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, 2022

☐ 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.

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 24, 2022, there were 69,308,481 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.

UNITED RENTALS, INC.

UNITED RENTALS (NORTH AMERICA), INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

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	27
Item 3	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4	Controls and Procedures	44
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	45
Item 1A	Risk Factors	45
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 6	Exhibits	46
	Signatures	47

3

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 cyclical nature of our business, which is highly sensitive to North American construction and industrial activities; if construction or industrial activity decline, our revenues and, because many of our costs are fixed, our profitability may be adversely affected;

•the impact of global economic conditions (including inflation, increased interest rates, supply chain constraints, potential trade wars and sanctions and other measures imposed in response to the ongoing conflict in Ukraine) and public health crises and epidemics, such as the coronavirus (COVID-19), on us, our customers and our suppliers, in the United States and the rest of the world;

•uncertainty regarding the ongoing impact of existing and emerging variant strains of COVID-19 on global economic conditions, and regarding the length of time it will take for the COVID-19 pandemic to ultimately subside or become viewed as endemic. Uncertainty remains regarding the effectiveness of vaccines against COVID-19 (including against emerging variant strains), and the time it will take for the pandemic to subside will also be impacted by measures that may in the future be implemented to protect public health;

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

•excess fleet in the equipment rental industry;

•inability to benefit from government spending, including spending associated with infrastructure projects;

•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;

•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 $9.9 billion at September 30, 2022) 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 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 amount of borrowings permitted in 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 other financial markets;

•the possibility that companies that we have acquired or may acquire could have undiscovered liabilities or involve other unexpected costs, may strain our management capabilities or may be difficult to integrate;

•incurrence of impairment charges;

•fluctuations in the price of our common stock and inability to complete stock repurchases in the time frame 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 (including COVID-19);

•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;

4

•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;

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

•risks related to climate change and climate change regulation;

•risks related to our ability to meet 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 additional 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 matters and commercial litigation;

•labor shortages and/or disputes, work stoppages or other labor difficulties, which may impact our productivity, and potential enactment of new legislation or other changes in law affecting 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, 2021, 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.

5

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

UNITED RENTALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

	September 30, 2022		December 31, 2021
	(unaudited)
ASSETS
Cash and cash equivalents	$	76	$	144
Accounts receivable, net	1,934		1,677
Inventory	193		164
Prepaid expenses and other assets	124		166
Total current assets	2,327		2,151
Rental equipment, net	11,553		10,560
Property and equipment, net	648		612
Goodwill	5,543		5,528
Other intangible assets, net	500		615
Operating lease right-of-use assets	801		784
Other long-term assets	47		42
Total assets	$	21,419	$	20,292
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt and current maturities of long-term debt	$	156	$	906
Accounts payable	1,136		816
Accrued expenses and other liabilities	972		881
Total current liabilities	2,264		2,603
Long-term debt	9,754		8,779
Deferred taxes	2,263		2,154
Operating lease liabilities	630		621
Other long-term liabilities	155		144
Total liabilities	15,066		14,301
Common stock—$0.01 par value, 500,000,000 shares authorized, 114,709,579 and 69,308,052 shares issued and outstanding, respectively, at September 30, 2022 and 114,434,075 and 72,420,566 shares issued and outstanding, respectively, at December 31, 2021	1		1
Additional paid-in capital	2,604		2,567
Retained earnings	9,017		7,551
Treasury stock at cost—45,401,527 and 42,013,509 shares at September 30, 2022 and December 31, 2021, respectively	(4,957)		(3,957)
Accumulated other comprehensive loss	(312)		(171)
Total stockholders’ equity	6,353		5,991
Total liabilities and stockholders’ equity	$	21,419	$	20,292

See accompanying notes.

