SEC Form 10-Q filed by United Rentals Inc.

10/23/24 4:20:57 PM ET

$URI

Diversified Commercial Services

Consumer Discretionary

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________

FORM 10-Q

___________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-14387

Commission File Number 1-13663

___________________________________

United Rentals, Inc.

United Rentals (North America), Inc.

(Exact Names of Registrants as Specified in Their Charters)

___________________________________



Delaware						06-1522496
Delaware						86-0933835
(States of Incorporation)						(I.R.S. Employer Identification Nos.)


100 First Stamford Place, Suite 700
Stamford
Connecticut						06902
(Address of Principal Executive Offices)						(Zip Code)

Registrants’ Telephone Number, Including Area Code: (203) 622-3131

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $.01 par value, of United Rentals, Inc.

URI

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Large Accelerated Filer

☒

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐Yes x No

As of October 21, 2024, there were 65,622,379 shares of United Rentals, Inc. common stock, $0.01 par value, outstanding. There is no market for the common stock of United Rentals (North America), Inc., all outstanding shares of which are owned by United Rentals, Inc.

This combined Form 10-Q is separately filed by (i) United Rentals, Inc. and (ii) United Rentals (North America), Inc. (which is a wholly owned subsidiary of United Rentals, Inc.). United Rentals (North America), Inc. meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and is therefore filing this report with the reduced disclosure format permitted by such instruction.

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UNITED RENTALS, INC.

UNITED RENTALS (NORTH AMERICA), INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

INDEX


		Page
PART I	FINANCIAL INFORMATION

Item 1	Unaudited Condensed Consolidated Financial Statements (unaudited)	6

	United Rentals, Inc. Condensed Consolidated Balance Sheets	6

	United Rentals, Inc. Condensed Consolidated Statements of Income	7

	United Rentals, Inc. Condensed Consolidated Statements of Comprehensive Income	8

	United Rentals, Inc. Condensed Consolidated Statements of Stockholders’ Equity	9

	United Rentals, Inc. Condensed Consolidated Statements of Cash Flows	11

	Notes to Unaudited Condensed Consolidated Financial Statements	12

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3	Quantitative and Qualitative Disclosures About Market Risk	42

Item 4	Controls and Procedures	43

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	44

Item 1A	Risk Factors	44

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	44



Item 5	Other Information	44

Item 6	Exhibits	45

	Signatures	46

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “seek,” “on-track,” “plan,” “project,” “forecast,” “intend” or “anticipate,” or the negative thereof or comparable terminology, or by discussions of strategy or outlook. You are cautioned that our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control, and, consequently, our actual results may differ materially from those projected.

Factors that could cause actual results to differ materially from those projected include, but are not limited to, the following:

•the impact of global economic conditions (including inflation, interest rates, supply chain constraints, trade wars and sanctions), geopolitical risks (including risks related to international conflicts and the upcoming elections in the United States) and public health crises and epidemics on us, our customers and our suppliers, in the United States and the rest of the world;

•declines in construction or industrial activity, which can adversely impact our revenues and, because many of our costs are fixed, our profitability;

•rates we charge and time utilization we achieve being less than anticipated;

•changes in customer, fleet, geographic and segment mix;

•excess fleet in the equipment rental industry;

•inability to benefit from government spending, including spending associated with infrastructure projects, or a reduction in government spending;

•trends in oil and natural gas, including significant increases in the prices of oil or natural gas, could adversely affect the demand for our services and products;

•competition from existing and new competitors;

•the cyclical nature of the industry in which we operate and the industries of our customers, such as those in the construction industry;

•costs we incur being more than anticipated, including as a result of inflation, and the inability to realize expected savings in the amounts or time frames planned;

•our significant indebtedness (which totaled $13.4 billion at September 30, 2024) requires us to use a substantial portion of our cash flow for debt service and can constrain our flexibility in responding to unanticipated or adverse business conditions;

•inability to refinance our indebtedness on terms that are favorable to us, including as a result of volatility and uncertainty in capital or credit markets or increases in interest rates, or at all;

•incurrence of additional debt, which could exacerbate the risks associated with our current level of indebtedness;

•noncompliance with financial or other covenants in our debt agreements, which could result in our lenders terminating the agreements and requiring us to repay outstanding borrowings;

•restrictive covenants and the amount of borrowings permitted under our debt instruments, which can limit our financial and operational flexibility;

•inability to access the capital that our businesses or growth plans may require, including as a result of uncertainty in capital or credit markets;

•the possibility that companies that we have acquired or may acquire could have undiscovered liabilities, or that companies or assets that we have acquired or may acquire could involve other unexpected costs, may strain our management capabilities, or may be difficult to integrate, and that we may not realize the expected benefits from an acquisition over the timeframe we expect, or at all;

•incurrence of impairment charges;

•fluctuations in the price of our common stock and inability to complete stock repurchases or pay dividends in the time frames and/or on the terms anticipated;

•our charter provisions as well as provisions of certain debt agreements and our significant indebtedness may have the effect of making more difficult or otherwise discouraging, delaying or deterring a takeover or other change of control of us;

•inability to manage credit risk adequately or to collect on contracts with a large number of customers;

•turnover in our management team and inability to attract and retain key personnel, as well as loss, absenteeism or the inability of employees to work or perform key functions in light of public health crises or epidemics;

•inability to obtain equipment and other supplies for our business from our key suppliers on acceptable terms or at all, as a result of supply chain disruptions, insolvency, financial difficulties or other factors;

•increases in our maintenance and replacement costs and/or decreases in the residual value of our equipment;

•inability to sell our new or used fleet in the amounts, or at the prices, we expect;

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•risks related to security breaches, cybersecurity attacks, failure to protect personal information, compliance with privacy, data protection and cyber incident reporting laws and regulations, and other significant disruptions in our information technology systems;

•risks related to climate change and climate change regulation;

•risks related to our environmental and social goals, including our greenhouse gas intensity reduction goal;

•the fact that our holding company structure requires us to depend in part on distributions from subsidiaries and such distributions could be limited by contractual or legal restrictions;

•shortfalls in our insurance coverage;

•increases in our loss reserves to address business operations or other claims and any claims that exceed our established levels of reserves;

•incurrence of expenses (including indemnification obligations) and other costs in connection with litigation, regulatory and investigatory matters;

•the costs of complying with environmental, safety and foreign laws and regulations, as well as other risks associated with non-U.S. operations, including currency exchange risk, and tariffs;

•the outcome or other potential consequences of regulatory and investigatory matters and litigation;

•labor shortages and/or disputes, work stoppages or other labor difficulties, which may impact our productivity and increase our costs, and changes in law that could affect our labor relations or operations generally; and

•the effect of changes in tax law.

For a more complete description of these and other possible risks and uncertainties, please refer to our Annual Report on Form 10-K for the year ended December 31, 2023, as well as to our subsequent filings with the SEC. Our forward-looking statements contained herein speak only as of the date hereof, and we make no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations.

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PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

UNITED RENTALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share data)


	September 30, 2024		December 31, 2023
	(unaudited)
ASSETS
Cash and cash equivalents	$	479	$	363
Accounts receivable, net	2,396		2,230
Inventory	211		205
Prepaid expenses and other assets	235		135

Total current assets	3,321		2,933
Rental equipment, net	15,241		14,001
Property and equipment, net	1,000		903
Goodwill	6,853		5,940
Other intangible assets, net	694		670
Operating lease right-of-use assets	1,255		1,099
Other long-term assets	48		43
Total assets	$	28,412	$	25,589
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt and current maturities of long-term debt	$	1,510	$	1,465
Accounts payable	1,216		905
Accrued expenses and other liabilities	1,300		1,267
Total current liabilities	4,026		3,637
Long-term debt	11,884		10,053

Deferred taxes	2,675		2,701
Operating lease liabilities	1,021		895
Other long-term liabilities	225		173
Total liabilities	19,831		17,459

Common stock—$0.01 par value, 500,000,000 shares authorized, 115,114,012 and 65,702,533 shares issued and outstanding, respectively, at September 30, 2024 and 115,010,396 and 67,269,577 shares issued and outstanding, respectively, at December 31, 2023	1		1
Additional paid-in capital	2,686		2,650
Retained earnings	13,231		11,672
Treasury stock at cost—49,411,479 and 47,740,819 shares at September 30, 2024 and December 31, 2023, respectively	(7,100)		(5,965)
Accumulated other comprehensive loss	(237)		(228)
Total stockholders’ equity	8,581		8,130
Total liabilities and stockholders’ equity	$	28,412	$	25,589

See accompanying notes.

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In millions, except per share amounts)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Revenues:
Equipment rentals	$	3,463	$	3,224	$	9,607	$	8,945
Sales of rental equipment	321		366		1,069		1,136
Sales of new equipment	77		52		186		166
Contractor supplies sales	38		39		116		110
Service and other revenues	93		84		272		247
Total revenues	3,992		3,765		11,250		10,604
Cost of revenues:
Cost of equipment rentals, excluding depreciation	1,392		1,286		3,958		3,664
Depreciation of rental equipment	629		588		1,819		1,755
Cost of rental equipment sales	176		185		564		569
Cost of new equipment sales	65		43		152		137
Cost of contractor supplies sales	26		28		80		78
Cost of service and other revenues	56		50		165		150
Total cost of revenues	2,344		2,180		6,738		6,353
Gross profit	1,648		1,585		4,512		4,251
Selling, general and administrative expenses	416		374		1,209		1,134

Restructuring charge	1		5		3		24
Non-rental depreciation and amortization	109		107		322		329
Operating income	1,122		1,099		2,978		2,764
Interest expense, net	178		163		511		474

Other income, net	(5)		(7)		(12)		(19)
Income before provision for income taxes	949		943		2,479		2,309
Provision for income taxes	241		240		593		564


Net income	$	708	$	703	$	1,886	$	1,745


Basic earnings per share	$	10.73	$	10.30	$	28.33	$	25.37



Diluted earnings per share	$	10.70	$	10.29	$	28.25	$	25.30

See accompanying notes.

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In millions)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Net income	$	708	$	703	$	1,886	$	1,745
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments (1)	55		(27)		(9)		(3)
Fixed price diesel swaps	—		—		—		(1)
Other comprehensive (loss) income (1)	55		(27)		(9)		(4)
Comprehensive income	$	763	$	676	$	1,877	$	1,741

(1)There were no material reclassifications from accumulated other comprehensive loss reflected in other comprehensive income (loss) during 2024 or 2023. There were no material taxes associated with other comprehensive income (loss) during 2024 or 2023.

See accompanying notes.

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In millions)




	Three Months Ended September 30, 2024
	Common Stock							Treasury Stock
	Number of Shares (1) (2)	Amount		Additional Paid-in Capital		Retained Earnings		Number of Shares	Amount		Accumulated Other Comprehensive Loss (3)
Balance at June 30, 2024	66	$	1	$	2,664	$	12,630	49	$	(6,722)	$	(292)
Net income						708
Dividends declared (3)						(107)
Foreign currency translation adjustments											55


Stock compensation expense, net	—			24



Tax withholding for share based compensation	—			(2)
Repurchase of common stock	—							—	(378)

Balance at September 30, 2024	66	$	1	$	2,686	$	13,231	49	$	(7,100)	$	(237)



	Three Months Ended September 30, 2023
	Common Stock							Treasury Stock
	Number of Shares (1) (2)	Amount		Additional Paid-in Capital		Retained Earnings		Number of Shares	Amount		Accumulated Other Comprehensive Loss (3)
Balance at June 30, 2023	68	$	1	$	2,621	$	10,493	47	$	(5,460)	$	(241)
Net income						703
Dividends declared (3)						(102)
Foreign currency translation adjustments											(27)


Stock compensation expense, net	—			23



Tax withholding for share based compensation	—			(2)
Repurchase of common stock	—							—	(253)

Balance at September 30, 2023	68	$	1	$	2,642	$	11,094	47	$	(5,713)	$	(268)

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	Nine Months Ended September 30, 2024
	Common Stock							Treasury Stock
	Number of Shares (1)	Amount		Additional Paid-in Capital		Retained Earnings		Number of Shares	Amount		Accumulated Other Comprehensive Loss (2)
Balance at December 31, 2023	67	$	1	$	2,650	$	11,672	48	$	(5,965)	$	(228)
Net income						1,886
Dividends declared (3)						(327)
Foreign currency translation adjustments											(9)


Stock compensation expense, net	—			79



Tax withholding for share based compensation	—			(43)
Repurchase of common stock	(1)							1	(1,135)

Balance at September 30, 2024	66	$	1	$	2,686	$	13,231	49	$	(7,100)	$	(237)


	Nine Months Ended September 30, 2023
	Common Stock							Treasury Stock
	Number of Shares (1)	Amount		Additional Paid-in Capital		Retained Earnings		Number of Shares	Amount		Accumulated Other Comprehensive Loss (2)
Balance at December 31, 2022	69	$	1	$	2,626	$	9,656	45	$	(4,957)	$	(264)
Net income						1,745
Dividends declared (3)						(307)
Foreign currency translation adjustments											(3)
Fixed price diesel swaps											(1)

Stock compensation expense, net	1			72



Tax withholding for share based compensation	—			(56)
Repurchase of common stock	(2)							2	(756)

Balance at September 30, 2023	68	$	1	$	2,642	$	11,094	47	$	(5,713)	$	(268)

(1)Common stock outstanding decreased by approximately two million net shares during the year ended December 31, 2023.

