rental agreements with us.

If we are unable to manage credit risk issues adequately, or if a large number of customers have financial difficulties at the same time, our credit losses could increase above historical levels and our operating results would be adversely affected.

Further, a worsening of economic conditions would be expected to result in increased delinquencies and credit losses.

Further, a worsening of economic conditions would be expected to result in increased delinquencies and credit losses, which could exacerbate adverse impacts on our business and operating results.

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

32 unchanged sentences

We rely on our information technology systems to be able to monitor and control our operations, adjust to changing market conditions, implement strategic initiatives and support our online ordering system.

Any disruptions in these systems or the failure of these systems to operate as expected could adversely affect our ability to access and use certain applications and could, depending on the nature and magnitude of the problem, adversely affect our operating results by limiting our ability to effectively monitor and control our operations, adjust to changing market conditions, implement strategic initiatives and service online orders.

In addition, the security measures we employ to protect our systems may not detect or prevent all attempts to hack our systems, denial-of-service attacks, viruses, malicious software (malware), employee error or malfeasance, phishing attacks, security breaches, disruptions during the process of upgrading or replacing computer software or hardware or integrating systems of acquired businesses or assets, or other attacks and similar disruptions that may jeopardize the security of information stored in or transmitted by the sites, networks and systems that we otherwise maintain, which include cloud-based networks and data center storage.

We have, from time to time, experienced threats to our data and systems, including malware and computer virus attacks.

Any disruptions in these systems or the failure of these systems to operate as expected have in the past adversely affected, and could in the future adversely affect, our ability to access and use certain applications and could, depending on the nature and magnitude of the problem, adversely affect our operating results by limiting our ability to effectively monitor and control our operations, adjust to changing market conditions, implement strategic initiatives and service online orders.

Although such disruptions and failures have not been material to date, we cannot guarantee that they will not be material in the future.

In addition, the security measures we employ to protect our systems have in the past not detected or prevented, and may in the future not detect or prevent, all attempts to hack our systems, denial-of-service attacks, viruses, malicious software (malware), employee error or malfeasance, phishing attacks, security breaches, disruptions during the process of upgrading or replacing computer software or hardware or integrating systems of acquired businesses or assets or other attacks and similar disruptions that may jeopardize the security of information stored in or transmitted by the sites, networks and systems that we otherwise maintain, which include cloud-based networks and data center storage.

We have, from time to time, experienced threats to and breaches of our data and systems, including malware and computer virus attacks.

We are continuously developing and enhancing our controls, processes and practices designed to protect our systems, computers, software, data and networks from attack, damage, or unauthorized access.

This continued development and enhancement requires us to expend significant additional resources.

This continued development and enhancement requires us to expend significant resources.

However, we may not anticipate or combat all types of future attacks until after they have been launched.

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

Our response to attacks, and our investments in our technology and our controls, processes and practices, may not be sufficient to shield us from significant losses or liability.

Further, given the increasing sophistication of bad actors and complexity of the techniques used to obtain unauthorized access or disable systems, a breach or attack could potentially persist for an extended period of time before being detected.

As a result, we may not be able to anticipate the attack or respond adequately or timely, and the extent of a particular incident, and the steps that we may need to take to investigate the incident, may not be immediately clear.

It could take a significant amount of time before an investigation can be completed and full, reliable information about the incident becomes known.

During an investigation, it is possible we may not necessarily know the extent of the harm or how to remediate it, which could further adversely impact us, and new regulations could result in us being required to disclose information about a material cybersecurity incident before it has been mitigated or resolved, or even fully investigated.

We also face cybersecurity risks due to our reliance on internet technology and hybrid work arrangements, which could strain our technology resources or create additional opportunities for cybercriminals to exploit vulnerabilities.

1 unchanged sentence

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

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

Regulators have been imposing new data privacy and security requirements, including new and greater monetary fines for privacy violations.

For example, the European Union’s (“EU”) General Data Protection Regulation (Regulation (EU) 2016/679) (the “GDPR”) has stringent data protection requirements and provides for significant penalties.

Non-compliance with the GDPR could lead to lower revenues, increased costs (including fines, which could be significant) and other material adverse effects on our results of operations.

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

states have proposed or adopted their own data protection legislation.

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

In addition, countries such as

the United Kingdom (the “UK”) have implemented the GDPR through their own legislation.

Other countries, including the U.S., have proposed or adopted their own data protection legislation.

These laws and regulations are broad in scope and subject to evolving interpretations and increasing enforcement, and we have incurred costs to monitor compliance and have altered our practices, and may have to do so again in the future.

Moreover, certain new and existing data privacy laws and regulations could diverge and conflict with each other in certain respects, which makes compliance increasingly difficult.

