QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 86-0933835 | |||||||
(States of Incorporation) | (I.R.S. Employer Identification Nos.) | |||||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated Filer | ☐ | |||||||||||||||
Non-Accelerated Filer | ☐ | Smaller Reporting Company | |||||||||||||||
Emerging Growth Company |
Page | ||||||||
PART I | ||||||||
Item 1 | ||||||||
Item 2 | ||||||||
Item 3 | ||||||||
Item 4 | ||||||||
PART II | ||||||||
Item 1 | ||||||||
Item 1A | ||||||||
Item 2 | ||||||||
Item 6 | ||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
(unaudited) | |||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net | |||||||||||
Inventory | |||||||||||
Prepaid expenses and other assets | |||||||||||
Total current assets | |||||||||||
Rental equipment, net | |||||||||||
Property and equipment, net | |||||||||||
Goodwill | |||||||||||
Other intangible assets, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Other long-term assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Short-term debt and current maturities of long-term debt | $ | $ | |||||||||
Accounts payable | |||||||||||
Accrued expenses and other liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Deferred taxes | |||||||||||
Operating lease liabilities | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Common stock—$ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Treasury stock at cost— | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Revenues: | |||||||||||
Equipment rentals | $ | $ | |||||||||
Sales of rental equipment | |||||||||||
Sales of new equipment | |||||||||||
Contractor supplies sales | |||||||||||
Service and other revenues | |||||||||||
Total revenues | |||||||||||
Cost of revenues: | |||||||||||
Cost of equipment rentals, excluding depreciation | |||||||||||
Depreciation of rental equipment | |||||||||||
Cost of rental equipment sales | |||||||||||
Cost of new equipment sales | |||||||||||
Cost of contractor supplies sales | |||||||||||
Cost of service and other revenues | |||||||||||
Total cost of revenues | |||||||||||
Gross profit | |||||||||||
Selling, general and administrative expenses | |||||||||||
Restructuring charge | |||||||||||
Non-rental depreciation and amortization | |||||||||||
Operating income | |||||||||||
Interest expense, net | |||||||||||
Other income, net | ( | ( | |||||||||
Income before provision for income taxes | |||||||||||
Provision for income taxes | |||||||||||
Net income | $ | $ | |||||||||
Basic earnings per share | $ | $ | |||||||||
Diluted earnings per share | $ | $ |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net income | $ | $ | |||||||||
Other comprehensive (loss) income, net of tax: | |||||||||||
Foreign currency translation adjustments (1) | |||||||||||
Fixed price diesel swaps | ( | ||||||||||
Other comprehensive (loss) income (1) | |||||||||||
Comprehensive income | $ | $ |
Three Months Ended March 31, 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 | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||
Dividends declared (3) | ( | ||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | |||||||||||||||||||||||||||||||||||||||||
Fixed price diesel swaps | ( | ||||||||||||||||||||||||||||||||||||||||
Stock compensation expense, net | |||||||||||||||||||||||||||||||||||||||||
Tax withholding for share based compensation | — | ( | |||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | ( | |||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | $ | ( | $ | ( |
Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
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, 2021 | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | |||||||||||||||||||||||||||||||||||||||||
Fixed price diesel swaps | |||||||||||||||||||||||||||||||||||||||||
Stock compensation expense, net | |||||||||||||||||||||||||||||||||||||||||
Tax withholding for share based compensation | — | ( | |||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | ( | |||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | $ | $ | $ | ( | $ | ( |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash Flows From Operating Activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of deferred financing costs and original issue discounts | |||||||||||
Gain on sales of rental equipment | ( | ( | |||||||||
Gain on sales of non-rental equipment | ( | ( | |||||||||
Insurance proceeds from damaged equipment | ( | ( | |||||||||
Stock compensation expense, net | |||||||||||
Restructuring charge | |||||||||||
Increase in deferred taxes | |||||||||||
Changes in operating assets and liabilities, net of amounts acquired: | |||||||||||
(Increase) decrease in accounts receivable | ( | ||||||||||
Increase in inventory | ( | ( | |||||||||
Decrease in prepaid expenses and other assets | |||||||||||
(Decrease) increase in accounts payable | ( | ||||||||||
Decrease in accrued expenses and other liabilities | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash Flows From Investing Activities: | |||||||||||
Purchases of rental equipment | ( | ( | |||||||||
Purchases of non-rental equipment and intangible assets | ( | ( | |||||||||
Proceeds from sales of rental equipment | |||||||||||
Proceeds from sales of non-rental equipment | |||||||||||
Insurance proceeds from damaged equipment | |||||||||||
Purchases of other companies, net of cash acquired | ( | ( | |||||||||
Purchases of investments | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash Flows From Financing Activities: | |||||||||||
Proceeds from debt | |||||||||||
Payments of debt | ( | ( | |||||||||
Common stock repurchased, including tax withholdings for share based compensation | ( | ( | |||||||||
Dividends paid | ( | ||||||||||
Net cash used in financing activities | ( | ( | |||||||||
Effect of foreign exchange rates | |||||||||||
Net decrease in cash and cash equivalents | ( | ( | |||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid for income taxes, net | $ | $ | |||||||||
Cash paid for interest |
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||||||||||||||
Topic 842 | Topic 606 | Total | Topic 842 | Topic 606 | Total | ||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||
Owned equipment rentals | $ | $ | — | $ | $ | $ | — | $ | |||||||||||||||||||||||||||
Re-rent revenue | — | — | |||||||||||||||||||||||||||||||||
Ancillary and other rental revenues: | |||||||||||||||||||||||||||||||||||