6

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,
	2022		2021		2022		2021
Revenues:
Equipment rentals	$	2,732	$	2,277	$	7,369	$	5,895
Sales of rental equipment	181		183		556		644
Sales of new equipment	32		47		115		153
Contractor supplies sales	32		29		94		80
Service and other revenues	74		60		212		168
Total revenues	3,051		2,596		8,346		6,940
Cost of revenues:
Cost of equipment rentals, excluding depreciation	1,053		886		2,961		2,416
Depreciation of rental equipment	470		412		1,362		1,172
Cost of rental equipment sales	69		99		231		373
Cost of new equipment sales	25		38		93		128
Cost of contractor supplies sales	23		21		66		57
Cost of service and other revenues	45		37		125		102
Total cost of revenues	1,685		1,493		4,838		4,248
Gross profit	1,366		1,103		3,508		2,692
Selling, general and administrative expenses	356		326		1,022		877
Merger related costs	—		—		—		3
Restructuring charge	(1)		—		—		1
Non-rental depreciation and amortization	90		98		278		279
Operating income	921		679		2,208		1,532
Interest expense, net	106		132		313		331
Other income, net	(1)		(3)		(12)		(1)
Income before provision for income taxes	816		550		1,907		1,202
Provision for income taxes	210		141		441		297
Net income	$	606	$	409	$	1,466	$	905
Basic earnings per share	$	8.69	$	5.65	$	20.61	$	12.49
Diluted earnings per share	$	8.66	$	5.63	$	20.56	$	12.45

See accompanying notes.

7

UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In millions)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income	$	606	$	409	$	1,466	$	905
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments (1)	(92)		(52)		(141)		(24)
Fixed price diesel swaps	(3)		—		—		1
Other comprehensive (loss) income	(95)		(52)		(141)		(23)
Comprehensive income (1)	$	511	$	357	$	1,325	$	882

(1)There were no material reclassifications from accumulated other comprehensive loss reflected in other comprehensive income (loss) during 2022 or 2021. There was no material tax impact related to the foreign currency translation adjustments. We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes were provided on such earnings prior to 2020. In 2020 and 2021, we identified cash in our foreign operations in excess of near-term working capital needs that could no longer be considered indefinitely reinvested. As a result, our prior assertion that all undistributed earnings of our foreign subsidiaries should be considered indefinitely reinvested changed. In 2021, we remitted $203 of cash from foreign operations (such amount represents the cumulative amount of identified cash in our foreign operations in excess of near-term working capital needs). We continue to expect that the remaining balance of our undistributed foreign earnings will be indefinitely reinvested. If we determine that all or a portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes. There were no material taxes associated with other comprehensive income (loss) during 2022 or 2021.

See accompanying notes.

8

UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In millions) 

	Three Months Ended September 30, 2022
	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, 2022	70	$	1	$	2,570	$	8,411	45	$	(4,719)	$	(217)
Net income						606
Foreign currency translation adjustments											(92)
Fixed price diesel swaps											(3)
Stock compensation expense, net	—			35
Tax withholding for share based compensation	—			(1)
Repurchase of common stock	—							—	(238)
Balance at September 30, 2022	69	$	1	$	2,604	$	9,017	45	$	(4,957)	$	(312)

	Three Months Ended September 30, 2021
	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, 2021	72	$	1	$	2,506	$	6,661	42	$	(3,957)	$	(117)
Net income						409
Foreign currency translation adjustments											(52)
Stock compensation expense, net	—			33
Tax withholding for share based compensation	—			(1)
Balance at September 30, 2021	72	$	1	$	2,538	$	7,070	42	$	(3,957)	$	(169)

9

	Nine Months Ended September 30, 2022
	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 December 31, 2021	72	$	1	$	2,567	$	7,551	42	$	(3,957)	$	(171)
Net income						1,466
Foreign currency translation adjustments											(141)
Stock compensation expense, net	—			95
Tax withholding for share based compensation	—			(58)
Repurchase of common stock	(3)							3	(1,000)
Balance at September 30, 2022	69	$	1	$	2,604	$	9,017	45	$	(4,957)	$	(312)

	Nine Months Ended September 30, 2021
	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 December 31, 2020	72	$	1	$	2,482	$	6,165	42	$	(3,957)	$	(146)
Net income						905
Foreign currency translation adjustments											(24)
Fixed price diesel swaps											1
Stock compensation expense, net	—			89
Tax withholding for share based compensation	—			(33)
Balance at September 30, 2021	72	$	1	$	2,538	$	7,070	42	$	(3,957)	$	(169)

(1)Amounts may not foot due to rounding.

