UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________

FORM 10-Q



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

For the quarterly period ended September 30, ~~2019~~

2020



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

For the transition period from to

Commission File Number 1-14387

Commission File Number 1-13663

___________________________________

United Rentals, Inc.

United Rentals (North America), Inc.

(Exact Names of Registrants as Specified in Their Charters)

___________________________________



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


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

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

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

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

URI

New York Stock Exchange

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

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

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

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

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

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

As of October ~~14, 2019,~~26, 2020, there were ~~75,155,939~~72,136,631 shares of United Rentals, Inc. common stock, $0.01 par value, outstanding. There is no market for the common stock of United Rentals (North America), Inc., all outstanding shares of which are owned by United Rentals, Inc.

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

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UNITED RENTALS, INC.

UNITED RENTALS (NORTH AMERICA), INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, ~~2019~~2020

INDEX


					Page
PART I			FINANCIAL INFORMATION

				~~Page~~
~~PART I~~Item 1	~~FINANCIAL INFORMATION~~

~~Item 1~~	Unaudited Condensed Consolidated Financial Statements	6

			United Rentals, Inc. Condensed Consolidated Balance Sheets as of September 30, ~~2019~~2020 (unaudited) and December 31, ~~2018~~2019		6

			United Rentals, Inc. Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30 , 2020 and 2019 ~~and 2018~~ (unaudited)		7

			United Rentals, Inc. Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30 , 2020 and 2019 ~~and 2018~~ (unaudited)		8

			United Rentals, Inc. Condensed Consolidated Statement of Stockholders’ Equity for the Three and Nine Months Ended September 30 , 2020 and 2019 ~~and 2018~~ (unaudited)		9

			United Rentals, Inc. Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30 , 2020 and 2019 ~~and 2018~~ (unaudited)		11

			Notes to Unaudited Condensed Consolidated Financial Statements		12

Item 2			Management’s Discussion and Analysis of Financial Condition and Results of Operations		3936

Item 3			Quantitative and Qualitative Disclosures About Market Risk		5354

Item 4			Controls and Procedures		5455

PART II			OTHER INFORMATION

Item 1			Legal Proceedings		5556

Item 1A			Risk Factors		5556

Item 2			Unregistered Sales of Equity Securities and Use of Proceeds		5556



Item 6			Exhibits		5657

			Signatures		5758

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

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

•uncertainty regarding the length of time it will take for the United States and the rest of the world to slow the spread of the novel strain of coronavirus (COVID-19) to the point where applicable governmental authorities are comfortable easing current “social distancing” policies, which have required closing many businesses deemed “non-essential”; such restrictions are designed to protect public health but also have the effect of significantly reducing demand for equipment rentals;

•the extent to which businesses in and associated with the construction industry, including equipment rental service providers such as us, continue to be deemed “essential” for the purposes of “social distancing” policies in the regions in which we operate;

•the impact of global economic conditions (including potential trade wars) and public health crises and epidemics, such as COVID-19, on us, our customers and our suppliers, in the United States and the rest of the world;

•the possibility that companies that we have acquired or may acquire, including BakerCorp International Holdings, Inc. (“BakerCorp”) and Vander Holding Corporation and its subsidiaries (“BlueLine”), could have undiscovered liabilities or involve other unexpected costs, may strain our management capabilities or may be difficult to integrate;

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

•our significant indebtedness (which totaled ~~$11.7~~$10.1 billion at September 30, ~~2019)~~2020) requires us to use a substantial portion of our cash flow for debt service and can constrain our flexibility in responding to unanticipated or adverse business conditions;

•inability to refinance our indebtedness on terms that are favorable to us (including as a result of current volatility and uncertainty in capital markets due to COVID-19), or at all;

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

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

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

•overcapacity of fleet in the equipment rental ~~industry;~~industry, including as a result of reduced demand for fleet due to the impacts of COVID-19 on our customers;

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

•fluctuations in the price of our common stock and inability to complete stock repurchases in the time frame and/or on the terms ~~anticipated;~~anticipated (for example, due to COVID-19);

•rates we charge and time utilization we achieve being less than ~~anticipated;~~anticipated (including as a result of COVID-19);

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

•inability to access the capital that our businesses or growth plans may ~~require;~~require (including as a result of uncertainty in capital or other financial markets due to COVID-19);

•incurrence of impairment charges;

•trends in oil and natural gas could adversely affect the demand for our services and products;

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

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

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

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

•shortfalls in our insurance coverage;

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

•turnover in our management team and inability to attract and retain key ~~personnel;~~personnel, as well as loss, absenteeism or the inability of employees to work or perform key functions in light of public health crises or epidemics (including COVID-19);

•costs we incur being more than anticipated, and the inability to realize expected savings in the amounts or time frames planned;

•dependence on key suppliers to obtain equipment and other supplies for our business on acceptable terms;

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

•competition from existing and new competitors;

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

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

•labor disputes, work stoppages or other labor difficulties, which may impact our productivity, and potential enactment of new legislation or other changes in law affecting our labor relations or operations generally;

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

•the effect of changes in tax law.

For a more complete description of these and other possible risks and uncertainties, please refer to our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, as well as to our subsequent filings with the SEC. Our forward-looking statements contained herein speak only as of the date hereof, and we make no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations.

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PART I. FINANCIAL INFORMATION


~~Item 1.~~	~~Financial Statements~~

Item 1.Financial Statements

UNITED RENTALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share data)


	September 30, 2019			December 31, 2018				September 30, 2020		December 31, 2019
	(unaudited)							(unaudited)
ASSETS							ASSETS
Cash and cash equivalents	$	60		$	43		Cash and cash equivalents	$	174	$	52
Accounts receivable, net of allowance for doubtful accounts of $103 at September 30, 2019 and $93 at December 31, 2018	1,595			1,545
Accounts receivable, net of allowance for doubtful accounts of $114 at September 30, 2020 and $103 at December 31, 2019							Accounts receivable, net of allowance for doubtful accounts of $114 at September 30, 2020 and $103 at December 31, 2019	1,324		1,530
Inventory	130			109			Inventory	108		120
Prepaid expenses and other assets	96			64			Prepaid expenses and other assets	122		140

Total current assets	1,881			1,761			Total current assets	1,728		1,842
Rental equipment, net	10,164			9,600			Rental equipment, net	9,041		9,787
Property and equipment, net	587			614			Property and equipment, net	598		604
Goodwill	5,143			5,058			Goodwill	5,147		5,154
Other intangible assets, net	961			1,084			Other intangible assets, net	701		895
Operating lease right-of-use assets (note 8)	650			—
Operating lease right-of-use assets							Operating lease right-of-use assets	663		669
Other long-term assets	19			16			Other long-term assets	30		19
Total assets	$	19,405		$	18,133		Total assets	$	17,908	$	18,970
LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt and current maturities of long-term debt	$	973		$	903		Short-term debt and current maturities of long-term debt	$	700	$	997
Accounts payable	839			536			Accounts payable	541		454
Accrued expenses and other liabilities	831			677			Accrued expenses and other liabilities	675		747
Total current liabilities	2,643			2,116			Total current liabilities	1,916		2,198
Long-term debt	10,691			10,844			Long-term debt	9,351		10,431

Deferred taxes	1,800			1,687			Deferred taxes	1,818		1,887
Operating lease liabilities (note 8)	522			—
Operating lease liabilities							Operating lease liabilities	524		533
Other long-term liabilities	99			83			Other long-term liabilities	138		91
Total liabilities	15,755			14,730			Total liabilities	13,747		15,140
Common stock—$0.01 par value, 500,000,000 shares authorized, 113,778,857 and 75,750,691 shares issued and outstanding, respectively, at September 30, 2019 and 112,907,209 and 79,872,956 shares issued and outstanding, respectively, at December 31, 2018	1			1

Common stock—$0.01 par value, 500,000,000 shares authorized, 114,145,755 and 72,132,246 shares issued and outstanding, respectively, at September 30, 2020 and 113,825,667 and 74,362,195 shares issued and outstanding, respectively, at December 31, 2019							Common stock—$0.01 par value, 500,000,000 shares authorized, 114,145,755 and 72,132,246 shares issued and outstanding, respectively, at September 30, 2020 and 113,825,667 and 74,362,195 shares issued and outstanding, respectively, at December 31, 2019	1		1
Additional paid-in capital	2,429			2,408			Additional paid-in capital	2,463		2,440
Retained earnings	4,937			4,101			Retained earnings	5,868		5,275
Treasury stock at cost—38,028,166 and 33,034,253 shares at September 30, 2019 and December 31, 2018, respectively	(3,500		)	(2,870		)
Treasury stock at cost—42,013,509 and 39,463,472 shares at September 30, 2020 and December 31, 2019, respectively							Treasury stock at cost—42,013,509 and 39,463,472 shares at September 30, 2020 and December 31, 2019, respectively	(3,957)		(3,700)
Accumulated other comprehensive loss	(217		)	(237		)	Accumulated other comprehensive loss	(214)		(186)
Total stockholders’ equity	3,650			3,403			Total stockholders’ equity	4,161		3,830
Total liabilities and stockholders’ equity	$	19,405		$	18,133		Total liabilities and stockholders’ equity	$	17,908	$	18,970

See accompanying notes.