Delivery and pick-up | — | — | |||||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||||
Total ancillary and other rental revenues | |||||||||||||||||||||||||||||||||||
Total equipment rentals | |||||||||||||||||||||||||||||||||||
Sales of rental equipment | — | — | |||||||||||||||||||||||||||||||||
Sales of new equipment | — | — | |||||||||||||||||||||||||||||||||
Contractor supplies sales | — | — | |||||||||||||||||||||||||||||||||
Service and other revenues | — | — | |||||||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | $ | $ |
Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | ||||||||||
Beginning balance | $ | $ | |||||||||
Charged to costs and expenses (1) | |||||||||||
Charged to revenue (2) | |||||||||||
Deductions and other (3) | ( | ( | |||||||||
Ending balance | $ | $ |
Inventory | $ | ||||
Rental equipment | |||||
Property and equipment | |||||
Intangibles (1) | |||||
Operating lease right-of-use assets | |||||
Other assets | |||||
Total identifiable assets acquired | |||||
Accounts payable, accrued expenses and other liabilities | ( | ||||
Operating lease liabilities | ( | ||||
Debt (finance leases) | ( | ||||
Total liabilities assumed | ( | ||||
Net identifiable assets acquired | |||||
Goodwill (2) | |||||
Net assets acquired | $ |
Fair value | Life (years) | |||||||
Customer relationships | $ | |||||||
Non-compete agreements | ||||||||
Total | $ |
Three Months Ended | |||||
March 31, | |||||
2022 | |||||
United Rentals historic revenues | $ | ||||
Ahern Rentals historic revenues | |||||
Pro forma revenues | |||||
United Rentals historic pretax income | |||||
Ahern Rentals historic pretax (loss) income | ( | ||||
Combined pretax income | |||||
Pro forma adjustments to combined pretax income: | |||||
Impact of fair value mark-ups/useful life changes on depreciation (1) | ( | ||||
Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2) | ( | ||||
Intangible asset amortization (3) | ( | ||||
Interest expense (4) | ( | ||||
Elimination of historic interest (5) | |||||
Elimination of historic legal and financing costs (6) | |||||
Pro forma pretax income | $ |
General rentals | Specialty | Total | |||||||||||||||
Three Months Ended March 31, 2023 | |||||||||||||||||
Equipment rentals | $ | $ | $ | ||||||||||||||
Sales of rental equipment | |||||||||||||||||
Sales of new equipment | |||||||||||||||||
Contractor supplies sales | |||||||||||||||||
Service and other revenues | |||||||||||||||||
Total revenue | |||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||
Equipment rentals gross profit | |||||||||||||||||
Capital expenditures | |||||||||||||||||
Three Months Ended March 31, 2022 | |||||||||||||||||
Equipment rentals | $ | $ | $ | ||||||||||||||
Sales of rental equipment | |||||||||||||||||
Sales of new equipment | |||||||||||||||||
Contractor supplies sales | |||||||||||||||||
Service and other revenues | |||||||||||||||||
Total revenue | |||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||
Equipment rentals gross profit | |||||||||||||||||
Capital expenditures |
March 31, 2023 | December 31, 2022 | ||||||||||
Total reportable segment assets | |||||||||||
General rentals | $ | $ | |||||||||
Specialty | |||||||||||
Total assets | $ | $ |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Total equipment rentals gross profit | $ | $ | |||||||||
Gross profit from other lines of business | |||||||||||
Selling, general and administrative expenses | ( | ( | |||||||||
Restructuring charge (1) | ( | ||||||||||
Non-rental depreciation and amortization | ( | ( | |||||||||
Interest expense, net | ( | ( | |||||||||
Other income, net | |||||||||||
Income before provision for income taxes | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
Equipment (1) | $ | $ | |||||||||
Insurance | |||||||||||
Advertising reimbursements (2) | |||||||||||
Income taxes (3) | |||||||||||
Other (4) | |||||||||||
Prepaid expenses and other assets | $ | $ |
General rentals | Specialty | Total | |||||||||||||||
Balance at January 1, 2023 (1) | $ | $ | $ | ||||||||||||||
Goodwill related to acquisitions (2) | ( | ( | ( | ||||||||||||||
Foreign currency translation and other adjustments | |||||||||||||||||
Balance at March 31, 2023 (1) | $ | $ | $ |
March 31, 2023 | |||||||||||||||||||||||||||||||||||||||||
Weighted-Average Remaining Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net Amount | ||||||||||||||||||||||||||||||||||||||
Non-compete agreements | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Customer relationships | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Trade names and associated trademarks | $ | $ | $ |
December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
Weighted-Average Remaining Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net Amount | ||||||||||||||||||||||||||||||||||||||
Non-compete agreements | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Customer relationships | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Trade names and associated trademarks | $ | $ | $ |
March 31, 2023 | ||||||||||||||
Weighted-Average Remaining Amortization Period | Net Carrying Amount | |||||||||||||
Non-compete agreements | $ | |||||||||||||
Customer relationships | ||||||||||||||
2023 | $ | ||||||||||
2024 | |||||||||||
2025 | |||||||||||
2026 | |||||||||||
2027 | |||||||||||
Thereafter | |||||||||||
Total | $ |
March 31, 2023 | December 31, 2022 | ||||||||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
Senior notes | $ | $ | $ | $ | |||||||||||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
Repurchase facility expiring 2023 (1) | $ | $ | |||||||||
Accounts receivable securitization facility expiring 2024 (1) (2) | |||||||||||
Term loan facility expiring 2025 (1) (3) | |||||||||||
$ | |||||||||||
5 1/2 percent Senior Notes due 2027 | |||||||||||
3 7/8 percent Senior Secured Notes due 2027 | |||||||||||
4 7/8 percent Senior Notes due 2028 (4) | |||||||||||
5 1/4 percent Senior Notes due 2030 | |||||||||||
3 7/8 percent Senior Notes due 2031 | |||||||||||
3 3/4 percent Senior Notes due 2032 | |||||||||||
Finance leases | |||||||||||
Total debt | |||||||||||
Less short-term portion (5) | ( | ( | |||||||||
Total long-term debt | $ | $ |
ABL facility | Accounts receivable securitization facility | Term loan facility | Repurchase facility | ||||||||||||||||||||
Borrowing capacity, net of letters of credit | $ | $ | $ | ||||||||||||||||||||
Letters of credit | |||||||||||||||||||||||