(2)The Accumulated Other Comprehensive Loss balance primarily reflects foreign currency translation adjustments.

(3)We declared dividends of $1.63 and $1.48 per share during the three months ended September 30, 2024 and 2023, respectively, and $4.89 and $4.44 per share during the nine months ended September 30, 2024 and 2023, respectively.

See accompanying notes.

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)


	Nine Months Ended
	September 30,
	2024		2023
Cash Flows From Operating Activities:
Net income	$	1,886	$	1,745
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,141		2,084
Amortization of deferred financing costs and original issue discounts	11		11
Gain on sales of rental equipment	(505)		(567)
Gain on sales of non-rental equipment	(13)		(16)
Insurance proceeds from damaged equipment	(38)		(30)
Stock compensation expense, net	79		72

Restructuring charge	3		24
Loss on repurchase/redemption/amendment of debt securities	1		—


(Decrease) increase in deferred taxes	(31)		88
Changes in operating assets and liabilities, net of amounts acquired:
Increase in accounts receivable	(51)		(254)
Decrease in inventory	5		22
(Increase) decrease in prepaid expenses and other assets	(44)		183
Increase (decrease) in accounts payable	152		(15)
Decrease in accrued expenses and other liabilities	(98)		(57)
Net cash provided by operating activities	3,498		3,290
Cash Flows From Investing Activities:
Payments for purchases of rental equipment	(3,178)		(3,078)
Payments for purchases of non-rental equipment and intangible assets	(266)		(267)
Proceeds from sales of rental equipment	1,069		1,136
Proceeds from sales of non-rental equipment	50		46
Insurance proceeds from damaged equipment	38		30
Purchases of other companies, net of cash acquired	(1,342)		(406)
Purchases of investments	(4)		—
Net cash used in investing activities	(3,633)		(2,539)
Cash Flows From Financing Activities:
Proceeds from debt	9,729		6,718
Payments of debt	(7,964)		(6,175)


Common stock repurchased, including tax withholdings for share based compensation	(1,168)		(806)
Payments of financing costs	(17)		—

Dividends paid	(326)		(305)
Net cash provided by (used in) financing activities	254		(568)
Effect of foreign exchange rates	(3)		(5)
Net increase in cash and cash equivalents	116		178
Cash and cash equivalents at beginning of period	363		106
Cash and cash equivalents at end of period	$	479	$	284
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net	$	812	$	389
Cash paid for interest	544		495

See accompanying notes.

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions, except per share data, unless otherwise indicated)

1. Organization, Description of Business and Basis of Presentation

United Rentals, Inc. (“Holdings,” “URI” or the “Company”) is principally a holding company and conducts its operations primarily through its wholly owned subsidiary, United Rentals (North America), Inc. (“URNA”), and subsidiaries of URNA. Holdings’ primary asset is its sole ownership of all issued and outstanding shares of common stock of URNA. URNA’s various credit agreements and debt instruments place restrictions on its ability to transfer funds to its shareholder.

We rent equipment to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities. We primarily operate in the United States and Canada, and have a limited presence in Europe, Australia and New Zealand. In addition to renting equipment, we sell new and used rental equipment, as well as related contractor supplies, parts and service.

We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with the accounting policies described in our annual report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”) and the interim reporting requirements of Form 10-Q. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the 2023 Form 10-K.

In our opinion, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of financial condition, operating results and cash flows for the interim periods presented have been made. Interim results of operations are not necessarily indicative of the results of the full year.

New Accounting Pronouncements

Improvements to Reportable Segment Disclosures. In November 2023, the FASB issued ASU 2023-07, which expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in the ASU require, among other things, disclosure of significant segment expenses that are regularly provided to an entity's chief operating decision maker (“CODM”) and a description of other segment items (the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss) by reportable segment, as well as disclosure of the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Annual disclosures are required for fiscal years beginning after December 15, 2023 and interim disclosures are required for periods within fiscal years beginning after December 15, 2024. Retrospective application is required, and early adoption is permitted. These requirements are not expected to have an impact on our financial statements, but will result in significantly expanded reportable segment disclosures.

Improvements to Income Tax Disclosures. In December 2023, the FASB issued ASU 2023-09, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, may be applied prospectively or retrospectively, and allows for early adoption. These requirements are not expected to have an impact on our financial statements, but will impact our income tax disclosures.

2. Revenue Recognition

Revenue Recognition Accounting Standards

We recognize revenue in accordance with two different accounting standards: 1) Topic 606 (which addresses revenue from contracts with customers) and 2) Topic 842 (which addresses lease revenue). Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account under Topic 606. As reflected below, most of our revenue is accounted for under Topic 842. Our contracts with customers generally do not include multiple performance obligations. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for such products or services.

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

Nature of goods and services

In the following table, revenue is summarized by type and by the applicable accounting standard.



	Three Months Ended September 30,
			2024						2023
	Topic 842		Topic 606		Total		Topic 842		Topic 606		Total
Revenues:
Owned equipment rentals	$	2,804	$	—	$	2,804	$	2,651	$	—	$	2,651
Re-rent revenue	71		—		71		68		—		68
Ancillary and other rental revenues:
Delivery and pick-up	—		297		297		—		258		258
Other	243		48		291		204		43		247
Total ancillary and other rental revenues	243		345		588		204		301		505
Total equipment rentals	3,118		345		3,463		2,923		301		3,224
Sales of rental equipment	—		321		321		—		366		366
Sales of new equipment	—		77		77		—		52		52
Contractor supplies sales	—		38		38		—		39		39
Service and other revenues	—		93		93		—		84		84
Total revenues	$	3,118	$	874	$	3,992	$	2,923	$	842	$	3,765


	Nine Months Ended September 30,
			2024						2023
	Topic 842		Topic 606		Total		Topic 842		Topic 606		Total
Revenues:
Owned equipment rentals	$	7,812	$	—	$	7,812	$	7,378	$	—	$	7,378
Re-rent revenue	184		—		184		176		—		176
Ancillary and other rental revenues:
Delivery and pick-up	—		778		778		—		699		699
Other	685		148		833		554		138		692
Total ancillary and other rental revenues	685		926		1,611		554		837		1,391
Total equipment rentals	8,681		926		9,607		8,108		837		8,945
Sales of rental equipment	—		1,069		1,069		—		1,136		1,136
Sales of new equipment	—		186		186		—		166		166
Contractor supplies sales	—		116		116		—		110		110
Service and other revenues	—		272		272		—		247		247
Total revenues	$	8,681	$	2,569	$	11,250	$	8,108	$	2,496	$	10,604

Revenues by reportable segment are presented in note 4 of the condensed consolidated financial statements, using the revenue captions reflected in our condensed consolidated statements of operations. The majority of our revenue is recognized in our general rentals segment and in the U.S. (for the nine months ended September 30, 2024, 71 percent and 91 percent, respectively). We believe that the disaggregation of our revenue from contracts to customers as reflected above, coupled with the further discussion below and the reportable segment disclosures in note 4, depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

Lease revenues (Topic 842)

The accounting for the types of revenue that are accounted for under Topic 842 is discussed below.

Owned equipment rentals represent our most significant revenue type (they accounted for 69 percent of total revenues for the nine months ended September 30, 2024) and are governed by our standard rental contract. We account for such rentals as operating leases. The lease terms are included in our contracts, and the determination of whether our contracts contain leases generally does not require significant assumptions or judgments. Our lease revenues do not include material amounts of variable payments.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

Owned equipment rentals: Owned equipment rentals represent revenues from renting equipment that we own. We do not generally provide an option for the lessee to purchase the rented equipment at the end of the lease, and do not generate material revenue from sales of equipment under such options.

We recognize revenues from renting equipment on a straight-line basis. Our rental contract periods are hourly, daily, weekly or monthly. By way of example, if a customer were to rent a piece of equipment and the daily, weekly and monthly rental rates for that particular piece were (in actual dollars) $100, $300 and $900, respectively, we would recognize revenue of $32.14 per day. The daily rate for recognition purposes is calculated by dividing the monthly rate of $900 by the monthly term of 28 days. This daily rate assumes that the equipment will be on rent for the full 28 days, as we are unsure of when the customer will return the equipment and therefore unsure of which rental contract period will apply.

As part of this straight-line methodology, when the equipment is returned, we recognize as incremental revenue the excess, if any, between the amount the customer is contractually required to pay, which is based on the rental contract period applicable to the actual number of days the equipment was out on rent, over the cumulative amount of revenue recognized to date. In any given accounting period, we will have customers return equipment and be contractually required to pay us more than the cumulative amount of revenue recognized to date under the straight-line methodology. For instance, continuing the above example, if the customer rented the above piece of equipment on December 29 and returned it at the close of business on January 1, we would recognize incremental revenue on January 1 of $171.44 (in actual dollars, representing the difference between the amount the customer is contractually required to pay, or $300 at the weekly rate, and the cumulative amount recognized to date on a straight-line basis, or $128.56, which represents four days at $32.14 per day).

We record amounts billed to customers in excess of recognizable revenue as deferred revenue on our balance sheet. We had deferred revenue (associated with both Topic 842 and Topic 606) of $174 and $138 as of September 30, 2024 and December 31, 2023, respectively.

As noted above, we are unsure of when the customer will return rented equipment. As such, we do not know how much the customer will owe us upon return of the equipment and cannot provide a maturity analysis of future lease payments. Our equipment is generally rented for short periods of time. Lessees do not provide residual value guarantees on rented equipment.

We expect to derive significant future benefits from our equipment following the end of the rental term. Our rentals are generally short-term in nature, and our equipment is typically rented for the majority of the time that we own it. We additionally recognize revenue from sales of rental equipment when we dispose of the equipment.

Re-rent revenue: Re-rent revenue reflects revenues from equipment that we rent from vendors and then rent to our customers. We account for such rentals as subleases. The accounting for re-rent revenue is the same as the accounting for owned equipment rentals described above.

“Other” equipment rental revenue is primarily comprised of 1) Rental Protection Plan (or "RPP") revenue associated with the damage waiver customers can purchase when they rent our equipment to protect against potential loss or damage, 2) environmental charges associated with the rental of equipment, 3) charges for rented equipment that is damaged by our customers and 4) charges for setup and other services performed on rented equipment.

Revenues from contracts with customers (Topic 606)

The accounting for the types of revenue that are accounted for under Topic 606 is discussed below. Substantially all of our revenues under Topic 606 are recognized at a point-in-time rather than over time.

Delivery and pick-up: Delivery and pick-up revenue associated with renting equipment is recognized when the service is performed.

“Other” equipment rental revenue is primarily comprised of revenues associated with the consumption of fuel by our customers which are recognized when the equipment is returned by the customer (and consumption, if any, can be measured).

Sales of rental equipment, new equipment and contractor supplies are recognized at the time of delivery to, or pick-up by, the customer and when collectibility is probable.

Service and other revenues primarily represent revenues earned from providing repair and maintenance services on our customers’ fleet (including parts sales). Service revenue is recognized as the services are performed.