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In millions, except per share amounts)


	Three Months Ended					Nine Months Ended							Three Months Ended				Nine Months Ended
	September 30,					September 30,							September 30,				September 30,
	2019			2018		2019			2018				2020		2019		2020		2019
Revenues:												Revenues:
Equipment rentals	$	2,147		$	1,861	$	5,902		$	4,951		Equipment rentals	$	1,861	$	2,147	$	5,286	$	5,902
Sales of rental equipment	198			140		587			478			Sales of rental equipment	199		198		583		587
Sales of new equipment	67			54		189			140			Sales of new equipment	54		67		169		189
Contractor supplies sales	27			24		78			66			Contractor supplies sales	25		27		73		78
Service and other revenues	49			37		139			106			Service and other revenues	48		49		140		139
Total revenues	2,488			2,116		6,895			5,741			Total revenues	2,187		2,488		6,251		6,895
Cost of revenues:												Cost of revenues:
Cost of equipment rentals, excluding depreciation	813			671		2,324			1,883			Cost of equipment rentals, excluding depreciation	689		813		2,083		2,324
Depreciation of rental equipment	417			343		1,211			988			Depreciation of rental equipment	395		417		1,216		1,211
Cost of rental equipment sales	122			83		363			282			Cost of rental equipment sales	123		122		353		363
Cost of new equipment sales	58			46		163			121			Cost of new equipment sales	47		58		147		163
Cost of contractor supplies sales	18			15		54			43			Cost of contractor supplies sales	18		18		52		54
Cost of service and other revenues	27			20		75			58			Cost of service and other revenues	29		27		86		75
Total cost of revenues	1,455			1,178		4,190			3,375			Total cost of revenues	1,301		1,455		3,937		4,190
Gross profit	1,033			938		2,705			2,366			Gross profit	886		1,033		2,314		2,705
Selling, general and administrative expenses	273			265		824			736			Selling, general and administrative expenses	232		273		721		824
Merger related costs	—			11		1			14			Merger related costs	0		0		0		1
Restructuring charge	2			9		16			15			Restructuring charge	6		2		11		16
Non-rental depreciation and amortization	102			75		311			213			Non-rental depreciation and amortization	97		102		292		311
Operating income	656			578		1,553			1,388			Operating income	551		656		1,290		1,553
Interest expense, net	147			118		478			339			Interest expense, net	278		147		544		478

Other income, net	(1		)	—		(6		)	(2		)	Other income, net	(2)		(1)		(6)		(6)
Income before provision for income taxes	510			460		1,081			1,051			Income before provision for income taxes	275		510		752		1,081
Provision for income taxes	119			127		245			265			Provision for income taxes	67		119		159		245

Net income	$	391		$	333	$	836		$	786		Net income	$	208	$	391	$	593	$	836

Basic earnings per share	$	5.10		$	4.05	$	10.70		$	9.44		Basic earnings per share	$	2.88	$	5.10	$	8.14	$	10.70

Diluted earnings per share	$	5.08		$	4.01	$	10.66		$	9.34		Diluted earnings per share	$	2.87	$	5.08	$	8.12	$	10.66

See accompanying notes.

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In millions)

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Net income $ 391

$ 333
$ 836
$ 786
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (1) (23 )
18
19
(28 )
Fixed price diesel swaps —

—
1
1
Other comprehensive income (loss) (23 ) 18
20
(27 )
Comprehensive income (1) $ 368
$ 351
$ 856
$ 759


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Net income	$	208	$	391	$	593	$	836
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (1)	32		(23)		(26)		19
Fixed price diesel swaps	1		0		(2)		1
Other comprehensive income (loss)	33		(23)		(28)		20
Comprehensive income (1)	$	241	$	368	$	565	$	856

(1)There were no0 material reclassifications from accumulated other comprehensive loss reflected in other comprehensive income (loss) during ~~2019~~2020 or ~~2018.~~2019. There is no0 tax impact related to the foreign currency translation adjustments, as the earnings are considered permanently reinvested. We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested. We have not repatriated funds to the U.S. to satisfy domestic liquidity needs, nor do we anticipate the need to do so. If we determine that all or a portion of our foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes. There were no0 material taxes associated with other comprehensive income (loss) during ~~2019~~2020 or ~~2018.~~2019.

See accompanying notes.

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In millions)




	Three Months Ended September 30, 2020
	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 June 30, 2020	72	$	1	$	2,450	$	5,660	42	$	(3,957)	$	(247)
Net income						208
Foreign currency translation adjustments											32
Fixed price diesel swaps											1

Stock compensation expense, net	—			18



Shares repurchased and retired				(5)


Balance at September 30, 2020	72	$	1	$	2,463	$	5,868	42	$	(3,957)	$	(214)



	Three Months Ended September 30, 2019
	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 June 30, 2019	77	$	1	$	2,415	$	4,546	36	$	(3,290)	$	(194)
Net income						391
Foreign currency translation adjustments											(23)


Stock compensation expense, net	1			14




Repurchase of common stock	(2)							2	(210)

Balance at September 30, 2019	76	$	1	$	2,429	$	4,937	38	$	(3,500)	$	(217)

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																	Nine Months Ended September 30, 2020
	Three Months Ended September 30, 2019																Common Stock							Treasury Stock
	Common Stock								Treasury Stock								Number of Shares (1)	Amount		Additional Paid-in Capital		Retained Earnings		Number of Shares	Amount		Accumulated Other Comprehensive Loss (2)
	Number of Shares (1)		Amount		Additional Paid-in Capital		Retained Earnings		Number of Shares	Amount			Accumulated Other Comprehensive Loss (2)
Balance at June 30, 2019	77		$	1	$	2,415	$	4,546	36	$	(3,290	)	$	(194	)
Balance at December 31, 2019																Balance at December 31, 2019	74	$	1	$	2,440	$	5,275	39	$	(3,700)	$	(186)
Net income							391									Net income						593
Foreign currency translation adjustments													(23		)	Foreign currency translation adjustments											(26)
Fixed price diesel swaps																Fixed price diesel swaps											(2)

Stock compensation expense, net	1				14											Stock compensation expense, net	1			46
Exercise of common stock options																Exercise of common stock options				1

Shares repurchased and retired																Shares repurchased and retired				(24)
Repurchase of common stock	(2	)							2	(210		)				Repurchase of common stock	(3)							3	(257)
Balance at September 30, 2019	76		$	1	$	2,429	$	4,937	38	$	(3,500	)	$	(217	)

Balance at September 30, 2020																Balance at September 30, 2020	72	$	1	$	2,463	$	5,868	42	$	(3,957)	$	(214)

Three Months Ended September 30, 2018
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 June 30, 2018 83
$ 1
$ 2,351
$ 3,458
30
$ (2,450 ) $ (196 )
Net income 333

Foreign currency translation adjustments 18
Stock compensation expense, net —
30

Shares repurchased and retired (1 )
Repurchase of common stock (1 ) 1
(210 )
Balance at September 30, 2018 82
$ 1
$ 2,380
$ 3,791
31
$ (2,660 ) $ (178 )

Nine Months Ended September 30, 2019
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, 2018 80
$ 1
$ 2,408
$ 4,101
33
$ (2,870 ) $ (237 )
Net income 836

Foreign currency translation adjustments 19
Fixed price diesel swaps 1
Stock compensation expense, net 1
45

Exercise of common stock options 10

Shares repurchased and retired (34 )
Repurchase of common stock (5 ) 5
(630 )
Balance at September 30, 2019 76
$ 1
$ 2,429
$ 4,937
38
$ (3,500 ) $ (217 )


																		Nine Months Ended September 30, 2019
	Nine Months Ended September 30, 2018																	Common Stock							Treasury Stock
	Common Stock									Treasury Stock								Number of Shares (1)	Amount		Additional Paid-in Capital		Retained Earnings		Number of Shares	Amount		Accumulated Other Comprehensive Loss (2)
	Number of Shares (1)		Amount		Additional Paid-in Capital			Retained Earnings		Number of Shares	Amount			Accumulated Other Comprehensive Loss (2)
Balance at December 31, 2017	84		$	1	$	2,356		$	3,005	28	$	(2,105	)	$	(151	)
Balance at December 31, 2018																	Balance at December 31, 2018	80	$	1	$	2,408	$	4,101	33	$	(2,870)	$	(237)
Net income								786									Net income						836
Foreign currency translation adjustments														(28		)	Foreign currency translation adjustments											19
Fixed price diesel swaps														1			Fixed price diesel swaps											1

Stock compensation expense, net	1				73												Stock compensation expense, net	1			45
Exercise of common stock options					2												Exercise of common stock options				10

Shares repurchased and retired					(51		)										Shares repurchased and retired				(34)
Repurchase of common stock	(3	)								3	(555		)				Repurchase of common stock	(5)							5	(630)
Balance at September 30, 2018	82		$	1	$	2,380		$	3,791	31	$	(2,660	)	$	(178	)

Balance at September 30, 2019																	Balance at September 30, 2019	76	$	1	$	2,429	$	4,937	38	$	(3,500)	$	(217)

(1)Common stock outstanding decreased by ~~less than 5~~approximately 6 million net shares during the year ended December 31, ~~2018.~~2019.

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

See accompanying notes.

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)

Nine Months Ended
September 30,
2019 2018
Cash Flows From Operating Activities:
Net income $ 836
$ 786
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,522
1,201
Amortization of deferred financing costs and original issue discounts 11
9
Gain on sales of rental equipment (224 ) (196 )
Gain on sales of non-rental equipment (3 ) (4 )
Gain on insurance proceeds from damaged equipment (18 ) (18 )
Stock compensation expense, net 45
73
Merger related costs 1
14
Restructuring charge 16
15
Loss on repurchase/redemption of debt securities and amendment of ABL facility 32
—
Increase in deferred taxes 117
190
Changes in operating assets and liabilities, net of amounts acquired:
Increase in accounts receivable (30 ) (131 )
Increase in inventory (17 ) (23 )
(Increase) decrease in prepaid expenses and other assets (21 ) 31
Increase in accounts payable 301
238
Increase (decrease) in accrued expenses and other liabilities 14
(62 )
Net cash provided by operating activities 2,582
2,123
Cash Flows From Investing Activities:
Purchases of rental equipment (1,974 ) (1,962 )
Purchases of non-rental equipment (157 ) (134 )
Proceeds from sales of rental equipment 587
478
Proceeds from sales of non-rental equipment 26
13
Insurance proceeds from damaged equipment 18
18
Purchases of other companies, net of cash acquired (247 ) (805 )
Purchases of investments (2 ) (1 )
Net cash used in investing activities (1,749 ) (2,393 )
Cash Flows From Financing Activities:
Proceeds from debt 6,125
7,062
Payments of debt (6,269 ) (6,464 )
Proceeds from the exercise of common stock options 10
2
Common stock repurchased (664 ) (606 )
Payments of financing costs (18 ) (1 )
Net cash used in financing activities (816 ) (7 )
Effect of foreign exchange rates —
(10 )
Net increase (decrease) in cash and cash equivalents 17
(287 )
Cash and cash equivalents at beginning of period 43
352
Cash and cash equivalents at end of period $ 60
$ 65
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net $ 96
$ 50
Cash paid for interest 480
379


	Nine Months Ended
	September 30,
	2020		2019
Cash Flows From Operating Activities:
Net income	$	593	$	836
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,508		1,522
Amortization of deferred financing costs and original issue discounts	11		11
Gain on sales of rental equipment	(230)		(224)
Gain on sales of non-rental equipment	(5)		(3)
Insurance proceeds from damaged equipment	(34)		(18)
Stock compensation expense, net	46		45
Merger related costs	0		1
Restructuring charge	11		16
Loss on repurchase/redemption of debt securities and amendment of ABL facility	159		32