Interest rate at March 31, 2023 | % | % | % | % | |||||||||||||||||||
Average month-end debt outstanding | |||||||||||||||||||||||
Weighted-average interest rate on average debt outstanding | % | % | % | % | |||||||||||||||||||
Maximum month-end debt outstanding |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Numerator: | |||||||||||
Net income available to common stockholders | |||||||||||
Denominator: | |||||||||||
Denominator for basic earnings per share—weighted-average common shares | |||||||||||
Effect of dilutive securities: | |||||||||||
Employee stock options | |||||||||||
Restricted stock units | |||||||||||
Denominator for diluted earnings per share—adjusted weighted-average common shares | |||||||||||
Basic earnings per share | $ | $ | |||||||||
Diluted earnings per share | $ | $ |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net income | $ | 451 | $ | 367 | |||||||
Diluted earnings per share | $ | 6.47 | $ | 5.05 |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Tax rate applied to items below | 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 | ||||||||||||||||||||
Merger related intangible asset amortization (1) | $ | (49) | $ | (0.70) | $ | (37) | $ | (0.52) | |||||||||||||||
Impact on depreciation related to acquired fleet and property and equipment (2) | (22) | (0.32) | (7) | (0.10) | |||||||||||||||||||
Impact of the fair value mark-up of acquired fleet (3) | (31) | (0.44) | (5) | (0.06) | |||||||||||||||||||
Restructuring charge (4) | (1) | (0.02) | — | — | |||||||||||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net income | $ | 451 | $ | 367 | |||||||
Provision for income taxes | 143 | 116 | |||||||||
Interest expense, net | 150 | 94 | |||||||||
Depreciation of rental equipment | 575 | 435 | |||||||||
Non-rental depreciation and amortization | 118 | 97 | |||||||||
EBITDA | $ | 1,437 | $ | 1,109 | |||||||
Restructuring charge (1) | 1 | — | |||||||||
Stock compensation expense, net (2) | 24 | 24 | |||||||||
Impact of the fair value mark-up of acquired fleet (3) | 41 | 6 | |||||||||
Adjusted EBITDA | $ | 1,503 | $ | 1,139 | |||||||
Net income margin | 13.7 | % | 14.5 | % | |||||||
Adjusted EBITDA margin | 45.8 | % | 45.1 | % |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net cash provided by operating activities | $ | 939 | $ | 886 | |||||||
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 | (4) | (3) | |||||||||
Gain on sales of rental equipment | 190 | 116 | |||||||||
Gain on sales of non-rental equipment | 4 | 2 | |||||||||
Insurance proceeds from damaged equipment | 9 | 7 | |||||||||
Restructuring charge (1) | (1) | — | |||||||||
Stock compensation expense, net (2) | (24) | (24) | |||||||||
Changes in assets and liabilities | 117 | (34) | |||||||||
Cash paid for interest | 178 | 149 | |||||||||
Cash paid for income taxes, net | 29 | 10 | |||||||||
EBITDA | $ | 1,437 | $ | 1,109 | |||||||
Add back: | |||||||||||
Restructuring charge (1) | 1 | — | |||||||||
Stock compensation expense, net (2) | 24 | 24 | |||||||||
Impact of the fair value mark-up of acquired fleet (3) | 41 | 6 | |||||||||
Adjusted EBITDA | $ | 1,503 | $ | 1,139 |
Three Months Ended March 31, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
Equipment rentals* | $ | 2,740 | $ | 2,175 | 26.0 | % | |||||||||||
Sales of rental equipment | 388 | 211 | 83.9 | % | |||||||||||||
Sales of new equipment | 44 | 45 | (2.2) | % | |||||||||||||
Contractor supplies sales | 34 | 29 | 17.2 | % | |||||||||||||
Service and other revenues | 79 | 64 | 23.4 | % | |||||||||||||
Total revenues | $ | 3,285 | $ | 2,524 | 30.2 | % | |||||||||||
*Equipment rentals variance components: | |||||||||||||||||
Year-over-year change in average OEC | 25.6 | % | |||||||||||||||
Assumed year-over-year inflation impact (1) | (1.5) | % | |||||||||||||||
Fleet productivity (2) | 2.0 | % | |||||||||||||||
Contribution from ancillary and re-rent revenue (3) | (0.1) | % | |||||||||||||||
Total change in equipment rentals | 26.0 | % | |||||||||||||||
*Pro forma equipment rentals variance components (4): | |||||||||||||||||
Year-over-year change in average OEC | 12.2 | % | |||||||||||||||
Assumed year-over-year inflation impact (1) | (1.5) | % | |||||||||||||||
Fleet productivity (2) | 5.9 | % | |||||||||||||||
Contribution from ancillary and re-rent revenue (3) | — | % | |||||||||||||||
Total change in equipment rentals | 16.6 | % |
General rentals | Specialty | Total | |||||||||||||||
Three Months Ended March 31, 2023 | |||||||||||||||||
Equipment rentals | $ | 2,018 | $ | 722 | $ | 2,740 | |||||||||||
Sales of rental equipment | 350 | 38 | 388 | ||||||||||||||
Sales of new equipment | 18 | 26 | 44 | ||||||||||||||
Contractor supplies sales | 21 | 13 | 34 | ||||||||||||||
Service and other revenues | 72 | 7 | 79 | ||||||||||||||
Total revenue | $ | 2,479 | $ | 806 | $ | 3,285 | |||||||||||
Three Months Ended March 31, 2022 | |||||||||||||||||
Equipment rentals | $ | 1,593 | $ | 582 | $ | 2,175 | |||||||||||
Sales of rental equipment | 184 | 27 | 211 | ||||||||||||||
Sales of new equipment | 29 | 16 | 45 | ||||||||||||||
Contractor supplies sales | 18 | 11 | 29 | ||||||||||||||
Service and other revenues | 58 | 6 | 64 | ||||||||||||||
Total revenue | $ | 1,882 | $ | 642 | $ | 2,524 |
General rentals | Specialty | Total | |||||||||||||||
Three Months Ended March 31, 2023 | |||||||||||||||||
Equipment Rentals Gross Profit | $ | 663 | $ | 340 | $ | 1,003 | |||||||||||
Equipment Rentals Gross Margin | 32.9 | % | 47.1 | % | 36.6 | % | |||||||||||
Three Months Ended March 31, 2022 | |||||||||||||||||
Equipment Rentals Gross Profit | $ | 575 | $ | 259 | $ | 834 | |||||||||||
Equipment Rentals Gross Margin | 36.1 | % | 44.5 | % | 38.3 | % |
Three Months Ended March 31, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
Total gross margin | 37.8% | 39.3% | (150) bps | ||||||||||||||
Equipment rentals | 36.6% | 38.3% | (170) bps | ||||||||||||||
Sales of rental equipment | 49.0% | 55.0% | (600) bps | ||||||||||||||
Sales of new equipment | 18.2% | 17.8% | 40 bps | ||||||||||||||
Contractor supplies sales | 29.4% | 31.0% | (160) bps | ||||||||||||||
Service and other revenues | 38.0% | 39.1% | (110) bps |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | Change | ||||||||||||
Selling, general and administrative ("SG&A") expense | $382 | $323 | 18.3% | |||||||||||
SG&A expense as a percentage of revenue | 11.6% | 12.8% | (120) bps | |||||||||||
