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What changed in United Rentals's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of United Rentals's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+329 added−334 removedSource: 10-K (2024-01-24) vs 10-K (2023-01-25)

Top changes in United Rentals's 2023 10-K

329 paragraphs added · 334 removed · 268 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

47 edited+7 added−21 removed52 unchanged
Biggest changeThe data below should be read in conjunction with, and is qualified by reference to, our Management’s Discussion and Analysis and our consolidated financial statements and notes thereto contained elsewhere in this report. 1 Table of Contents 2022 2021 PERFORMANCE MEASURES Total revenues (in millions) $11,642 $9,716 Equipment rental revenue percent of total revenues 87% 84% Equipment rental revenue variance components: Year-over-year change in average original equipment cost (“OEC”) 13.6% 4.0% Assumed year-over-year inflation impact (1) (1.5)% (1.5)% Fleet productivity (2) 9.4% 10.4% Contribution from ancillary and re-rent revenue (3) 1.8% 2.0% Total equipment rental revenue variance 23.3% 14.9% Key account percent of equipment rental revenue 68% 72% National account percent of equipment rental revenue 42% 43% FLEET Fleet OEC (in billions) $19.61 $15.79 Equipment classes 4,600 4,300 Equipment units 1,020,000 780,000 Fleet age in months 53.5 54.1 Percent of fleet that is current on manufacturer's recommended maintenance 77% 77% Equipment rental revenue percent by fleet type: General construction and industrial equipment 42% 42% Aerial work platforms 24% 26% General tools and light equipment 8% 8% Power and HVAC (heating, ventilating and air conditioning) equipment 10% 9% Trench safety equipment 6% 6% Fluid solutions equipment 7% 7% Mobile storage equipment and modular office space 3% 2% LOCATIONS/PERSONNEL Rental locations (4) 1,521 1,345 Approximate range of branches per district 4-13 3-11 Approximate range of districts per region 6-11 4-9 Range of regions per division 2-6 2-6 Hourly employees 17,500 14,200 Salaried employees 7,100 6,200 Total employees (4) 24,600 20,400 INDUSTRY Estimated North American market share (5) 17% 15% Estimated North American equipment rental industry revenue growth (5) 11% 4% 2023 projected North American industry equipment rental revenue growth 4% CUSTOMERS/SUPPLIERS Largest customer percent of total revenues 1% 1% Top 10 customers percent of total revenues 4% 4% Largest supplier percent of capital expenditures 10% 9% Top 10 supplier percent of capital expenditures 45% 49% (1) Reflects the estimated impact of inflation on the revenue productivity of fleet based on OEC, which is recorded at cost.
Biggest changeThe data below should be read in conjunction with, and is qualified by reference to, our Management’s Discussion and Analysis and our consolidated financial statements and notes thereto contained elsewhere in this report. 1 Table of Contents 2023 2022 PERFORMANCE MEASURES Total revenues (in millions) $14,332 $11,642 Equipment rental revenue percent of total revenues 84% 87% Equipment rental revenue variance components: Year-over-year change in average original equipment cost (“OEC”) 21.9% 13.6% Assumed year-over-year inflation impact (1) (1.5)% (1.5)% Fleet productivity (2) (0.7)% 9.4% Contribution from ancillary and re-rent revenue (3) (0.4)% 1.8% 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% National account percent of equipment rental revenue 43% 42% FLEET Fleet OEC (in billions) $20.66 $19.61 Equipment classes 4,800 4,600 Equipment units 995,000 1,020,000 Fleet age in months 52.4 53.5 Equipment rental revenue percent by fleet type: General construction and industrial equipment 42% 42% Aerial work platforms 25% 24% General tools and light equipment 8% 8% Power and HVAC (heating, ventilating and air conditioning) equipment 10% 10% Trench safety equipment 5% 6% Fluid solutions equipment 7% 7% Mobile storage equipment and modular office space 3% 3% LOCATIONS/PERSONNEL Rental locations 1,584 1,521 Approximate range of branches per district 5-14 4-13 Approximate range of districts per region 6-11 6-11 Range of regions per division 3-6 2-6 Hourly employees 18,900 17,500 Salaried employees 7,400 7,100 Total employees 26,300 24,600 INDUSTRY Estimated North American market share (5) 15% 15% Estimated North American equipment rental industry revenue growth (5) 12% 14% CUSTOMERS/SUPPLIERS Largest customer percent of total revenues 1% 1% Top 10 customers percent of total revenues 4% 4% Largest supplier percent of capital expenditures 15% 10% Top 10 supplier percent of capital expenditures 48% 45% 2 Table of Contents (1) Reflects the estimated impact of inflation on the revenue productivity of fleet based on OEC, which is recorded at cost.
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; and • 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.
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; and • 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.
We offer for rent approximately 4,600 classes of rental equipment on an hourly, daily, weekly or monthly basis. The types of equipment that we offer include general construction and industrial equipment; aerial work platforms; trench safety equipment; power and HVAC equipment; fluid solutions equipment; mobile storage equipment and modular office space; and general tools and light equipment.
We offer for rent approximately 4,800 classes of rental equipment on an hourly, daily, weekly or monthly basis. The types of equipment that we offer include general construction and industrial equipment; aerial work platforms; trench safety equipment; power and HVAC equipment; fluid solutions equipment; mobile storage equipment and modular office space; and general tools and light equipment.
Item 1. Business United Rentals is the largest equipment rental company in the world, operates throughout the United States and Canada, and has a limited presence in Europe, Australia and New Zealand. The table below presents key information about our business as of and for the years ended December 31, 2022 and 2021.
Item 1. Business United Rentals is the largest equipment rental company in the world, operates throughout the United States and Canada, and has a limited presence in Europe, Australia and New Zealand. The table below presents key information about our business as of and for the years ended December 31, 2023 and 2022.
("Ahern Rentals"), which is discussed 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"). As discussed above, we completed the acquisition of Ahern Rentals in December 2022.
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"). As discussed above, we completed the acquisition of Ahern Rentals in December 2022.
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.
Our information technology infrastructure facilitates our ability to make rapid and informed decisions, respond quickly to changing market conditions and share rental equipment among branches. We have an in-house team of information technology specialists that supports our systems. 6 Table of Contents Our information technology systems are accessible to management, branch and call center personnel.
Our information technology infrastructure facilitates our ability to make rapid and informed decisions, respond quickly to changing market conditions and share rental equipment among branches. We have an in-house team of information technology specialists that supports our systems. Our information technology systems are accessible to management, branch and call center personnel.
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 9 Table of Contents (ii) fines and penalties for non-compliance.
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.
To support these objectives, the Company’s human resources programs are designed to: keep people safe 3 Table of Contents and healthy; enhance the Company’s culture through efforts aimed at making the workplace more inclusive; acquire and retain diverse talent; reward and support employees through competitive pay and benefit programs; develop talent to prepare them for critical roles and leadership positions; and facilitate internal talent mobility to create a high-performing workforce.
To support these objectives, the Company’s human resources programs are designed to: keep people safe and healthy; enhance the Company’s culture through efforts aimed at making the workplace more inclusive; acquire and retain diverse talent; reward and support employees through competitive pay and benefit programs; develop talent to prepare them for critical roles and leadership positions; and facilitate internal talent mobility to create a high-performing workforce.
Rental rate changes are calculated based on the year-over-year variance in average contract 2 Table of Contents 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.
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.
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.
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 4 Table of Contents that enables us to develop strong, long-term relationships with our larger customers.
For example, voluntary employee turnover, which represents voluntary terminations during the year divided by average headcount during the year, was 13.1 percent, 13.5 percent and 9.1 percent for 2022, 2021 and 2020, respectively. We also conduct an annual employee experience survey, which provides valuable information on drivers of engagement and areas where we can improve.
For example, voluntary employee turnover, which represents voluntary terminations during the year divided by average headcount during the year, was 12.4 percent, 13.1 percent and 13.5 percent for 2023, 2022 and 2021, respectively. We also conduct an annual employee experience survey, which provides valuable information on drivers of engagement and areas where we can improve.
Our business is seasonal, with demand for our rental equipment tending to be lower in the winter months. Sales and Marketing We market our products and services through multiple channels as described below. 8 Table of Contents Sales Force .
Our business is seasonal, with demand for our rental equipment tending to be lower in the winter months. Sales and Marketing We market our products and services through multiple channels as described below. Sales Force .
In 2022, based on our classification of the vertical market segments in which our equipment was used: • Industrial and other non-construction rentals represented approximately 48 percent of our rental revenue, primarily reflecting rentals to manufacturers, energy companies, chemical companies, paper mills, railroads, shipbuilders, utilities, retailers and infrastructure entities; 5 Table of Contents • Commercial construction rentals represented approximately 47 percent of our rental revenue, primarily reflecting rentals related to the construction and remodeling of facilities for office space, lodging, healthcare, entertainment and other commercial purposes; and • Residential rentals represented approximately five percent of our rental revenue, primarily reflecting rentals of equipment for the construction and renovation of homes.
In 2023, based on our classification of the vertical market segments in which our equipment was used: • Industrial and other non-construction rentals represented approximately 49 percent of our rental revenue, primarily reflecting rentals to manufacturers, energy companies, chemical companies, paper mills, railroads, shipbuilders, utilities, retailers and infrastructure entities; • Commercial construction rentals represented approximately 46 percent of our rental revenue, primarily reflecting rentals related to the construction and remodeling of facilities for office space, lodging, healthcare, entertainment and other commercial purposes; and • Residential rentals represented approximately five percent of our rental revenue, primarily reflecting rentals of equipment for the construction and renovation of homes.
We offer a wide array of training solutions (classroom, hands-on, e-learning and experience maps) for further development of our employees to help them achieve their career goals. In addition, as we did in 2022, we aim to regularly develop new training programs, launch pilot programs and expand leadership opportunities for our employees.
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.
The specialty segment includes the rental of specialty construction products such as (i) trench safety equipment, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers and line testing equipment for underground work, (ii) power and HVAC equipment, such as portable diesel generators, electrical distribution equipment, and temperature control equipment, (iii) fluid solutions equipment primarily used for fluid containment, transfer and treatment, and (iv) mobile storage equipment and modular office space.
The specialty segment 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.
See "Industry Overview and Economic Outlook" above for a discussion of our end-markets, as well as projected market performance in 2023. 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.
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, storm water, solid and hazardous wastes and materials, and air quality.
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.
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.
We incur ongoing expenses associated with the performance of appropriate investigation and remediation activities at certain locations. Employees Approximately 7,100 of our employees are salaried and approximately 17,500 are hourly. Collective bargaining agreements relating to approximately 143 separate locations cover approximately 1,600 of our employees.
We incur ongoing expenses associated with the performance of appropriate investigation and remediation activities at certain locations. Employees Approximately 7,400 of our employees are salaried and approximately 18,900 are hourly. Collective bargaining agreements relating to approximately 153 separate locations cover approximately 1,800 of our employees.
See Item 2—Properties for further geographical detail on our branch network. Our North American network operates in 49 U.S. states and every Canadian province, and serves customers that range from Fortune 500 companies to small businesses and homeowners.
Our North American network operates in 49 U.S. states and every Canadian province, and serves customers that range from Fortune 500 companies to small businesses and homeowners.
We offer repair and maintenance services and sell parts for equipment that is owned by our customers. Customers Our customer base is highly diversified and ranges from Fortune 500 companies to small businesses and homeowners.
We sell a variety of contractor supplies including construction consumables, tools, small equipment and safety supplies. Service and Other Revenues . We offer repair and maintenance services and sell parts for equipment that is owned by our customers. Customers Our customer base is highly diversified and ranges from Fortune 500 companies to small businesses and homeowners.
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.
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.
In 2022, employees voluntarily donated approximately $1.2 million to the fund, and employees received 338 grants totaling approximately $1.0 million. 4 Table of Contents • Training and development: The Company is committed to the continual development of its employees.
In 2023, employees voluntarily donated approximately $1.6 million to the fund, and employees received 469 grants totaling approximately $1.9 million. • Training and development: The Company is committed to the continual development of its employees.
Consistent with the life-cycle approach we use to manage our fleet, the rate at which we replace used equipment with new equipment depends on a number of factors, including changing general economic conditions, growth opportunities, the market for used equipment, the age of our fleet and the need to adjust fleet composition to meet customer demand.
Consistent with the life-cycle approach we use to manage our fleet, the rate at which we replace used equipment with new equipment depends on a number of factors, including changing general economic conditions, growth opportunities, the market for used equipment, the age of our fleet and the need to adjust fleet composition to meet customer demand. 7 Table of Contents We utilize many channels to sell used equipment: through our national and export sales forces, which can access many resale markets across our network; at auction; through brokers; and directly to manufacturers.