(Decrease) increase in deferred taxes	(66)		117
Changes in operating assets and liabilities, net of amounts acquired:
Decrease (increase) in accounts receivable	202		(30)
Decrease (increase) in inventory	12		(17)
Decrease (increase) in prepaid expenses and other assets	30		(21)
Increase in accounts payable	88		301
(Decrease) increase in accrued expenses and other liabilities	(37)		14
Net cash provided by operating activities	2,288		2,582
Cash Flows From Investing Activities:
Purchases of rental equipment	(785)		(1,974)
Purchases of non-rental equipment	(145)		(157)
Proceeds from sales of rental equipment	583		587
Proceeds from sales of non-rental equipment	31		26
Insurance proceeds from damaged equipment	34		18
Purchases of other companies, net of cash acquired	(2)		(247)
Purchases of investments	(2)		(2)
Net cash used in investing activities	(286)		(1,749)
Cash Flows From Financing Activities:
Proceeds from debt	7,251		6,125
Payments of debt	(8,829)		(6,269)

Proceeds from the exercise of common stock options	1		10
Common stock repurchased	(281)		(664)
Payments of financing costs	(23)		(18)


Net cash used in financing activities	(1,881)		(816)
Effect of foreign exchange rates	1		0
Net increase in cash and cash equivalents	122		17
Cash and cash equivalents at beginning of period	52		43
Cash and cash equivalents at end of period	$	174	$	60
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net	$	239	$	96
Cash paid for interest	438		480

See accompanying notes.

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1. Organization, Description of Business and Basis of Presentation

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

We rent equipment to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities in the United States, Canada and Europe. In July 2018, we completed the acquisition of BakerCorp International Holdings, Inc. (“BakerCorp”), which allowed for our entry into select European markets. 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, ~~2018~~2019 (the “~~2018~~“2019 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 ~~2018~~2019 Form 10-K.

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

COVID-19

The novel coronavirus (“COVID-19”) was first identified in people in late 2019. COVID-19 spread rapidly throughout the world and, in March 2020, the World Health Organization characterized COVID-19 as a pandemic. COVID-19 is a pandemic of respiratory disease spreading from person-to-person that poses a serious public health risk. It has significantly disrupted supply chains and businesses around the world. The extent and duration of the COVID-19 impact, on the operations and financial position of United Rentals and on the global economy, is uncertain. While visibility into future economic conditions remains limited, based on increased insight into near-term indicators, we reintroduced full-year 2020 guidance in July 2020, after having withdrawn it in April 2020. In October 2020, after reporting third quarter results, we raised our full-year 2020 guidance. The health and safety of our employees and customers remains our top priority, and we have also engaged in extensive contingency planning to manage the business impact of the pandemic.

Prior to mid-March 2020, our results were largely in line with expectations. We began to experience a decline in revenues in March 2020, when rental volume declined in response to shelter-in-place orders and other market restrictions. COVID-19 is discussed in more detail throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

New Accounting Pronouncements

~~Measurement of Credit Losses on Financial Instruments.~~ In June 2016, the Financial Accounting Standards Board ("FASB") issued guidance that will require companies to present assets held at amortized cost and available for sale debt securities net of the amount expected to be collected. The guidance requires the measurement of expected credit losses to be based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectibility. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2019 and early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Different components of the guidance require modified retrospective or prospective adoption. This guidance does not apply to receivables arising from operating leases. As discussed in note 2 to the condensed consolidated financial statements, most of our equipment rental revenue is accounted for as lease revenue (such revenue represented 78 percent of our total revenues for the nine months ended September 30, 2019). We expect to adopt this guidance when effective, and the impact on our financial statements, while limited to our non-operating lease receivables, is not currently estimable, as it will depend on market conditions and our forecast expectations upon, and following, adoption.

Simplifying the Test for Goodwill Impairment. In January 2017, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued guidance intended to simplify the subsequent accounting for goodwill acquired in a business combination. Prior guidance required utilizing a two-step process to review goodwill for impairment. A second step was required if there was an indication that an impairment may exist, and the second step required calculating the potential impairment by comparing the implied fair value of the reporting unit's goodwill (as if purchase accounting were performed on the testing date) with the carrying amount of the goodwill. The new guidance eliminates the second step from the goodwill impairment test. Under the new guidance, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value (although the loss should not exceed the total amount of goodwill allocated to the reporting unit). The guidance requires prospective adoption and will be effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. ~~Early~~We will adopt this guidance for the goodwill impairment test that we will conduct as of October 1, 2020, and do not expect the adoption of ~~this~~the guidance ~~is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently assessing whether we will early adopt. The guidance is not expected~~ to have a significant impact on our financial statements.

~~Guidance Adopted~~

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in ~~2019~~millions, except per share data, unless otherwise indicated)

~~Leases~~

Simplifying the Accounting for Income Taxes.~~. See note 8 to our condensed consolidated financial statements for a discussion of our lease accounting following our adoption of an updated FASB lease accounting standard in 2019.~~

~~2. Revenue Recognition~~

~~Revenue Recognition Accounting Standards~~

In ~~May 2014, and in subsequent updates,~~December 2019, the FASB issued guidance ~~("Topic 606")~~intended to ~~clarify~~simplify the ~~principles~~accounting for ~~recognizing revenue. We adopted Topic 606 on January 1, 2018. Topic 606 includes~~income taxes. The guidance removes the ~~required steps~~following exceptions: 1) exception to ~~achieve~~ the ~~core principle~~incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, 2) exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, 3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary and 4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. Additionally, the guidance simplifies the accounting for income taxes by: 1) requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, 2) requiring that an entity evaluate when a step up in the tax basis of goodwill should ~~recognize revenue to depict~~be considered part of the ~~transfer of promised goods or services to customers~~business combination in ~~an amount that reflects the consideration to~~ which the book goodwill was originally recognized and when it should be considered a separate transaction, 3) specifying that an entity ~~expects~~is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements (although the entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority), 4) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date and 5) making minor improvements for income tax accounting related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method. The guidance will be effective for fiscal years and interim periods beginning after December 15, 2020. Different components of the guidance require retrospective, modified retrospective or prospective adoption, and early adoption is permitted. We will adopt this guidance when it becomes effective, in the first quarter of 2021, and the impact on our financial statements is not expected to be ~~entitled~~material.

Guidance Adopted in ~~exchange for those goods or services.~~2020

Measurement of Credit Losses on Financial Instruments. In ~~March~~June 2016, the FASB issued ~~updated~~guidance that requires companies to present certain financial assets net of the amount expected to be collected. Trade receivables (as noted below, excluding receivables arising from operating lease ~~accounting~~revenues) are the only material financial asset we have that is impacted by this guidance. The guidance ~~("Topic 842"), as explained further~~requires the measurement of expected credit losses to be based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectibility. This guidance does not apply to receivables arising from operating lease revenues. As discussed in note 82 to the condensed consolidated financial ~~statements. We adopted Topic 842 on January 1, 2019. Topic 842 is an update to Topic 840, which was the lease accounting standard in place through December 31, 2018. As reflected below,~~statements, most of our equipment rental revenue is accounted for ~~under Topic 842 (Topic 840~~as lease revenue (such revenue represented 78 percent of our total revenues for ~~2018)~~the nine months ended September 30, 2020). ~~There were no significant changes~~We adopted this guidance in the first quarter of 2020, and the impact of adoption on our financial statements was not material. See note 2 (see "Receivables and contract assets and liabilities") for further discussion of our receivables.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In March 2020, the FASB issued guidance that provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. We adopted this guidance in 2020, and the impact of adoption on our ~~revenue accounting upon adoption~~financial statements was not material. The expedients and exceptions in this guidance are optional, and we are evaluating the potential future financial statement impact of ~~Topic 842.~~any such expedient or exception that we may elect to apply.

2. Revenue Recognition

Revenue Recognition Accounting Standards

We recognize revenue in accordance with two different accounting standards: 1) Topic 606 (which addresses revenue from contracts with customers) and 2) Topic ~~842.~~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

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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

Three Months Ended September 30,
2019 2018
Topic 842 Topic 606 Total Topic 840 Topic 606 Total
Revenues:
Owned equipment rentals $ 1,831
$ —
$ 1,831
$ 1,589
$ —
$ 1,589
Re-rent revenue 41
—
41
41
—
41
Ancillary and other rental revenues:
Delivery and pick-up —
156
156
—
132
132
Other 95
24
119
78
21
99
Total ancillary and other rental revenues 95
180
275
78
153
231
Total equipment rentals 1,967
180
2,147
1,708
153
1,861
Sales of rental equipment —
198
198
—
140
140
Sales of new equipment —
67
67
—
54
54
Contractor supplies sales —
27
27
—
24
24
Service and other revenues —
49
49
—
37
37
Total revenues $ 1,967
$ 521
$ 2,488
$ 1,708
$ 408
$ 2,116



	Three Months Ended September 30,
			2020						2019
	Topic 842		Topic 606		Total		Topic 842		Topic 606		Total
Revenues:
Owned equipment rentals	$	1,572	$	—	$	1,572	$	1,831	$	—	$	1,831
Re-rent revenue	41		—		41		41		—		41
Ancillary and other rental revenues:
Delivery and pick-up	0		138		138		0		156		156
Other	84		26		110		95		24		119
Total ancillary and other rental revenues	84		164		248		95		180		275
Total equipment rentals	1,697		164		1,861		1,967		180		2,147
Sales of rental equipment	—		199		199		—		198		198
Sales of new equipment	—		54		54		—		67		67
Contractor supplies sales	—		25		25		—		27		27
Service and other revenues	—		48		48		—		49		49
Total revenues	$	1,697	$	490	$	2,187	$	1,967	$	521	$	2,488

Nine Months Ended September 30,
2019 2018
Topic 842 Topic 606 Total Topic 840 Topic 606 Total
Revenues:
Owned equipment rentals $ 5,029
$ —
$ 5,029
$ 4,260
$ —
$ 4,260
Re-rent revenue 113
—
113
95
—
95
Ancillary and other rental revenues:
Delivery and pick-up —
418
418
—
336
336
Other 262
80
342
198
62
260
Total ancillary and other rental revenues 262
498
760
198
398
596
Total equipment rentals 5,404
498
5,902
4,553
398
4,951
Sales of rental equipment —
587
587
—
478
478
Sales of new equipment —
189
189
—
140
140
Contractor supplies sales —
78
78
—
66
66
Service and other revenues —
139
139
—
106
106
Total revenues $ 5,404
$ 1,491
$ 6,895
$ 4,553
$ 1,188
$ 5,741