Restructuring charge | 1 | — | —% | |||||||||||
Non-rental depreciation and amortization | 118 | 97 | 21.6% | |||||||||||
Interest expense, net | 150 | 94 | 59.6% | |||||||||||
Other income, net | (4) | (5) | (20.0)% | |||||||||||
Provision for income taxes | 143 | 116 | 23.3% | |||||||||||
Effective tax rate | 24.1% | 24.0% | 10 bps | |||||||||||
ABL facility: | |||||
Borrowing capacity, net of letters of credit | $ | 2,336 | |||
Outstanding debt, net of debt issuance costs | 1,838 | ||||
Interest rate at March 31, 2023 | 5.9 | % | |||
Average month-end principal amount of debt outstanding | 1,750 | ||||
Weighted-average interest rate on average debt outstanding | 5.7 | % | |||
Maximum month-end principal amount of debt outstanding | 1,848 | ||||
Accounts receivable securitization facility: | |||||
Borrowing capacity | 220 | ||||
Outstanding debt, net of debt issuance costs | 879 | ||||
Interest rate at March 31, 2023 | 5.7 | % | |||
Average month-end principal amount of debt outstanding | 966 | ||||
Weighted-average interest rate on average debt outstanding | 5.6 | % | |||
Maximum month-end principal amount of debt outstanding | 1,100 |
Corporate Rating | Outlook | ||||||||||
Moody’s | Ba1 | Stable | |||||||||
Standard & Poor’s | BB+ | Stable |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net cash provided by operating activities | $ | 939 | $ | 886 | |||||||
Purchases of rental equipment | (797) | (482) | |||||||||
Purchases of non-rental equipment and intangible assets | (73) | (55) | |||||||||
Proceeds from sales of rental equipment | 388 | 211 | |||||||||
Proceeds from sales of non-rental equipment | 12 | 5 | |||||||||
Insurance proceeds from damaged equipment | 9 | 7 | |||||||||
Free cash flow | $ | 478 | $ | 572 |
March 31, 2023 | |||||
Current receivable from non-guarantor subsidiaries | $23 | ||||
Other current assets | 466 | ||||
Total current assets | 489 | ||||
Long-term receivable from non-guarantor subsidiaries | 100 | ||||
Other long-term assets | 20,168 | ||||
Total long-term assets | 20,268 | ||||
Total assets | 20,757 | ||||
Current liabilities | 1,998 | ||||
Long-term liabilities | 13,981 | ||||
Total liabilities | 15,979 | ||||
Three Months Ended March 31, 2023 | |||||
Total revenues | $2,983 | ||||
Gross profit | 1,126 | ||||
Net income | 387 | ||||
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) | |||||||||||||||||||
January 1, 2023 to January 31, 2023 | 63,945 | (1) | $ | 391.95 | — | ||||||||||||||||||
February 1, 2023 to February 28, 2023 | 110,898 | (1) | $ | 450.63 | 109,836 | ||||||||||||||||||
March 1, 2023 to March 31, 2023 | 553,458 | (1) | $ | 411.01 | 495,127 | ||||||||||||||||||
Total | 728,301 | $ | 415.37 | 604,963 | $ | 1,000,001,111 |
2(a) | Agreement and Plan of Merger, dated as of June 30, 2018, by and among United Rentals, Inc., UR Merger Sub IV Corporation and BakerCorp International Holdings, Inc. (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 July 2, 2018) | ||||
2(b) | |||||
2(c) | |||||
3(a) | |||||
3(b) | |||||
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) | ||||
10 | |||||
22 | |||||
31(a)* | |||||
31(b)* | |||||
32(a)** | |||||
32(b)** | |||||
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) |
UNITED RENTALS, INC. | ||||||||||||||
Dated: | April 26, 2023 | By: | /S/ ANDREW B. LIMOGES | |||||||||||
Andrew B. Limoges Vice President, Controller and Principal Accounting Officer | ||||||||||||||
UNITED RENTALS (NORTH AMERICA), INC. | ||||||||||||||
Dated: | April 26, 2023 | By: | /S/ ANDREW B. LIMOGES | |||||||||||
Andrew B. Limoges Vice President, Controller and Principal Accounting Officer | ||||||||||||||
/S/ MATTHEW J. FLANNERY | ||
Matthew J. Flannery | ||
Chief Executive Officer |
/S/ WILLIAM E. GRACE | ||
William E. Grace | ||
Chief Financial Officer |
/S/ MATTHEW J. FLANNERY | ||
Matthew J. Flannery | ||
Chief Executive Officer |
/S/ WILLIAM E. GRACE | ||
William E. Grace | ||
Chief Financial Officer |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 114,941,392 | 114,758,508 |
Common stock, shares outstanding (in shares) | 68,934,902 | 69,356,981 |
Treasury stock, shares (in shares) | 46,006,490 | 45,401,527 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|||
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 451 | $ 367 | ||
Other comprehensive (loss) income, net of tax: | ||||
Foreign currency translation adjustments | [1] | 1 | 17 | |
Fixed price diesel swaps | (1) | 3 | ||
Other comprehensive (loss) income (1) | 0 | 20 | ||
Comprehensive income (loss) | [1] | $ 451 | $ 387 | |
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||
Reclassification from AOCI, current period, net of tax, attributable to parent | $ 0 | $ 0 |
Other comprehensive income (loss), foreign currency translation adjustment, tax, portion attributable to parent | 0 | 0 |
Other comprehensive income (loss), tax, portion attributable to parent | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) |
Total |
Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Treasury Stock |
Accumulated Other Comprehensive Loss |
[2] | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance (in shares) at Dec. 31, 2021 | [1] | 72,000,000 | |||||||||||||||
Balance at Dec. 31, 2021 | $ 1,000,000 | $ 2,567,000,000 | $ 7,551,000,000 | $ (3,957,000,000) | $ (171,000,000) | ||||||||||||
Balance (in shares) at Dec. 31, 2021 | 42,000,000 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net income | $ 367,000,000 | 367,000,000 | |||||||||||||||
Foreign currency translation adjustments | 17,000,000 | [3] | 17,000,000 | ||||||||||||||
Fixed price diesel swaps | 3,000,000 | 3,000,000 | |||||||||||||||
Stock compensation expense, net | 24,000,000 | ||||||||||||||||
Tax withholding for share based compensation | (56,000,000) | ||||||||||||||||
Repurchase of common stock (in shares) | (1,000,000) | [1] | (1,000,000) | ||||||||||||||
Repurchase of common stock | $ (262,000,000) | ||||||||||||||||
Balance (in shares) at Mar. 31, 2022 | [1] | 72,000,000 | |||||||||||||||
Balance at Mar. 31, 2022 | $ 1,000,000 | 2,535,000,000 | 7,918,000,000 | $ (4,219,000,000) | (151,000,000) | ||||||||||||
Balance (in shares) at Mar. 31, 2022 | 43,000,000 | ||||||||||||||||
Balance (in shares) at Dec. 31, 2021 | [1] | 72,000,000 | |||||||||||||||
Balance at Dec. 31, 2021 | $ 1,000,000 | 2,567,000,000 | 7,551,000,000 | $ (3,957,000,000) | (171,000,000) | ||||||||||||