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.
Mix includes the impact of changes in customer, fleet, geographic and segment mix. 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.
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.
Estimated market share is calculated by dividing our total 2023 North American rental revenue by ARA’s forecasted 2023 industry revenue.
Our 2022 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.
In 2022, we switched survey administration to Peakon (a Workday company). 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 (8.6), Health & Wellbeing (8.4) and Safety Commitment (9.2).
We believe we have sufficient alternative sources of supply available for each of our major equipment categories. For a discussion of the risks associated with potential supply chain disruptions, see Item 1A- Risk Factors (“Operational Risks- Disruptions in our supply chain could result in adverse effects on our results of operations and financial performance ").
For a discussion of the risks associated with potential supply chain disruptions, see Item 1A- Risk Factors (“Operational Risks- Disruptions in our supply chain could result in adverse effects on our results of operations and financial performance "). Competition We primarily operate in the United States and Canada, and have a limited presence in Europe, Australia and New Zealand.
We manage our rental fleet, which is the largest and most comprehensive in the industry, utilizing a life-cycle approach that focuses on satisfying customer demand and optimizing utilization levels.
We believe our ability to serve such customers should allow us to improve our performance and enhance our market leadership position. 5 Table of Contents We manage our rental fleet, which is the largest and most comprehensive in the industry, utilizing a life-cycle approach that focuses on satisfying customer demand and optimizing utilization levels.
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 7 Table of Contents companies, manufacturers, utilities, municipalities and homeowners.
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 reflects the aggregation of four geographic divisions—Central, Northeast, Southeast and West—and operates throughout the United States and Canada.
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.
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.
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.
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 15 percent market share in North America based on 2023 total equipment rental industry revenues as measured by the ARA.
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. We consider product capabilities and industry position, the terms being offered, product liability history, customer acceptance and financial strength.
We utilize a comprehensive selection process to determine our equipment vendors. We consider product capabilities and industry position, the terms being offered, product liability history, customer acceptance and financial strength. We believe we have sufficient alternative sources of supply available for each of our major equipment categories.
Our large and diverse fleet allows us to serve large customers that require substantial quantities and/or wide varieties of equipment. We believe our ability to serve such customers should allow us to improve our performance and enhance our market leadership position.
Competitive Advantages We believe that we benefit from the following competitive advantages: Large and Diverse Rental Fleet . Our large and diverse fleet allows us to serve large customers that require substantial quantities and/or wide varieties of equipment.
We sell equipment such as aerial lifts, reach forklifts, telehandlers, compressors and generators from many leading equipment manufacturers. The type of new equipment that we sell varies by location. Contractor Supplies Sales . We sell a variety of contractor supplies including construction consumables, tools, small equipment and safety supplies. Service and Other Revenues .
We also sell used equipment through our website, which includes an online database of used equipment available for sale. Sales of New Equipment . We sell equipment such as aerial lifts, reach forklifts, telehandlers, compressors and generators from many leading equipment manufacturers. The type of new equipment that we sell varies by location. Contractor Supplies Sales .
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.
The Company has 3 Table of Contents 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.
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.
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. 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.
As the largest equipment rental company in the world, we have strong brand recognition, which helps us attract new customers and build customer loyalty. Geographic and Customer Diversity . We primarily operate in the United States and Canada, and have a limited presence in Europe, Australia and New Zealand, and our global branch network includes 1,521 rental locations.
As the largest equipment rental company in the world, we have strong brand recognition, which helps us attract new customers and build customer loyalty. 6 Table of Contents Geographic and Customer Diversity .
Our four ERGs aim to represent and support the diverse communities that make up our workforce by facilitating: networking and connecting with peers; education and awareness efforts; and leadership and skill development.
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 seven ERGs aim to represent and support the diverse communities that make up our workforce by facilitating: networking and connecting with peers; education and awareness efforts; and leadership and skill development.
Total Control ® is a unique customer offering that enables us to develop strong, long-term relationships with our larger customers. 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.
Total Control ® is a unique customer offering that enables us to develop strong, long-term relationships with our larger customers. Advertising .
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.
Estimated North American market share as of December 31, 2022 includes the standalone, pre-acquisition revenue of Ahern Rentals. Subsequent to our prior disclosure of 2022 industry information, the ARA increased its estimate of the size of the North American equipment rental industry.
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.
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.
We also regularly participate in industry trade shows and conferences and sponsor a variety of local and national promotional events. Suppliers 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.
Suppliers 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 8 Table of Contents we negotiate are competitive and that there is sufficient product available to meet anticipated customer demand.
Approximately 50 percent of eligible employees participated in the program in 2022. • 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; and inclusive volunteering opportunities.
Approximately 63 percent of eligible employees participated in the program in 2023. • 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.
Competition We primarily operate in the United States and Canada, and have a limited presence in Europe, Australia and New Zealand. The North American equipment rental industry is highly fragmented and competitive.
We primarily operate in the United States and Canada, and have a limited presence in Europe, Australia and New Zealand, and our global branch network includes 1,584 rental locations. See Item 2—Properties for further geographical detail on our branch network.
(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.
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.
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. • Compensation programs and employee benefits: Our compensation and benefits programs provide a package designed to attract, retain and motivate employees.
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: Our compensation and benefits programs provide a package designed to attract, retain and motivate employees.
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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. See "Industry Overview and Economic Outlook" below for further discussion of our end-markets.
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(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).
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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.
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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 The Company’s key human capital management objectives are to attract, retain and develop talent to deliver on the Company’s strategy.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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. Human Capital The Company’s key human capital management objectives are to attract, retain and develop talent to deliver on the Company’s strategy.
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In 2022, we switched survey administration to Peakon (a Workday company).
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In 2022, our employees enhanced their skills through approximately 645,000 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).
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We estimate that, based on industry estimates from the ARA, 2022 North American equipment rental industry revenue grew approximately 11 percent year-over-year.
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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. Competitive Advantages We believe that we benefit from the following competitive advantages: Large and Diverse Rental Fleet .
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The general rentals segment is comprised of four geographic divisions—Central, Northeast, Southeast and West—and operates throughout the United States and Canada.
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We utilize many channels to sell used equipment: through our national and export sales forces, which can access many resale markets across our network; at auction; through brokers; and directly to manufacturers. We also sell used equipment through our website, which includes an online database of used equipment available for sale. Sales of New Equipment .

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeTurnover 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. Our success is dependent, in part, on the experience and skills of our management team, and competition in our industry and the business world for top management talent is generally significant.
Biggest changeFurther, 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.
These factors, in addition to general economic conditions and the factors discussed above under “Cautionary Statement Regarding Forward-Looking Statements”, include, but are not limited to: • the seasonal rental patterns of our customers, with rental activity tending to be lower in the winter; • changes in the size of our rental fleet and/or in the rate at which we sell our used equipment; • excess fleet in the equipment rental industry; • changes in private non-residential construction spending or government funding for infrastructure and other construction projects; • changes in demand for, or utilization of, our equipment or in the prices we charge due to changes in economic conditions, including rising inflation, competition or other factors; • changes in customer, fleet, geographic and segment mix; • commodity price pressures and the resultant increase in the cost of fuel and steel to our equipment suppliers, which can result in increased equipment costs for us; • cost increases as a result of inflation; • other cost fluctuations, such as costs for employee-related compensation and healthcare benefits; • labor shortages and/or disputes, work stoppages or other labor difficulties; • potential enactment of new legislation affecting our operations or labor relations; • supply chain or other disruptions that impact our ability to obtain equipment and other supplies for our business from our key suppliers on acceptable terms or at all; • completion of acquisitions, divestitures or recapitalizations; • increases in interest rates and related increases in our interest expense and our debt service obligations; • the possible need, from time to time, to record goodwill impairment charges or other write-offs or charges due to a variety of occurrences, such as the adoption of new accounting standards, the impairment of assets, rental location divestitures, dislocation in the equity and/or credit markets, consolidations or closings, restructurings, the refinancing of existing indebtedness or the buy-out of equipment leases; and 15 Table of Contents • currency risks and other risks associated with international operations.
These factors, in addition to general economic conditions and the factors discussed above under “Cautionary Statement Regarding Forward-Looking Statements”, include, but are not limited to: • the seasonal rental patterns of our customers, with rental activity tending to be lower in the winter; • changes in the size of our rental fleet and/or in the rate at which we sell our used equipment; • excess fleet in the equipment rental industry; • changes in private non-residential construction spending or government funding for infrastructure and other construction projects; • changes in demand for, or utilization of, our equipment or in the prices we charge due to changes in economic conditions, including rising inflation, competition or other factors; • changes in customer, fleet, geographic and segment mix; • commodity price pressures and the resultant increase in the cost of fuel and steel to our equipment suppliers, which can result in increased equipment costs for us; • cost increases as a result of inflation; • other cost fluctuations, such as costs for employee-related compensation and healthcare benefits; • labor shortages and/or disputes, work stoppages or other labor difficulties; • potential enactment of new legislation affecting our operations or labor relations; • supply chain or other disruptions that impact our ability to obtain equipment and other supplies for our business from our key suppliers on acceptable terms or at all; • completion of acquisitions, divestitures or recapitalizations; • increases in interest rates and related increases in our interest expense and our debt service obligations; • the possible need, from time to time, to record goodwill impairment charges or other write-offs or charges due to a variety of occurrences, such as the adoption of new accounting standards, the impairment of assets, rental location divestitures, dislocation in the equity and/or credit markets, consolidations or closings, restructurings, the refinancing of existing indebtedness or the buy-out of equipment leases; and • currency risks and other risks associated with international operations.
Acquisitions entail certain risks, including: • unrecorded liabilities of acquired companies and unidentified issues with acquired companies or acquired assets that we fail to discover during our due diligence investigations or that are not subject to indemnification or reimbursement by the seller; • greater than expected expenses, such as the need to obtain additional debt or equity financing for any transaction; • unfavorable accounting treatment and unexpected increases in taxes; • adverse effects on our ability to maintain relationships with customers, employees and suppliers; • inherent risk associated with entering a geographic area or line of business in which we have no or limited experience; • difficulty in assimilating the operations and personnel of an acquired company, or acquired assets, within our existing operations, including the consolidation of corporate and administrative functions; • difficulty in integrating marketing, information technology and other systems; • difficulty in conforming standards, controls, procedures and policies, business cultures and compensation structures; • difficulty in identifying and eliminating redundant and underperforming operations and assets; • loss of key employees of the acquired company; • operating inefficiencies that have a negative impact on profitability; • impairment of goodwill or other acquisition-related intangible assets; • failure to achieve anticipated synergies or receiving an inadequate return of capital; and 14 Table of Contents • strains on management and other personnel time and resources to evaluate, negotiate and integrate acquisitions.
Acquisitions entail certain risks, including: • unrecorded liabilities of acquired companies and unidentified issues with acquired companies or acquired assets that we fail to discover during our due diligence investigations or that are not subject to indemnification or reimbursement by the seller; • greater than expected expenses, such as the need to obtain additional debt or equity financing for any transaction; • unfavorable accounting treatment and unexpected increases in taxes; • adverse effects on our ability to maintain relationships with customers, employees and suppliers; • inherent risk associated with entering a geographic area or line of business in which we have no or limited experience; • difficulty in assimilating the operations and personnel of an acquired company, or acquired assets, within our existing operations, including the consolidation of corporate and administrative functions; • difficulty in integrating marketing, information technology and other systems; • difficulty in conforming standards, controls, procedures and policies, business cultures and compensation structures; • difficulty in identifying and eliminating redundant and underperforming operations and assets; • loss of key employees of the acquired company; • operating inefficiencies that have a negative impact on profitability; • impairment of goodwill or other acquisition-related intangible assets; • failure to achieve anticipated synergies or receiving an inadequate return of capital; and • strains on management and other personnel time and resources to evaluate, negotiate and integrate acquisitions.
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. companies, including us, which may also impact our decision to engage in share repurchases.
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.
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. Share repurchases could also increase the volatility of the price of our common stock and could diminish our cash reserves. In October 2022, our Board of Directors authorized a share repurchase program.
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. In October 2022, our Board of Directors authorized a share repurchase program.
However, such insurance may not fully cover these claims for a number of reasons, including: • our insurance policies, reflecting a program structure that we believe reflects market conditions for companies our size, are often subject to significant deductibles or self-insured retentions; • our director and officer liability insurance policy has no deductible for individual non-indemnifiable loss, but is subject to a deductible for company reimbursement coverage; 20 Table of Contents • we do not currently maintain Company-wide stand-alone first party coverage for environmental liability (other than legally required and third party site pollution coverage), since we believe the cost for such coverage is high relative to the benefit it provides; and • 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.