(2)Common stock outstanding increased by less than one million net shares during the year ended December 31, 2021.

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

See accompanying notes.

10

UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)

	Nine Months Ended
	September 30,
	2022		2021
Cash Flows From Operating Activities:
Net income	$	1,466	$	905
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,640		1,451
Amortization of deferred financing costs and original issue discounts	9		9
Gain on sales of rental equipment	(325)		(271)
Gain on sales of non-rental equipment	(6)		(6)
Insurance proceeds from damaged equipment	(25)		(19)
Stock compensation expense, net	95		89
Merger related costs	—		3
Restructuring charge	—		1
Loss on repurchase/redemption of debt securities	17		30
Increase in deferred taxes	130		157
Changes in operating assets and liabilities, net of amounts acquired:
Increase in accounts receivable	(261)		(224)
(Increase) decrease in inventory	(33)		8
Decrease in prepaid expenses and other assets	70		306
Increase in accounts payable	332		548
Increase in accrued expenses and other liabilities	73		34
Net cash provided by operating activities	3,182		3,021
Cash Flows From Investing Activities:
Purchases of rental equipment	(2,456)		(2,308)
Purchases of non-rental equipment and intangible assets	(182)		(142)
Proceeds from sales of rental equipment	556		644
Proceeds from sales of non-rental equipment	15		20
Insurance proceeds from damaged equipment	25		19
Purchases of other companies, net of cash acquired	(323)		(1,435)
Purchases of investments	(5)		(1)
Net cash used in investing activities	(2,370)		(3,203)
Cash Flows From Financing Activities:
Proceeds from debt	5,219		7,030
Payments of debt	(5,026)		(6,694)
Common stock repurchased, including tax withholdings for share based compensation	(1,058)		(33)
Payments of financing costs	(9)		(8)
Net cash (used in) provided by financing activities	(874)		295
Effect of foreign exchange rates	(6)		5
Net (decrease) increase in cash and cash equivalents	(68)		118
Cash and cash equivalents at beginning of period	144		202
Cash and cash equivalents at end of period	$	76	$	320
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net	$	295	$	151
Cash paid for interest	339		362

See accompanying notes.

11

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, 2021 (the “2021 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 2021 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.

COVID-19

The novel coronavirus (“COVID-19”) was first identified in people in late 2019. COVID-19 spread rapidly throughout the world and, in March 2020, the World Health Organization characterized COVID-19 as a pandemic. COVID-19 is a pandemic of respiratory disease spreading from person-to-person that poses a serious public health risk. The COVID-19 pandemic has significantly disrupted supply chains and businesses around the world. Uncertainty remains regarding the ongoing impact of existing and emerging variant strains of COVID-19 on the operations and financial position of United Rentals, and on the global economy. Uncertainty also remains regarding the length of time it will take for the COVID-19 pandemic to ultimately subside or become viewed as endemic, which will be impacted by the effectiveness of vaccines against COVID-19 (including against emerging variant strains), and by measures that may in the future be implemented to protect public health. The health and safety of our employees and customers remains our top priority, and we have implemented a detailed COVID-19 response plan, which is explained in more detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and which we believe helped mitigate the impact of COVID-19 on our results.

We began to experience a decline in revenues in March 2020, when rental volume declined in response to shelter-in-place orders and other market restrictions. The volume declines were more pronounced in 2020 than 2021, and we have seen continuing evidence of recovery across our construction and industrial markets, as well as encouraging gains in end-market indicators, as reflected in our 2022 forecast and performance through September 30, 2022. COVID-19 is discussed in more detail throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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.