Balance (in shares) at Dec. 31, 2021 | 42,000,000 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Dividends declared | $ 0 | ||||||||||||||||
Balance (in shares) at Dec. 31, 2022 | 69,356,981 | 69,000,000 | [1] | ||||||||||||||
Balance at Dec. 31, 2022 | $ 7,062,000,000 | $ 1,000,000 | 2,626,000,000 | 9,656,000,000 | $ (4,957,000,000) | (264,000,000) | |||||||||||
Balance (in shares) at Dec. 31, 2022 | 45,401,527 | 45,000,000 | |||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net income | $ 451,000,000 | 451,000,000 | |||||||||||||||
Dividends declared | [4] | (104,000,000) | |||||||||||||||
Foreign currency translation adjustments | 1,000,000 | [3] | 1,000,000 | ||||||||||||||
Fixed price diesel swaps | $ (1,000,000) | (1,000,000) | |||||||||||||||
Stock compensation expense, net (in shares) | [1] | 1,000,000 | |||||||||||||||
Stock compensation expense, net | 24,000,000 | ||||||||||||||||
Tax withholding for share based compensation | (52,000,000) | ||||||||||||||||
Repurchase of common stock (in shares) | (1,000,000) | [1] | (1,000,000) | ||||||||||||||
Repurchase of common stock | $ (251,000,000) | ||||||||||||||||
Balance (in shares) at Mar. 31, 2023 | 68,934,902 | 69,000,000 | [1] | ||||||||||||||
Balance at Mar. 31, 2023 | $ 7,130,000,000 | $ 1,000,000 | $ 2,598,000,000 | $ 10,003,000,000 | $ (5,208,000,000) | $ (264,000,000) | |||||||||||
Balance (in shares) at Mar. 31, 2023 | 46,006,490 | 46,000,000 | |||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - USD ($) shares in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Dividends declared | $ 0 | |
Dividends declared (in usd per share) | $ 1.48 | |
Common Stock | ||
Change in common stock outstanding (in shares, approximately) | (3) |
Organization, Description of Business and Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Description of Business and Basis of Presentation | 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, 2022 (the “2022 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 2022 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.
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Revenue Recognition |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | 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. Nature of goods and services In the following table, revenue is summarized by type and by the applicable accounting standard.
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 three months ended March 31, 2023, 75 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 three months ended March 31, 2023) 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. 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 $129 and $131 as of March 31, 2023 and December 31, 2022, 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. Receivables and contract assets and liabilities As reflected above, most of our equipment rental revenue is accounted for under Topic 842 (such revenue represented 76 percent of our total revenues for the three months ended March 31, 2023). 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 three months ended March 31, 2023, and for each of the last three full years. Our customer with the largest receivable balance represented approximately one percent of total receivables at March 31, 2023 and December 31, 2022. 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 76 percent of our total revenues for the three months ended March 31, 2023, and these revenues account for corresponding portions of the $2.034 billion of net accounts receivable and the associated allowance for credit losses of $146 as of March 31, 2023). 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.
_________________ (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 customers in excess of recognizable revenue. We did not recognize material revenue during the three months ended March 31, 2023 or 2022 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 months ended March 31, 2023 and 2022 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 March 31, 2023. 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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Acquisitions |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions On December 7, 2022, we completed the acquisition of assets of Ahern Rentals, Inc. ("Ahern Rentals"), which was accounted for as a business combination. Ahern Rentals was the eighth largest equipment rental company in North America and served customers primarily in the construction and industrial sectors across 30 states. The acquisition: • Increased capacity in key geographies, with concentrations on both U.S. coasts and in the Gulf region; • Increased availability of high-demand aerial and material handling equipment for our customers; and • Created immediate cross-sell opportunities to an expanded customer base. The aggregate consideration paid to acquire Ahern Rentals was $2.012 billion. The acquisition and related fees and expenses were funded through the issuance of $1.5 billion principal amount of 6 percent Senior Secured Notes 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 initial accounting for the acquisition is incomplete, principally related to finalizing 1) the measurement of the acquired net working capital, 2) the valuation of the acquired rental equipment (inclusive of the completion of our usual and customary procedures to validate the existence of the acquired rental fleet) and intangible assets and 3) the associated income tax considerations. All amounts below could change, potentially materially, as there is significant additional information that we must obtain to finalize the valuations of the assets acquired and liabilities assumed, primarily because of the proximity of the acquisition date to the balance sheet date of March 31, 2023. During the three months ended March 31, 2023, we recognized measurement period adjustments primarily to establish preliminary values for intangibles assets and lease assets and liabilities. These adjustments resulted in a substantial reduction to goodwill versus the previously reported amount (see note 6 to the condensed consolidated financial statements for further discussion of goodwill changes). Non-rental depreciation and amortization for the three months ended March 31, 2023 includes $8 of intangible asset amortization that would have been recognized in 2022 if the intangible asset values had been preliminarily established as of December 31, 2022.