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 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; • we do not currently maintain Company-wide stand-alone first party coverage for environmental liability (other than legally required and third party site pollution coverage), since we believe the cost for such coverage is high relative to the benefit it provides; and • 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.
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.
Also, our ability to repurchase shares of stock may be limited by restrictive covenants in our debt agreements. 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.
When certain conditions are met, cash and cash equivalents and borrowing base collateral in excess of the ABL facility size may be included when calculating specified availability under the ABL facility. As of December 31, 2022, specified availability under the ABL facility exceeded the required threshold and, as a result, this financial covenant was inapplicable.
When certain conditions are met, cash and cash equivalents and borrowing base collateral in excess of the ABL facility size may be included when calculating specified availability under the ABL facility. As of December 31, 2023, specified availability under the ABL facility exceeded the required threshold and, as a result, this financial covenant was inapplicable.
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. 21 Table of Contents
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. 22 Table of Contents
We are also subject 16 Table of Contents 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.
Distributions from our subsidiaries may also be limited by restrictive covenants in our debt agreements. Legal and Regulatory Risks We are exposed to a variety of claims relating to our business, and our insurance may not fully cover them. We are in the ordinary course exposed to a variety of claims relating to our business.
Distributions from our subsidiaries may also be limited by restrictive covenants in our debt agreements. Legal and Regulatory Risks We are exposed to a variety of claims relating to our business, and our insurance may not fully cover them. In the ordinary course of our business operations, we are exposed to a variety of potential claims.
Our 1,316 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.
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.
Our significant indebtedness could adversely affect our business, results of operations and financial condition in a number of ways by, among other things: • increasing our vulnerability to, and limiting our flexibility to plan for, or react to, adverse economic, industry or competitive developments; • making it more difficult to pay or refinance our debts as they become due during periods of adverse economic, financial market or industry conditions; 11 Table of Contents • 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; • restricting our ability to move operating cash flows to Holdings.
Our significant indebtedness could adversely affect our business, results of operations and financial condition in a number of ways by, among other things: • increasing our vulnerability to, and limiting our flexibility to plan for, or react to, adverse economic, industry or competitive developments; • 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 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.
The extent to which these efforts and strategies will achieve our desired efficiencies and goals in 2023 and beyond is uncertain, as their success depends on a number of factors, some of which are beyond our control.
The extent to which these efforts and strategies will achieve our desired efficiencies and goals in 2024 and beyond is uncertain, as their success depends on a number of factors, some of which are beyond our control.
We have, from time to time, experienced threats to 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.
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 resources.
In addition, the following factors, among others, could adversely impact us, our customers or our suppliers and in turn adversely affect our revenues and operating results: • a decrease in expected levels of infrastructure spending; • a lack of availability of credit; • excess fleet in the equipment rental industry; • a decrease in the level of exploration, development, production activity and capital spending by oil and natural gas companies; • an increase in costs, including the cost of construction materials, as a result of inflation or other factors; • an increase in interest rates; • adverse weather conditions, which may temporarily affect a particular region; • a prolonged shutdown of the U.S. government; • public health crises and epidemics (or concerns over the possibility of such a health crisis or epidemic), such as COVID-19; • supply chain disruptions; • 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; or 10 Table of Contents • other unforeseen or catastrophic events.
In addition, the following factors, among others, could adversely impact us, our customers or our suppliers and in turn adversely affect our revenues and operating results: • a decrease in expected levels of infrastructure spending; • a lack of availability of credit; • excess fleet in the equipment rental industry; • a decrease in the level of exploration, development, production activity and capital spending by oil and natural gas companies; • an increase in costs, including the cost of construction materials, as a result of inflation or other factors; • an increase in interest rates; • instability in macroeconomic conditions; • adverse weather conditions, which may temporarily affect a particular region; • a prolonged shutdown of the U.S. government; • public health crises and epidemics (or concerns over the possibility of such a health crisis or epidemic), such as COVID-19; • supply chain disruptions; • terrorism or hostilities involving the United States, Canada, Europe, Australia or New Zealand; • 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; or • other unforeseen or catastrophic events.
Therefore, there can be no guarantee that our strategies will prove effective in achieving the desired level of profitability, margins or returns to stockholders. 17 Table of Contents We are dependent on our relationships with key suppliers to obtain equipment and other supplies for our business on acceptable terms.
Therefore, there can be no guarantee that our strategies will prove effective in achieving the desired level of profitability, margins or returns to stockholders. We are dependent on our relationships with key suppliers to obtain equipment and other supplies for our business on acceptable terms.
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.
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.
For a discussion of our goodwill impairment testing, see “Critical Accounting Policies-Evaluation of Goodwill Impairment” in Part II, Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations. Risks Related to our Securities Our operating results may fluctuate, which could affect the trading value of our securities.
For a discussion of our goodwill impairment testing, see “Critical Accounting Policies-Evaluation of Goodwill Impairment” in Part II, Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations. Risks Related to our Securities 14 Table of Contents Our operating results may fluctuate, which could affect the trading value of our securities.
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.
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.
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.
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.
Provisions of law, such as those 20 Table of Contents 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.
Industry and Economic Risks Challenging economic conditions and the occurrence of unforeseen or catastrophic events, including public health crises and epidemics, have in the past adversely impacted, and may in the future adversely impact, us, our customers or our suppliers and in turn adversely affect our business, revenues and operating results.
Industry and Economic Risks 9 Table of Contents Challenging economic conditions and the occurrence of unforeseen or catastrophic events, including public health crises and epidemics, have in the past adversely impacted, and may in the future adversely impact, us, our customers or our suppliers and in turn adversely affect our business, revenues and operating results.
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.
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 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.
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 or be satisfied with our efforts to attain such goals.
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.
We may in the future encounter increased competition from our existing competitors or from new competitors. 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.
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.
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 12 Table of Contents our business needs and would be forced to adopt an alternative strategy.
Although our share repurchase program is intended to enhance long-term stockholder value, there is no assurance that it will do so and short-term stock price fluctuations could reduce the program’s effectiveness. Our charter provisions, as well as other factors, may affect the likelihood of a takeover or change of control of the Company.
Although our 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.
For example, the General Data Protection Regulation (Regulation (EU) 2016/679) (the “GDPR”) has caused European Union (“EU”) data protection requirements to be more stringent and provides for greater penalties. Non-compliance with the GDPR could lead to lower revenues, increased costs (including fines, which could be significant) and other material adverse effects on our results of operations.
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.
A portion of our indebtedness bears interest at variable rates that are linked to changing market interest rates. As a result, increases in market interest rates increase our interest expense and our debt service obligations. At December 31, 2022, we had $3.5 billion of indebtedness that bore interest at variable rates.
A portion of our indebtedness bears interest at variable rates that are linked to changing market interest rates. As a result, increases in market interest rates increase our interest expense and our debt service obligations. At December 31, 2023, we had $3.6 billion of indebtedness that bore interest at variable rates.
See “Operational Risks– Climate change, climate change regulations and greenhouse effects may materially adversely impact our operations and markets .” Risks Related to our Indebtedness and Liquidity Our significant indebtedness exposes us to various risks. At December 31, 2022, our total indebtedness was $11.4 billion.
See “Operational Risks– Climate change, climate change regulations and greenhouse effects may materially adversely impact our operations and markets .” Risks Related to our Indebtedness and Liquidity Our significant indebtedness exposes us to various risks. At December 31, 2023, our total indebtedness was $11.5 billion.
The inability to borrow under our 13 Table of Contents 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.
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.
Changes in these requirements, or any material failure by our branches to comply with 21 Table of Contents them, can increase our costs, affect our reputation, limit our business, drain management time and attention and otherwise impact our operations in adverse ways.
If we determine that our goodwill has become impaired, we may incur impairment charges, which would negatively impact our operating results. At December 31, 2022, we had $6.0 billion of goodwill on our consolidated balance sheet. Goodwill represents the excess of cost over the fair value of net assets acquired in business combinations.
If we determine that our goodwill has become impaired, we may incur impairment charges, which would negatively impact our operating results. At December 31, 2023, we had $5.9 billion of goodwill on our consolidated balance sheet. Goodwill represents the excess of cost over the fair value of net assets acquired in business combinations.
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. We currently have approximately 1,600 employees who are represented by unions and covered by collective bargaining agreements and approximately 23,000 employees who are not represented by unions.
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. We currently have approximately 1,800 employees who are represented by unions and covered by collective bargaining agreements and approximately 24,500 employees who are not represented by unions.
Our competitors include small, independent businesses with one or two rental locations, regional competitors that operate in one or more states, national and global companies or divisions of national and global companies, and equipment vendors and dealers who both sell and rent equipment directly to customers.
The equipment rental industry is highly fragmented and competitive. Our competitors include small, independent businesses with one or two rental locations, regional competitors that operate in one or more states, national and global companies or divisions of national and global companies, and equipment vendors and dealers who both sell and rent equipment directly to customers.
Our common stock price has fluctuated significantly and may continue to do so in the future for a number of reasons, including: • fluctuations in the results of our operations and general conditions in the economy, our market, and the markets served by our customers; • announcements of developments related to our business; • market perceptions of any proposed merger or acquisition and the likelihood of our involvement in other merger and acquisition activity; • variations in our revenues, gross margins, earnings or other financial results from investors’ expectations; • departure of key personnel; • purchases or sales of large blocks of our stock by institutional investors or transactions by insiders; • investor perceptions of the equipment rental industry in general and our Company in particular; • fluctuations in the prices of oil and natural gas; • expectations regarding our share repurchase program; and • the operating and stock performance of comparable companies or related industries.
Our common stock price has fluctuated significantly and may continue to do so in the future for a number of reasons, including: • fluctuations in the results of our operations and general conditions in the economy, our market, and the markets served by our customers; • announcements of developments related to our business; • market perceptions of any proposed merger or acquisition and the likelihood of our involvement in other merger and acquisition activity; • variations in our revenues, gross margins, earnings or other financial results from investors’ expectations; • departure of key personnel; • purchases or sales of large blocks of our stock by institutional investors or transactions by insiders; • investor perceptions of the equipment rental industry in general and our Company in particular; • fluctuations in the prices of oil and natural gas; • expectations regarding our share repurchase programs; • changes in our dividend policy; and • the operating and stock performance of comparable companies or related industries. 15 Table of Contents In addition, prices in the stock market have been volatile over the past few years.
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.
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.
These claims include those relating to (i) personal injury or property damage involving equipment rented or sold by us, (ii) motor vehicle accidents involving our vehicles and our employees and (iii) employment-related claims. Currently, we carry a broad range of insurance for the protection of our assets and operations.
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.
We may be able to incur substantially more debt and take other actions that could diminish our ability to make payments on our indebtedness when due, which could further exacerbate the risks associated with our current level of indebtedness. 12 Table of Contents Despite our indebtedness level, we may be able to incur substantially more indebtedness in the future and such indebtedness may be secured indebtedness.
We may be able to incur substantially more debt and take other actions that could diminish our ability to make payments on our indebtedness when due, which could further exacerbate the risks associated with our current level of indebtedness.
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.
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.
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.
As of December 31, 2022, our variable rate indebtedness represented 31 percent of our total indebtedness. See Item 7A—Quantitative and Qualitative Disclosures About Market Risk for additional information related to interest rate risk. To service our indebtedness, we will require a significant amount of cash and our ability to generate cash depends on many factors beyond our control.
See Item 7A—Quantitative and Qualitative Disclosures About Market Risk for additional information related to interest rate risk. 11 Table of Contents To service our indebtedness, we will require a significant amount of cash and our ability to generate cash depends on many factors beyond our control.
In addition, prices in the stock market have been volatile over the past few years. In certain cases, the fluctuations have been unrelated to the operating performance of the affected companies. As a result, the price of our common stock could fluctuate in the future without regard to our operating performance.
In certain cases, the fluctuations have been unrelated to the operating performance of the affected companies. As a result, the price of our common stock could fluctuate in the future without regard to our operating performance.
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. The equipment rental industry is highly fragmented and competitive.
See “Operational Risks– Climate change, climate change regulations and greenhouse effects may materially adversely impact our operations and markets .” 10 Table of Contents 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.
These laws regulate issues such as wastewater, stormwater, solid and hazardous waste and materials, and air quality.
These laws regulate issues such as wastewater, storm water, solid and hazardous waste, storage of hazardous materials, and air quality.
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.
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. Regulators have been imposing new data privacy and security requirements, including new and greater monetary fines for privacy violations.
If our rental fleet ages, our operating costs may increase, we may be unable to pass along such costs, and our earnings may decrease. The costs of new equipment we use in our fleet have increased, and may continue to increase, requiring us to spend more for replacement equipment or preventing us from procuring equipment on a timely basis.