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

Receivables and contract assets and liabilities

As reflected above, most of our equipment rental revenue is accounted for under Topic 842 (such revenue represented 77 percent of our total revenues for the nine months ended September 30, 2024). The customers that are responsible for the remaining revenue that is accounted for under Topic 606 are generally the same customers that rent our equipment. We manage credit risk associated with our accounts receivables at the customer level. Because the same customers generate the revenues that are accounted for under both Topic 606 and Topic 842, the discussions below on credit risk and our allowance for credit losses address receivables arising from revenues from both Topic 606 and Topic 842.

Concentration of credit risk with respect to our receivables is limited because a large number of geographically diverse customers makes up our customer base. Our largest customer accounted for one percent or less of total revenues for the nine months ended September 30, 2024, and for each of the last three full years. Our customer with the largest receivable balance represented approximately one percent of total receivables at September 30, 2024 and December 31, 2023. We manage credit risk through credit approvals, credit limits and other monitoring procedures.

Our allowance for credit losses reflects our estimate of the amount of our receivables that we will be unable to collect based on historical write-off experience and, as applicable, current conditions and reasonable and supportable forecasts that affect collectibility. Our estimate could require change based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, we may be required to increase or decrease our allowance. Trade receivables that have contractual maturities of one year or less are written-off when they are determined to be uncollectible based on the criteria necessary to qualify as a deduction for federal tax purposes. Write-offs of such receivables require management approval based on specified dollar thresholds. See the table below for a rollforward of our allowance for credit losses.

The measurement of expected credit losses is based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectibility. Trade receivables are the only material financial asset we have that is subject to the requirement to measure expected credit losses as noted above, as this requirement does not apply to receivables arising from operating lease revenues. Substantially all of our non-lease trade receivables are due in one year or less. As discussed above, most of our equipment rental revenue is accounted for as lease revenue (such revenue represented 77 percent of our total revenues for the nine months ended September 30, 2024, and these revenues account for corresponding portions of the $2.396 billion of net accounts receivable and the associated allowance for credit losses of $184 as of September 30, 2024).

As discussed above, most of our equipment rental revenue is accounted for under Topic 842. The customers that are responsible for the remaining revenue that is accounted for under Topic 606 are generally the same customers that rent our equipment. We manage credit risk associated with our accounts receivables at the customer level. The rollforward of our allowance for credit losses (in total, and associated with revenues arising from both Topic 606 and Topic 842) is shown below.


	Three Months Ended September 30, 2024		Three Months Ended September 30, 2023		Nine Months Ended September 30, 2024		Nine Months Ended September 30, 2023
Beginning balance	$	176	$	147	$	169	$	134

Charged to costs and expenses (1)	6		4		13		9
Charged to revenue (2)	17		16		40		37
Deductions and other (3)	(15)		(9)		(38)		(22)
Ending balance	$	184	$	158	$	184	$	158

_________________

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

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

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

We do not have material contract assets, or impairment losses associated therewith, or material contract liabilities, associated with contracts with customers. Our contracts with customers do not generally result in material amounts billed to

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

customers in excess of recognizable revenue. We did not recognize material revenue during the three or nine months ended September 30, 2024 or 2023 that was included in the contract liability balance as of the beginning of such periods.

Performance obligations

Most of our Topic 606 revenue is recognized at a point-in-time, rather than over time. Accordingly, in any particular period, we do not generally recognize a significant amount of revenue from performance obligations satisfied (or partially satisfied) in previous periods, and the amounts of such revenue recognized during the three and nine months ended September 30, 2024 and 2023 were not material. We also do not expect to recognize material revenue in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of September 30, 2024.

Payment terms

Our Topic 606 revenues do not include material amounts of variable consideration. Our payment terms vary by the type and location of our customer and the products or services offered. The time between invoicing and when payment is due is not significant. Our contracts do not generally include a significant financing component. For certain products or services and customer types, we require payment before the products or services are delivered to the customer. Our contracts with customers do not generally result in significant obligations associated with returns, refunds or warranties. See above for a discussion of how we manage credit risk.

Revenue is recognized net of taxes collected from customers, which are subsequently remitted to governmental authorities.

Contract costs

We do not recognize any assets associated with the incremental costs of obtaining a contract with a customer (for example, a sales commission) that we expect to recover. Most of our revenue is recognized at a point-in-time or over a period of one year or less, and we use the practical expedient that allows us to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less.

Contract estimates and judgments

Our revenues accounted for under Topic 606 generally do not require significant estimates or judgments, primarily for the following reasons:

•The transaction price is generally fixed and stated in our contracts;

•As noted above, our contracts generally do not include multiple performance obligations, and accordingly do not generally require estimates of the standalone selling price for each performance obligation;

•Our revenues do not include material amounts of variable consideration, or result in significant obligations associated with returns, refunds or warranties; and

•Most of our revenue is recognized as of a point-in-time and the timing of the satisfaction of the applicable performance obligations is readily determinable. As noted above, our Topic 606 revenue is generally recognized at the time of delivery to, or pick-up by, the customer.

Our revenues accounted for under Topic 842 also generally do not require significant estimates or judgments. We monitor and review our estimated standalone selling prices on a regular basis.

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

3. Acquisitions

On March 15, 2024, we completed the acquisition of Yak Access, LLC, Yak Mat, LLC and New South Access & Environmental Solutions, LLC (collectively, “Yak”). Yak was a leader in the North American matting industry with a fleet of approximately 600,000 hardwood, softwood, and composite mats that provide surface protection across both construction and maintenance, repair and operations (“MRO”) applications, and served customers primarily in the industrial sector across over 40 states. The acquisition:

• Provided entry into the matting market via an industry leader with established scale across fleet, operations, and talent;

• Augmented exposure to the energy and power verticals, where significant investment is expected over the next several decades; and

• Enhanced our one-stop-shop value proposition with immediate cross-selling opportunities to existing and new construction and MRO customers.

The acquisition date fair value of the purchase price to acquire Yak was $1.158 billion, comprised of cash and $41 of estimated contingent consideration ($50 is the maximum amount of contingent consideration) that could become payable to the seller based on revenue attainment in the first two years after closing. The acquisition and related fees and expenses were funded through the issuance of $1.100 billion principal amount of 6 1/8 Senior Notes (see note 7 to the condensed consolidated financial statements for further information) and drawings on our senior secured asset-based revolving credit facility (“ABL facility”).

The table below summarizes the fair values of the assets acquired and liabilities assumed. The purchase price allocations for these assets and liabilities are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period. The accounting for the acquisition that has not yet been completed principally relates to finalizing the valuations of the acquired rental equipment, intangible assets and taxes. During the three months ended September 30, 2024, we recognized measurement period adjustments that were not material.



Accounts receivable (1)	$	99
Inventory	8

Rental equipment	132
Property and equipment	32
Intangible assets (customer relationships) (2)	140
Operating lease right-of-use assets	4
Other assets	17
Total identifiable assets acquired	432

Accounts payable, accrued expenses and other liabilities	(102)

Operating lease liabilities	(4)

Total liabilities assumed	(106)
Net identifiable assets acquired	326
Goodwill (3)	832
Net assets acquired	$	1,158

___________________

(1)The estimated fair value of accounts receivables acquired was $99, and the gross contractual amount was $102. We estimated that $3 would be uncollectible.

(2)The customer relationships are being amortized over a 6 year life.

(3)All of the goodwill was assigned to our specialty segment. As noted above, we have not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed. As such, we expect that goodwill will change from the amount noted above. Once finalized, we expect that the goodwill that results from the acquisition will be primarily reflective of Yak's going-concern value, the value of Yak's assembled workforce and new customer relationships expected to arise from the acquisition. All of the goodwill is expected to be deductible for income tax purposes (because the acquired Yak entities were sold as disregarded entities, the acquisition was treated as an asset purchase for income tax purposes, which resulted in the goodwill that is deductible for income tax purposes equaling the total acquired goodwill).

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

The debt issuance costs associated with the issuance of debt to partially fund the acquisition are reflected, net of amortization subsequent to the acquisition date, in long-term debt in our consolidated balance sheets. The total post-acquisition revenue attributable to the acquired Yak locations was $104 and $206 for the three and nine months ended September 30, 2024, respectively. It is not practicable to reasonably estimate the amount of earnings of Yak since the acquisition date, primarily due to our corporate structure and the allocation of corporate costs.

Pro forma financial information

The pro forma information below gives effect to the Yak acquisition as if it had been completed on January 1, 2023. Pro forma information for the three months ended September 30, 2024 is excluded from the presentation below because Yak was included in our results for the entire period. Pro forma information for the nine months ended September 30, 2024 is presented below because Yak was not included in our results in 2024 prior to the acquisition date. The pro forma information is not necessarily indicative of our results had the acquisition been completed on the above date, nor is it necessarily indicative of our future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisition and also does not reflect additional revenue opportunities following the acquisition. The pro forma information includes adjustments to record the acquired assets and liabilities of Yak at their respective fair values and to give effect to the financing for the acquisition. The pro forma adjustments reflected in the table below are subject to change as additional analysis is performed. The purchase price allocations for the assets acquired and liabilities assumed are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period. Increases or decreases in the estimated fair values of the net assets acquired may impact our statements of income in future periods. The table below presents unaudited pro forma consolidated income statement information as if Yak had been included in our consolidated results for the entire periods reflected:


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2023		2024		2023
United Rentals historic revenue (1)	$	3,765	$	11,250	$	10,604
Yak historic revenue (2)	86		97		270
Pro forma revenue (1)	3,851		11,347		10,874
United Rentals historic pretax income	943		2,479		2,309
Yak historic pretax (loss) income	(9)		10		68
Combined pretax income	934		2,489		2,377
Pro forma adjustments to combined pretax income:
Impact of fair value mark-ups/useful life changes on depreciation (3)	—		—		1

Intangible asset amortization (4)	(4)		—		(12)

Interest expense (5)	(18)		(14)		(52)
Elimination of historic interest (6)	14		11		53

Elimination of refinancing transactions (7)	—		(40)		(101)
Transaction bonuses and other (8)	—		22		2



Pro forma pretax income	$	926	$	2,468	$	2,268

___________________

(1)United Rentals historic revenue for the nine months ended September 30, 2024 includes the post-acquisition revenue attributable to the acquired Yak locations of $206 that is discussed above. Pro forma revenue for the nine months ended September 30, 2024 includes $303 of pre/post-acquisition revenue from the acquired Yak locations, comprised of $97 of historic Yak revenue and $206 of post-acquisition revenue attributable to the acquired Yak locations.

(2)Yak revenue reflects only the historical results of the entities being acquired, and includes an estimate of revenue from mat rentals to a commonly controlled entity that were eliminated in consolidation by Yak.

(3)Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups of the equipment acquired in the Yak acquisition. There were no material changes to the useful lives and salvage values of the acquired equipment.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

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

(5)As discussed above, the acquisition and related fees and expenses were funded through the issuance of senior notes and drawings on our ABL facility. Interest expense was adjusted to reflect interest on the debt used to finance the acquisition.

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

(7)Reflects gains on the extinguishment of debt, net of refinancing transaction expenses.

(8)Primarily reflects bonuses paid in connection with the acquisition.

During 2024 and 2023, we completed other acquisitions that were not significant individually or in the aggregate. See the condensed consolidated statements of cash flows for the total cash outflow for purchases of other companies (including Yak), net of cash acquired.

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

4. Segment Information

Our reportable segments are i) general rentals and ii) specialty. For general rentals, the divisions discussed below, which are our operating segments, are aggregated into the reportable segment. The specialty segment is a single division that is both an operating segment and a reportable segment. We believe that the divisions that are aggregated into our reportable segments have similar economic characteristics, as each division is capital intensive, offers similar products to similar customers, uses similar methods to distribute its products, and is subject to similar competitive risks. The aggregation of our divisions also reflects the management structure that we use for making operating decisions and assessing performance. We evaluate segment performance primarily based on segment equipment rentals gross profit.

The general rentals segment includes the rental of i) general construction and industrial equipment, such as backhoes, skid-steer loaders, forklifts, earthmoving equipment and material handling equipment, ii) aerial work platforms, such as boom lifts and scissor lifts and iii) general tools and light equipment, such as pressure washers, water pumps and power tools. The general rentals segment reflects the aggregation of four geographic divisions—Central, Northeast, Southeast and West—and operates throughout the United States and Canada.