12

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,
			2022						2021
	Topic 842		Topic 606		Total		Topic 842		Topic 606		Total
Revenues:
Owned equipment rentals	$	2,238	$	—	$	2,238	$	1,897	$	—	$	1,897
Re-rent revenue	72		—		72		61		—		61
Ancillary and other rental revenues:
Delivery and pick-up	—		221		221		—		173		173
Other	163		38		201		115		31		146
Total ancillary and other rental revenues	163		259		422		115		204		319
Total equipment rentals	2,473		259		2,732		2,073		204		2,277
Sales of rental equipment	—		181		181		—		183		183
Sales of new equipment	—		32		32		—		47		47
Contractor supplies sales	—		32		32		—		29		29
Service and other revenues	—		74		74		—		60		60
Total revenues	$	2,473	$	578	$	3,051	$	2,073	$	523	$	2,596

	Nine Months Ended September 30,
			2022						2021
	Topic 842		Topic 606		Total		Topic 842		Topic 606		Total
Revenues:
Owned equipment rentals	$	6,053	$	—	$	6,053	$	4,937	$	—	$	4,937
Re-rent revenue	176		—		176		135		—		135
Ancillary and other rental revenues:
Delivery and pick-up	—		583		583		—		437		437
Other	429		128		557		296		90		386
Total ancillary and other rental revenues	429		711		1,140		296		527		823
Total equipment rentals	6,658		711		7,369		5,368		527		5,895
Sales of rental equipment	—		556		556		—		644		644
Sales of new equipment	—		115		115		—		153		153
Contractor supplies sales	—		94		94		—		80		80
Service and other revenues	—		212		212		—		168		168
Total revenues	$	6,658	$	1,688	$	8,346	$	5,368	$	1,572	$	6,940

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, 2022, 73 percent and 90 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 73 percent of total revenues for the nine months ended September 30, 2022) 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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UNITED RENTALS, INC.

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 $126 and $83 as of September 30, 2022 and December 31, 2021, 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 80 percent of our total revenues for the nine months ended September 30, 2022). 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 less than one percent of total revenues for the nine months ended September 30, 2022, 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, 2022 and December 31, 2021. 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 80 percent of our total revenues for the nine months ended September 30, 2022, and these revenues account for corresponding portions of the $1.934 billion of net accounts receivable and the associated allowance for credit losses of $123 as of September 30, 2022).

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, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Beginning balance	$	117	$	112	$	112	$	108
Charged to costs and expenses (1)	3		1		6		3
Charged to revenue (2)	11		8		28		17
Deductions and other (3)	(8)		(6)		(23)		(13)
Ending balance	$	123	$	115	$	123	$	115

_________________

(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, 2022 or 2021 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 or nine months ended September 30, 2022 and 2021 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, 2022.

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 May 25, 2021, we completed the acquisition of General Finance. General Finance previously operated as Pac-Van and Container King in the U.S. and Canada, and as Royal Wolf in Australia and New Zealand, and was a leading provider of mobile storage and modular office space. Its network served diverse end-markets, including construction, commercial, industrial, retail, transportation, petrochemical, consumer, natural resources, governmental and education. As of March 31, 2021, General Finance’s rental fleet consisted of approximately 100,000 units at an original cost of approximately $650. For the 12 months ended December 31, 2020, General Finance had revenues of $342 (such amount represents General Finance’s historic revenue presented in accordance with our revenue mapping). The acquisition:

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

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

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

The aggregate consideration paid to acquire General Finance was $1.032 billion. The acquisition and related fees and expenses were funded through available cash and drawings on our senior secured asset-based revolving credit facility (“ABL facility”).