(1)The following table reflects the fair values and useful lives of the acquired intangible assets identified based on our preliminary purchase accounting assessments:
(2)All of the goodwill was assigned to our general rentals 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, goodwill could change from the amount noted above. Once finalized, we expect that the goodwill that results from the acquisition will be primarily reflective of Ahern Rentals' going-concern value, the value of Ahern Rentals' 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 acquisition is a purchase of assets, the goodwill that is deductible for income tax purposes equals the total acquired goodwill. As noted above, goodwill could change from the amount above). 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. Additionally, in the first quarter of 2023, we initiated a restructuring program following the closing of the Ahern Rentals acquisition. 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. It is not practicable to reasonably estimate the amounts of revenue and earnings of Ahern Rentals since the acquisition date, primarily due to the movement of fleet between URI locations and the acquired Ahern Rentals 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 Ahern Rentals acquisition as if it had been completed on January 1, 2021. 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 Ahern Rentals’ 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 Ahern Rentals 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 Ahern Rentals had been included in our consolidated results for the entire period reflected:
________________ (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 Ahern Rentals acquisition. (2) Cost of rental equipment sales was adjusted for the fair value mark-ups, and the changes in useful lives and salvage values, of rental equipment acquired in the Ahern Rentals acquisition. (3) Intangible asset amortization was adjusted to include amortization of the acquired intangible assets. (4) 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. (5) Historic interest on debt that is not part of the combined entity was eliminated. (6) Reflects legal and financing costs incurred by Ahern Rentals that do not relate to the combined entity (specifically, legal costs related to a particular lawsuit and costs related to an attempted financing). During 2023 and 2022, 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, net of cash acquired.
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | 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. The following tables set forth financial information by segment.
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:
___________________ (1)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.
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Prepaid Expenses and Other Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Assets | Prepaid Expenses and Other Assets Prepaid expenses and other assets consist of the following:
_________________ (1) Reflects refundable deposits on expected purchases, primarily of rental equipment, pursuant to advance purchase agreements. Such deposits are presented as a component of our cash flow from operations when paid. (2) Reflects reimbursements due for advertising that promotes a vendor’s products or services. (3) Primarily relates to tax depreciation benefits associated with the Ahern Rentals acquisition discussed in note 3 to the condensed consolidated financial statements. The tax depreciation deductions generated by the Ahern Rentals acquisition resulted in an income tax receivable associated with U.S. federal and state tax payments made prior to the acquisition. The decrease reflected above from December 31, 2022 to March 31, 2023 reflects the use of a portion of the receivable to reduce cash paid for income taxes, and we expect that the remaining receivable will further reduce the cash paid for income taxes throughout the remainder of 2023. (4) Includes multiple items, none of which are individually significant.
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The following table presents the changes in the carrying amount of goodwill for the three months ended March 31, 2023:
_________________ (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 decrease in goodwill related to acquisitions above primarily reflects measurement period adjustments associated with the December 2022 acquisition of Ahern Rentals. For additional detail on the Ahern Rentals acquisition, see note 3 to our condensed consolidated financial statements. Other intangible assets were comprised of the following at March 31, 2023 and December 31, 2022:
Our other intangibles assets, net at March 31, 2023 include the assets set forth in the table below associated with the acquisition of Ahern Rentals that is discussed in note 3 to our condensed consolidated financial statements. No residual value has been assigned to these assets. The non-compete agreements are being amortized on a straight-line basis and the customer relationships are being amortized using the sum of the years' digits method, and we believe that such methods best reflect 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.
Amortization expense for other intangible assets was $79 and $62 for the three months ended March 31, 2023 and 2022, respectively. The year-over-year increase primarily reflects the impact of the Ahern Rentals acquisition discussed above. As of March 31, 2023, estimated amortization expense for other intangible assets for each of the next five years and thereafter is as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements As of March 31, 2023 and December 31, 2022, 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 March 31, 2023 and December 31, 2022. The estimated fair values of our other financial instruments, all of which are categorized in Level 1 of the fair value hierarchy, as of March 31, 2023 and December 31, 2022 have been calculated based upon available market information, and were as follows:
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | DebtDebt, net of unamortized original issue discounts or premiums, and unamortized debt issuance costs, consists of the following:
___________________ (1)The table below presents financial information associated with our variable rate indebtedness as of and for the three months ended March 31, 2023. There is no borrowing capacity under the repurchase facility because it is an uncommitted facility. The repurchase facility expires on June 23, 2023 unless extended by the mutual consent of the parties to the repurchase facility agreement. If the facility is not extended, we believe we have sufficient liquidity to repay the outstanding debt under the facility. 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.
(2)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 March 31, 2023, there were $1.348 billion of receivables, net of applicable reserves and other deductions, in the collateral pool. (3)In April 2023, the term loan facility was amended to transition to an interest rate based on the Secured Overnight Financing Rate ("SOFR"). (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 March 31, 2023, the total above is comprised of two separate 4 7/8 percent Senior Notes, one with a book value of $1.659 billion and one with a book value of $4. (5)Short-term debt primarily reflects borrowings under the repurchase facility and the short-term portion of our finance leases. Loan Covenants and Compliance As of March 31, 2023, we were in compliance with the covenants and other provisions of the ABL, accounts receivable securitization, term loan and repurchase facilities and the senior notes. Any failure to be in compliance with any material provision or covenant of these agreements could have a material adverse effect on our liquidity and operations.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 March 31, 2023, 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.
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Legal and Regulatory Matters |
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Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal and Regulatory Matters | Legal and Regulatory MattersWe are subject to a number of claims and proceedings that generally arise in the ordinary course of our business. These matters include, but are not limited to, general liability claims (including personal injury, property and auto claims), indemnification and guarantee obligations, employee injuries and employment-related claims, self-insurance obligations, contract and real estate matters, and other general business litigation. Based on advice of counsel and available information, including current status or stage of proceeding, and taking into account accruals for matters where we have established them, we currently believe that any liabilities ultimately resulting from such claims and proceedings will not, individually or in the aggregate, have a material adverse effect on our consolidated financial condition, results of operations or cash flows. |
Earnings Per Share |
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Earnings Per Share | 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):
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Organization, Description of Business and Basis of Presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease revenues (Topic 842) | 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 three months ended March 31, 2023) 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. 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 $129 and $131 as of March 31, 2023 and December 31, 2022, 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.
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Revenues from contracts with customers (Topic 606) | 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. Receivables and contract assets and liabilities As reflected above, most of our equipment rental revenue is accounted for under Topic 842 (such revenue represented 76 percent of our total revenues for the three months ended March 31, 2023). 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 three months ended March 31, 2023, and for each of the last three full years. Our customer with the largest receivable balance represented approximately one percent of total receivables at March 31, 2023 and December 31, 2022. 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 76 percent of our total revenues for the three months ended March 31, 2023, and these revenues account for corresponding portions of the $2.034 billion of net accounts receivable and the associated allowance for credit losses of $146 as of March 31, 2023). 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.