The specialty segment, which, as noted above, is a single division that is both an operating segment and a reportable 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, iv) mobile storage equipment and modular office space and v) surface protection mats. The specialty segment’s customers include construction companies involved in infrastructure projects, municipalities and industrial companies. This segment primarily operates in the United States and Canada, and has a limited presence in Europe, Australia and New Zealand.

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

The following tables set forth financial information by segment.


	General rentals		Specialty		Total
Three Months Ended September 30, 2024
Equipment rentals	$	2,327	$	1,136	$	3,463
Sales of rental equipment	274		47		321
Sales of new equipment	36		41		77
Contractor supplies sales	22		16		38
Service and other revenues	86		7		93
Total revenue	2,745		1,247		3,992
Depreciation and amortization expense	568		170		738
Equipment rentals gross profit	874		568		1,442
Three Months Ended September 30, 2023
Equipment rentals	$	2,307	$	917	$	3,224
Sales of rental equipment	320		46		366
Sales of new equipment	24		28		52
Contractor supplies sales	23		16		39
Service and other revenues	78		6		84
Total revenue	2,752		1,013		3,765
Depreciation and amortization expense	580		115		695
Equipment rentals gross profit	872		478		1,350
Nine Months Ended September 30, 2024
Equipment rentals	$	6,606	$	3,001	$	9,607
Sales of rental equipment	933		136		1,069
Sales of new equipment	92		94		186
Contractor supplies sales	65		51		116
Service and other revenues	248		24		272
Total revenue	7,944		3,306		11,250
Depreciation and amortization expense	1,683		458		2,141
Equipment rentals gross profit	2,357		1,473		3,830
Capital expenditures (1)	2,738		815		3,553
Nine Months Ended September 30, 2023
Equipment rentals	$	6,514	$	2,431	$	8,945
Sales of rental equipment	1,012		124		1,136
Sales of new equipment	66		100		166
Contractor supplies sales	67		43		110
Service and other revenues	225		22		247
Total revenue	7,884		2,720		10,604
Depreciation and amortization expense	1,737		347		2,084
Equipment rentals gross profit	2,323		1,203		3,526
Capital expenditures (1)	2,663		682		3,345

___________________

(1)The condensed consolidated statements of cash flows include the payments for capital expenditures, while the table above reflects the gross capital expenditures. Accounts payable as of September 30, 2024 and December 31, 2023 included $183 and $74, respectively, of amounts due but unpaid for purchases of rental equipment. The net impact of accrued purchases of rental equipment was not material for the nine months ended September 30, 2023.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)


	September 30, 2024		December 31, 2023
Total reportable segment assets
General rentals	$	21,176	$	20,411
Specialty (1)	7,236		5,178
Total assets	$	28,412	$	25,589

___________________

(1)The increase in the specialty segment assets includes the impact of the Yak acquisition discussed in note 3 to the condensed consolidated financial statements.

Equipment rentals gross profit is the primary measure management reviews to make operating decisions and assess segment performance. The following is a reconciliation of equipment rentals gross profit to income before provision for income taxes:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Total equipment rentals gross profit	$	1,442	$	1,350	$	3,830	$	3,526
Gross profit from other lines of business	206		235		682		725
Selling, general and administrative expenses	(416)		(374)		(1,209)		(1,134)

Restructuring charge (1)	(1)		(5)		(3)		(24)
Non-rental depreciation and amortization	(109)		(107)		(322)		(329)
Interest expense, net	(178)		(163)		(511)		(474)

Other income, net	5		7		12		19
Income before provision for income taxes	$	949	$	943	$	2,479	$	2,309

___________________

(1)Primarily reflects severance and branch closure charges associated with our restructuring programs. The restructuring charges generally involve the closure of a large number of branches over a short period of time, often in periods following a major acquisition. The amounts above primarily reflect charges associated with the restructuring program initiated following the December 2022 acquisition of Ahern Rentals, Inc. As of September 30, 2024, there were no open restructuring programs.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

5. Goodwill and Other Intangible Assets

The following table presents the changes in the carrying amount of goodwill for the nine months ended September 30, 2024:


	General rentals		Specialty		Total
Balance at January 1, 2024 (1)	$	4,775	$	1,165	$	5,940
Goodwill related to acquisitions (2)	3		907		910
Foreign currency translation and other adjustments	(3)		6		3
Balance at September 30, 2024 (1)	$	4,775	$	2,078	$	6,853

_________________

(1)The total carrying amount of goodwill for all periods in the table above is reflected net of $1.557 billion of accumulated impairment charges, which were primarily recorded in our general rentals segment.

(2)Includes goodwill adjustments for the effect on goodwill of changes to net assets acquired during the measurement period. The goodwill related to acquisitions above primarily reflects the March 2024 acquisition of Yak, which is discussed note 3 to our condensed consolidated financial statements.

Other intangible assets were comprised of the following at September 30, 2024 and December 31, 2023:


	September 30, 2024
	Weighted-Average Remaining Amortization Period	Gross Carrying Amount			Accumulated Amortization			Net Amount
Non-compete agreements	3 years		$	167		$	76		$	91
Customer relationships	6 years		$	2,647		$	2,048		$	599
Trade names and associated trademarks	2 years		$	11		$	7		$	4


	December 31, 2023
	Weighted-Average Remaining Amortization Period	Gross Carrying Amount			Accumulated Amortization			Net Amount
Non-compete agreements	4 years		$	176		$	58		$	118
Customer relationships	6 years		$	2,468		$	1,919		$	549
Trade names and associated trademarks	2 years		$	9		$	6		$	3

Our other intangibles assets, net at September 30, 2024 includes the assets in the table below associated with the acquisition of Yak that is discussed in note 3 to our condensed consolidated financial statements. No residual value has been assigned to these assets. The customer relationships are being amortized using the sum of the years' digits method, and we believe that this method best reflects the estimated pattern in which the economic benefits will be consumed. The intangible asset values are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period.

September 30, 2024

Weighted-Average Remaining
Amortization Period

Net Carrying
Amount

Customer relationships

6 years

120

Amortization expense for other intangible assets was $64 and $66 for the three months ended September 30, 2024 and 2023, respectively, and $190 and $210 for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, estimated amortization expense for other intangible assets for each of the next five years and thereafter is as follows:

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)


2024		$	63
2025	218
2026	166
2027	114
2028	62
Thereafter	71
Total		$	694

6. Fair Value Measurements

As of September 30, 2024 and December 31, 2023, the amounts of our assets and liabilities that were accounted for at fair value were immaterial.

Fair value measurements are categorized in one of the following three levels based on the lowest level input that is significant to the fair value measurement in its entirety:

Level 1- Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2- Observable inputs other than quoted prices in active markets for identical assets or liabilities include:

a)quoted prices for similar assets or liabilities in active markets;

b)quoted prices for identical or similar assets or liabilities in inactive markets;

c)inputs other than quoted prices that are observable for the asset or liability;

d)inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3- Inputs to the valuation methodology are unobservable (i.e., supported by little or no market activity) and significant to the fair value measure.

Fair Value of Financial Instruments

The carrying amounts reported in our condensed consolidated balance sheets for accounts receivable, accounts payable and accrued expenses and other liabilities approximate fair value due to the immediate to short-term maturity of these financial instruments. The fair values of our variable rate debt facilities and finance leases approximated their book values as of September 30, 2024 and December 31, 2023. The estimated fair values of our other financial instruments, all of which are categorized in Level 1 of the fair value hierarchy, as of September 30, 2024 and December 31, 2023 have been calculated based upon available market information, and were as follows:


	September 30, 2024				December 31, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value


Senior notes	$	8,817	$	8,745	$	7,720	$	7,442

7. Debt

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

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)


	September 30, 2024		December 31, 2023
Repurchase facility (terminated in 2024) (1)	$	—	$	100
Accounts receivable securitization facility expiring 2025 (1) (2)	1,423		1,300

$4.25 billion ABL facility expiring 2027 (1)	1,915		1,261

Term loan facility expiring 2031 (1) (3)	986		945
5 1/2 percent Senior Notes due 2027	499		498
3 7/8 percent Senior Secured Notes due 2027	746		745
4 7/8 percent Senior Notes due 2028 (4)	1,666		1,665
6 percent Senior Secured Notes due 2029	1,489		1,488
5 1/4 percent Senior Notes due 2030	745		745
4 percent Senior Notes due 2030	745		744
3 7/8 percent Senior Notes due 2031	1,092		1,091
3 3/4 percent Senior Notes due 2032	745		744
6 1/8 percent Senior Notes due 2034 (5)	1,090		—
Finance leases	253		192




Total debt	13,394		11,518
Less short-term portion (6)	(1,510)		(1,465)
Total long-term debt	$	11,884	$	10,053

___________________

(1)The table below presents financial information associated with our variable rate indebtedness as of and for the nine months ended September 30, 2024. The repurchase facility is not included below because (i) there were no borrowings under it during the nine months ended September 30, 2024 and (ii) it was terminated in May 2024. We have borrowed the full available amount under the term loan facility. The principal obligation under the term loan facility is required to be repaid in quarterly installments in an aggregate amount equal to 1.0 percent per annum, with the balance due at the maturity of the facility. The average amount of debt outstanding under the term loan facility decreases slightly each quarter due to the requirement to repay a portion of the principal obligation.



	ABL facility			Accounts receivable securitization facility			Term loan facility
Borrowing capacity, net of letters of credit	$	2,311		$	76		$	—
Letters of credit	18
Interest rate at September 30, 2024	6.2		%	5.9		%	6.6		%
Average month-end debt outstanding	1,512			1,197			993
Weighted-average interest rate on average debt outstanding	6.4		%	6.2		%	7.0		%
Maximum month-end debt outstanding	1,921			1,424			1,000

(2)In May 2024, the accounts receivable securitization facility was amended, primarily to increase the facility size and extend the maturity date. The size of the facility, which expires on June 24, 2025, was increased to $1.5 billion. The facility may be extended on a 364-day basis by mutual agreement with the purchasers under the facility. Borrowings under the accounts receivable securitization facility are permitted only to the extent that the face amount of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans. As of September 30, 2024, there were $1.526 billion of receivables, net of applicable reserves and other deductions, in the collateral pool.

(3)In February 2024, the term loan facility was amended, primarily to extend the maturity date to February 14, 2031 and to increase the facility size to $1.000 billion (at the time of the amendment, the facility size was $948).

(4)URNA separately issued 4 7/8 percent Senior Notes in August 2017 and in September 2017. Following the issuances, URNA consummated an exchange offer pursuant to which most of the 4 7/8 percent Senior Notes issued in September 2017 were exchanged for additional notes fungible with the 4 7/8 percent Senior Notes issued in August 2017. As of September 30, 2024, the total above is comprised of two separate 4 7/8 percent Senior Notes, one with a book value of $1.662 billion and one with a book value of $4.

(5)In March 2024, URNA issued $1.100 billion aggregate principal amount of 6 1/8 percent Senior Notes (the “6 1/8 percent Notes”) which are due March 15, 2034. The 6 1/8 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 6 1/8 percent Notes may be redeemed on or after March 15, 2029, at specified redemption prices that range from 103.063 percent in 2029, to 100 percent in 2032 and thereafter, in each case, plus accrued and unpaid interest, if any. At any time prior to March 15, 2029, URNA may, at its option, redeem some or all of the 6 1/8 percent Notes at a redemption price equal to 100 percent of the aggregate principal amount of the notes to be

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

redeemed, plus a “make-whole” premium and accrued and unpaid interest, if any, to the redemption date. In addition, at any time on or prior to March 15, 2027, up to 40 percent of the aggregate principal amount of the 6 1/8 percent Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 106.125 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any. The indenture governing the 6 1/8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens and (ii) mergers and consolidations, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the requirements to provide subsidiary guarantees and to make an offer to repurchase the notes upon the occurrence of a change of control will not apply to URNA and its restricted subsidiaries during any period when the 6 1/8 percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 6 1/8 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

(6)Short-term debt primarily reflects borrowings under the accounts receivable securitization facility and the repurchase facility that was terminated in May 2024, and the short-term portion of our finance leases.