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

Cash and cash equivalents	$	13
Accounts receivable (1)	44
Inventory	36
Rental equipment	682
Property and equipment	42
Intangibles (2)	123
Operating lease right-of-use assets	59
Other assets	23
Total identifiable assets acquired	1,022
Current liabilities	(92)
Deferred taxes	(118)
Operating lease liabilities	(44)
Total liabilities assumed	(254)
Net identifiable assets acquired	768
Goodwill (3)	264
Net assets acquired	$	1,032

(1)The fair value of accounts receivables acquired was $44, and the gross contractual amount was $50. We estimated that $6 would be uncollectible.

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

	Fair value		Life (years)
Customer relationships	$	116	7
Trade names and associated trademarks	7		5
Total	$	123

(3)All of the goodwill was assigned to our specialty segment. The level of goodwill that resulted from the acquisition is primarily reflective of General Finance's going-concern value, the value of General Finance's assembled

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

workforce and new customer relationships expected to arise from the acquisition. $28 of goodwill is expected to be deductible for income tax purposes.

The three and nine months ended September 30, 2021 included General Finance acquisition-related costs which are included in “Merger related costs” in our condensed consolidated statements of income.

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

Pro forma financial information

The pro forma information below gives effect to the General Finance acquisition as if it had been completed on January 1, 2020 (the "pro forma acquisition date”). The pro forma information is not necessarily indicative of our results had the acquisition been completed on the above date, nor is it necessarily indicative of our future results. The pro forma information reflects General Finance’s historic revenue presented in accordance with our revenue mapping, does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisition, and also does not reflect additional revenue opportunities following the acquisition. The pro forma information includes adjustments to record the acquired assets and liabilities of General Finance at their respective fair values and to give effect to the financing for the acquisition. The table below presents unaudited pro forma consolidated income statement information as if General Finance had been included in our consolidated results for the entire period reflected:

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
		2021		2021
United Rentals historic revenues		$	2,596	$	6,940
General Finance historic revenues		—		144
Pro forma revenues		2,596		7,084
United Rentals historic pretax income		550		1,202
General Finance historic pretax (loss) income		—		9
Combined pretax income		550		1,211
Pro forma adjustments to combined pretax income:
Impact of fair value mark-ups/useful life changes on depreciation (1)		—		(11)
Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2)		—		(6)
Intangible asset amortization (3)		1		(11)
Interest expense (4)		—		(6)
Elimination of historic interest (5)		—		23
Elimination of merger related costs (6)		—		12
Elimination of changes in the valuation of bifurcated derivatives in convertible notes (7)		—		(16)
Pro forma pretax income		$	551	$	1,196

________________

(1) Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups, and the changes in useful lives and salvage values, of the equipment acquired in the General Finance acquisition.

(2) Cost of rental equipment sales was adjusted for the fair value mark-ups of rental equipment acquired in the General Finance acquisition.

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

(4) As discussed above, we funded the General Finance acquisition using drawings on our ABL facility. Interest expense was adjusted to reflect interest on the ABL facility borrowings.

(5) Historic interest on debt that is not part of the combined entity was eliminated. The adjustment for the nine months ended September 30, 2021 includes a debt redemption loss of $12.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

(6) Merger related costs primarily comprised of financial and legal advisory fees associated with the General Finance acquisition were eliminated as they were assumed to have been recognized prior to the pro forma acquisition date. The adjustment for the nine months ended September 30, 2021 includes $9 of merger related costs recognized by General Finance prior to the acquisition.

(7) General Finance historically recognized changes in the valuation of bifurcated derivatives in convertible notes in its statements of operations. These historic changes were eliminated because the bifurcated derivatives are not part of the combined entity.

During 2022, we completed a series of acquisitions which 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, 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, includes the rental of specialty construction products such as i) trench safety equipment, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers and line testing equipment for underground work, ii) power and HVAC equipment, such as portable diesel generators, electrical distribution equipment, and temperature control equipment, iii) fluid solutions equipment primarily used for fluid containment, transfer and treatment, and iv) mobile storage equipment and modular office space. The specialty segment’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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