The costs of new equipment we use in our fleet have increased, and may continue to increase, requiring us to spend more for replacement equipment or preventing us from procuring equipment on a timely basis. If our rental equipment ages, the costs of maintaining such equipment, if not replaced within a certain period of time, will likely increase.
Any suspension or delay in our suppliers’ ability to provide us adequate equipment or supplies, or in our ability to procure equipment or supplies from other sources in a timely manner or at all, could impair our ability to meet customer demand and therefore could have a material adverse effect on our business, financial condition or results of operations.
Any suspension or delay in our suppliers’ ability to provide us adequate equipment or supplies, or in our ability to procure equipment or supplies from other sources in a timely manner or at all, could impair our ability to meet customer demand and therefore could have a material adverse effect on our business, financial condition or results of operations. 17 Table of Contents If our rental fleet ages, our operating costs may increase, we may be unable to pass along such costs, and our earnings may decrease.
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.
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. 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.
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. 18 Table of Contents In addition, because our systems sometimes contain information about individuals and businesses, our failure to appropriately maintain the security of the data we hold, whether as a result of our own error or the malfeasance or errors of others, have led, and could in the future lead, to disruptions in our online ordering system or other data systems, and could lead to unauthorized release of confidential or otherwise protected information or corruption of data.
In addition, because our systems sometimes contain information about individuals and businesses, our failure to appropriately maintain the security of the data we hold, whether as a result of our own error or the malfeasance or errors of others, have led, and could in the future lead, to disruptions in our online ordering system or other data systems, and could lead to unauthorized release of confidential or otherwise protected information or corruption of data.
From time-to-time we have also approached, or have been approached by, other public companies or large privately-held companies to explore consolidation opportunities. There can be no assurance that we will be able to identify suitable acquisition opportunities in the future or that we will be able to consummate any such transactions on terms and conditions acceptable to us.
There can be no assurance that we will be able to identify suitable acquisition opportunities in the future or that we will be able to consummate any such transactions on terms and conditions acceptable to us.
If we are unable to obtain sufficient additional capital in the future, we may be unable to fund the capital outlays required for the success of our business, including those relating to purchasing equipment, growth plans and refinancing existing indebtedness.
If we are unable to obtain sufficient additional capital in the future, we may be unable to fund the capital outlays required for the success of our business, including those relating to purchasing equipment, growth plans and refinancing existing indebtedness. 13 Table of Contents Risks Related to our Strategic Transactions and Investments Our growth strategies may be unsuccessful if we are unable to identify and complete future acquisitions and successfully integrate acquired businesses or assets.
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.
In addition, countries such as 18 Table of Contents 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.
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.
We cannot make any guarantees with respect to payment of dividends on our common stock.
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.
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.
If our rental equipment ages, the costs of maintaining such equipment, if not replaced within a certain period of time, will likely increase. The costs of maintenance may materially increase in the future and could lead to material adverse effects on our results of operations.
The costs of maintenance may materially increase in the future and could lead to material adverse effects on our results of operations.
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. 19 Table of Contents Our rental fleet is subject to residual value risk upon disposition, and may not sell at the prices or in the quantities we expect.
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. 19 Table of Contents 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.
Although we believe we generally have competitive pay packages, we can provide no assurance that our efforts to attract and retain our senior management staff will be successful.
Our success is dependent, in part, on the experience and skills of our management team, and competition in our industry and the business world for top management talent is generally significant. Although we believe we generally have competitive pay packages, we can provide no assurance that our efforts to attract and retain our senior management staff will be successful.
No assurance can be given that cash dividends will continue to be declared and paid, and, if declared and paid, the amount of such dividends. Operational Risks If we are unable to collect on contracts with customers, our operating results would be adversely affected.
No assurance can be given that cash dividends will continue to be declared and paid, and, if declared and paid, the amount of such dividends.
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.
Operational Risks If we are unable to collect on contracts with customers, our operating results would be adversely affected. 16 Table of Contents 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.
Risks Related to our Strategic Transactions and Investments Our growth strategies may be unsuccessful if we are unable to identify and complete future acquisitions and successfully integrate acquired businesses or assets. We have historically achieved a significant portion of our growth through acquisitions and we will continue to consider potential acquisitions on a selective basis.
We have historically achieved a significant portion of our growth through acquisitions and we will continue to consider potential acquisitions on a selective basis. From time to time we have also approached, or have been approached by, other public companies or large privately-held companies to explore consolidation opportunities.
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.
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.
Removed
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.
Added
As of December 31, 2023, our variable rate indebtedness represented 31 percent of our total indebtedness.
Added
Despite our indebtedness level, we may be able to incur substantially more indebtedness in the future and such indebtedness may be secured indebtedness.
Added
On January 24, 2024, our Board of Directors authorized a new $1.5 billion share repurchase program.
Added
Although such disruptions and failures have not been material to date, we cannot guarantee that they will not be material in the future.
Added
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.
Added
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.
Added
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.
Added
It could take a significant amount of time before an investigation can be completed and full, reliable information about the incident becomes known.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeUnited States ● Alabama (GR 29, S 9) ● Maine (GR 4) ● Oklahoma (GR 27, S 6) ● Alaska (GR 2) ● Maryland (GR 17, S 8) ● Oregon (GR 13, S 6) ● Arizona (GR 20, S 9) ● Massachusetts (GR 17, S 5) ● Pennsylvania (GR 21, S 7) ● Arkansas (GR 13, S 2) ● Michigan (GR 10, S 6) ● Puerto Rico (GR 2) ● California (GR 96, S 40) ● Minnesota (GR 12, S 4) ● Rhode Island (GR 2) ● Colorado (GR 19, S 6) ● Mississippi (GR 15, S 1) ● South Carolina (GR 29, S 10) ● Connecticut (GR 7, S 3) ● Missouri (GR 20, S 8) ● South Dakota (GR 2) ● Delaware (GR 2) ● Montana (GR 1) ● Tennessee (GR 27, S 12) ● Florida (GR 58, S 33) ● Nebraska (GR 3, S 1) ● Texas (GR 136, S 41) ● Georgia (GR 40, S 11) ● Nevada (GR 18, S 7) ● Utah (GR 9, S 5) ● Idaho (GR 6) ● New Hampshire (GR 1, S 2) ● Vermont (GR 2, S 1) ● Illinois (GR 20, S 10) ● New Jersey (GR 13, S 10) ● Virginia (GR 27, S 9) ● Indiana (GR 8, S 4) ● New Mexico (GR 9, S 1) ● Washington (GR 25, S 9) ● Iowa (GR 11, S 3) ● New York (GR 22, S 5) ● West Virginia (GR 6, S 3) ● Kansas (GR 17, S 3) ● North Carolina (GR 30, S 12) ● Wisconsin (GR 10, S 6) ● Kentucky (GR 14, S 5) ● North Dakota (GR 5, S 1) ● Wyoming (GR 6) ● Louisiana (GR 40, S 15) ● Ohio (GR 20, S 14) Canada Europe Asia-Pacific ● Alberta (GR 26, S 11) ● Belgium (S 1) ● Australia (S 27) ● British Columbia (GR 23, S 5) ● France (S 5) ● New Zealand (S 19) ● Manitoba (GR 5) ● Germany (S 4) ● New Brunswick (GR 6, S 1) ● Netherlands (S 1) ● Newfoundland (GR 5) ● United Kingdom (S 2) ● Nova Scotia (GR 4, S 1) ● Ontario (GR 30, S 7) ● Prince Edward Island (GR 1) ● Quebec (GR 8, S 4) ● Saskatchewan (GR 7, S 2) Our branch locations generally include facilities for displaying equipment and, depending on the location, may include separate areas for equipment service, storage and displaying contractor supplies.
Biggest changeUnited States ● Alabama (GR 30, S 9) ● Maine (GR 4) ● Oklahoma (GR 27, S 8) ● Alaska (GR 2) ● Maryland (GR 16, S 8) ● Oregon (GR 12, S 6) ● Arizona (GR 19, S 9) ● Massachusetts (GR 17, S 5) ● Pennsylvania (GR 23, S 8) ● Arkansas (GR 13, S 3) ● Michigan (GR 11, S 7) ● Puerto Rico (GR 2) ● California (GR 94, S 41) ● Minnesota (GR 12, S 5) ● Rhode Island (GR 2) ● Colorado (GR 18, S 5) ● Mississippi (GR 14, S 1) ● South Carolina (GR 27, S 10) ● Connecticut (GR 7, S 3) ● Missouri (GR 23, S 7) ● South Dakota (GR 2) ● Delaware (GR 3) ● Montana (GR 2) ● Tennessee (GR 31, S 13) ● Florida (GR 55, S 34) ● Nebraska (GR 5, S 1) ● Texas (GR 126, S 47) ● Georgia (GR 39, S 13) ● Nevada (GR 17, S 6) ● Utah (GR 10, S 5) ● Idaho (GR 6, S 2) ● New Hampshire (GR 1, S 2) ● Vermont (GR 2, S 1) ● Illinois (GR 18, S 10) ● New Jersey (GR 14, S 10) ● Virginia (GR 27, S 14) ● Indiana (GR 10, S 5) ● New Mexico (GR 10, S 3) ● Washington (GR 26, S 10) ● Iowa (GR 11, S 4) ● New York (GR 25, S 5) ● West Virginia (GR 8, S 3) ● Kansas (GR 16, S 5) ● North Carolina (GR 34, S 14) ● Wisconsin (GR 11, S 6) ● Kentucky (GR 14, S 5) ● North Dakota (GR 5) ● Wyoming (GR 5) ● Louisiana (GR 43, S 15) ● Ohio (GR 24, S 16) Canada Europe Asia-Pacific ● Alberta (GR 25, S 11) ● Belgium (S 7) ● Australia (S 23) ● British Columbia (GR 24, S 5) ● France (S 6) ● New Zealand (S 19) ● Manitoba (GR 5) ● Germany (S 7) ● New Brunswick (GR 5, S 1) ● Netherlands (S 15) ● Newfoundland (GR 5) ● United Kingdom (S 3) ● Nova Scotia (GR 4, S 1) ● Ontario (GR 30, S 8) ● Prince Edward Island (GR 1) ● Quebec (GR 9, S 4) ● Saskatchewan (GR 7, S 2) Our branch locations generally include facilities for displaying equipment and, depending on the location, may include separate areas for equipment service, storage and displaying contractor supplies.
Additionally, we maintain other corporate facilities, including in Shelton, Connecticut, where we occupy approximately 12,000 square feet under a lease that expires in 2025, and in Scottsdale, Arizona, where we occupy approximately 20,000 square feet under a lease that expires in 2023.
Additionally, we maintain other corporate facilities, including in Shelton, Connecticut, where we occupy approximately 12,000 square feet under a lease that expires in 2025, and in Scottsdale, Arizona, where we occupy approximately 20,000 square feet under a lease that expires in 2029.
Approximately 35 percent of this fleet is leased and the balance is owned. 22 Table of Contents Our corporate headquarters are located in Stamford, Connecticut, where we occupy approximately 47,000 square feet under a lease that expires in 2030.
Approximately 40 percent of this fleet is leased and the balance is owned. 24 Table of Contents Our corporate headquarters are located in Stamford, Connecticut, where we occupy approximately 47,000 square feet under a lease that expires in 2030.
We own 123 of our branch locations and lease the other branch locations. We also lease or own other premises used for purposes such as district and regional offices and service centers. We have a fleet of approximately 15,800 vehicles. These vehicles are used for delivery, maintenance, management and sales functions.
We own 131 of our branch locations and lease the other branch locations. We also lease or own other premises used for purposes such as district and regional offices and service centers. We have a fleet of approximately 16,400 vehicles. These vehicles are used for delivery, maintenance, management and sales functions.
Item 2. Properties As of January 1, 2023, we operated 1,521 rental locations. 1,316 of these locations are in the United States, 146 are in Canada, 13 are in Europe and 46 are in our Asia-Pacific network (which is comprised of our locations in Australia and New Zealand).
Item 2. Properties As of January 1, 2024, we operated 1,584 rental locations. 1,357 of these locations are in the United States, 147 are in Canada, 38 are in Europe and 42 are in our Asia-Pacific network (which is comprised of our locations in Australia and New Zealand).

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−1 removed0 unchanged
Biggest changeThe number of beneficial owners is substantially greater than the number of record holders because a large portion of our common stock is held of record in broker “street names.” Purchases of Equity Securities by the Issuer The following table provides information about acquisitions of Holdings’ common stock by Holdings during the fourth quarter of 2022: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Program (2) October 1, 2022 to October 31, 2022 186 (1) $ 283.89 — November 1, 2022 to November 30, 2022 31,435 (1) $ 321.26 — December 1, 2022 to December 31, 2022 203 (1) $ 351.59 — Total 31,824 $ 321.23 $ — $ 1,250,000,000 (1) All shares purchased were withheld by Holdings to satisfy tax withholding obligations upon the vesting of restricted stock unit awards.