Loan Covenants and Compliance

As of September 30, 2024, we were in compliance with the covenants and other provisions of the ABL, accounts receivable securitization and term loan facilities and our 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.

The only financial covenant that currently exists under the ABL facility is the fixed charge coverage ratio. Subject to certain limited exceptions specified in the ABL facility, the fixed charge coverage ratio covenant under the ABL facility will only apply in the future if specified availability under the ABL facility falls below 10 percent of the maximum revolver amount under the ABL facility. 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 September 30, 2024, specified availability under the ABL facility exceeded the required threshold and, as a result, this financial covenant was inapplicable. Under our accounts receivable securitization facility, we are required, among other things, to maintain certain financial tests relating to: (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding. The accounts receivable securitization facility also requires us to comply with the fixed charge coverage ratio under the ABL facility, to the extent the ratio is applicable under the ABL facility.

Covenants in the agreements governing our ABL facility, term loan facility and certain other debt instruments impose limitations on our ability to make share repurchases and dividend payments, subject to important exceptions that would allow us to make such repurchases or payments under certain conditions. Based on our current total indebtedness leverage ratio (as defined in the applicable debt agreements) and usage of the ABL facility as of September 30, 2024, we met the criteria under the applicable debt agreements for these exceptions, and as a result we were not restricted in our ability to make share repurchases and dividend payments.

8. Legal and Regulatory Matters

We are subject to a number of claims and proceedings that generally arise in the ordinary conduct of our business. These matters include, but are not limited to, general liability claims (including personal injury, product liability, and property and automobile claims), indemnification and guarantee obligations, employee injuries and employment-related claims, self-insurance obligations and contract and real estate matters. Based on advice of counsel and available information, including current status or stage of proceeding, and taking into account accruals included in our consolidated balance sheets for matters where we have established them, we currently believe that any liabilities ultimately resulting from these ordinary course claims and proceedings will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of operations or cash flows.

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in millions, except per share data, unless otherwise indicated)

9. Earnings Per Share

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares plus the effect of dilutive potential common shares outstanding during the period. The following table sets forth the computation of basic and diluted earnings per share (shares in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Numerator:



Net income available to common stockholders	$	708	$	703	1,886		1,745
Denominator:
Denominator for basic earnings per share—weighted-average common shares	66,019		68,153		66,596		68,757
Effect of dilutive securities:
Employee stock options	2		4		3		4



Restricted stock units	164		106		168		181
Denominator for diluted earnings per share—adjusted weighted-average common shares	66,185		68,263		66,767		68,942
Basic earnings per share	$	10.73	$	10.30	$	28.33	$	25.37
Diluted earnings per share	$	10.70	$	10.29	$	28.25	$	25.30

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share data, unless otherwise indicated)

Global Economic Conditions

Our operations are impacted by global economic conditions, including inflation, interest rate fluctuations 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. 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 in recent years. For example, in March 2024, United Rentals (North America), Inc. (“URNA”) issued $1.1 billion aggregate principal amount of senior unsecured notes at a 6 1/8 percent interest rate, while URNA's issuance in August 2021 of $750 aggregate principal amount of senior unsecured notes was at a 3 ¾ percent interest rate. Additionally, the weighted average interest rates on our variable debt instruments were 6.5 percent and 1.4 percent for the nine months ended September 30, 2024 and the year ended December 31, 2021, respectively. We have experienced and are continuing to experience inflationary pressures. A portion of inflationary cost increases is passed on to customers. The most significant cost increases that are passed on to customers are for fuel and delivery, and there are other costs for which the pass through to customers is less direct, such as repairs and maintenance, and labor. The impact of inflation and interest rate fluctuations may continue to be significant in the future.

We continue to assess the economic environment in which we operate and take appropriate actions to address the economic challenges we face.

Executive Overview

We are the largest equipment rental company in the world, with an integrated network of 1,666 rental locations. We primarily operate in the United States and Canada, and have a limited presence in Europe, Australia and New Zealand. Although the equipment rental industry is highly fragmented and diverse, we believe that we are well positioned to take advantage of this environment because, as a larger company, we have more extensive resources and certain competitive advantages. These include a fleet of rental equipment with a total original equipment cost (“OEC”) of $21.9 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. Our size also gives us greater purchasing power, the ability to provide customers with a broader range of equipment and services, the ability to provide customers with equipment that is more consistently well-maintained and therefore more productive and reliable, and the ability to enhance the earning potential of our assets by transferring equipment among branches to satisfy customer needs.

We offer approximately 5,000 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. Equipment rentals represented 85 percent of total revenues for the nine months ended September 30, 2024.

For the past several years, we have executed a strategy focused on improving the profitability of our core equipment rental business through revenue growth, margin expansion and operational efficiencies. In particular, we have focused on customer segmentation, customer service differentiation, rate management, fleet management and operational efficiency. Our general strategy focuses on profitability and return on invested capital, and, in particular, calls for:

•A consistently superior standard of service to customers, often provided through a single lead contact who can coordinate the cross-selling of the various services we offer throughout our network. 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. 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. We believe these efforts will lead to even better service of our target accounts, primarily large construction and industrial customers, as well as select local contractors. Our fleet team's analyses are aligned with these objectives to identify trends in equipment categories and define action plans that can generate improved returns;

•A continued focus on “Lean” management techniques, including kaizen processes focused on continuous improvement. We have a dedicated team responsible for reducing waste in our operational processes, with the objectives of: condensing the cycle time associated with preparing equipment for rent; optimizing our resources for

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delivery and pickup of equipment; improving the effectiveness and efficiency of our repair and maintenance operations; and implementing customer service best practices;

•The continued expansion and cross-selling of adjacent specialty and services products, which enables us to provide a "one-stop" shop for our customers. We believe that the expansion of our specialty business, as exhibited by our acquisition of Yak Access, LLC, Yak Mat, LLC and New South Access & Environmental Solutions, LLC (collectively, “Yak”) in March 2024, which is discussed in note 3 to our condensed consolidated financial statements, as well as our tools and onsite services offerings, further positions 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 acquisition of assets of Ahern Rentals, Inc. ("Ahern Rentals") in December 2022. Strategic acquisitions allow us to invest our capital to expand our business, further driving our ability to accomplish our strategic goals.

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. In 2024, we have taken the following actions to improve our financial flexibility and liquidity, and to position us to invest the necessary capital in our business:

•Issued $1.1 billion aggregate principal amount of 6 1/8 percent Senior Notes due 2034. The issued debt, together with drawings on our ABL facility, was used to fund the Yak acquisition that is discussed in note 3 to the condensed consolidated financial statements;

•Amended our term loan facility, primarily to extend the maturity date to February 2031 and to increase the facility size to $1.0 billion; and

•Amended our accounts receivable securitization facility, primarily to extend the maturity date and to increase the facility size from $1.3 billion to $1.5 billion. The facility expires in June 2025 and may be extended on a 364-day basis by mutual agreement with the purchasers under the facility.

As of September 30, 2024, we had available liquidity of $2.866 billion, comprised of cash and cash equivalents, and availability under the ABL and accounts receivable securitization facilities.

In October 2022, our Board of Directors authorized a $1.25 billion share repurchase program, which was completed in the first quarter of 2024. In January 2024, our Board of Directors authorized a $1.5 billion share repurchase program, and repurchases under this program began in March 2024, following the completion of the $1.25 billion program. We have repurchased $875 under the $1.5 billion program through September 30, 2024, and intend to repurchase a total of $1.25 billion under the program in 2024 and then complete the program by the end of the first quarter of 2025. A 1 percent excise tax is imposed on “net repurchases” (certain purchases minus certain issuances) of common stock. The repurchases above (as well as the total program sizes and expected 2024 repurchases) do not include the excise tax, which totaled $10 year-to-date through September 30, 2024.

Our Board of Directors also approved our first-ever quarterly dividend program in January 2023, and the first dividend under the program was paid in February 2023. During the nine months ended September 30, 2024 and 2023, we paid dividends of $326 ($4.89 per share) and $305 ($4.44 per share), respectively. On October 23, 2024, our Board of Directors declared a quarterly dividend of $1.63 per share, payable on November 27, 2024 to stockholders of record on November 13, 2024.

Net income. Net income and diluted earnings per share are presented below.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Net income	$	708	$	703	$	1,886	$	1,745
Diluted earnings per share	$	10.70	$	10.29	$	28.25	$	25.30

Net income and diluted earnings per share include the after-tax impacts of the items below. The tax rates applied to the items below reflect the statutory rates in the applicable entities.

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	Three Months Ended September 30,										Nine Months Ended September 30,
	2024					2023					2024					2023
Tax rate applied to items below	25.5		%			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		Contribution to net income (after-tax)			Impact on diluted earnings per share

Merger related intangible asset amortization (1)	$	(35)		$	(0.53)	$	(39)		$	(0.57)	$	(107)		$	(1.60)	$	(126)		$	(1.83)
Impact on depreciation related to acquired fleet and property and equipment (2)	(25)			(0.38)		(40)			(0.59)		(78)			(1.17)		(83)			(1.21)
Impact of the fair value mark-up of acquired fleet (3)	(10)			(0.15)		(16)			(0.23)		(35)			(0.52)		(64)			(0.92)


Restructuring charge (4)	(1)			(0.01)		(3)			(0.05)		(2)			(0.03)		(18)			(0.26)
Asset impairment charge (5)	(2)			(0.03)		—			—		(2)			(0.04)		—			—
Loss on repurchase/redemption/amendment of debt securities	—			—		—			—		(1)			(0.01)		—			—

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

(2)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 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 decreases in 2024 primarily reflect decreased sales of rental equipment acquired in the Ahern Rentals acquisition.

(4)This primarily reflects severance and branch closure charges associated with our restructuring programs. For additional information on the restructuring charges, which generally involve the closure of a large number of branches over a short period of time, often in periods following a major acquisition, see "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-Other costs/(income)-restructuring charges" below. The amounts above primarily reflect charges associated with a restructuring program initiated following the closing of the Ahern Rentals acquisition.

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

EBITDA GAAP Reconciliations. 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 restructuring charges, stock compensation expense, net and the impact of the fair value mark-up of the acquired fleet. 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. The net income and adjusted EBITDA margins represent net income or adjusted EBITDA divided by total revenue. Management believes that EBITDA and adjusted EBITDA, when viewed with the Company’s results under GAAP and the accompanying reconciliations, provide useful information about operating performance and period-over-period growth, and provide additional information that is useful for evaluating the operating performance of our core business without regard to potential distortions. Additionally, management believes that EBITDA and adjusted EBITDA help investors gain an understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made and debt is serviced. However, EBITDA and adjusted EBITDA are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income or cash flow from operating activities as indicators of operating performance or liquidity.

The table below provides a reconciliation between net income and EBITDA and adjusted EBITDA:

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	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Net income	$	708		$	703		$	1,886		$	1,745
Provision for income taxes	241			240			593			564
Interest expense, net	178			163			511			474

Depreciation of rental equipment	629			588			1,819			1,755
Non-rental depreciation and amortization	109			107			322			329
EBITDA	$	1,865		$	1,801		$	5,131		$	4,867

Restructuring charge (1)	1			5			3			24
Stock compensation expense, net (2)	24			23			79			72
Impact of the fair value mark-up of acquired fleet (3)	14			21			47			85

Adjusted EBITDA	$	1,904		$	1,850		$	5,260		$	5,048
Net income margin	17.7		%	18.7		%	16.8		%	16.5		%
Adjusted EBITDA margin	47.7		%	49.1		%	46.8		%	47.6		%

The table below provides a reconciliation between net cash provided by operating activities and EBITDA and adjusted EBITDA:


	Nine Months Ended
	September 30,
	2024		2023
Net cash provided by operating activities	$	3,498	$	3,290
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	(11)		(11)
Gain on sales of rental equipment	505		567
Gain on sales of non-rental equipment	13		16
Insurance proceeds from damaged equipment	38		30

Restructuring charge (1)	(3)		(24)
Stock compensation expense, net (2)	(79)		(72)
Loss on repurchase/redemption/amendment of debt securities	(1)		—


Changes in assets and liabilities	(185)		187
Cash paid for interest	544		495
Cash paid for income taxes, net	812		389
EBITDA	$	5,131	$	4,867
Add back:

Restructuring charge (1)	3		24
Stock compensation expense, net (2)	79		72
Impact of the fair value mark-up of acquired fleet (3)	47		85

Adjusted EBITDA	$	5,260	$	5,048

___________________

(1)This primarily reflects severance and branch closure charges associated with our restructuring programs. For additional information on the restructuring charges, which generally involve the closure of a large number of branches over a short period of time, often in periods following a major acquisition, see "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-Other costs/(income)-restructuring charges" below. The amounts above primarily reflect charges associated with a restructuring program initiated following the closing of the Ahern Rentals acquisition.