Complying with new regulatory requirements has in the past required, and could in the future require, us to incur substantial expenses or require us to change our business practices, either of which could harm our business.

As regulators have become increasingly focused on information security, data collection and use and privacy, we may be required to devote significant additional resources to modify and enhance our information security controls and to identify and remediate vulnerabilities, which could adversely impact our results of operations and profitability.

Any compromise or breach of our systems could result in adverse publicity, harm our reputation, lead to claims against us and affect our relationships with our customers and employees, any of which could have a material adverse effect on our business.

13 unchanged sentences

We are subject to risks related to our ability to meet our environmental and social goals, including our greenhouse gas intensity reduction goal.

Although we have announced environmental and social goals, including our greenhouse gas intensity reduction goal, our efforts to provide more low- and zero-emissions equipment to our customers and our efforts to provide customers with tools to monitor and manage their environmental impacts, there can be no assurance that our shareholders and other stakeholders will agree with our goals and strategies.

Moreover, any perception, whether or not valid, that we have failed to act responsibly with respect to such matters, failed to achieve our goals or failed to effectively respond to new or additional legal or regulatory requirements regarding climate change, could adversely affect our business and reputation.

8 unchanged sentences

As a result, there is no assurance that we will be able to successfully achieve our environmental and social goals, which could damage our reputation and customer and other stakeholder relationships and have an adverse effect on our business, results of operations and financial condition.

Our growing specialty reportable segment, as well as our tools and onsite services offerings, presents new and expanded risks, which may increase as we engage in new activities and provide new services.

Our specialty reportable segment has accounted for an increasing portion of our business and revenues in recent years.

Specialty segment revenues constituted 25.4 percent of our revenues for the year ended December 31, 2023, as compared to 7.3 percent of our revenues for the year ended December 31, 2013.

In connection with the expansion of the specialty segment, we have expanded the scope of services we provide to clients;

for example, we advise clients on the compatibility of our equipment with various applications, collaborate and consult with clients on certain aspects of civil construction projects, design and erect scaffolding, and design electrical pump systems.

To the extent we engage in those and other similar activities, we have faced, and will continue to face, increased legal, reputational and operational risks.

These new or expanded business activities also expose us to new or different types of risks, including risks related to spills, unauthorized use of equipment, system failure, ineffectiveness of the solutions and products we provide, and hazardous material issues and interference.

We have been, and may in the future be, subject to various claims in connection with these activities and services, and the associated risks may be difficult to assess or quantify and their existence and magnitude may remain unknown for substantial periods of time, particularly as we engage in new business activities where we do not have historical experience.

Although we have insurance to protect ourselves against claims in connection with these activities, we cannot guarantee that any insurance coverage will be sufficient or that we will continue to be able to obtain such coverage at reasonable rates or at all.

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

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

24 unchanged sentences

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

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

Provisions of law, such as those

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

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

2 unchanged sentences

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

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

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

In the ordinary course of our business operations, we are exposed to a variety of potential claims.

These claims include those relating to personal injuries or property damage arising from:

(i) the use and/or operation of our rented or sold equipment, (ii) motor vehicle accidents involving our vehicles and our employees and (iii) employment-related claims.

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

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

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

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

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

1 unchanged sentence

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

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

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

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

3 unchanged sentences

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

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

Under these laws, we may be liable for, among other things, (i) the costs of investigating and remediating any contamination at our sites as well as sites to which we send hazardous waste for disposal or treatment, regardless of fault, and (ii) fines and penalties for non-compliance.

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

Under these laws, we may be liable for, among other things:

(i) the costs of investigating and remediating any contamination at our sites as well as sites to which we send hazardous waste for disposal or treatment, regardless of fault;

and (ii) fines and penalties for non-compliance.

While our operations generally do not raise significant environmental risks, we use hazardous materials to clean and maintain equipment, dispose of solid and hazardous waste and wastewater from equipment washing, and store and dispense petroleum products from above-ground storage tanks located at certain of our locations.

6 unchanged sentences

Our 1,357 branch locations in the United States are located in 49 states, and Puerto Rico, which exposes us to a host of different state and local regulations, in addition to federal law and regulatory and contractual requirements we face as a government contractor.

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

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

These laws and requirements address multiple aspects of our operations, such as employee safety, consumer rights, privacy, employee benefits and more.

In addition, there are often different and potentially conflicting requirements in different jurisdictions.

Changes in these requirements, or any material failure by our branches to comply with

them, can increase our costs, affect our reputation, limit our business, drain management time and attention and otherwise impact our operations in adverse ways.

Our collective bargaining agreements and our relationship with our union-represented employees could disrupt our ability to serve our customers, lead to higher labor costs or the payment of withdrawal liability.

8 unchanged sentences

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

Unresolved Staff Comments

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

What changed 10-K

Item 1A. Risk Factors