Biggest changeThe number of beneficial owners is substantially greater than the number of record holders because a large portion of our common stock is held of record in broker “street names.” Purchases of Equity Securities by the Issuer The following table provides information about acquisitions of Holdings’ common stock by Holdings during the fourth quarter of 2023: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Program (2) October 1, 2023 to October 31, 2023 239,659 (1) $ 425.60 209,252 November 1, 2023 to November 30, 2023 93,261 (1) $ 455.84 92,643 December 1, 2023 to December 31, 2023 216,983 (1) $ 554.06 215,296 Total 549,903 $ 481.42 $ 517,191 $ 250,000,148 (1) In October 2023, November 2023 and December 2023, 30,407, 618 and 1,687 shares, respectively, were withheld by Holdings to satisfy tax withholding obligations upon the vesting of restricted stock unit awards.
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Holdings’ common stock trades on the New York Stock Exchange under the symbol “URI.” As of January 1, 2023, there were 63 holders of record of our common stock.
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Holdings’ common stock trades on the New York Stock Exchange under the symbol “URI.” As of January 1, 2024, there were 65 holders of record of our common stock.
These shares were not acquired pursuant to any repurchase plan or program. (2) On October 24, 2022, our Board of Directors authorized a $1.25 billion share repurchase program.
These shares were not acquired pursuant to any repurchase plan or program. (2) On October 24, 2022, our Board of Directors authorized a $1.25 billion share repurchase program. We 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 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. Equity Compensation Plans For information regarding equity compensation plans, see Item 12 of this annual report on Form 10-K. 23 Table of Contents
The amount in the table above reflects the remaining authorization as of December 31, 2023 under the current $1.25 billion share repurchase program. Equity Compensation Plans For information regarding equity compensation plans, see Item 12 of this annual report on Form 10-K. 25 Table of Contents
Removed
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.
Added
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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

143 edited+32 added−43 removed75 unchanged
Biggest changeRevenues by segment were as follows: 34 Table of Contents General rentals Specialty Total Year Ended December 31, 2022 Equipment rentals $ 7,345 $ 2,771 $ 10,116 Sales of rental equipment 835 130 965 Sales of new equipment 73 81 154 Contractor supplies sales 81 45 126 Service and other revenues 250 31 281 Total revenue $ 8,584 $ 3,058 $ 11,642 Year Ended December 31, 2021 Equipment rentals $ 6,074 $ 2,133 $ 8,207 Sales of rental equipment 862 106 968 Sales of new equipment 142 61 203 Contractor supplies sales 71 38 109 Service and other revenues 202 27 229 Total revenue $ 7,351 $ 2,365 $ 9,716 Year Ended December 31, 2020 Equipment rentals $ 5,472 $ 1,668 $ 7,140 Sales of rental equipment 785 73 858 Sales of new equipment 214 33 247 Contractor supplies sales 64 34 98 Service and other revenues 164 23 187 Total revenue $ 6,699 $ 1,831 $ 8,530 Equipment rentals. 2022 equipment rentals of $10.1 billion increased 23.3 percent, primarily due to a 13.6 percent increase in average OEC, which includes the impact of the May 2021 acquisition of General Finance and the December 2022 acquisition of Ahern Rentals, and a 9.4 percent increase in fleet productivity, which reflects broad-based strength of demand across our end-markets.
Biggest changeRevenues by segment were as follows: General rentals Specialty Total Year Ended December 31, 2023 Equipment rentals $ 8,803 $ 3,261 $ 12,064 Sales of rental equipment 1,411 163 1,574 Sales of new equipment 95 123 218 Contractor supplies sales 89 57 146 Service and other revenues 299 31 330 Total revenue $ 10,697 $ 3,635 $ 14,332 Year Ended December 31, 2022 Equipment rentals $ 7,345 $ 2,771 $ 10,116 Sales of rental equipment 835 130 965 Sales of new equipment 73 81 154 Contractor supplies sales 81 45 126 Service and other revenues 250 31 281 Total revenue $ 8,584 $ 3,058 $ 11,642 Year Ended December 31, 2021 Equipment rentals $ 6,074 $ 2,133 $ 8,207 Sales of rental equipment 862 106 968 Sales of new equipment 142 61 203 Contractor supplies sales 71 38 109 Service and other revenues 202 27 229 Total revenue $ 7,351 $ 2,365 $ 9,716 Equipment rentals. 2023 equipment rentals of $12.1 billion increased 19.3 percent, primarily due to a 21.9 percent increase in average OEC, partially offset by a 0.7 percent decrease in fleet productivity.
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.
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 continue to be significant in the future.
The equipment and inventory receipts from the suppliers pursuant to these purchase orders and the related payments to the suppliers are expected to be completed primarily throughout 2023 and 2024. The amount of our future capital expenditures will depend on a number of factors, including general economic conditions and growth prospects.
The equipment and inventory receipts from the suppliers pursuant to these purchase orders and the related payments to the suppliers are expected to be completed primarily throughout 2024. The amount of our future capital expenditures will depend on a number of factors, including general economic conditions and growth prospects.
See "Financial Overview" above for a summary of the 2022 capital structure actions taken to improve our financial flexibility and liquidity. On October 24, 2022, our Board of Directors authorized a $1.25 billion share repurchase program.
See "Financial Overview" above for a summary of the 2023 capital structure actions taken to improve our financial flexibility and liquidity. On October 24, 2022, our Board of Directors authorized a $1.25 billion share repurchase program.
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 "Item 1.
We continue to assess the economic environment in which we operate and any developments relating to COVID-19, and take appropriate actions to address the economic and other challenges we face. See "Item 1.
Other (income) expense, net primarily includes (i) currency gains and losses, (ii) finance charges, (iii) gains and losses on sales of non-rental equipment and (iv) other miscellaneous items. A detailed reconciliation of the effective tax rates to the U.S. federal statutory income tax rate is included in note 14 to our consolidated financial statements.
Other (income) expense, net primarily includes (i) currency gains and losses, (ii) finance charges, (iii) gains and losses on sales of non-rental equipment and (iv) other miscellaneous items. A detailed reconciliation of the effective tax rates to the U.S. federal statutory income tax rate is included in note 14 to our consolidated financial statements. Balance sheet .
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share data and unless otherwise indicated) We have omitted discussions comparing 2021 and 2020 results, as such disclosures were included in our Annual Report on Form 10-K for the year ended December 31, 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share data and unless otherwise indicated) We have omitted discussions comparing 2022 and 2021 results, as such disclosures were included in our Annual Report on Form 10-K for the year ended December 31, 2022.
Equipment rentals include our revenues from renting equipment, as well as revenue related to the fees we charge customers: for equipment delivery and pick-up; to protect the customer against liability for damage to our equipment while on rent; for fuel; and for environmental costs. Collectively, these "ancillary fees" represented approximately 16 percent of equipment rental revenue in 2022.
Equipment rentals include our revenues from renting equipment, as well as revenue related to the fees we charge customers: for equipment delivery and pick-up; to protect the customer against liability for damage to our equipment while on rent; for fuel; and for environmental costs. Collectively, these "ancillary fees" represented approximately 16 percent of equipment rental revenue in 2023.
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.
As of December 31, 2023, 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.
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.
Global Economic Conditions 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 rental capacity for our customers.
We offer approximately 4,600 classes of equipment for rent to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities. Our revenues are derived from the following sources: equipment rentals, sales of rental equipment, sales of new equipment, contractor supplies sales and service and other revenues.
We offer approximately 4,800 classes of equipment for rent to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities. Our revenues are derived from the following sources: equipment rentals, sales of rental equipment, sales of new equipment, contractor supplies sales and service and other revenues.
Based on our understanding of Rule 3-10 of Regulation S-X ("Rule 3-10"), we believe that Holdings’ guarantees of URNA indebtedness comply with the conditions set forth in Rule 3-10, which enable us to present summarized financial information for Holdings, URNA and the consolidated guarantor subsidiaries in accordance with Rule 13-01 of Regulation S-X.
Based on our understanding of Rule 3-10 of Regulation S-X ("Rule 3-10"), we believe that Holdings’ guarantees of URNA indebtedness comply with the conditions set forth in Rule 3-10, which enables us to present summarized financial information for Holdings, URNA and the consolidated guarantor subsidiaries in accordance with Rule 13-01 of Regulation S-X.
The gross margin fluctuations from sales of new equipment, contractor supplies sales and service and other revenues generally reflect normal variability, and such revenue types did not account for a significant portion of total gross profit (gross profit for these revenue types represented 4 percent of total gross profit for the year ended December 31, 2022).
The gross margin fluctuations from sales of new equipment, contractor supplies sales and service and other revenues generally reflect normal variability, and such revenue types did not account for a significant portion of total gross profit (gross profit for these revenue types represented 4 percent of total gross profit for the year ended December 31, 2023).
Business-Industry Overview and Economic Outlook" for a discussion of our end-markets, and Item 1A- Risk Factors for further discussion of the risks related to us and our business. Executive Overview We are the largest equipment rental company in the world, with an integrated network of 1,521 rental locations.
Business-Industry Overview and Economic Outlook" for a discussion of our end-markets, and Item 1A- Risk Factors for further discussion of the risks related to us and our business. Executive Overview We are the largest equipment rental company in the world, with an integrated network of 1,584 rental locations.
When certain conditions are met, cash and cash equivalents and borrowing base collateral in excess of the ABL facility size may be included when calculating specified availability under the ABL facility. As of December 31, 2022, specified availability under the ABL facility exceeded the required threshold and, as a result, this financial covenant was inapplicable.
When certain conditions are met, cash and cash equivalents and borrowing base collateral in excess of the ABL facility size may be included when calculating specified availability under the ABL facility. As of December 31, 2023, specified availability under the ABL facility exceeded the required threshold and, as a result, this financial covenant was inapplicable.
(3) As of December 31, 2022, we had outstanding advance purchase orders, which were negotiated in the ordinary course of business, with our equipment and inventory suppliers. These purchase orders can generally be cancelled by us without cancellation penalties.
(3) As of December 31, 2023, we had outstanding advance purchase orders, which were negotiated in the ordinary course of business, with our equipment and inventory suppliers. These purchase orders can generally be cancelled by us without cancellation penalties.
See note 12 to the consolidated financial statements for further debt information, and note 13 for further finance lease and operating lease information. (2) Estimated interest payments have been calculated based on the principal amount of debt and the applicable interest rates as of December 31, 2022.
See note 12 to the consolidated financial statements for further debt information, and note 13 for further finance lease and operating lease information. (2) Estimated interest payments have been calculated based on the principal amount of debt and the applicable interest rates as of December 31, 2023.
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.
In connection with our goodwill impairment test that was conducted as of October 1, 2023, we bypassed the optional qualitative assessment for each reporting unit and quantitatively compared the fair values of our reporting units with their carrying amounts.
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 31 Table of Contents information. 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.
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. 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.
Our digital capabilities, including our Total Control® platform, allow our sales teams to provide contactless end-to-end customer service; • The further optimization of our customer mix and fleet mix, with a dual objective : to enhance our performance in serving our current customer base, and to focus on the accounts and customer types that are best suited to our strategy for profitable growth.
Our digital capabilities, including our Total Control® platform, allow our sales teams to provide contactless end-to-end customer service; 27 Table of Contents • The further optimization of our customer mix and fleet mix, with a dual objective : to enhance our performance in serving our current customer base, and to focus on the accounts and customer types that are best suited to our strategy for profitable growth.
Although we believe aggregating these divisions into our reporting segments for segment reporting purposes is appropriate, to the extent that there are significant margin variances that do not converge, we may be required to disaggregate the divisions into separate reporting segments. Any such disaggregation would have no impact on our consolidated results of operations.
Although we believe aggregating these divisions into our reporting segments for segment reporting purposes is appropriate, to the extent that there are significant margin variances that do not 36 Table of Contents converge, we may be required to disaggregate the divisions into separate reporting segments. Any such disaggregation would have no impact on our consolidated results of operations.
Delivery and pick-up revenue, which represented approximately eight percent of equipment rental revenue in 2022, is the most significant ancillary revenue component. Sales of rental equipment represent our revenues from the sale of used rental equipment. Sales of new equipment represent our revenues from the sale of new equipment.