(2)Represents non-cash, share-based payments associated with the granting of equity instruments.

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For the three months ended September 30, 2024, net income increased $5, or 0.7 percent, and net income margin decreased 100 basis points to 17.7 percent. For the three months ended September 30, 2024, adjusted EBITDA increased $54, or 2.9 percent, and adjusted EBITDA margin decreased 140 basis points to 47.7 percent.

The year-over-year decrease in net income margin primarily reflects 1) increased selling, general and administrative ("SG&A") expenses as a percentage of revenue, which primarily reflects the impact of certain discrete expenses and normal variability in expense timing, 2) a 430 basis point decrease in gross margin from used equipment sales, which primarily reflects the continued normalization of the used equipment market, including pricing, and 3) increased depreciation on equipment acquired in the Yak acquisition.

The year-over-year decrease in adjusted EBITDA margin primarily reflects a 570 basis point decrease in gross margin from sales of rental equipment (excluding the adjustment reflected in the table above for the impact of the fair value mark-up of acquired fleet), which primarily reflects the continued normalization of the used equipment market, including pricing, and increased SG&A expenses as a percentage of revenue as discussed above.

For the nine months ended September 30, 2024, net income increased $141, or 8.1 percent, and net income margin increased 30 basis points to 16.8 percent. For the nine months ended September 30, 2024, adjusted EBITDA increased $212, or 4.2 percent, and adjusted EBITDA margin decreased 80 basis points to 46.8 percent.

The year-over-year increase in net income margin primarily reflects a 50 basis point increase in gross margin from equipment rentals, primarily due to decreased depreciation expense as a percentage of revenue, and reduced restructuring charges due to 2023 charges associated with the restructuring program initiated following the December 2022 acquisition of Ahern Rentals, partially offset by a 270 basis point decrease in gross margin from used equipment sales, which primarily reflects the continued normalization of the used equipment market, including pricing.

The year-over-year decrease in adjusted EBITDA margin primarily reflects a 580 basis point decrease in gross margin from sales of rental equipment (excluding the adjustment reflected in the table above for the impact of the fair value mark-up of acquired fleet), primarily due to the continued normalization of the used equipment market, including pricing.

Revenues are noted below. Fleet productivity is a comprehensive metric that provides greater insight into the decisions made by our managers in support of equipment rental growth and returns. Specifically, we seek to optimize the interplay of rental rates, time utilization and mix to drive rental revenue. Fleet productivity aggregates, in one metric, the impact of changes in rates, utilization and mix on owned equipment rental revenue. We believe that this metric is useful in assessing the effectiveness of our decisions on rates, time utilization and mix, particularly as they support the creation of shareholder value. The table below includes the components of the year-over-year change in rental revenue using the fleet productivity methodology.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024		2023		Change		2024		2023		Change
Equipment rentals*	$	3,463	$	3,224	7.4	%	$	9,607	$	8,945	7.4	%
Sales of rental equipment	321		366		(12.3)	%	1,069		1,136		(5.9)	%
Sales of new equipment	77		52		48.1	%	186		166		12.0	%
Contractor supplies sales	38		39		(2.6)	%	116		110		5.5	%
Service and other revenues	93		84		10.7	%	272		247		10.1	%
Total revenues	$	3,992	$	3,765	6.0	%	$	11,250	$	10,604	6.1	%
*Equipment rentals variance components:
Year-over-year change in average OEC					3.8	%					3.3	%
Assumed year-over-year inflation impact (1)					(1.5)	%					(1.5)	%
Fleet productivity (2)					3.5	%					4.1	%
Contribution from ancillary and re-rent revenue (3)					1.6	%					1.5	%
Total change in equipment rentals					7.4	%					7.4	%

___________________

(1)Reflects the estimated impact of inflation on the revenue productivity of fleet based on OEC, which is recorded at cost.

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(2)Reflects the combined impact of changes in rental rates, time utilization, and mix that contribute to the variance in owned equipment rental revenue. See note 2 to the condensed consolidated financial statements for a discussion of the different types of equipment rentals revenue. Rental rate changes are calculated based on the year-over-year variance in average contract rates, weighted by the prior period revenue mix. Time utilization is calculated by dividing the amount of time an asset is on rent by the amount of time the asset has been owned during the year. Mix includes the impact of changes in customer, fleet, geographic and segment mix.

(3)Reflects the combined impact of changes in the other types of equipment rentals revenue (see note 2 for further detail), excluding owned equipment rental revenue.

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 and other miscellaneous costs and services. 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. Contractor supplies sales represent our sales of supplies utilized by contractors, which include construction consumables, tools, small equipment and safety supplies. Services and other revenues primarily represent our revenues earned from providing repair and maintenance services on our customers’ fleet (including parts sales). See note 2 to the condensed consolidated financial statements for a discussion of our revenue recognition accounting.

For the three months ended September 30, 2024, total revenues of $3.992 billion increased 6.0 percent compared with 2023. Equipment rentals and sales of rental equipment are our largest revenue types (together, they accounted for 95 percent of total revenue for the three months ended September 30, 2024). Equipment rentals increased $239, or 7.4 percent, primarily due to a 3.5 percent increase in fleet productivity, which includes the impact of the Yak acquisition discussed above, and a 3.8 percent increase in average OEC. Sales of rental equipment decreased $45, or 12.3 percent, year-over-year, primarily due to changes in channel mix, and the continued normalization of the used equipment market, which resulted in lower pricing.

For the nine months ended September 30, 2024, total revenues of $11.250 billion increased 6.1 percent compared with 2023. Equipment rentals and sales of rental equipment are our largest revenue types (together, they accounted for 95 percent of total revenue for the nine months ended September 30, 2024). Equipment rentals increased $662, or 7.4 percent, primarily due to a 4.1 percent increase in fleet productivity, which includes the impact of the Yak acquisition, and a 3.3 percent increase in average OEC. Sales of rental equipment did not change significantly year-over-year.

Results of Operations

As discussed in note 4 to our condensed consolidated financial statements, our reportable segments are general rentals and specialty. The general rentals segment includes the rental of construction, aerial, industrial and homeowner equipment and related services and activities. The general rentals segment’s customers include construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities. This segment operates throughout the United States and Canada. The specialty segment rents products (and provides setup and other services on such rented equipment) including i) trench safety equipment, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers and line testing equipment for underground work, ii) power and HVAC equipment, such as portable diesel generators, electrical distribution equipment, and temperature control equipment, iii) fluid solutions equipment primarily used for fluid containment, transfer and treatment, iv) mobile storage equipment and modular office space and v) surface protection mats. The specialty segment’s customers include construction companies involved in infrastructure projects, municipalities and industrial companies. This segment primarily operates in the United States and Canada, and has a limited presence in Europe, Australia and New Zealand.

As discussed in note 4 to our condensed consolidated financial statements, we aggregate our four geographic divisions—Central, Northeast, Southeast and West—into our general rentals reporting segment. Historically, there have occasionally been variances in the levels of equipment rentals gross margins achieved by these divisions, though such variances have generally been small (close to or less than 10 percent, measured versus the equipment rentals gross margins of the aggregated general rentals' divisions). For the five year period ended September 30, 2024, 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 rental industry is cyclical, and there historically have occasionally been divisions with equipment rentals gross margins that varied by greater than 10 percent from the equipment rentals gross margins of the aggregated general rentals' divisions, though the specific divisions with margin variances of over 10 percent have fluctuated, and such variances have generally not exceeded 10 percent by a significant amount. We monitor the margin variances and confirm margin similarity between divisions on a quarterly basis.

We believe that the divisions that are aggregated into our segments have similar economic characteristics, as each division is capital intensive, offers similar products to similar customers, uses similar methods to distribute its products, and is subject to similar competitive risks. The aggregation of our divisions also reflects the management structure that we use for

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making operating decisions and assessing performance. 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.

These reporting segments align our external segment reporting with how management evaluates business performance and allocates resources. We evaluate segment performance primarily based on segment equipment rentals gross profit. Our revenues, operating results, and financial condition fluctuate from quarter to quarter reflecting the seasonal rental patterns of our customers, with rental activity tending to be lower in the winter.

Revenues by segment were as follows:


	General rentals		Specialty		Total
Three Months Ended September 30, 2024
Equipment rentals	$	2,327	$	1,136	$	3,463
Sales of rental equipment	274		47		321
Sales of new equipment	36		41		77
Contractor supplies sales	22		16		38
Service and other revenues	86		7		93
Total revenue	$	2,745	$	1,247	$	3,992
Three Months Ended September 30, 2023
Equipment rentals	$	2,307	$	917	$	3,224
Sales of rental equipment	320		46		366
Sales of new equipment	24		28		52
Contractor supplies sales	23		16		39
Service and other revenues	78		6		84
Total revenue	$	2,752	$	1,013	$	3,765
Nine Months Ended September 30, 2024
Equipment rentals	$	6,606	$	3,001	$	9,607
Sales of rental equipment	933		136		1,069
Sales of new equipment	92		94		186
Contractor supplies sales	65		51		116
Service and other revenues	248		24		272
Total revenue	$	7,944	$	3,306	$	11,250
Nine Months Ended September 30, 2023
Equipment rentals	$	6,514	$	2,431	$	8,945
Sales of rental equipment	1,012		124		1,136
Sales of new equipment	66		100		166
Contractor supplies sales	67		43		110
Service and other revenues	225		22		247
Total revenue	$	7,884	$	2,720	$	10,604

Equipment rentals represented 87 percent of total revenues for the three months ended September 30, 2024. For the three months ended September 30, 2024, equipment rentals of $3.463 billion increased $239, or 7.4 percent, as compared to the same period in 2023, primarily due to a 3.5 percent increase in fleet productivity, which includes the impact of the Yak acquisition discussed above, and a 3.8 percent increase in average OEC.

For the three months ended September 30, 2024, equipment rentals represented 85 percent of total revenues for the general rentals segment. For the three months ended September 30, 2024, general rentals equipment rentals increased $20, or 0.9 percent, as compared to the same period in 2023.

For the three months ended September 30, 2024, equipment rentals represented 91 percent of total revenues for the specialty segment. For the three months ended September 30, 2024, specialty equipment rentals increased $219, or 23.9

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percent, as compared to the same period in 2023, primarily due to the impact of the Yak acquisition and increased average OEC. Specialty equipment rentals increased 14.8 percent year-over-year excluding the revenue from the acquired Yak locations.

For the nine months ended September 30, 2024, equipment rentals represented 85 percent of total revenues. For the nine months ended September 30, 2024, equipment rentals of $9.607 billion increased $662, or 7.4 percent, as compared to the same period in 2023, primarily due to a 4.1 percent increase in fleet productivity, which includes the impact of the Yak acquisition, and a 3.3 percent increase in average OEC.

For the nine months ended September 30, 2024, equipment rentals represented 83 percent of total revenues for the general rentals segment. For the nine months ended September 30, 2024, general rentals equipment rentals increased $92, or 1.4 percent, as compared to the same period in 2023.

For the nine months ended September 30, 2024, equipment rentals represented 91 percent of total revenues for the specialty segment. For the nine months ended September 30, 2024, specialty equipment rentals increased $570, or 23.4 percent, as compared to the same period in 2023, primarily due to the impact of the Yak acquisition and increased average OEC. Specialty equipment rentals increased 16.6 percent year-over-year excluding the revenue from the acquired Yak locations.