	Nine Months Ended September 30,
			2020						2019
	Topic 842		Topic 606		Total		Topic 842		Topic 606		Total
Revenues:
Owned equipment rentals	$	4,498	$	—	$	4,498	$	5,029	$	—	$	5,029
Re-rent revenue	104		—		104		113		—		113
Ancillary and other rental revenues:
Delivery and pick-up	0		370		370		0		418		418
Other	243		71		314		262		80		342
Total ancillary and other rental revenues	243		441		684		262		498		760
Total equipment rentals	4,845		441		5,286		5,404		498		5,902
Sales of rental equipment	—		583		583		—		587		587
Sales of new equipment	—		169		169		—		189		189
Contractor supplies sales	—		73		73		—		78		78
Service and other revenues	—		140		140		—		139		139
Total revenues	$	4,845	$	1,406	$	6,251	$	5,404	$	1,491	$	6,895

Revenues by reportable segment and geographical market are presented in notes 43 and 1110 of the condensed consolidated financial statements, respectively, using the revenue captions reflected in our condensed consolidated statements of operations. The majority of our revenue is recognized in our general rentals segment and in the U.S. (for the nine months ended September 30, ~~2019, 79~~2020, 78 percent and 9192 percent, ~~of total revenues,~~ 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 and geographical market disclosures in notes 43 and ~~11,~~10, 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 7372 percent of total revenues for the nine months ended September 30, ~~2019)~~2020) and are governed by our standard rental contract. We account for such rentals as operating leases. The lease terms are included in our contracts, and the determination of whether our contracts contain leases generally does not require significant assumptions or judgments. Our lease revenues do not include material amounts of variable payments.

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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

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

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

We record amounts billed to customers in excess of recognizable revenue as deferred revenue on our balance sheet. We had deferred revenue (associated with both Topic ~~842/840~~842 and Topic 606) of ~~$59~~$57 and ~~$56~~$55 as of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, 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, and 3) charges for rented equipment that is damaged by our customers.

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

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

As reflected above, most of our equipment rental revenue is accounted for under Topic 842 (such revenue represented 78 percent of our total revenues for the nine months ended September 30, ~~2019)~~2020). 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 allowances for doubtful accounts address receivables arising from revenues from both Topic 606 and Topic ~~842 (Topic 840 for 2018).~~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 1 percent of total revenues for the nine months ended September 30, ~~2019,~~2020, and for each of the last three full years. Our customer with the largest receivable balance represented approximately 1 percent of total receivables at September 30, ~~2019~~2020 and December 31, ~~2018.~~2019. We manage credit risk through credit approvals, credit limits and other monitoring procedures.

Our allowances for doubtful accounts reflect our estimate of the amount of our receivables that we will be unable to collect based on historical write-off ~~experience.~~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 allowances. 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. ~~During~~See the table below for a rollforward of our allowance for doubtful accounts.

In the first quarter of 2020, we adopted accounting guidance that requires companies to present certain financial assets net of the amount expected to be collected. This guidance requires the measurement of expected credit losses to be based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectibility. Our allowance for doubtful accounts as of September 30, 2020 included an adjustment for the estimated impact of COVID-19 on future collectibility that was not material to our financial statements. Trade receivables are the only material financial asset we have that is impacted by this guidance, which 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 78 percent of our total revenues for the nine months ended September 30, ~~2019~~2020, and ~~2018, we recognized total additions, excluding acquisitions, to our allowances~~these revenues account for corresponding portions of the $1.324 billion of net accounts receivable and the associated allowance for doubtful accounts of ~~$33~~$114 reported on our condensed consolidated balance sheet as of September 30, 2020). During the three and ~~$27, respectively, primarily 1) as a reduction to equipment rental revenue or 2) as~~nine months ended September 30, 2020, we recognized total bad debt ~~expense~~expenses for our non-lease trade receivables, within selling, general and administrative expenses inon our condensed consolidated ~~statements~~statement of ~~income.~~income, of $2 and $8, respectively, associated with our allowance for doubtful accounts. Adoption of this guidance did not materially impact 1) net accounts receivable or the associated allowance for doubtful accounts as reported on our condensed consolidated balance sheet as of September 30, 2020 or 2) total bad debt expenses recognized associated with our allowance for doubtful accounts for the three and nine months ended September 30, 2020.

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 doubtful accounts (in total, and associated with revenues arising from both Topic 606 and Topic 842) is shown below.


	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Beginning balance	$	108	$	107	$	103	$	93
Acquired	0		0		0		1
Charged to costs and expenses (1)	2		1		8		6
Charged to revenue (2)	12		5		22		27
Deductions (3)	(8)		(10)		(19)		(24)
Ending balance	$	114	$	103	$	114	$	103

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

_________________

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

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

(3) Represents write-offs of accounts, net of immaterial recoveries.

We do 0t 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 0t recognize material revenue during the three orand nine months ended September 30, ~~2019~~2020 or ~~2018~~2019 that was included in the contract liability balance as of the beginning of such periods.

Performance obligations

Most of our Topic 606 revenue is recognized at a point-in-time, rather than over time. Accordingly, in any particular period, we do not generally recognize a significant amount of revenue from performance obligations satisfied (or partially satisfied) in previous periods, and the amounts of such revenue recognized during the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 were 0t material. We also do not expect to recognize material revenue in the future related to performance obligations that ~~are~~were unsatisfied (or partially unsatisfied) as of September 30, ~~2019.~~2020.

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.

~~3. Acquisitions~~

~~BakerCorp Acquisition~~

In July 2018, we completed the acquisition of BakerCorp. BakerCorp was a leading multinational provider of tank, pump, filtration and trench shoring rental solutions for a broad range of industrial and construction applications. BakerCorp had approximately 950 employees, and its operations were primarily concentrated in the United States and Canada, where it had 46 locations. BakerCorp also had 11 locations in France, Germany, the United Kingdom and the Netherlands. BakerCorp had annual revenues of approximately $295. The acquisition:

•~~Augmented our bundled solutions for fluid storage, transfer and treatment;~~

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

•~~Expanded our strategic account base; and~~

•~~Provided a significant opportunity to increase revenue and enhance customer service by cross-selling to our broader customer base.~~

~~The aggregate consideration paid was approximately $720. The acquisition and related fees and expenses were funded through drawings on our ABL facility.~~

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

Accounts receivable, net of allowance for doubtful accounts (1) $ 74
Inventory 4
Rental equipment 268
Property and equipment 25
Intangibles (2) 171
Other assets 3
Total identifiable assets acquired 545
Current liabilities (60 )
Deferred taxes (13 )
Total liabilities assumed (73 )
Net identifiable assets acquired 472
Goodwill (3) 248
Net assets acquired $ 720

~~(1)~~ ~~The fair value of accounts receivables acquired was $74, and the gross contractual amount was $81. We estimated that $7 would be uncollectible.~~

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

Fair value Life (years)
Customer relationships $ 166
8
Trade names and associated trademarks 5
5
Total $ 171

~~(3)~~
All of the goodwill was assigned to our trench, power and fluid solutions segment. The level of goodwill that resulted from the acquisition is primarily reflective of BakerCorp's going-concern value, the value of BakerCorp's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that are not associated with the identifiable assets. $6 of goodwill is expected to be deductible for income tax purposes.

~~The three and nine months ended September 30, 2019 include BakerCorp acquisition-related costs which are included in “Merger related costs” in our condensed consolidated statements of income.~~

Since the acquisition date, significant amounts of fleet have been moved between URI locations and the acquired BakerCorp locations, and it is not practicable to reasonably estimate the amounts of revenue and earnings of BakerCorp since the acquisition date. The impact of the BakerCorp acquisition on our equipment rentals revenue is primarily reflected in the increases in average OEC of 18.1 percent and 21.5 percent for the three and nine months ended September 30, 2019, respectively. Such increases include the impact of the acquisition of BlueLine discussed below.

~~BlueLine Acquisition~~

In October 2018, we completed the acquisition of BlueLine. BlueLine was one of the ten largest equipment rental companies in North America and served customers in the construction and industrial sectors with a focus on mid-sized and local accounts. BlueLine had 114 locations and over 1,700 employees based in 25 U.S. states, Canada and Puerto Rico. BlueLine had annual revenues of approximately $786. The acquisition:

•~~Expanded our equipment rental capacity in many of the largest metropolitan areas in North America,~~

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

~~including both U.S. coasts, the Gulf South and Ontario;~~

•~~Provided a well-diversified customer base with a balanced mix of commercial construction and industrial accounts;~~

•~~Added more mid-sized and local accounts to our customer base; and~~

•~~Provided a significant opportunity to increase revenue and enhance customer service by cross-selling to our broader customer base.~~

The aggregate consideration paid was approximately $2.069 billion. The acquisition and related fees and expenses were funded through borrowings under a new $1 billion senior secured term loan credit facility (the “term loan facility”) and the issuance of $1.1 billion principal amount of 6 ¹/₂ ~~percent Senior Notes due 2026.~~

The following table summarizes the fair values of the assets acquired and liabilities assumed. The purchase price allocations for these assets and liabilities are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period.

Accounts receivable, net of allowance for doubtful accounts (1) $ 117
Inventory 7
Rental equipment 1,078
Property and equipment 71
Intangibles (customer relationships) (2) 230
Other assets 45
Total identifiable assets acquired 1,548
Short-term debt and current maturities of long-term debt (3) (12 )
Current liabilities (135 )
Long-term debt (3) (25 )
Other long-term liabilities (4 )
Total liabilities assumed (176 )
Net identifiable assets acquired 1,372
Goodwill (4) 697
Net assets acquired $ 2,069

~~(1)~~ ~~The fair value of accounts receivables acquired was $117, and the gross contractual amount was $125. We estimated that $8 would be uncollectible.~~

~~(2)~~ ~~The customer relationships are being amortized over a 5 year life.~~

~~(3)~~ ~~The acquired debt reflects finance lease obligations.~~

~~(4)~~ All of the goodwill was assigned to our general rentals segment. The level of goodwill that resulted from the acquisition is primarily reflective of BlueLine's going-concern value, the value of BlueLine's assembled workforce, new customer relationships expected to arise from the acquisition, and operational synergies that we expect to achieve that are not associated with the identifiable assets. $25 of goodwill is expected to be deductible for income tax purposes.