Delivery and pick-up revenue, which represented approximately eight percent of equipment rental revenue in 2023, is the most significant ancillary revenue component. Sales of rental equipment represent our revenues from the sale of used rental equipment. Sales of new equipment represent our revenues from the sale of new equipment.
If the estimated salvage values of all of our rental equipment were to increase or decrease by one percentage point, we estimate that our annual depreciation expense would change by approximately $23.
If the estimated salvage values of all of our rental equipment were to increase or decrease by one percentage point, we estimate that our annual depreciation expense would change by approximately $27.
For the five year period ended December 31, 2022, there was no general rentals' division with an equipment rentals gross margin that differed materially from the equipment rentals gross margin of the aggregated general rentals' divisions.
For the five year period ended December 31, 2023, there was no general rentals' division with an equipment rentals gross margin that differed materially from the equipment rentals gross margin of the aggregated general rentals' divisions.
The issued debt, together with drawings on our ABL facility, was used to fund the Ahern Rentals acquisition that is discussed in note 4 to the consolidated financial statements.
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.
This approach takes two forms: The first is based on the market value (market capitalization plus interest-bearing 32 Table of Contents liabilities) and operating metrics (e.g., revenue and EBITDA) of companies engaged in the same or similar line of business. The second form is based on multiples paid in recent acquisitions of companies.
This approach takes two forms: The first is based on the market value (market capitalization plus interest-bearing liabilities) and operating metrics (e.g., revenue and EBITDA) of companies engaged in the same or similar line of business. The second form is based on multiples paid in recent acquisitions of companies.
Lower credit ratings generally result in higher borrowing costs and reduced access to debt capital markets. Credit ratings also affect the costs of derivative transactions, including interest rate and foreign currency derivative transactions. As a result, negative changes in our credit ratings could adversely impact our costs of funding.
Lower credit ratings generally result in higher borrowing costs and reduced access to debt capital markets. Credit ratings also affect the costs of derivative transactions, including interest rate and foreign currency derivative transactions. As a 41 Table of Contents result, negative changes in our credit ratings could adversely impact our costs of funding.
We used cash during this period principally to (i) purchase rental and non-rental equipment and intangible assets of $3.690 billion, (ii) purchase other companies for $2.340 billion and (iii) purchase shares of our common stock for $1.068 billion.
We used cash during this period principally to (i) make payments for purchases of rental and non-rental equipment and intangible assets of $3.690 billion, (ii) purchase other companies for $2.340 billion and (iii) purchase shares of our common stock for $1.068 billion.
Free Cash Flow GAAP Reconciliation We define “free cash flow” as net cash provided by operating activities less purchases of, and plus proceeds from, equipment and intangible assets. The equipment and intangible asset purchases and proceeds are included in cash flows from investing activities.
Free Cash Flow GAAP Reconciliation We define “free cash flow” as net cash provided by operating activities less payments for purchases of, and plus proceeds from, equipment and intangible assets. The equipment and intangible asset items are included in cash flows from investing activities.
These include a fleet of rental equipment with a total original equipment cost (“OEC”) of $19.6 billion, and a North American branch network that operates in 49 U.S. states and every Canadian province, and serves 99 of the 100 largest metropolitan areas in the U.S.
These include a fleet of rental equipment with a total original equipment cost (“OEC”) of $20.7 billion, and a North American branch network that operates in 49 U.S. states and every Canadian province, and serves 99 of the 100 largest metropolitan areas in the U.S.
To the extent that the useful lives of all of our depreciable property and equipment were to increase or decrease by one year, we estimate that our annual non-rental depreciation expense would decrease or increase by approximately $43 or $66, respectively. Acquisition Accounting .
To the extent that the useful lives of all of our depreciable property and equipment were to increase or decrease by one year, we estimate that our annual non-rental depreciation expense would decrease or increase by approximately $42 or $64, respectively. Acquisition Accounting .
For the three years in the period ended December 31, 2022, general rentals accounted for 70 percent of our total equipment rentals gross profit. This contribution percentage is consistent with general rentals’ equipment rental revenue contribution over the same period.
For the three years in the period ended December 31, 2023, general rentals accounted for 68 percent of our total equipment rentals gross profit. This contribution percentage is consistent with general rentals’ equipment rental revenue contribution over the same period.
Information Regarding Guarantors of URNA Indebtedness URNA is 100 percent owned by Holdings and has certain outstanding indebtedness that is guaranteed by both Holdings and, with the exception of its U.S. special purpose vehicle which holds receivable assets relating to the Company’s accounts receivable securitization facility (the “SPV”), captive insurance subsidiary and immaterial subsidiaries acquired in connection with the General Finance acquisition, all of URNA’s U.S. subsidiaries (the “guarantor subsidiaries”).
Information Regarding Guarantors of URNA Indebtedness URNA is 100 percent owned by Holdings and has certain outstanding indebtedness that is guaranteed by both Holdings and, with the exception of its U.S. special purpose vehicle which holds receivable assets relating to the Company’s accounts receivable securitization facility (the “SPV”) and a foreign subsidiary holding company acquired in connection with the General Finance acquisition, all of URNA’s U.S. subsidiaries (the “guarantor subsidiaries”).
Our credit ratings as of January 23, 2023 were as follows: Corporate Rating Outlook Moody’s Ba1 Stable Standard & Poor’s BB+ Stable A security rating is not a recommendation to buy, sell or hold securities.
Our credit ratings as of January 22, 2024 were as follows: Corporate Rating Outlook Moody’s Ba1 Stable Standard & Poor’s BB+ Stable A security rating is not a recommendation to buy, sell or hold securities.
Other than the guarantee by our Canadian subsidiary of URNA's indebtedness under the ABL facility, none of URNA’s indebtedness is guaranteed by URNA's foreign subsidiaries, the SPV, captive insurance subsidiary or immaterial subsidiaries acquired in connection with the General Finance acquisition (together, the “non-guarantor subsidiaries”).
Other than the guarantee by our Canadian subsidiary of URNA's indebtedness under the ABL facility, none of URNA’s indebtedness is guaranteed by URNA's foreign subsidiaries, the SPV, or the foreign subsidiary holding company acquired in connection with the General Finance acquisition (together, the “non-guarantor subsidiaries”).
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; and • 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, Inc.
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; and • 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, Inc.
The guarantees of URNA’s indebtedness are effectively junior to any indebtedness of our subsidiaries that are not guarantors, including our foreign subsidiaries.
The guarantees of URNA’s indebtedness are effectively junior to any indebtedness of our subsidiaries that are not guarantors, including our foreign 43 Table of Contents subsidiaries.
In 2022, equipment rental revenues represented 87 percent of our total revenues. 25 Table of Contents For the past several years, as we continued to manage the impact of COVID-19, we executed a strategy focused on improving the profitability of our core equipment rental business through revenue growth, margin expansion and operational efficiencies.
In 2023, equipment rental revenues represented 84 percent of our total revenues. For the past several years, as we continued to manage the impact of COVID-19, we executed a strategy focused on improving the profitability of our core equipment rental business through revenue growth, margin expansion and operational efficiencies.
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, since December 31, 2021, our divisions have been our operating segments.
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, our divisions are our operating segments.
These items are excluded from adjusted EBITDA internally when evaluating our operating performance and for strategic planning and forecasting purposes, and allow investors to make a more meaningful comparison between our core business operating results over different periods of time, as well as with those of other similar companies.
See below for further detail on each adjusting item. These items are excluded from adjusted EBITDA internally when evaluating our operating performance and for strategic planning and forecasting purposes, and allow investors to make a more meaningful comparison between our core business operating results over different periods of time, as well as with those of other similar companies.
In applying many accounting principles, we make assumptions, estimates and/or judgments. These assumptions, estimates and/or judgments are often subjective and may change based on changing circumstances or changes in our analysis. Material changes in these assumptions, estimates and/or judgments have the potential to materially alter our results of operations.
These assumptions, estimates and/or judgments are often subjective and may change based on changing circumstances or changes in our analysis. Material changes in these assumptions, estimates and/or judgments have the potential to materially alter our results of operations.
The specialty segment includes the rental of specialty construction products such as i) trench safety equipment, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers and line testing equipment for underground work, ii) power and HVAC equipment, such as portable diesel generators, electrical distribution equipment, and temperature control equipment, iii) fluid solutions equipment primarily used for fluid containment, transfer and treatment, and iv) mobile storage equipment and modular office space.
The specialty segment 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.
Revenues for each of the three years in the period ended December 31, 2022 were as follows: Year Ended December 31, Change 2022 2021 2020 2022 2021 Equipment rentals* $ 10,116 $ 8,207 $ 7,140 23.3% 14.9% Sales of rental equipment 965 968 858 (0.3)% 12.8% Sales of new equipment 154 203 247 (24.1)% (17.8)% Contractor supplies sales 126 109 98 15.6% 11.2% Service and other revenues 281 229 187 22.7% 22.5% Total revenues $ 11,642 $ 9,716 $ 8,530 19.8% 13.9% *Equipment rentals variance components: Year-over-year change in average OEC 13.6% 4.0% Assumed year-over-year inflation impact (1) (1.5)% (1.5)% Fleet productivity (2) 9.4% 10.4% Contribution from ancillary and re-rent revenue (3) 1.8% 2.0% Total change in equipment rentals 23.3% 14.9% _________________ (1) Reflects the estimated impact of inflation on the revenue productivity of fleet based on OEC, which is recorded at cost.
Revenues for each of the three years in the period ended December 31, 2023 were as follows: Year Ended December 31, Change 2023 2022 2021 2023 2022 Equipment rentals* $ 12,064 $ 10,116 $ 8,207 19.3% 23.3% Sales of rental equipment 1,574 965 968 63.1% (0.3)% Sales of new equipment 218 154 203 41.6% (24.1)% Contractor supplies sales 146 126 109 15.9% 15.6% Service and other revenues 330 281 229 17.4% 22.7% Total revenues $ 14,332 $ 11,642 $ 9,716 23.1% 19.8% *Equipment rentals variance components: Year-over-year change in average OEC 21.9% 13.6% Assumed year-over-year inflation impact (1) (1.5)% (1.5)% Fleet productivity (2) (0.7)% 9.4% Contribution from ancillary and re-rent revenue (3) (0.4)% 1.8% Total change in equipment rentals 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 change in equipment rentals 11.3% _________________ (1) Reflects the estimated impact of inflation on the revenue productivity of fleet based on OEC, which is recorded at cost.
See note 3 to our consolidated financial statements for further discussion of our revenue recognition accounting. 2022 total revenues of $11.6 billion increased 19.8 percent compared with 2021. Equipment rentals and sales of rental equipment are our largest revenue types (together, they accounted for 95 percent of total revenue for the year ended December 31, 2022).
See note 3 to our consolidated financial statements for further discussion of our revenue recognition accounting. 2023 total revenues of $14.3 billion increased 23.1 percent compared with 2022. Equipment rentals and sales of rental equipment are our largest revenue types (together, they accounted for 95 percent of total revenue for the year ended December 31, 2023).
Year Ended December 31, 2022 2021 2020 Net income $ 2,105 $ 1,386 $ 890 Diluted earnings per share $ 29.65 $ 19.04 $ 12.20 Net income and diluted earnings per share for each of the three years in the period ended December 31, 2022 include the after-tax impacts of the items below.
Year Ended December 31, 2023 2022 2021 Net income $ 2,424 $ 2,105 $ 1,386 Diluted earnings per share $ 35.28 $ 29.65 $ 19.04 Net income and diluted earnings per share for each of the three years in the period ended December 31, 2023 include the after-tax impacts of the items below.
We also conduct impairment reviews in connection with branch consolidations and other changes in our business. During the years ended December 31, 2022, 2021 and 2020, we recorded asset impairment charges of $3, $14 and $36, respectively, primarily in depreciation of rental equipment in our consolidated statements of income. These charges were primarily recognized in our general rentals segment.
We also conduct impairment reviews in connection with branch consolidations and other changes in our business. There were no asset impairment charges recognized in 2023, and during the years ended December 31, 2022 and 2021, we recorded asset impairment charges of $3 and $14, respectively, primarily in depreciation of rental equipment in our consolidated statements of income.
As of December 31, 2022, the indebtedness of our non-guarantors was comprised of (i) $959 of outstanding borrowings by the SPV in connection with the Company’s accounts receivable securitization facility, (ii) $133 of outstanding borrowings under the ABL facility by non-guarantor subsidiaries and (iii) $9 of finance leases of our non-guarantor subsidiaries.
As of December 31, 2023, the indebtedness of our non-guarantors was comprised of (i) $1.300 billion of outstanding borrowings by the SPV in connection with the Company’s accounts receivable securitization facility, (ii) $99 of outstanding borrowings under the ABL facility by non-guarantor subsidiaries and (iii) $9 of finance leases of our non-guarantor subsidiaries.