_________________ (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 customers in excess of recognizable revenue. We did not recognize material revenue during the three months ended March 31, 2023 or 2022 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 months ended March 31, 2023 and 2022 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 March 31, 2023. 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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Revenue Recognition (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in accounting principles | In the following table, revenue is summarized by type and by the applicable accounting standard.
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SEC Schedule, 12-09, Schedule of Valuation and Qualifying Accounts Disclosure | 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.
_________________ (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.
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Acquisitions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets acquired and liabilities assumed | The table below summarizes the fair values of the assets acquired and liabilities assumed. The initial accounting for the acquisition is incomplete, principally related to finalizing 1) the measurement of the acquired net working capital, 2) the valuation of the acquired rental equipment (inclusive of the completion of our usual and customary procedures to validate the existence of the acquired rental fleet) and intangible assets and 3) the associated income tax considerations. All amounts below could change, potentially materially, as there is significant additional information that we must obtain to finalize the valuations of the assets acquired and liabilities assumed, primarily because of the proximity of the acquisition date to the balance sheet date of March 31, 2023. During the three months ended March 31, 2023, we recognized measurement period adjustments primarily to establish preliminary values for intangibles assets and lease assets and liabilities. These adjustments resulted in a substantial reduction to goodwill versus the previously reported amount (see note 6 to the condensed consolidated financial statements for further discussion of goodwill changes). Non-rental depreciation and amortization for the three months ended March 31, 2023 includes $8 of intangible asset amortization that would have been recognized in 2022 if the intangible asset values had been preliminarily established as of December 31, 2022.
(1)The following table reflects the fair values and useful lives of the acquired intangible assets identified based on our preliminary purchase accounting assessments:
(2)All of the goodwill was assigned to our general rentals 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, goodwill could change from the amount noted above. Once finalized, we expect that the goodwill that results from the acquisition will be primarily reflective of Ahern Rentals' going-concern value, the value of Ahern Rentals' 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 acquisition is a purchase of assets, the goodwill that is deductible for income tax purposes equals the total acquired goodwill. As noted above, goodwill could change from the amount above).
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Finite-lived and indefinite-lived intangible assets acquired as part of business combination | The following table reflects the fair values and useful lives of the acquired intangible assets identified based on our preliminary purchase accounting assessments:
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Summary of business acquisition, pro forma information | The table below presents unaudited pro forma consolidated income statement information as if Ahern Rentals had been included in our consolidated results for the entire period reflected:
________________ (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 Ahern Rentals acquisition. (2) Cost of rental equipment sales was adjusted for the fair value mark-ups, and the changes in useful lives and salvage values, of rental equipment acquired in the Ahern Rentals acquisition. (3) Intangible asset amortization was adjusted to include amortization of the acquired intangible assets. (4) 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. (5) Historic interest on debt that is not part of the combined entity was eliminated. (6) Reflects legal and financing costs incurred by Ahern Rentals that do not relate to the combined entity (specifically, legal costs related to a particular lawsuit and costs related to an attempted financing).
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial information by segment | The following tables set forth financial information by segment.
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Reconciliation to equipment rentals gross profit | The following is a reconciliation of equipment rentals gross profit to income before provision for income taxes:
___________________ (1)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.
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Prepaid Expenses and Other Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid expenses and other assets | Prepaid expenses and other assets consist of the following:
_________________ (1) Reflects refundable deposits on expected purchases, primarily of rental equipment, pursuant to advance purchase agreements. Such deposits are presented as a component of our cash flow from operations when paid. (2) Reflects reimbursements due for advertising that promotes a vendor’s products or services. (3) Primarily relates to tax depreciation benefits associated with the Ahern Rentals acquisition discussed in note 3 to the condensed consolidated financial statements. The tax depreciation deductions generated by the Ahern Rentals acquisition resulted in an income tax receivable associated with U.S. federal and state tax payments made prior to the acquisition. The decrease reflected above from December 31, 2022 to March 31, 2023 reflects the use of a portion of the receivable to reduce cash paid for income taxes, and we expect that the remaining receivable will further reduce the cash paid for income taxes throughout the remainder of 2023. (4) Includes multiple items, none of which are individually significant.
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Goodwill and Other Intangible Assets (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill | The following table presents the changes in the carrying amount of goodwill for the three months ended March 31, 2023:
_________________ (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 decrease in goodwill related to acquisitions above primarily reflects measurement period adjustments associated with the December 2022 acquisition of Ahern Rentals. For additional detail on the Ahern Rentals acquisition, see note 3 to our condensed consolidated financial statements.
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Schedule of finite-lived intangible assets | Other intangible assets were comprised of the following at March 31, 2023 and December 31, 2022:
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Schedule of finite-lived intangible assets, future amortization expense | As of March 31, 2023, estimated amortization expense for other intangible assets for each of the next five years and thereafter is as follows:
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of financial instruments | The estimated fair values of our other financial instruments, all of which are categorized in Level 1 of the fair value hierarchy, as of March 31, 2023 and December 31, 2022 have been calculated based upon available market information, and were as follows:
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt instruments | Debt, net of unamortized original issue discounts or premiums, and unamortized debt issuance costs, consists of the following:
___________________ (1)The table below presents financial information associated with our variable rate indebtedness as of and for the three months ended March 31, 2023. There is no borrowing capacity under the repurchase facility because it is an uncommitted facility. The repurchase facility expires on June 23, 2023 unless extended by the mutual consent of the parties to the repurchase facility agreement. If the facility is not extended, we believe we have sufficient liquidity to repay the outstanding debt under the facility. 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.
(2)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 March 31, 2023, there were $1.348 billion of receivables, net of applicable reserves and other deductions, in the collateral pool. (3)In April 2023, the term loan facility was amended to transition to an interest rate based on the Secured Overnight Financing Rate ("SOFR"). (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 March 31, 2023, the total above is comprised of two separate 4 7/8 percent Senior Notes, one with a book value of $1.659 billion and one with a book value of $4. (5)Short-term debt primarily reflects borrowings under the repurchase facility and the short-term portion of our finance leases.