Sales of rental equipment. For the nine months ended September 30, 2024, sales of rental equipment represented approximately 10 percent of our total revenues. For the three months ended September 30, 2024, sales of rental equipment decreased 12.3 percent year-over-year, primarily due to changes in channel mix, and the continued normalization of the used equipment market, which resulted in lower pricing. For the nine months ended September 30, 2024, sales of rental equipment did not change significantly year-over-year.

Sales of new equipment. For the nine months ended September 30, 2024, sales of new equipment represented approximately 2 percent of our total revenues. For the three and nine months ended September 30, 2024, sales of new equipment increased 48.1 percent and 12.0 percent, respectively, primarily due to the impact of the Yak acquisition.

Contractor supplies sales represent our revenues associated with selling a variety of supplies, including construction consumables, tools, small equipment and safety supplies. For the nine months ended September 30, 2024, contractor supplies sales represented approximately 1 percent of our total revenues. For the three and nine months ended September 30, 2024, contractor supplies sales did not change significantly year-over-year.

Service and other revenues primarily represent our revenues earned from providing repair and maintenance services on our customers’ fleet (including parts sales). For the nine months ended September 30, 2024, service and other revenues represented approximately 2 percent of our total revenues. For the three and nine months ended September 30, 2024, service and other revenues did not change significantly year-over-year.

Segment Equipment Rentals Gross Profit

Segment equipment rentals gross profit and gross margin were as follows:


	General rentals			Specialty			Total
Three Months Ended September 30, 2024
Equipment Rentals Gross Profit	$	874		$	568		$	1,442
Equipment Rentals Gross Margin	37.6		%	50.0		%	41.6		%
Three Months Ended September 30, 2023
Equipment Rentals Gross Profit	$	872		$	478		$	1,350
Equipment Rentals Gross Margin	37.8		%	52.1		%	41.9		%
Nine Months Ended September 30, 2024
Equipment Rentals Gross Profit	$	2,357		$	1,473		$	3,830
Equipment Rentals Gross Margin	35.7		%	49.1		%	39.9		%
Nine Months Ended September 30, 2023
Equipment Rentals Gross Profit	$	2,323		$	1,203		$	3,526
Equipment Rentals Gross Margin	35.7		%	49.5		%	39.4		%

General rentals. For the three months ended September 30, 2024, equipment rentals gross profit increased by $2, and equipment rentals gross margin decreased by 20 basis points, year-over-year.

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For the nine months ended September 30, 2024, equipment rentals gross profit increased by $34, and equipment rentals gross margin was flat, year-over-year.

Specialty. For the three months ended September 30, 2024, equipment rentals gross profit increased by $90, and equipment rentals gross margin decreased by 210 basis points, year-over-year. Gross margin decreased primarily due to increased depreciation expense, including the impact of the Yak acquisition.

For the nine months ended September 30, 2024, equipment rentals gross profit increased by $270, and equipment rentals gross margin decreased by 40 basis points, year-over-year. Gross margin decreased primarily due to increased depreciation expense, including the impact of the Yak acquisition.

Gross Margin. Gross margins by revenue classification were as follows:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2024		2023		Change	2024	2023	Change
Total gross margin	41.3	%	42.1	%	(80) bps	40.1%	40.1%	— bps
Equipment rentals	41.6	%	41.9	%	(30) bps	39.9%	39.4%	50 bps
Sales of rental equipment	45.2	%	49.5	%	(430) bps	47.2%	49.9%	(270) bps
Sales of new equipment	15.6	%	17.3	%	(170) bps	18.3%	17.5%	80 bps
Contractor supplies sales	31.6	%	28.2	%	340 bps	31.0%	29.1%	190 bps
Service and other revenues	39.8	%	40.5	%	(70) bps	39.3%	39.3%	— bps

For the three months ended September 30, 2024, total gross margin decreased 80 basis points from the same period in 2023. Equipment rentals gross margin decreased 30 basis points from 2023. Gross margin from sales of rental equipment decreased 430 basis points from 2023, which primarily reflected the continued normalization of the used equipment market, including pricing. 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 three months ended September 30, 2024).

For the nine months ended September 30, 2024, total gross margin was flat year-over-year. Equipment rentals gross margin increased 50 basis points from 2023, primarily due to decreased depreciation expense as a percentage of revenue. Gross margin from sales of rental equipment decreased 270 basis points from 2023, which primarily reflected the continued normalization of the used equipment market, including pricing. 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 nine months ended September 30, 2024).

Other costs/(income)

The table below includes the other costs/(income) in our condensed consolidated statements of income, as well as key associated metrics:


	Three Months Ended September 30,			Nine Months Ended September 30,
	2024	2023	Change	2024	2023	Change
Selling, general and administrative ("SG&A") expense	$416	$374	11.2%	$1,209	$1,134	6.6%
SG&A expense as a percentage of revenue	10.4%	9.9%	50 bps	10.7%	10.7%	— bps

Restructuring charge	1	5	(80.0)%	3	24	(87.5)%
Non-rental depreciation and amortization	109	107	1.9%	322	329	(2.1)%
Interest expense, net	178	163	9.2%	511	474	7.8%
Other income, net	(5)	(7)	(28.6)%	(12)	(19)	(36.8)%
Provision for income taxes	241	240	0.4%	593	564	5.1%
Effective tax rate	25.4%	25.5%	(10) bps	23.9%	24.4%	(50) bps

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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. SG&A expense as a percentage of revenue for the three months ended September 30, 2024 increased year-over-year primarily due to the impact of certain discrete expenses and normal variability in expense timing. SG&A expense as a percentage of revenue for the nine months ended September 30, 2024 was flat year-over-year.

The restructuring charges primarily reflect severance and branch closure charges associated with our restructuring programs. We incur severance costs and branch closure charges in the ordinary course of our business. We only include such costs that are part of a restructuring program as restructuring charges. The designated restructuring programs generally involve the closure of a large number of branches over a short period of time, often in periods following a major acquisition, and result in significant costs that we would not normally incur absent a major acquisition or other triggering event that results in the initiation of a restructuring program. The year-over-year decreases in restructuring charges for the three and nine months ended September 30, 2024 primarily reflect 2023 charges associated with the restructuring program initiated following the December 2022 acquisition of Ahern Rentals. Since the first such program was initiated in 2008, we have completed seven restructuring programs and have incurred total restructuring charges of $383. We currently have no open restructuring programs, and the total liability associated with our restructuring programs was $18 as of September 30, 2024.

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. Our other intangible assets consist of customer relationships, non-compete agreements and trade names and associated trademarks.

Interest expense, net for the three and nine months ended September 30, 2024 increased by 9.2 percent and 7.8 percent year-over-year, respectively, primarily reflecting increased average debt, including the debt issued to partially fund the Yak acquisition discussed above.

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.

The effective tax rates for 2024 and 2023 differed from the federal statutory rate of 21 percent primarily due to the geographical mix of income between foreign and domestic operations, the impact of state and local taxes, stock compensation, and other deductible and nondeductible charges. The nine months ended September 30, 2023 additionally included the impact of the release of a valuation allowance on foreign tax credits.

Balance sheet. Prepaid expenses and other assets increased by $100, or 74.1 percent, from December 31, 2023 to September 30, 2024, primarily due to an increase in income taxes receivable which reflected required tax payments exceeding the estimated tax accruals. Goodwill increased by $913, or 15.4 percent, from December 31, 2023 to September 30, 2024, primarily due to the impact of the Yak acquisition, as discussed in note 3 to the condensed consolidated financial statements. Operating lease right-of-use assets increased by $156, or 14.2 percent, and operating lease liabilities increased by $126, or 14.1 percent, from December 31, 2023 to September 30, 2024, and both increases primarily reflected increased amounts of real estate and equipment leased under operating leases. Accounts payable increased by $311, or 34.4 percent, from December 31, 2023 to September 30, 2024, primarily due to seasonal increases in capital expenditures and business activities. See the condensed consolidated statements of cash flows for further information on changes in cash and cash equivalents, the condensed consolidated statements of stockholders’ equity for further information on changes in stockholders’ equity and note 7 to the condensed consolidated financial statements for further information on debt changes.

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Liquidity and Capital Resources

We manage our liquidity using internal cash management practices, which are subject to (i) the policies and cooperation of the financial institutions we utilize to maintain and provide cash management services, (ii) the terms and other requirements of the agreements to which we are a party and (iii) the statutes, regulations and practices of each of the local jurisdictions in which we operate.

Our Board of Directors also approved our first-ever quarterly dividend program in January 2023, and the first dividend under the program was paid in February 2023. During the nine months ended September 30, 2024 and 2023, we paid dividends totaling $326 ($4.89 per share) and $305 ($4.44 per share), respectively. On October 23, 2024, our Board of Directors declared a quarterly dividend of $1.63 per share, payable on November 27, 2024 to stockholders of record on November 13, 2024.

Our principal existing sources of cash are cash generated from operations and from the sale of rental equipment, and borrowings available under our ABL facility and accounts receivable securitization facility. As of September 30, 2024, we had cash and cash equivalents of $479. We believe that our existing sources of cash will be sufficient to support our existing operations over the next 12 months. The table below presents financial information associated with our principal sources of cash as of and for the nine months ended September 30, 2024:



ABL facility:
Borrowing capacity, net of letters of credit	$	2,311
Outstanding debt, net of debt issuance costs (1)	1,915
Interest rate at September 30, 2024	6.2		%
Average month-end principal amount of debt outstanding (1)	1,512
Weighted-average interest rate on average debt outstanding	6.4		%
Maximum month-end principal amount of debt outstanding (1)	1,921
Accounts receivable securitization facility:
Borrowing capacity	76
Outstanding debt, net of debt issuance costs (2)	1,423
Interest rate at September 30, 2024	5.9		%
Average month-end principal amount of debt outstanding (2)	1,197
Weighted-average interest rate on average debt outstanding	6.2		%
Maximum month-end principal amount of debt outstanding (2)	1,424

___________________

(1)The outstanding and maximum amounts of debt under the ABL facility exceeded the average outstanding amount primarily due to the use of borrowings under the facility to fund seasonal expenditures and acquisition activity.

(2)The outstanding and maximum amounts of debt under the accounts receivable securitization facility exceeded the average outstanding amount primarily due to normal usage of increased availability under the facility. Borrowings under the accounts receivable securitization facility are permitted only to the extent that the face amount of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans. The maximum amount of debt above reflects normal usage of the available borrowings based on the amount of the receivables in the collateral pool (see note 7 to the condensed consolidated financial statements for further detail). In May 2024, the accounts receivable securitization facility was amended, primarily to extend the maturity date and to increase the facility size from $1.3 billion to $1.5 billion, which also contributed to the difference in the average and maximum amounts outstanding.

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We expect that our principal short-term (over the next 12 months) and long-term needs for cash relating to our operations will be to fund (i) operating activities and working capital, (ii) the purchase of rental equipment and inventory items offered for sale, (iii) payments due under operating leases, (iv) debt service, (v) share repurchases, (vi) dividends and (vii) acquisitions. We plan to fund such cash requirements from our existing sources of cash. In addition, we may seek additional financing through the securitization of some of our real estate, the use of additional operating leases or other financing sources as market conditions permit. The table below presents information on payments coming due under the most significant categories of our needs for cash (excluding operating cash flows pertaining to normal business operations, such as human capital costs, which are not accurately estimable) as of September 30, 2024:


	2024		2025		2026		2027		2028		Thereafter		Total
Debt and finance leases (1)	$	24	$	1,508	$	70	$	3,226	$	1,699	$	6,939	$	13,466
Interest due on debt (2)	178		669		627		545		368		845		3,232
Operating leases (1)	86		328		290		238		184		381		1,507

Purchase obligations (3)	765		337		9		—		—		—		1,111

Total	$	1,053	$	2,842	$	996	$	4,009	$	2,251	$	8,165	$	19,316

_________________

(1) The payments due with respect to a period represent (i) in the case of debt and finance leases, the scheduled principal payments due in such period, and (ii) in the case of operating leases, the payments due in such period for non-cancelable operating leases with initial or remaining terms of one year or more. See note 7 to the condensed consolidated financial statements for further debt information.

(2) Estimated interest payments have been calculated based on the principal amount of debt and the applicable interest rates as of September 30, 2024.

(3) As of September 30, 2024, 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. 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 and 2025.