(3) 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.
(3) 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. The increase in 2023 primarily reflects the impact of the Ahern Rentals acquisition.
Impairment of Long-lived Assets (Excluding Goodwill). We review the recoverability of our rental equipment, property and equipment and lease assets when events or changes in circumstances occur that indicate that the carrying value of the assets may not be recoverable.
We review the recoverability of our rental equipment, property and equipment, lease assets and other intangible assets when events or changes in circumstances occur that indicate that the carrying value of the assets may not be recoverable.
For the three years in the period ended December 31, 2022, sales of contractor supplies represented approximately 1 percent of our total revenues. Our general rentals segment accounted for most of these sales. 2022 sales of contractor supplies did not change materially from 2021. Service and other revenues .
For the three years in the period ended December 31, 2023, sales of contractor supplies represented approximately 1 percent of our total revenues. 2023 sales of contractor supplies did not change materially from 2022. Service and other revenues .
Segment Equipment Rentals Gross Profit Segment equipment rentals gross profit and gross margin for each of the three years in the period ended December 31, 2022 were as follows: General rentals Specialty Total 2022 Equipment Rentals Gross Profit $ 2,905 $ 1,340 $ 4,245 Equipment Rentals Gross Margin 39.6 % 48.4 % 42.0 % 2021 Equipment Rentals Gross Profit $ 2,269 $ 998 $ 3,267 Equipment Rentals Gross Margin 37.4 % 46.8 % 39.8 % 2020 Equipment Rentals Gross Profit $ 1,954 $ 765 $ 2,719 Equipment Rentals Gross Margin 35.7 % 45.9 % 38.1 % General rentals.
Segment Equipment Rentals Gross Profit Segment equipment rentals gross profit and gross margin for each of the three years in the period ended December 31, 2023 were as follows: General rentals Specialty Total 2023 Equipment Rentals Gross Profit $ 3,219 $ 1,595 $ 4,814 Equipment Rentals Gross Margin 36.6 % 48.9 % 39.9 % 2022 Equipment Rentals Gross Profit $ 2,905 $ 1,340 $ 4,245 Equipment Rentals Gross Margin 39.6 % 48.4 % 42.0 % 2021 Equipment Rentals Gross Profit $ 2,269 $ 998 $ 3,267 Equipment Rentals Gross Margin 37.4 % 46.8 % 39.8 % General rentals.
The table below provides a reconciliation between net cash provided by operating activities and free cash flow. 40 Table of Contents Year Ended December 31, 2022 2021 2020 Net cash provided by operating activities $ 4,433 $ 3,689 $ 2,658 Purchases of rental equipment (3,436) (2,998) (961) Purchases of non-rental equipment and intangible assets (254) (200) (197) Proceeds from sales of rental equipment 965 968 858 Proceeds from sales of non-rental equipment 24 30 42 Insurance proceeds from damaged equipment 32 25 40 Free cash flow $ 1,764 $ 1,514 $ 2,440 Free cash flow for the year ended December 31, 2022 was $1.764 billion, an increase of $250 as compared to $1.514 billion for the year ended December 31, 2021.
The table below provides a reconciliation between net cash provided by operating activities and free cash flow. 42 Table of Contents Year Ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 4,704 $ 4,433 $ 3,689 Payments for purchases of rental equipment (3,714) (3,436) (2,998) Payments for purchases of non-rental equipment and intangible assets (356) (254) (200) Proceeds from sales of rental equipment 1,574 965 968 Proceeds from sales of non-rental equipment 60 24 30 Insurance proceeds from damaged equipment 38 32 25 Free cash flow $ 2,306 $ 1,764 $ 1,514 Free cash flow for the year ended December 31, 2023 was $2.306 billion, an increase of $542 as compared to $1.764 billion for the year ended December 31, 2022.
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.
We completed the acquisition of General Finance in May 2021, and 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 amount by eight percent.
Year Ended December 31, 2022 2021 2020 Tax rate applied to items below 25.3 % 25.3 % 25.2 % Contribution to net income (after-tax) Impact on diluted earnings per share Contribution to net income (after-tax) Impact on diluted earnings per share Contribution to net income (after-tax) Impact on diluted earnings per share Merger related costs (1) $ — $ — $ (2) $ (0.03) $ — $ — Merger related intangible asset amortization (2) (126) (1.79) (143) (1.98) (163) (2.22) Impact on depreciation related to acquired fleet and property and equipment (3) (40) (0.56) (12) (0.16) (6) (0.08) Impact of the fair value mark-up of acquired fleet (4) (20) (0.29) (28) (0.38) (37) (0.51) Restructuring charge (5) — — (1) (0.02) (13) (0.18) Asset impairment charge (6) (2) (0.03) (10) (0.14) (27) (0.37) Loss on repurchase/redemption of debt securities (7) (13) (0.18) (22) (0.31) (137) (1.88) (1) This reflects transaction costs associated with the General Finance acquisition discussed in note 4 to the consolidated financial statements.
Year Ended December 31, 2023 2022 2021 Tax rate applied to items below 25.3 % 25.3 % 25.3 % Contribution to net income (after-tax) Impact on diluted earnings per share Contribution to net income (after-tax) Impact on diluted earnings per share Contribution to net income (after-tax) Impact on diluted earnings per share Merger related costs (1) $ — $ — $ — $ — $ (2) $ (0.03) Merger related intangible asset amortization (2) (160) (2.33) (126) (1.79) (143) (1.98) Impact on depreciation related to acquired fleet and property and equipment (3) (113) (1.65) (40) (0.56) (12) (0.16) Impact of the fair value mark-up of acquired fleet (4) (81) (1.17) (20) (0.29) (28) (0.38) Restructuring charge (5) (21) (0.31) — — (1) (0.02) Asset impairment charge (6) — — (2) (0.03) (10) (0.14) Loss on repurchase/redemption of debt securities (7) — — (13) (0.18) (22) (0.31) (1) This reflects transaction costs associated with the General Finance acquisition that was completed in May 2021.
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.
We also continue to monitor any developments relating to the coronavirus (“COVID-19”). 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.
We recognize deferred tax assets and liabilities for certain future deductible or taxable temporary differences expected to be reported in our income tax returns. These deferred tax assets and liabilities are computed using the tax rates that are expected to apply in the periods when the related future deductible or taxable temporary difference is expected to be settled or realized.
These deferred tax assets and liabilities are computed using the tax rates that are expected to apply in the periods when the related future deductible or taxable temporary difference is expected to be settled or realized.
As discussed in note 5 to our consolidated financial statements, we aggregate our four geographic divisions—Central, Northeast, Southeast and West—into our general rentals reporting segment.
As discussed in note 5 to our consolidated financial statements, our general rentals reporting segment reflects the aggregation of four geographic divisions—Central, Northeast, Southeast and West.
Other costs/(income) The table below includes the other costs/(income) in our consolidated statements of income, as well as key associated metrics, for the three years in the period ended December 31, 2022: Year Ended December 31, Change 2022 2021 2020 2022 2021 Selling, general and administrative ("SG&A") expense $ 1,400 $ 1,199 $ 979 16.8% 22.5% SG&A expense as a percentage of revenue 12.0 % 12.3 % 11.5 % (30) bps 80 bps Merger related costs — 3 — (100.0)% — Restructuring charge — 2 17 (100.0)% (88.2)% Non-rental depreciation and amortization 364 372 387 (2.2)% (3.9)% Interest expense, net 445 424 669 5.0% (36.6)% Other (income) expense, net (15) 7 (8) (314.3)% (187.5)% Provision for income taxes 697 460 249 51.5% 84.7% Effective tax rate 24.9 % 24.9 % 21.9 % — bps 300 bps SG&A expense primarily includes sales force compensation, information technology costs, third party professional fees, management salaries, bad debt expense and clerical and administrative overhead.
Other costs/(income) The table below includes the other costs/(income) in our consolidated statements of income, as well as key associated metrics, for the three years in the period ended December 31, 2023: Year Ended December 31, Change 2023 2022 2021 2023 2022 Selling, general and administrative ("SG&A") expense $ 1,527 $ 1,400 $ 1,199 9.1% 16.8% SG&A expense as a percentage of revenue 10.7 % 12.0 % 12.3 % (130) bps (30) bps Merger related costs — — 3 — (100.0)% Restructuring charge 28 — 2 — (100.0)% Non-rental depreciation and amortization 431 364 372 18.4% (2.2)% Interest expense, net 635 445 424 42.7% 5.0% Other (income) expense, net (19) (15) 7 26.7% (314.3)% Provision for income taxes 787 697 460 12.9% 51.5% Effective tax rate 24.5 % 24.9 % 24.9 % (40) bps — bps SG&A expense primarily includes sales force compensation, information technology costs, third party professional fees, management salaries, bad debt expense and clerical and administrative overhead.
Like the Holdings guarantees, the guarantees of the guarantor subsidiaries are subject to subordination provisions (to the same extent that the obligations of the issuer under the relevant notes are subordinated to other debt of the issuer) and to a standard limitation which provides that the maximum amount guaranteed by each guarantor will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws. 41 Table of Contents All of the existing guarantees by Holdings and the guarantor subsidiaries rank equally in right of payment with all of the guarantors' existing and future senior indebtedness.
Like the Holdings guarantees, the guarantees of the guarantor subsidiaries are subject to subordination provisions (to the same extent that the obligations of the issuer under the relevant notes are subordinated to other debt of the issuer) and to a standard limitation which provides that the maximum amount guaranteed by each guarantor will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws.
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.
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. Impairment of Long-lived Assets (Excluding Goodwill).
Gross margins by revenue classification were as follows: 36 Table of Contents Year Ended December 31, Change 2022 2021 2020 2022 2021 Total gross margin 42.9% 39.7% 37.3% 320 bps 240 bps Equipment rentals 42.0% 39.8% 38.1% 220 bps 170 bps Sales of rental equipment 58.7% 44.5% 38.7% 1,420 bps 580 bps Sales of new equipment 19.5% 16.7% 13.4% 280 bps 330 bps Contractor supplies sales 33.3% 28.4% 29.6% 490 bps (120) bps Service and other revenues 40.2% 39.3% 37.4% 90 bps 190 bps 2022 gross margin of 42.9 percent increased 320 basis points from 2021.
Gross margins by revenue classification were as follows: Year Ended December 31, Change 2023 2022 2021 2023 2022 Total gross margin 40.6% 42.9% 39.7% (230) bps 320 bps Equipment rentals 39.9% 42.0% 39.8% (210) bps 220 bps Sales of rental equipment 49.9% 58.7% 44.5% (880) bps 1,420 bps Sales of new equipment 17.9% 19.5% 16.7% (160) bps 280 bps Contractor supplies sales 32.2% 33.3% 28.4% (110) bps 490 bps Service and other revenues 38.5% 40.2% 39.3% (170) bps 90 bps 38 Table of Contents 2023 gross margin of 40.6 percent decreased 230 basis points from 2022.
The table below provides a reconciliation between net income and EBITDA and adjusted EBITDA: Year Ended December 31, 2022 2021 2020 Net income $ 2,105 $ 1,386 $ 890 Provision for income taxes 697 460 249 Interest expense, net 445 424 669 Depreciation of rental equipment 1,853 1,611 1,601 Non-rental depreciation and amortization 364 372 387 EBITDA 5,464 4,253 3,796 Merger related costs (1) — 3 — Restructuring charge (2) — 2 17 Stock compensation expense, net (3) 127 119 70 Impact of the fair value mark-up of acquired fleet (4) 27 37 49 Adjusted EBITDA $ 5,618 $ 4,414 $ 3,932 Net income margin 18.1 % 14.3 % 10.4 % Adjusted EBITDA margin 48.3 % 45.4 % 46.1 % The table below provides a reconciliation between net cash provided by operating activities and EBITDA and adjusted EBITDA: 28 Table of Contents Year Ended December 31, 2022 2021 2020 Net cash provided by operating activities $ 4,433 $ 3,689 $ 2,658 Adjustments for items included in net cash provided by operating activities but excluded from the calculation of EBITDA: Amortization of deferred financing costs and original issue discounts (13) (13) (14) Gain on sales of rental equipment 566 431 332 Gain on sales of non-rental equipment 9 10 8 Insurance proceeds from damaged equipment 32 25 40 Merger related costs (1) — (3) — Restructuring charge (2) — (2) (17) Stock compensation expense, net (3) (127) (119) (70) Loss on repurchase/redemption of debt securities (5) (17) (30) (183) Changes in assets and liabilities (151) (328) 241 Cash paid for interest 406 391 483 Cash paid for income taxes, net 326 202 318 EBITDA 5,464 4,253 3,796 Add back: Merger related costs (1) — 3 — Restructuring charge (2) — 2 17 Stock compensation expense, net (3) 127 119 70 Impact of the fair value mark-up of acquired fleet (4) 27 37 49 Adjusted EBITDA $ 5,618 $ 4,414 $ 3,932 _________________ (1) This reflects transaction costs associated with the General Finance acquisition discussed in note 4 to the consolidated financial statements.