The three and nine months ended September 30, 2019 include BlueLine acquisition-related costs which are included in “Merger related costs” in our condensed consolidated statements of income. In addition to the acquisition-related costs reflected in our consolidated statements of income, the debt issuance costs associated with the issuance of debt to fund the acquisition are reflected, net of amortization subsequent to the acquisition date, in long-term debt in our consolidated balance sheets.

Since the acquisition date, significant amounts of fleet have been moved between URI locations and the acquired BlueLine locations, and it is not practicable to reasonably estimate the amounts of revenue and earnings of BlueLine since the acquisition date. The impact of the BlueLine acquisition on our equipment rentals revenue is primarily reflected in the increases in average OEC of 18.1 percent and 21.5 percent for the three and nine months ended September 30, 2019, respectively. Such increases include the impact of the acquisition of BakerCorp discussed above.

~~Pro forma financial information~~

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

The pro forma information below gives effect to the BakerCorp and BlueLine acquisitions as if they had been completed on January 1, 2018 (“the pro forma acquisition date”). The pro forma information is not necessarily indicative of our results of operations had the acquisitions been completed on the above date, nor is it necessarily indicative of our future results. The pro forma information does not reflect any cost savings from operating efficiencies or synergies that could result from the acquisitions, and also does not reflect additional revenue opportunities following the acquisitions. The pro forma information includes adjustments to record the assets and liabilities of BakerCorp and BlueLine at their respective fair values based on available information and to give effect to the financing for the acquisitions and related transactions. The pro forma adjustments reflected in the table below are subject to change as additional analysis is performed. The acquisition measurement period for BakerCorp has ended and the values assigned to the BakerCorp assets acquired and liabilities assumed are final. The opening balance sheet values assigned to the BlueLine 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 tables below present unaudited pro forma consolidated income statement information as if BakerCorp and BlueLine had been included in our consolidated results for the entire period reflected.

Three Months Ended Nine Months Ended
September 30, 2018 September 30, 2018
United Rentals BlueLine BakerCorp Total United Rentals BlueLine BakerCorp Total
Historic/pro forma revenues $ 2,116
$ 219
$ 28
$ 2,363
$ 5,741
$ 601
$ 184
$ 6,526

Historic/combined pretax income (loss) 460
—
(63 ) 397
1,051
(30 ) (84 ) 937

Pro forma adjustments to pretax income (loss):
Impact of fair value mark-ups/useful life changes on depreciation (1) (2 ) (2 ) (4 ) (5 ) (8 ) (13 )
Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2) (5 ) —
(5 ) (13 ) —
(13 )
Intangible asset amortization (3) (20 ) (4 ) (24 ) (58 ) (24 ) (82 )
Interest expense (4) (28 ) (2 ) (30 ) (82 ) (14 ) (96 )
Elimination of historic interest (5) 32
9
41
95
30
125

Elimination of merger related costs (6) 3
65
68
5
66
71

Restructuring charges (7) (3 ) 5
2
(26 ) (4 ) (30 )
Pro forma pretax income $ 445
$ 899

(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 BakerCorp and BlueLine acquisitions.

(2) Cost of rental equipment sales was adjusted for the fair value mark-ups of rental equipment acquired in the BlueLine acquisition. BakerCorp did not historically recognize a material amount of rental equipment sales, and accordingly no adjustment was required for BakerCorp.

~~(3) The intangible assets acquired in the BakerCorp and BlueLine acquisitions were amortized.~~

~~(4) As discussed above, we issued debt to fund the BakerCorp and BlueLine acquisitions. Interest expense was adjusted to reflect these changes in our debt portfolio.~~

~~(5) Historic interest on debt that is not part of the combined entity was eliminated.~~

(6) Merger related costs primarily comprised of financial and legal advisory fees associated with the BakerCorp and BlueLine acquisitions were eliminated as they were assumed to have been recognized prior to the pro forma acquisition date. The adjustments for BakerCorp for the three and nine months ended September 30, 2018 include $57 of merger related costs recognized by BakerCorp prior to the acquisition. The adjustments for BlueLine for the three and nine months ended September 30, 2018 include $2 and $4, respectively, of merger related costs recognized by BlueLine prior to the acquisition.

(7) We expect to recognize restructuring charges primarily comprised of severance costs and branch closure charges associated with the acquisitions over a period of approximately one year following the acquisition dates, which, for the pro forma presentation, was January 1, 2018. The adjustments above reflect the timing of the actual restructuring charges following

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

the acquisitions (the pro forma restructuring charges above for the three and nine months ended September 30, 2018 reflect the actual restructuring charges recognized during the three and nine months following the acquisitions). As discussed in note 5 to the condensed consolidated financial statement, we expect to complete the BakerCorp/BlueLine restructuring program in 2019, and do not expect to incur significant additional expenses in connection with the program.

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

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

4.3. Segment Information

Our reportable segments are i) general rentals and ii) trench, power and fluid solutions. Our regions discussed below, which are our operating segments, are aggregated into our reportable segments. We believe that the regions that are aggregated into our reportable segments have similar economic characteristics, as each region 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 regions 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 11 geographic regions—Carolinas, Gulf South, Industrial (which serves the geographic Gulf region and has a strong industrial presence), Mid-Atlantic, Mid Central, Midwest, Northeast, Pacific West, South, Southeast and Western Canada—and operates throughout the United States and Canada.

The trench, power and fluid solutions 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 and iii) fluid solutions equipment primarily used for fluid containment, transfer and treatment. The trench, power and fluid solutions segment is comprised of the following regions, each of which primarily rents the corresponding equipment type described above: i) the Trench Safety region, ii) the Power and HVAC region, iii) the Fluid Solutions region and iv) the Fluid Solutions Europe region. The trench, power and fluid solutions segment’s customers include construction companies involved in infrastructure projects, municipalities and industrial companies. This segment operates throughout the United States and in Canada and Europe.

The following tables set forth financial information by segment.

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


	General rentals		Trench, power and fluid solutions		Total
Three Months Ended September 30, 2020
Equipment rentals	$	1,391	$	470	$	1,861
Sales of rental equipment	182		17		199
Sales of new equipment	47		7		54
Contractor supplies sales	17		8		25
Service and other revenues	42		6		48
Total revenue	1,679		508		2,187
Depreciation and amortization expense	402		90		492
Equipment rentals gross profit	543		234		777
Three Months Ended September 30, 2019
Equipment rentals	$	1,642	$	505	$	2,147
Sales of rental equipment	183		15		198
Sales of new equipment	60		7		67
Contractor supplies sales	17		10		27
Service and other revenues	42		7		49
Total revenue	1,944		544		2,488
Depreciation and amortization expense	426		93		519
Equipment rentals gross profit	671		246		917
Nine Months Ended September 30, 2020
Equipment rentals	$	4,040	$	1,246	$	5,286
Sales of rental equipment	530		53		583
Sales of new equipment	145		24		169
Contractor supplies sales	48		25		73
Service and other revenues	122		18		140
Total revenue	4,885		1,366		6,251
Depreciation and amortization expense	1,240		268		1,508
Equipment rentals gross profit	1,410		577		1,987
Capital expenditures	771		159		930
Nine Months Ended September 30, 2019
Equipment rentals	$	4,592	$	1,310	$	5,902
Sales of rental equipment	541		46		587
Sales of new equipment	167		22		189
Contractor supplies sales	53		25		78
Service and other revenues	119		20		139
Total revenue	5,472		1,423		6,895
Depreciation and amortization expense	1,254		268		1,522
Equipment rentals gross profit	1,765		602		2,367
Capital expenditures	1,800		331		2,131

General
rentals
Trench, power and fluid solutions Total
Three Months Ended September 30, 2019
Equipment rentals $ 1,642
$ 505
$ 2,147
Sales of rental equipment 183
15
198
Sales of new equipment 60
7
67
Contractor supplies sales 17
10
27
Service and other revenues 42
7
49
Total revenue 1,944
544
2,488
Depreciation and amortization expense 426
93
519
Equipment rentals gross profit 671
246
917
Three Months Ended September 30, 2018
Equipment rentals $ 1,444
$ 417
$ 1,861
Sales of rental equipment 130
10
140
Sales of new equipment 50
4
54
Contractor supplies sales 17
7
24
Service and other revenues 33
4
37
Total revenue 1,674
442
2,116
Depreciation and amortization expense 351
67
418
Equipment rentals gross profit 629
218
847
Nine Months Ended September 30, 2019
Equipment rentals $ 4,592
$ 1,310
$ 5,902
Sales of rental equipment 541
46
587
Sales of new equipment 167
22
189
Contractor supplies sales 53
25
78
Service and other revenues 119
20
139
Total revenue 5,472
1,423
6,895
Depreciation and amortization expense 1,254
268
1,522
Equipment rentals gross profit 1,765
602
2,367
Capital expenditures 1,800
331
2,131
Nine Months Ended September 30, 2018
Equipment rentals $ 3,977
$ 974
$ 4,951
Sales of rental equipment 446
32
478
Sales of new equipment 125
15
140
Contractor supplies sales 50
16
66
Service and other revenues 95
11
106
Total revenue 4,693
1,048
5,741
Depreciation and amortization expense 1,022
179
1,201
Equipment rentals gross profit 1,598
482
2,080
Capital expenditures 1,845
251
2,096

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

September 30,
2019 December 31,
2018
Total reportable segment assets
General rentals $ 16,383
$ 15,597
Trench, power and fluid solutions 3,022
2,536
Total assets $ 19,405
$ 18,133


	September 30, 2020		December 31, 2019
Total reportable segment assets
General rentals	$	15,039	$	16,036
Trench, power and fluid solutions	2,869		2,934
Total assets	$	17,908	$	18,970

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Total equipment rentals gross profit	$	777	$	917	$	1,987	$	2,367
Gross profit from other lines of business	109		116		327		338
Selling, general and administrative expenses	(232)		(273)		(721)		(824)
Merger related costs	0		0		0		(1)
Restructuring charge	(6)		(2)		(11)		(16)
Non-rental depreciation and amortization	(97)		(102)		(292)		(311)
Interest expense, net	(278)		(147)		(544)		(478)

Other income, net	2		1		6		6
Income before provision for income taxes	$	275	$	510	$	752	$	1,081

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Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
Total equipment rentals gross profit $ 917
$ 847
$ 2,367
$ 2,080
Gross profit from other lines of business 116
91
338
286
Selling, general and administrative expenses (273 ) (265 ) (824 ) (736 )
Merger related costs —
(11 ) (1 )
(14 )
Restructuring charge (2 ) (9 ) (16 ) (15 )
Non-rental depreciation and amortization (102 ) (75 ) (311 ) (213 )
Interest expense, net (147 ) (118 ) (478 ) (339 )
Other income, net 1
—
6
2
Income before provision for income taxes $ 510
$ 460

$ 1,081

$ 1,051
UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

5.4. Restructuring and Asset Impairment Charges

Restructuring charges primarily include severance costs associated with headcount reductions, as well as branch closure charges. We incur severance costs and branch closure charges in the ordinary course of our business. We only include such costs that are part of a restructuring program as restructuring charges. Since the first such ~~restructuring~~ program was initiated in 2008, we have completed 45 restructuring programs and have incurred total restructuring charges of ~~$331.~~$344.