To access the capital markets, we rely on credit rating agencies to assign ratings to our securities as an indicator of credit quality. 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. Our credit ratings as of October 21, 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. There is no assurance that any rating will remain in effect for a given period of time or that any rating will not be revised or withdrawn by a rating agency in the future.

Loan Covenants and Compliance. As of September 30, 2024, we were in compliance with the covenants and other provisions of the ABL, accounts receivable securitization and term loan facilities and our senior notes. Any failure to be in compliance with any material provision or covenant of these agreements could have a material adverse effect on our liquidity and operations.

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defined in the applicable debt agreements) and usage of the ABL facility as of September 30, 2024, we met the criteria under the applicable debt agreements for these exceptions, and as a result we were not restricted in our ability to make share repurchases and dividend payments.

Sources and Uses of Cash. During the nine months ended September 30, 2024, we (i) generated cash from operating activities of $3.498 billion, (ii) generated cash from the sale of rental and non-rental equipment of $1.119 billion and (iii) received cash from debt proceeds, net of payments, of $1.765 billion. We used cash during this period principally to (i) make payments for purchases of rental and non-rental equipment and intangible assets of $3.444 billion, (ii) purchase other companies for $1.342 billion, (iii) purchase shares of our common stock for $1.168 billion and (iv) pay dividends of $326. During the nine months ended September 30, 2023, we (i) generated cash from operating activities of $3.290 billion, (ii) generated cash from the sale of rental and non-rental equipment of $1.182 billion and (iii) received cash from debt proceeds, net of payments, of $543. We used cash during this period principally to (i) make payments for purchases of rental and non-rental equipment and intangible assets of $3.345 billion, (ii) purchase other companies for $406, (iii) purchase shares of our common stock for $806 and (iv) pay dividends of $305.

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. Management believes that free cash flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements. However, free cash flow is not a measure of financial performance or liquidity under GAAP. Accordingly, free cash flow should not be considered an alternative to net income or cash flow from operating activities as an indicator of operating performance or liquidity. The table below provides a reconciliation between net cash provided by operating activities and free cash flow.


	Nine Months Ended
	September 30,
	2024		2023
Net cash provided by operating activities	$	3,498	$	3,290
Payments for purchases of rental equipment	(3,178)		(3,078)
Payments for purchases of non-rental equipment and intangible assets	(266)		(267)
Proceeds from sales of rental equipment	1,069		1,136
Proceeds from sales of non-rental equipment	50		46
Insurance proceeds from damaged equipment	38		30

Free cash flow	$	1,211	$	1,157

Free cash flow for the nine months ended September 30, 2024 did not change significantly year-over-year.

Relationship between Holdings and URNA. Holdings is principally a holding company and primarily conducts its operations through its wholly owned subsidiary, URNA, and subsidiaries of URNA. Holdings licenses its tradename and other intangibles and provides certain services to URNA in connection with its operations. These services principally include: (i) senior management services; (ii) finance and tax-related services and support; (iii) information technology systems and support; (iv) acquisition-related services; (v) legal services; and (vi) human resource support. In addition, Holdings leases certain equipment and real property that are made available for use by URNA and its 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”). 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”). The receivable assets owned by the SPV have been sold or contributed by URNA to the SPV and are not available to satisfy the obligations of URNA or Holdings’ other subsidiaries. Holdings consolidates each of URNA and the guarantor subsidiaries in its consolidated financial statements. URNA and the guarantor subsidiaries are all 100 percent-owned and controlled by Holdings. Holdings’ guarantees of URNA’s indebtedness are full and unconditional, except that the guarantees may be automatically released and relieved upon satisfaction of the requirements for legal defeasance or covenant defeasance under the applicable indenture being met. The Holdings guarantees are also 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 Holdings will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws.

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The guarantees of Holdings and the guarantor subsidiaries are made on a joint and several basis. The guarantees of the guarantor subsidiaries are not full and unconditional because a guarantor subsidiary can be automatically released and relieved of its obligations under certain circumstances, including sale of the guarantor subsidiary, the sale of all or substantially all of the guarantor subsidiary's assets, the requirements for legal defeasance or covenant defeasance under the applicable indenture being met, designating the guarantor subsidiary as an unrestricted subsidiary for purposes of the applicable covenants or the notes being rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA. 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.

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. The secured indebtedness of Holdings and the guarantor subsidiaries (including guarantees of URNA’s existing and future secured indebtedness) will rank effectively senior to guarantees of any unsecured indebtedness to the extent of the value of the assets securing such indebtedness. Future guarantees of subordinated indebtedness will rank junior to any existing and future senior indebtedness of the guarantors. The guarantees of URNA’s indebtedness are effectively junior to any indebtedness of our subsidiaries that are not guarantors, including our foreign subsidiaries. As of September 30, 2024, the indebtedness of our non-guarantors was comprised of (i) $1.423 billion of outstanding borrowings by the SPV in connection with the Company’s accounts receivable securitization facility, (ii) $121 of outstanding borrowings under the ABL facility by non-guarantor subsidiaries and (iii) $12 of finance leases of our non-guarantor subsidiaries.

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 summarized financial information excludes the financial information of the non-guarantor subsidiaries. In accordance with Rule 3-10, separate financial statements of the guarantor subsidiaries have not been presented. Our presentation below excludes the investment in the non-guarantor subsidiaries and the related income from the non-guarantor subsidiaries.

The summarized financial information of Holdings, URNA and the guarantor subsidiaries on a combined basis is as follows:



			September 30, 2024
Current receivable from non-guarantor subsidiaries			$2
Other current assets			498
Total current assets			500


Long-term assets			22,715
Total assets			23,215
Current liabilities			2,342
Long-term liabilities			15,380
Total liabilities			17,722
			Nine Months Ended September 30, 2024
Total revenues			$10,261
Gross profit			4,151
Net income			1,690

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Item 3.Quantitative and Qualitative Disclosures about Market Risk (dollars in millions, unless otherwise indicated)

Our exposure to market risk primarily consists of (i) interest rate risk associated with our variable and fixed rate debt and (ii) foreign currency exchange rate risk associated with our foreign operations.

Interest Rate Risk. As of September 30, 2024, we had an aggregate of $4.3 billion of indebtedness that bears interest at variable rates, comprised of borrowings under the ABL, accounts receivable securitization and term loan facilities. The amount of variable rate indebtedness outstanding under these facilities may fluctuate significantly. See note 7 to the condensed consolidated financial statements for the amounts outstanding, and the interest rates thereon, as of September 30, 2024 under these facilities. As of September 30, 2024, based upon the amount of our variable rate debt outstanding, our annual after-tax earnings would decrease by approximately $32 for each one percentage point increase in the interest rates applicable to our variable rate debt.

At September 30, 2024, we had an aggregate of $9.1 billion of indebtedness that bears interest at fixed rates. A one percentage point decrease in market interest rates as of September 30, 2024 would increase the fair value of our fixed rate indebtedness by approximately 3 percent. For additional information concerning the fair value of our fixed rate debt, see note 6 (see “Fair Value of Financial Instruments”) to our condensed 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. During the nine months ended September 30, 2024, our foreign subsidiaries accounted for $987, or 9 percent, of our total revenue of $11.250 billion, and $178, or 7 percent, of our total pretax income of $2.479 billion. 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.

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Item 4.Controls and Procedures

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company’s management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a–15(e) and 15d–15(e) of the Exchange Act, as of September 30, 2024. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2024.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.Legal Proceedings

The information set forth under note 8 to our unaudited condensed consolidated financial statements of this quarterly report on Form 10-Q is incorporated by reference in answer to this item.

Item 1A.Risk Factors

Our results of operations and financial condition are subject to numerous risks and uncertainties described in our 2023 Form 10-K, which risk factors are incorporated herein by reference. You should carefully consider the risk factors in our 2023 Form 10-K in conjunction with the other information contained in this report. Should any of these risks materialize, our business, financial condition and future prospects could be negatively impacted.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information about purchases of Holdings’ common stock by Holdings during the third quarter of 2024:


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)
July 1, 2024 to July 31, 2024	142,693	(1)	$	690.37	141,878
August 1, 2024 to August 31, 2024	272,032	(1)	$	697.57	271,568
September 1, 2024 to September 30, 2024	125,163	(1)	$	706.62	124,016
Total	539,888		$	697.76	537,462	$	625,000,000

_________________

(1)In July 2024, August 2024 and September 2024, 815, 464 and 1,147 shares, respectively, were withheld by Holdings to satisfy tax withholding obligations upon the vesting of restricted stock unit awards. These shares were not acquired pursuant to any repurchase plan or program.

(2)On January 24, 2024, our Board of Directors authorized a $1.5 billion share repurchase program, and repurchases under this program began in March 2024. We intend to repurchase a total of $1.25 billion under this program in 2024, and then complete the program by the end of the first quarter of 2025. A 1 percent excise tax is imposed on “net repurchases” (certain purchases minus certain issuances) of common stock. The repurchases above (as well as the total program size and expected 2024 repurchases) do not include the excise tax, which totaled $10 million year-to-date through September 30, 2024.

Item 5. Other Information

Certain of our officers or directors have made, and may from time to time make, elections to have shares withheld or sold back to Holdings to cover withholding taxes, which may constitute non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K).

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Item 6.Exhibits






2(a)			Asset Purchase Agreement, dated as of November 11, 2022, by and among United Rentals (North America), Inc., Ahern Rentals, Inc., and Xtreme Re-Rental, LLC (incorporated by reference to Exhibit 2.1 of the United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on November 14, 2022)

2(b)			Agreement and Plan of Merger, dated April 15, 2021, by and among General Finance Corporation, United Rentals (North America), Inc., and UR Merger Sub VI Corporation (incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by United Rentals, Inc. on April 15, 2021)

3(a)			Seventh Amended and Restated Certificate of Incorporation of United Rentals, Inc., dated May 9, 2024 (incorporated by reference to Exhibit 3.1 of the United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on May 9, 2024)

3(b)			Third Amended and Restated By-Laws of United Rentals, Inc., amended as of December 19, 2022 (incorporated by reference to Exhibit 3.1 of the United Rentals, Inc. Current Report on Form 8-K filed on December 20, 2022)

3(c)			Restated Certificate of Incorporation of United Rentals (North America), Inc., dated April 30, 2012 (incorporated by reference to Exhibit 3(c) of the United Rentals, Inc. and United Rentals (North America), Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2013)

3(d)			By-laws of United Rentals (North America), Inc. dated May 8, 2013 (incorporated by reference to Exhibit 3(d) of the United Rentals, Inc. and United Rentals (North America), Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2013)































22			Subsidiary Guarantors (incorporated by reference to Exhibit 22 of the United Rentals, Inc. and United Rentals (North America), Inc. Report on Form 10-K for the fiscal year ended December 31, 2023)

31(a)*			Rule 13a-14(a) Certification by Chief Executive Officer

31(b)*			Rule 13a-14(a) Certification by Chief Financial Officer

32(a)**			Section 1350 Certification by Chief Executive Officer

32(b)**			Section 1350 Certification by Chief Financial Officer

101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH			XBRL Taxonomy Extension Schema Document

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			XBRL Taxonomy Extension Label Linkbase Document

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K under the Exchange Act.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UNITED RENTALS, INC.

Dated:

October 23, 2024

By:

/S/ ANDREW B. LIMOGES

Andrew B. Limoges
Vice President, Controller and Principal Accounting Officer

UNITED RENTALS (NORTH AMERICA), INC.

Dated:

October 23, 2024

By:

/S/ ANDREW B. LIMOGES

Andrew B. Limoges
Vice President, Controller and Principal Accounting Officer

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Date	Price Target	Rating	Analyst
6/28/2024	$750.00	Outperform	Raymond James
6/26/2024	$745.00	Buy	Citigroup
6/7/2024	$780.00	Overweight	JP Morgan
3/14/2024	$793.00	Buy	Truist
1/8/2024	$500.00	Equal-Weight	Morgan Stanley
1/5/2024	$485.00	Outperform → Underperform	Exane BNP Paribas
12/5/2023	$504.00 → $525.00	Buy → Neutral	UBS
12/5/2023	$504.00 → $525.00	Buy → Neutral	BofA Securities

SEC Form 10-Q filed by United Rentals Inc.

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