The table below provides a reconciliation between net income and EBITDA and adjusted EBITDA: Year Ended December 31, 2023 2022 2021 Net income $ 2,424 $ 2,105 $ 1,386 Provision for income taxes 787 697 460 Interest expense, net 635 445 424 Depreciation of rental equipment 2,350 1,853 1,611 Non-rental depreciation and amortization 431 364 372 EBITDA 6,627 5,464 4,253 Merger related costs (1) — — 3 Restructuring charge (2) 28 — 2 Stock compensation expense, net (3) 94 127 119 Impact of the fair value mark-up of acquired fleet (4) 108 27 37 Adjusted EBITDA $ 6,857 $ 5,618 $ 4,414 Net income margin 16.9 % 18.1 % 14.3 % Adjusted EBITDA margin 47.8 % 48.3 % 45.4 % The table below provides a reconciliation between net cash provided by operating activities and EBITDA and adjusted EBITDA: 30 Table of Contents Year Ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 4,704 $ 4,433 $ 3,689 Adjustments for items included in net cash provided by operating activities but excluded from the calculation of EBITDA: Amortization of deferred financing costs and original issue discounts (14) (13) (13) Gain on sales of rental equipment 786 566 431 Gain on sales of non-rental equipment 21 9 10 Insurance proceeds from damaged equipment 38 32 25 Merger related costs (1) — — (3) Restructuring charge (2) (28) — (2) Stock compensation expense, net (3) (94) (127) (119) Loss on repurchase/redemption of debt securities (5) — (17) (30) Changes in assets and liabilities 107 (151) (328) Cash paid for interest 614 406 391 Cash paid for income taxes, net 493 326 202 EBITDA 6,627 5,464 4,253 Add back: Merger related costs (1) — — 3 Restructuring charge (2) 28 — 2 Stock compensation expense, net (3) 94 127 119 Impact of the fair value mark-up of acquired fleet (4) 108 27 37 Adjusted EBITDA $ 6,857 $ 5,618 $ 4,414 _________________ (1) This reflects transaction costs associated with the General Finance acquisition that was completed in May 2021.
As of December 31, 2022, there were no open restructuring programs, and the total liability associated with the closed restructuring programs was $6. 37 Table of Contents Non-rental depreciation and amortization includes (i) the amortization of other intangible assets and (ii) depreciation expense associated with equipment that is not offered for rent (such as computers and office equipment) and amortization expense associated with leasehold improvements.
As of December 31, 2023, the total liability associated with our restructuring programs was $21. Non-rental depreciation and amortization includes (i) the amortization of other intangible assets and (ii) depreciation expense associated with equipment that is not offered for rent (such as computers and office equipment) and amortization expense associated with leasehold improvements.
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 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.
(4) 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. (5) 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.
(4) 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. The increase in 2023 primarily reflects the impact of the Ahern Rentals acquisition. (5) This primarily reflects severance and branch closure charges associated with our restructuring programs.
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.
The COVID-19 impact on our business was most pronounced in 2020, and activity across our end-markets began to recover in 2021. 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 on our business.
Adjusted EBITDA represents EBITDA plus the sum of the merger related costs, restructuring charge, stock compensation expense, net, and the impact of the fair value mark-up of acquired fleet.
EBITDA represents the sum of net income, provision for income taxes, interest expense, net, depreciation of rental equipment and non-rental depreciation and amortization. Adjusted EBITDA represents EBITDA plus the sum of the merger related costs, restructuring charge, stock compensation expense, net, and the impact of the fair value mark-up of acquired fleet.
For the three years in the period ended December 31, 2022, service and other revenues represented approximately 2 percent of our total revenues. Our general rentals segment accounted for most of these sales. 2022 service and other revenues increased 22.7 percent from 2021 primarily due to growth initiatives. Fourth Quarter Items .
For the three years in the period ended December 31, 2023, service and other revenues represented approximately 2 percent of our total revenues. 2023 service and other revenues increased 17.4 percent from 2022 primarily due to growth initiatives. Fourth Quarter Items .
See "Item 1. Business- Industry Overview and Economic Outlook" for a discussion of our end-markets. As discussed below, fleet productivity is a comprehensive metric that reflects the combined impact of changes in rental rates, time utilization, and mix that contribute to the variance in owned equipment rental revenue.
As discussed below, fleet productivity is a comprehensive metric that reflects the combined impact of changes in rental rates, time utilization, and mix that contribute to the variance in owned equipment rental revenue.
Key accounts are each managed by a single point of contact to enhance customer service. Financial Overview Prior to taking actions pertaining to our financial flexibility and liquidity, we assess our available sources and anticipated uses of cash, including, with respect to sources, cash generated from operations and from the sale of rental equipment.
Financial Overview Prior to taking actions pertaining to our financial flexibility and liquidity, we assess our available sources and anticipated uses of cash, including, with respect to sources, cash generated from operations and from the sale of rental equipment.
Merger related costs only include costs associated with major acquisitions completed since 2012 that significantly impact our operations (the "major acquisitions," each of which had annual revenues of over $200 prior to acquisition).
Merger related costs only include costs associated with major acquisitions completed since 2012 that significantly impact our operations (the "major acquisitions," each of which had annual revenues of over $200 prior to acquisition). (2) This reflects the amortization of the intangible assets acquired in the major acquisitions. The increase in 2023 primarily reflects the impact of the Ahern Rentals acquisition.
For additional information, see "Results of Operations-Other costs/(income)-restructuring charges" below. (3) Represents non-cash, share-based payments associated with the granting of equity instruments. (4) 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.
As of December 31, 2023, there were no open restructuring programs. (3) Represents non-cash, share-based payments associated with the granting of equity instruments. (4) 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.
Excluding the impact of these losses, interest expense, net for the year ended December 31, 2022 increased by 8.6 percent year-over-year primarily due to a slight increase in average debt and higher interest rates (as noted above, the weighted average interest rates on our variable debt instruments were 3.3 percent in 2022 and 1.4 percent in 2021).
Excluding the impact of these losses, interest expense, net for the year ended December 31, 2023 increased by 48.4 percent year-over-year primarily due to increased average debt, including the debt issued to partially fund the Ahern Rentals acquisition discussed above, and higher variable debt interest rates (the weighted average interest rates on our variable debt instruments were 6.3 percent in 2023 and 3.3 percent in 2022).
Mix includes the impact of changes in customer, fleet, geographic and segment mix. The positive fleet productivity for 2021 includes the impact of COVID-19, which resulted in rental volume declines in response to shelter-in-place orders and other market restrictions.
Mix includes the impact of changes in customer, fleet, geographic and segment mix. The positive fleet productivity for 2022 reflected strong demand across our end-markets. 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.
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.
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.
In evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume that the position will be examined by the appropriate taxing authority with full knowledge of all relevant 33 Table of Contents information.
In evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume that the position will be examined by the appropriate taxing authority with full knowledge of all relevant information. The second step is measurement: a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements.
We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes were provided on such earnings prior to the fourth quarter of 2020.
We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes were provided on such earnings prior to the fourth quarter of 2020. In 2021, we remitted the cumulative amount of identified cash in our foreign operations in excess of near-term working capital needs.
Excluding the impact of these losses, interest expense, net for the year ended December 31, 2022 increased by 8.6 percent year-over-year primarily due to a slight increase in average debt and higher interest rates (as noted above, the weighted average interest rates on our variable debt instruments were 3.3 percent in 2022 and 1.4 percent in 2021).
Excluding the impact of these losses, interest expense, net for the year ended December 31, 2023 increased by 31 Table of Contents 48.4 percent year-over-year primarily due to increased average debt, including the debt issued to partially fund the Ahern Rentals acquisition, and higher interest rates (the weighted average interest rates on our variable debt instruments were 6.3 percent in 2023 and 3.3 percent in 2022).
The 2020 charges principally related to the discontinuation of certain equipment programs, and were not related to COVID-19. In support of our review for indicators of impairment, we perform a review of all assets at the district level relative to district performance and conclude whether indicators of impairment exist associated with our long-lived assets, including rental equipment.
These charges were primarily recognized in our general rentals segment. In support of our review for indicators of impairment, we perform a review of all assets at the district level relative to district performance and conclude whether indicators of impairment exist associated with our long-lived assets, including rental equipment. We also specifically review the financial performance of our rental equipment.
In 2022, we took the following actions to improve our financial flexibility and liquidity, and to position us to invest the necessary capital in our business (see note 12 to the consolidated financial statements for further discussion of our debt instruments): 26 Table of Contents • Redeemed $500 principal amount of our 5 1 / 2 percent Senior Notes due 2027; • Amended and extended our accounts receivable securitization facility, including an increase in the size of the facility from $900 to $1.1 billion.
In 2023, we took the following actions to improve our financial flexibility and liquidity, and to position us to invest the necessary capital in our business (see note 12 to the consolidated financial statements for further discussion of our debt instruments): • Amended our accounts receivable securitization facility, primarily to increase the size of the facility from $1.1 billion to $1.3 billion.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA one percentage point decrease in market interest rates as of December 31, 2022 would increase the fair value of our fixed rate indebtedness by approximately six percent. For additional information concerning the fair value and terms of our fixed rate debt, see note 11 (see “Fair Value of Financial Instruments”) and note 12 to our consolidated financial statements.
Biggest changeA one percentage point decrease in market interest rates as of December 31, 2023 would increase the fair value of our fixed rate 44 Table of Contents indebtedness by approximately five percent.
Based on the size of our foreign operations relative to the Company as a whole, we do not believe that a 10 percent change in exchange rates would have a material impact on our earnings. We do not engage in purchasing forward exchange contracts for speculative purposes. 43 Table of Contents
Based on the size of our foreign operations relative to the Company as a whole, we do not believe that a 10 percent change in exchange rates would have a material impact on our earnings. We do not engage in purchasing forward exchange contracts for speculative purposes. 45 Table of Contents
As of December 31, 2022, we had an aggregate of $3.5 billion of indebtedness that bears interest at variable rates, comprised of borrowings under the ABL, accounts receivable securitization, term loan and repurchase facilities. See note 12 to our consolidated financial statements for the amounts outstanding, and the interest rates thereon, as of December 31, 2022 under these facilities.
As of December 31, 2023, we had an aggregate of $3.6 billion of indebtedness that bears interest at variable rates, comprised of borrowings under the ABL, accounts receivable securitization, term loan and repurchase facilities. See note 12 to our consolidated financial statements for the amounts outstanding, and the interest rates thereon, as of December 31, 2023 under these facilities.
For additional information concerning the terms of our variable rate debt, see note 12 to our consolidated financial statements. At December 31, 2022, we had an aggregate of $7.8 billion of indebtedness that bears interest at fixed rates.
For additional information concerning the terms of our variable rate debt, see note 12 to our consolidated financial statements. At December 31, 2023, we had an aggregate of $7.9 billion of indebtedness that bears interest at fixed rates.
As of December 31, 2022, based upon the amount of our variable rate debt 42 Table of Contents outstanding, our annual after-tax earnings would decrease by approximately $26 for each one percentage point increase in the interest rates applicable to our variable rate debt. The amount of variable rate indebtedness outstanding may fluctuate significantly.
As of December 31, 2023, based upon the amount of our variable rate debt outstanding, our annual after-tax earnings would decrease by approximately $27 for each one percentage point increase in the interest rates applicable to our variable rate debt. The amount of variable rate indebtedness outstanding may fluctuate significantly.
Currency Exchange Risk . We primarily operate in the U.S. and Canada, and have a limited presence in Europe, Australia and New Zealand. During the year ended December 31, 2022, our foreign subsidiaries accounted for $1.154 billion, or 10 percent, of our total revenue of $11.642 billion, and $233, or 8 percent, of our total pretax income of $2.802 billion.
During the year ended December 31, 2023, our foreign subsidiaries accounted for $1.269 billion, or 9 percent, of our total revenue of $14.332 billion, and $285, or 9 percent, of our total pretax income of $3.211 billion.
Added
For additional information concerning the fair value and terms of our fixed rate debt, see note 11 (see “Fair Value of Financial Instruments”) and note 12 to our consolidated financial statements. Currency Exchange Risk . We primarily operate in the U.S. and Canada, and have a limited presence in Europe, Australia and New Zealand.

Other URI 10-K year-over-year comparisons