Closed Restructuring Programs

Our closed restructuring programs were initiated either in recognition of a challenging economic environment or following the completion of certain significant acquisitions. As of September 30, ~~2019,~~2020, the total liability associated with the closed restructuring programs was ~~$12.~~$15.

~~BakerCorp/BlueLine~~2020-2021 Cost Savings Restructuring Program

In the ~~third~~fourth quarter of ~~2018,~~2019, we initiated a restructuring program ~~following the closing of the BakerCorp acquisition discussed in note 3 to the condensed consolidated financial statements. The restructuring program also includes actions undertaken~~ associated with the ~~BlueLine acquisition discussed in note 3 to~~consolidation of certain common functions, the ~~condensed consolidated financial statements.~~relocation of our shared-service facilities and certain other cost reduction measures. We expect to complete the restructuring program in ~~2019, and do not expect~~the first half of 2021. The total costs expected to ~~incur significant additional expenses~~be incurred in connection with the ~~program.~~program are not currently estimable, as we are still identifying the actions that will be undertaken. As of September 30, 2020, we have not recognized material costs under this program, and the liability balance associated with the program is not material.

~~The table below provides certain information concerning~~Asset Impairment Charges

In addition to the restructuring ~~activity under the BakerCorp/BlueLine restructuring program~~charges discussed above, during the three and nine months ended September 30, ~~2019:~~

Reserve Balance at Charged to
Costs and
Expenses (1) Payments
and Other Reserve Balance at
December 31, 2018 September 30, 2019
Branch closure charges $ 3
$ 14
$ (5 ) $ 12
Severance and other 9
6
(13 ) 2
Total $ 12
$ 20
$ (18 ) $ 14

~~Table~~2020, we recorded asset impairment charges of ~~Contents~~

~~UNITED RENTALS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Dollars~~$10 and $36, respectively, primarily in ~~millions, except per share data, unless otherwise indicated)~~

~~_________________~~

~~(1) Reflected~~our general rentals segment. The asset impairment charges, which were not related to COVID-19, are primarily reflected in depreciation of rental equipment in our condensed consolidated statements of income ~~as “Restructuring charge” (such charge also includes activity under our closed restructuring programs). These~~and principally relate to the discontinuation of certain equipment programs. There were 0 material asset impairment charges ~~are not allocated to our reportable segments.~~during the three and nine months ended September 30, 2019.

5. Fair Value Measurements

As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, 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.~~

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.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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 ABL, accounts receivable securitization and term loan facilities and ~~finance/capital~~finance leases ~~(the classification of such leases changed upon adoption of a new lease accounting standard, as explained further in note 8 to the condensed consolidated financial statements)~~ approximated their book values as of September 30, ~~2019~~2020 and December 31, ~~2018~~.2019. The estimated fair values of our other financial instruments, all of which are categorized in Level 1 of the fair value hierarchy, as of September 30, ~~2019~~2020 and December 31, ~~2018~~2019 have been calculated based upon available market information, and were as follows:

September 30, 2019 December 31, 2018

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value
Senior notes $ 8,008
$ 8,455
$ 8,102
$ 7,632


	September 30, 2020				December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value


Senior notes	$	7,705	$	8,113	$	7,755	$	8,176

7.6. Debt

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

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~~UNITED RENTALS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

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

September 30, 2019 December 31, 2018
Accounts Receivable Securitization Facility expiring 2020 (1) (2) $ 925
$ 850
$3.75 billion ABL Facility expiring 2024 (1) (3) 1,630
1,685
Term loan facility expiring 2025 (1) 981
988
4 ⁵/₈ percent Senior Secured Notes due 2023
995
994
5 ³/₄ percent Senior Notes due 2024 (4)
—
842
5 ¹/₂ percent Senior Notes due 2025
795
794
4 ⁵/₈ percent Senior Notes due 2025
742
741
5 ⁷/₈ percent Senior Notes due 2026
999
999
6 ¹/₂ percent Senior Notes due 2026
1,088
1,087
5 ¹/₂ percent Senior Notes due 2027
992
991
4 ⁷/₈ percent Senior Notes due 2028 (5)
1,652
1,650
4 ⁷/₈ percent Senior Notes due 2028 (5)
4
4
5 ¹/₄ percent Senior Notes due 2030 (6)
741
—
Finance leases (7) 120
—
Capital leases (7) —
122
Total debt 11,664
11,747
Less short-term portion (8) (973 ) (903 )
Total long-term debt $ 10,691
$ 10,844


	September 30, 2020		December 31, 2019
Accounts Receivable Securitization Facility expiring 2021 (1) (2)	$	634	$	929
$3.75 billion ABL Facility expiring 2024 (1) (3)	598		1,638
Term loan facility expiring 2025 (1)	973		979











5 1/2 percent Senior Notes due 2025 (4)	0		795
4 5/8 percent Senior Notes due 2025 (5)	743		742
5 7/8 percent Senior Notes due 2026	999		999
6 1/2 percent Senior Notes due 2026 (6)	0		1,089
5 1/2 percent Senior Notes due 2027	993		992
3 7/8 percent Senior Secured Notes due 2027	742		741
4 7/8 percent Senior Notes due 2028 (7)	1,654		1,652
4 7/8 percent Senior Notes due 2028 (7)	4		4
5 1/4 percent Senior Notes due 2030	742		741
4 percent Senior Notes due 2030 (8)	741		—
3 7/8 percent Senior Notes due 2031 (9)	1,087		—
Finance leases	141		127




Total debt	10,051		11,428
Less short-term portion (10)	(700)		(997)
Total long-term debt	$	9,351	$	10,431

___________________

(1)The table below presents financial information associated with our variable rate indebtedness as of and for the nine months ended September 30, ~~2019.~~2020. We have borrowed the full available amount under the term loan facility. The principal obligation under the term loan facility is required to be repaid in quarterly installments in an aggregate amount equal to 1.0 percent per annum, with the balance due at the maturity of the facility. The average amount of debt outstanding under the term loan facility decreases slightly each quarter due to the requirement to repay a portion of the principal obligation.

ABL facility Accounts receivable securitization facility Term loan facility
Borrowing capacity, net of letters of credit $ 2,051
$ 50
$ —
Letters of credit 57

Interest rate at September 30, 2019 3.4 % 2.9 % 3.8 %
Average month-end debt outstanding 1,585
914
994
Weighted-average interest rate on average debt outstanding 3.8 % 3.2 % 4.1 %
Maximum month-end debt outstanding 1,691
967
998

~~(2)~~

In June 2019, the accounts receivable securitization facility was amended, primarily to extend the maturity date which may be further extended on a 364-day basis by mutual agreement with the purchasers under the facility. The facility expires on June 26, 2020. Borrowings under the accounts receivable securitization facility are permitted only to the extent that the face amount of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans. As of ~~September 30, 2019, there were $1.050 billion of receivables, net of applicable reserves and other deductions, in the collateral pool.~~


~~(3)~~	In February 2019, the ABL facility was amended, primarily to increase the facility size to $3.75 billion, extend the maturity date to February 2024 and make a portion of the facility available for borrowing in British Pounds and Euros by certain subsidiaries of URNA in Europe.


~~(4)~~	~~In May 2019, URNA redeemed all of its 5~~ ³/₄ percent Senior Notes. Upon redemption, we recognized a loss of $32 in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes.

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



	ABL facility			Accounts receivable securitization facility			Term loan facility
Borrowing capacity, net of letters of credit	$	3,091		$	165		$	0
Letters of credit	52
Interest rate at September 30, 2020	1.4		%	1.5		%	1.9		%
Average month-end debt outstanding	730			671			984
Weighted-average interest rate on average debt outstanding	2.1		%	1.9		%	2.4		%
Maximum month-end debt outstanding	1,494			811			988

~~(5)~~

(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 September 30, 2020, there were $873 of receivables, net of applicable reserves and other deductions, in the collateral pool. In April 2020, we amended the accounts receivable securitization facility to adjust, on a temporary basis, the financial tests relating to: (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding. The adjustments to these tests were intended to make compliance with such tests more likely for the calendar months ending April 30, 2020 and May 31, 2020, and we were in compliance with such tests for these months. In June 2020, the accounts receivable securitization facility was further amended to (a) extend the maturity date, which may be further extended on a 364-day basis by mutual agreement with the purchasers under the facility, to June 25, 2021, (b) reduce the size of the facility from $975 to $800 and (c) adjust, for the calendar months ending on or after June 30, 2020, the financial tests (including the method of calculation) relating to (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding.

(3)The decrease in the outstanding debt under the ABL facility since December 31, 2019 primarily reflects the use of proceeds from operations to reduce borrowings under the ABL facility.

(4)At the time of the offering of the 4 percent Senior Notes due 2030 (the “4 percent Notes”) discussed below, we indicated our expectation that we would re-borrow an amount equal to the net proceeds from the offering, along with additional borrowings under the ABL facility, to redeem URNA's 5 1/2 percent Senior Notes due 2025 on or after July 15, 2020. Prior to redeeming the 5 1/2 percent Senior Notes due 2025, we considered the impact of COVID-19 on liquidity, and assessed our available sources and anticipated uses of cash, including, with respect to sources, cash generated from operations and from the sale of rental equipment. In August 2020, URNA redeemed all of its 5 1/2 percent Senior Notes due 2025. Upon redemption, we recognized a loss of $27 in interest expense, net, reflecting the difference between the net carrying amount and the total purchase price of the redeemed notes.