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Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share | The following table sets forth the computation of basic and diluted earnings per share (shares in thousands):
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Revenue Recognition (Allowance for Doubtful Accounts Rollforward) (Details) - SEC Schedule, 12-09, Allowance, Credit Loss - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Beginning balance | $ 134 | $ 112 |
Charged to costs and expenses | 3 | 1 |
Charged to revenue | 13 | 8 |
Deductions | (4) | (5) |
Ending balance | $ 146 | $ 116 |
Acquisitions (Narrative) (Details) $ in Millions |
Dec. 07, 2022
USD ($)
|
Mar. 31, 2023
state
|
Nov. 30, 2022
USD ($)
|
---|---|---|---|
6 percent Senior Secured Notes due 2029 | Senior notes | |||
Business Acquisition [Line Items] | |||
Debt instrument, face amount | $ 1,500 | ||
Stated interest rate | 6.00% | 6.00% | |
Ahern Rentals | |||
Business Acquisition [Line Items] | |||
Number of states | state | 30 | ||
Aggregate consideration paid | $ 2,012 |
Acquisitions (Assets Acquired and Liabilities Assumed - Ahern Rentals) (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
Dec. 07, 2022 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 5,708 | $ 6,026 | |
Ahern Rentals | |||
Business Acquisition [Line Items] | |||
Inventory | $ 30 | ||
Rental equipment | 1,290 | ||
Property and equipment | 187 | ||
Fair value | 450 | ||
Operating lease right-of-use assets | 211 | ||
Other assets | 9 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets, Total | 2,177 | ||
Accounts payable, accrued expenses and other liabilities | (33) | ||
Operating lease liabilities | (199) | ||
Debt (finance leases) | (38) | ||
Total liabilities assumed | (270) | ||
Net identifiable assets acquired | 1,907 | ||
Goodwill | 105 | ||
Net assets acquired | $ 2,012 |
Acquisitions (Other Intangible Assets Associated with Acquisition) (Details) - Ahern Rentals $ in Millions |
Dec. 07, 2022
USD ($)
|
---|---|
Finite-Lived Intangible Assets [Line Items] | |
Fair value | $ 450 |
Customer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Fair value | $ 260 |
Life (years) | 9 years |
Non-compete agreements | |
Finite-Lived Intangible Assets [Line Items] | |
Fair value | $ 190 |
Life (years) | 5 years |
Segment Information (Reconciliation to Income (loss) from Continuing Operations) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Equipment rentals gross profit | $ 1,241 | $ 992 |
Selling, general and administrative expenses | (382) | (323) |
Restructuring charge | (1) | 0 |
Non-rental depreciation and amortization | (118) | (97) |
Interest expense, net | (150) | (94) |
Other income, net | 4 | 5 |
Income before provision for income taxes | 594 | 483 |
Total equipment rentals gross profit | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Equipment rentals gross profit | 1,003 | 834 |
Gross profit from other lines of business | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Equipment rentals gross profit | $ 238 | $ 158 |
Prepaid Expenses and Other Assets (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Equipment | $ 12 | $ 17 |
Insurance | 16 | 31 |
Advertising reimbursements | 19 | 25 |
Income taxes (3) | 148 | 235 |
Other | 72 | 73 |
Prepaid expenses and other assets | $ 267 | $ 381 |
Goodwill and Other Intangible Assets (Goodwill) (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 6,026 |
Goodwill related to acquisitions | (320) |
Foreign currency translation and other adjustments | 2 |
Ending balance | 5,708 |
Goodwill accumulated impairment loss | 1,557 |
General rentals | |
Goodwill [Roll Forward] | |
Beginning balance | 4,980 |
Goodwill related to acquisitions | (309) |
Foreign currency translation and other adjustments | 0 |
Ending balance | 4,671 |
Specialty | |
Goodwill [Roll Forward] | |
Beginning balance | 1,046 |
Goodwill related to acquisitions | (11) |
Foreign currency translation and other adjustments | 2 |
Ending balance | $ 1,037 |
Goodwill and Other Intangible Assets (Other Intangible Assets) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Net Amount | $ 868 | $ 452 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Remaining Amortization Period | 4 years | 3 years |
Gross Carrying Amount | $ 266 | $ 69 |
Accumulated Amortization | 38 | 22 |
Net Amount | $ 228 | $ 47 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Remaining Amortization Period | 6 years | 5 years |
Gross Carrying Amount | $ 2,647 | $ 2,349 |
Accumulated Amortization | 2,011 | 1,949 |
Net Amount | $ 636 | $ 400 |
Trade names and associated trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Remaining Amortization Period | 3 years | 3 years |
Gross Carrying Amount | $ 14 | $ 14 |
Accumulated Amortization | 10 | 9 |
Net Amount | $ 4 | $ 5 |
Goodwill and Other Intangible Assets (Other Intangible Assets Associated with Acquisition) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Net Carrying Amount | $ 868 | $ 452 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Remaining Amortization Period | 4 years | 3 years |
Net Carrying Amount | $ 228 | $ 47 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Remaining Amortization Period | 6 years | 5 years |
Net Carrying Amount | $ 636 | $ 400 |
General Finance Corporation | Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Remaining Amortization Period | 5 years | |
Net Carrying Amount | $ 177 | |
General Finance Corporation | Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-Average Remaining Amortization Period | 9 years | |
Net Carrying Amount | $ 243 |
Goodwill and Other Intangible Assets (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 79 | $ 62 |
Goodwill and Other Intangible Assets (Maturity Schedule) (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 | $ 199 | |
2024 | 211 | |
2025 | 172 | |
2026 | 130 | |
2027 | 85 | |
Thereafter | 71 | |
Net Amount | $ 868 | $ 452 |
Fair Value Measurements (Fair value of financial instruments) (Details) - Senior notes - Level 1 - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Senior notes | $ 7,714 | $ 7,712 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Senior notes | $ 7,311 | $ 7,143 |
Debt (Narrative) (Details) - ABL Facility - Line of Credit - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Debt Instrument | ||
Maximum borrowing capacity | $ 4,250,000,000 | |
Minimum available borrowing capacity, percentage | 10.00% |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Numerator: | ||
Net income available to common stockholders | $ 451 | $ 367 |
Denominator: | ||
Denominator for basic earnings per share—weighted-average common shares (in shares) | 69,414 | 72,372 |
Effect of dilutive securities: | ||
Denominator for diluted earnings per share—adjusted weighted-average common shares (in shares) | 69,745 | 72,684 |
Basic earnings per share (in dollars per share) | $ 6.50 | $ 5.07 |
Diluted earnings per share (in dollars per share) | $ 6.47 | $ 5.05 |
Employee stock options | ||
Effect of dilutive securities: | ||
Effect of dilutive securities (in shares) | 4 | 4 |
Restricted stock units | ||
Effect of dilutive securities: | ||
Effect of dilutive securities (in shares) | 327 | 308 |
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