(5)In October 2020, URNA redeemed all of its 4 5/8 percent Senior Notes due 2025, using borrowings available under our ABL facility. Upon redemption, we recognized a loss of $24 in interest expense, net, reflecting the difference between the net carrying amount and the total purchase price of the redeemed notes.

(6)In August 2020, URNA redeemed all of its 6 1/2 percent Senior Notes. Upon redemption, we recognized a loss of $132 in interest expense, net, reflecting the difference between the net carrying amount and the total purchase price of the redeemed notes.

(7)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 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.

(8)In February 2020, URNA issued $750 aggregate principal amount of 4 percent Notes which are due July 15, 2030. The net proceeds from the issuance were approximately $741 (after deducting offering expenses). The 4 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 4 percent Notes may be redeemed on or after July 15, 2025, at specified redemption prices that range from 102.000 percent in 2025, to 100 percent in 2028 and thereafter, in each case, plus accrued and unpaid interest, if any. In addition, at any time on or prior to July 15, 2023, up to 40 percent of the aggregate principal amount of the 4 percent Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 104.000 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any. The indenture governing the 4 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens and (ii) mergers and consolidations, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the requirements to provide subsidiary guarantees and to make an offer to repurchase the notes upon the occurrence of a change of control will not apply to URNA and its restricted subsidiaries during any period when the 4 percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as

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

defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 4 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

(9)In August 2020, URNA issued $1.100 billion aggregate principal amount of 3 7/8 percent Senior Notes (the “3 7/8 percent Notes”) which are due February 15, 2031. The net proceeds from the issuance were approximately $1.087 billion (after deducting offering expenses). The 3 7/8 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 3 7/8 percent Notes may be redeemed on or after August 15, 2025, at specified redemption prices that range from 101.938 percent in 2025, to 100 percent in 2028 and thereafter, in each case, plus accrued and unpaid interest, if any. In addition, at any time on or prior to August 15, 2023, up to 40 percent of the aggregate principal amount of the 3 7/8 percent Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 103.875 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any. The indenture governing the 3 7/8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens and (ii) mergers and consolidations, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the requirements to provide subsidiary guarantees and to make an offer to repurchase the notes upon the occurrence of a change of control will not apply to URNA and its restricted subsidiaries during any period when the 3 7/8 percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 3 7/8 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.

(10)As of September 30, 2020, our short-term debt primarily reflects $634 of borrowings under our accounts receivable securitization facility.

~~(6)~~

~~In May 2019, URNA issued $750 aggregate principal amount of 5~~ ¹/₄ ~~percent Senior Notes (the “5~~ ¹/₄ ~~percent Notes”) which are due January 15, 2030. The net proceeds from the issuance were approximately $741 (after deducting offering expenses). The 5~~ ¹/₄ ~~percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 5~~ ¹/₄ percent Notes may be redeemed on or after January 15, 2025, at specified redemption prices that range from 102.625 percent in 2025, to 100 percent in 2028 and thereafter, in each case, plus accrued and unpaid interest, if any. In addition, at any time on or prior to January 15, 2023, up to 40 percent of the aggregate principal amount of the 5 ¹/₄ percent Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 105.250 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any. The indenture governing the 5 ¹/₄ percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; (iii) sales, transfers and other dispositions of assets; (iv) dividends and other distributions, stock repurchases and redemptions and other restricted payments; and (v) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the 5 ¹/₄ percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 5 ¹/₄ ~~percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon.~~


~~(7)~~	As discussed in note 8 to the condensed consolidated financial statements, we adopted an updated lease accounting standard on January 1, 2019. Upon adoption of the new standard, the leases that were previously classified as capital leases through December 31, 2018 were classified as finance leases. There were no significant changes to the accounting upon this change in classification.


~~(8)~~	~~As of September 30, 2019, our short-term debt primarily reflects $925 of borrowings under our accounts receivable securitization facility.~~

Loan Covenants and Compliance

As of September 30, ~~2019,~~2020, we were in compliance with the covenants and other provisions of the ABL, accounts receivable securitization and term loan 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 ~~maintenance~~ covenant that currently exists under the ABL facility is the fixed charge coverage ratio. Subject to certain limited exceptions specified in the ABL facility, the fixed charge coverage ratio covenant under the ABL facility will only apply in the future if specified availability under the ABL facility falls below 10 percent of the maximum revolver amount under the ABL facility. When certain conditions are met, cash and cash equivalents and borrowing base collateral in excess of the ABL facility size may be included when calculating specified availability under the ABL facility. As of September 30, ~~2019,~~2020, specified availability under the ABL facility exceeded the required threshold and, as a result, this financial ~~maintenance~~ 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.

8.7. Leases

~~Adoption of Accounting Standards Codification (“ASC”) Topic 842, “Leases”~~

In March 2016, the FASB issued guidance ("Topic 842") to increase transparency and comparability among organizations by requiring (1) recognition of lease assets and lease liabilities on the balance sheet and (2) disclosure of key information about leasing arrangements. Some changes to the lessor accounting guidance were made to align both of the following: (1) the lessor accounting guidance with certain changes made to the lessee accounting guidance and (2) key aspects of the lessor accounting model with revenue recognition guidance. We adopted Topic 842 at the required adoption date of January 1, 2019, using the transition method that allowed us to initially apply Topic 842 as of January 1, 2019 and recognize a cumulative-effect

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~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

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

adjustment to the opening balance of retained earnings in the period of adoption. We used the package of practical expedients permitted under the transition guidance that allowed us to not reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. We additionally used, for our real estate operating leases, the practical expedient that allows lessees to treat the lease and non-lease components of leases as a single lease component. We did not recognize a material adjustment to the opening balance of retained earnings upon adoption. Because of the transition method we used to adopt Topic 842, Topic 842 was not applied to periods prior to adoption and the adoption of Topic 842 had no impact on our previously reported results.

As discussed in note 2 to the condensed consolidated financial statements, most of our equipment rental ~~revenues, which~~revenue is accounted for 86as lease revenue under Topic 842 (such lease revenue represented 78 percent of our total revenues for the nine months ended September 30, 2019, were accounted for under the previous lease accounting standard through December 31, 2018 and are accounted for under Topic 842 following adoption. There were no significant changes to our revenue accounting upon adoption of Topic 842.2020). See note 2 to the condensed consolidated financial statements for a discussion of our revenue accounting (such discussion includes lessor disclosures required under Topic 842).

The adoption of Topic 842 had a material impact on our condensed consolidated balance sheet due to the recognition of right-of-use (“ROU”) assets and lease liabilities, as discussed further below. The adoption of Topic 842 did not have a material impact on our condensed consolidated income statement (as noted above, although a significant portion of our revenue is accounted for under Topic 842 following adoption, there were no significant changes to our revenue accounting upon adoption) or our condensed consolidated cash flow statement.

~~Lease Accounting~~

We determine if an arrangement is a lease at inception. Our material lease contracts are generally for real estate or vehicles, and the determination of whether such contracts contain leases generally does not require significant estimates or judgments. We lease real estate and equipment under operating leases. We lease a significant portion of our branch locations, and also lease other premises used for purposes such as district and regional offices and service centers. Our finance lease obligations consist primarily of rental equipment (primarily vehicles) and building leases.

Operating leases result in the recognition of ~~ROU~~right-of-use ("ROU") assets and lease liabilities on the balance sheet. ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

payments over the lease term. As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate at the commencement date to determine the present value of lease payments. The operating lease ROU assets also include any lease payments made and exclude lease incentives. Our lease terms may include options, at our sole discretion, to extend or terminate the lease that we are reasonably certain to exercise. The amount of payments associated with such options reflected in the “Maturity of lease liabilities” table below is not material. Most real estate leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 5 years or more. Lease expense is recognized on a straight-line basis over the lease term.

Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense on such leases is recognized on a straight-line basis over the lease term. The primary leases we enter into with initial terms of 12 months or less are for equipment that we rent from vendors and then rent to our customers. We generate sublease revenue from such leases that we refer to as "re-rent revenue" as discussed in note 2 to the condensed consolidated financial statements. Apart from ~~the~~this re-rent revenue, ~~discussed in note 2,~~ we do not generate material sublease income.

We have lease agreements with lease and non-lease components, and, for our real estate operating leases, we use the practical expedient that allows us to account for the lease and non-lease components as a single lease component. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The tables below present financial information associated with our ~~leases. This information is only presented~~leases as of September 30, 2020 and December 31, 2019, and for the three and nine months ended September 30, ~~2019 because, as noted above, we adopted Topic 842 using a transition method that does not require application to periods prior to adoption.~~2020 and 2019.


	Classification	September 30, 2020		December 31, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	663	$	669
Finance lease assets	Rental equipment	297		286
	Less accumulated depreciation	(87)		(89)
	Rental equipment, net	210		197
	Property and equipment, net:
	Non-rental vehicles	8		8
	Buildings	19		18
	Less accumulated depreciation and amortization	(11)		(15)
	Property and equipment, net	16		11
Total leased assets		889		877
Liabilities
Current
Operating	Accrued expenses and other liabilities	178		178
Finance	Short-term debt and current maturities of long-term debt	56		58
Long-term
Operating	Operating lease liabilities	524		533
Finance	Long-term debt	85		69
Total lease liabilities		$	843	$	838

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Classification September 30, 2019
Assets
Operating lease assets Operating lease right-of-use assets $ 650
Finance lease assets Rental equipment 276
Less accumulated depreciation (90 )
Rental equipment, net 186
Property and equipment, net:
Non-rental vehicles 8
Buildings 16
Less accumulated depreciation and amortization (19 )
Property and equipment, net 5
Total leased assets 841
Liabilities
Current
Operating Accrued expenses and other liabilities 174
Finance Short-term debt and current maturities of long-term debt 38
Long-term
Operating Operating lease liabilities 522
Finance Long-term debt 82
Total lease liabilities $ 816


Lease cost	Classification	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019			Lease cost	Classification	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Operating lease cost (1)	Cost of equipment rentals, excluding depreciation (1)	$	95		$	270		Operating lease cost (1)	Cost of equipment rentals, excluding depreciation (1)	$	95	$	95	$	273	$	270
	Selling, general and administrative expenses	3			8				Selling, general and administrative expenses	2		3		8		8
	Restructuring charge	1			14				Restructuring charge	1		1		3		14
Finance lease cost								Finance lease cost
Amortization of leased assets	Depreciation of rental equipment	7			21			Amortization of leased assets	Depreciation of rental equipment	8		7		23		21
	Non-rental depreciation and amortization	1			2				Non-rental depreciation and amortization	0		1		1		2
Interest on lease liabilities	Interest expense, net	2			5			Interest on lease liabilities	Interest expense, net	3		2		9		5
Sublease income (2)		(42		)	(114		)	Sublease income (2)		(41)		(42)		(105)		(114)
Net lease cost		$	67		$	206		Net lease cost		$	68	$	67	$	212	$	206

_________________

(1) Includes variable lease costs, which are immaterial. Cost of equipment rentals, excluding depreciation includes $32 and $40 for the three months ended, September 30, 2020 and 2019, respectively, and $90 and $103 for the nine months ended September 30, ~~2019 includes $40~~2020 and ~~$103,~~2019, respectively, of short-term lease costs associated with equipment that we rent from vendors and then rent to our customers, as discussed further above. Apart from these costs, short-term lease costs are immaterial.

(2) Primarily reflects re-rent revenue as discussed further above.

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~~UNITED RENTALS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

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


Maturity of lease liabilities (as of September 30, 2019)	Operating leases (1)			Finance leases (2)
2019	$	53		$	12
Maturity of lease liabilities (as of September 30, 2020)							Maturity of lease liabilities (as of September 30, 2020)	Operating leases (1)		Finance leases (2)
2020	199			42			2020	$	53	$	15
2021	170			42			2021	201		65
2022	130			18			2022	168		36
2023	96			6			2023	134		25
2024							2024	100		4
Thereafter	137			7			Thereafter	145		5
Total	785			127			Total	801		150
Less amount representing interest	(89		)	(7		)	Less amount representing interest	(99)		(9)
Present value of lease liabilities	$	696		$	120		Present value of lease liabilities	$	702	$	141

_________________

(1) Reflects payments for non-cancelable operating leases with initial or remaining terms of one year or more as of September 30, ~~2019.~~2020. The table above does not include any legally binding minimum lease payments for leases signed but not yet commenced, and such leases are not material in the aggregate.

(2) The table above does not include any legally binding minimum lease payments for leases signed but not yet commenced, and such leases are not material in the aggregate.


Lease term and discount rate	September 30, 2020		December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	4.8		4.8
Finance leases	2.9		3.2
Weighted-average discount rate
Operating leases	4.4	%	4.7	%
Finance leases	3.6	%	4.0	%



~~Lease term and discount rate~~	~~September 30, 2019~~
~~Weighted-average remaining lease term (years)~~
~~Operating leases~~	~~4.8~~
~~Finance leases~~	~~3.4~~
~~Weighted-average discount rate~~
~~Operating leases~~	~~4.8~~	%
~~Finance leases~~	~~4.0~~	%

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Other information Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases $ 151
Operating cash flows from finance leases 5
Financing cash flows from finance leases 35
Leased assets obtained in exchange for new operating lease liabilities 147
Leased assets obtained in exchange for new finance lease liabilities $ 36


Other information	Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	156	$	151
Operating cash flows from finance leases	9		5
Financing cash flows from finance leases	39		35
Leased assets obtained in exchange for new operating lease liabilities	135		147
Leased assets obtained in exchange for new finance lease liabilities	$	54	$	36

8. Legal and Regulatory Matters

We 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.

10.9. Earnings Per Share

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Numerator:



Net income available to common stockholders	$	208	$	391	593		836
Denominator:
Denominator for basic earnings per share—weighted-average common shares	72,190		76,699		72,795		78,111
Effect of dilutive securities:
Employee stock options	9		30		12		144



Restricted stock units	243		128		193		186
Denominator for diluted earnings per share—adjusted weighted-average common shares	72,442		76,857		73,000		78,441
Basic earnings per share	$	2.88	$	5.10	$	8.14	$	10.70
Diluted earnings per share	$	2.87	$	5.08	$	8.12	$	10.66

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

~~outstanding during the period. The following table sets forth the computation of basic and diluted earnings per share (shares in thousands):~~

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Numerator:
Net income available to common stockholders $ 391
$ 333
836
786
Denominator:
Denominator for basic earnings per share—weighted-average common shares 76,699
82,344
78,111
83,345
Effect of dilutive securities:
Employee stock options 30
372
144
389
Restricted stock units 128
456
186
477
Denominator for diluted earnings per share—adjusted weighted-average common shares 76,857
83,172
78,441
84,211
Basic earnings per share $ 5.10
$ 4.05
$ 10.70
$ 9.44
Diluted earnings per share $ 5.08
$ 4.01
$ 10.66
$ 9.34

~~Table of Contents~~

~~UNITED RENTALS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

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

~~11.~~10. Condensed Consolidating Financial Information of Guarantor Subsidiaries

URNA is 100 percent owned by Holdings (“Parent”) and has certain outstanding indebtedness that is guaranteed by both Parent and, with the exception of its U.S. special purpose vehicle which holds receivable assets relating to the Company’s accounts receivable securitization facility (the “SPV”), all of URNA’s U.S. subsidiaries (the “guarantor subsidiaries”). Other than the guarantee by certain Canadian subsidiaries of URNA's indebtedness under the ABL facility, none of URNA’s indebtedness is guaranteed by URNA's foreign subsidiaries or the SPV (together, the “non-guarantor subsidiaries”). The receivable assets owned by the SPV have been sold or contributed by URNA to the SPV and are not available to satisfy the obligations of URNA or Parent’s other subsidiaries. The guarantor subsidiaries are all 100 percent-owned and the guarantees are made on a joint and several basis. The guarantees are not full and unconditional because a guarantor subsidiary can be automatically released and relieved of its obligations under certain circumstances, including sale of the guarantor subsidiary, the sale of all or substantially all of the guarantor subsidiary's assets, the requirements for legal defeasance or covenant defeasance under the applicable indenture being met, designating the guarantor subsidiary as an unrestricted subsidiary for purposes of the applicable covenants or the notes being rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA. The guarantees are also subject to subordination provisions (to the same extent that the obligations of the issuer under the relevant notes are subordinated to other debt of the issuer) and to a standard limitation which provides that the maximum amount guaranteed by each guarantor will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws. Based on our understanding of Rule 3-10 of Regulation S-X ("Rule 3-10"), we believe that the guarantees of the guarantor subsidiaries comply with the conditions set forth in Rule 3-10 and therefore continue to utilize Rule 3-10 to present condensed consolidating financial information for Holdings, URNA, the guarantor subsidiaries and the non-guarantor subsidiaries. Separate consolidated financial statements of the guarantor subsidiaries have not been presented because management believes that such information would not be material to investors. However, condensed consolidating financial information is presented.

Covenants in the ABL, accounts receivable securitization and term loan facilities, and the other agreements governing our debt, impose operating and financial restrictions on URNA, Parent and the guarantor subsidiaries, including limitations on the ability to make share repurchases and dividend payments. As of September 30, ~~2019,~~2020, the amount available for distribution under the most restrictive of these covenants was ~~$702.~~$915. The Company’s total available capacity for making share repurchases and dividend payments includes the intercompany receivable balance of Parent. As of September 30, ~~2019,~~2020, our total available capacity for making share repurchases and dividend payments, which includes URNA’s capacity to make restricted payments and the intercompany receivable balance of Parent, was ~~$2.809~~$3.774 billion.

The condensed consolidating financial information of Parent and its subsidiaries is as follows:

3128

Table of Contents

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

~~CONDENSED CONSOLIDATING BALANCE SHEET~~

~~September 30, 2019~~

Parent URNA
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations Total
Foreign SPV
ASSETS
Cash and cash equivalents $ —
$ 35
$ —
$ 25
$ —
$ —
$ 60
Accounts receivable, net —
—
—
159
1,436
—
1,595
Intercompany receivable (payable) 2,107
(1,980 ) (111 ) (16 ) —
—
—
Inventory —
118
—
12
—
—
130
Prepaid expenses and other assets —
80
—
16
—
—
96
Total current assets 2,107
(1,747 ) (111 ) 196
1,436
—
1,881
Rental equipment, net —
9,370
—
794
—
—
10,164
Property and equipment, net 65
389
82
51
—
—
587
Investments in subsidiaries 1,488
1,675
1,033
—
—
(4,196 ) —
Goodwill —
4,760
—
383
—
—
5,143
Other intangible assets, net —
895
—
66
—
—
961
Operating lease right-of-use assets —
193
387
70
—
—
650
Other long-term assets 11
8
—
—
—
—
19
Total assets $ 3,671
$ 15,543
$ 1,391
$ 1,560
$ 1,436
$ (4,196 ) $ 19,405
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Short-term debt and current maturities of long-term debt $ —
$ 46
$ —
$ 2
$ 925
$ —
$ 973
Accounts payable —
751
—
88
—
—
839
Accrued expenses and other liabilities —
661
115
53
2
—
831
Total current liabilities —
1,458
115
143
927
—
2,643
Long-term debt —
10,656
8
27
—
—
10,691
Deferred taxes 21
1,692
—
87
—
—
1,800
Operating lease liabilities —
151
313
58
—
—
522
Other long-term liabilities —
98
—
1
—
—
99
Total liabilities 21
14,055
436
316
927
—
15,755
Total stockholders’ equity (deficit) 3,650
1,488
955
1,244
509
(4,196 ) 3,650
Total liabilities and stockholders’ equity (deficit) $ 3,671
$ 15,543
$ 1,391
$ 1,560
$ 1,436
$ (4,196 ) $ 19,405

~~Table of Contents~~

~~UNITED RENTALS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

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

CONDENSED CONSOLIDATING BALANCE SHEET

~~December 31, 2018~~September 30, 2020


	Parent		URNA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries				Eliminations		Total
							Foreign		SPV
ASSETS
Cash and cash equivalents	$	0	$	26	$	0	$	148	$	0	$	0	$	174
Accounts receivable, net	0		0		0		140		1,184		0		1,324
Intercompany receivable (payable)	2,859		(2,774)		(89)		3		1		0		0
Inventory	0		97		0		11		0		0		108
Prepaid expenses and other assets	0		121		0		1		0		0		122

Total current assets	2,859		(2,530)		(89)		303		1,185		0		1,728
Rental equipment, net	0		8,312		0		729		0		0		9,041
Property and equipment, net	104		393		55		46		0		0		598
Investments in subsidiaries	1,206		1,776		1,076		0		0		(4,058)		0
Goodwill	0		4,757		0		390		0		0		5,147
Other intangible assets, net	0		655		0		46		0		0		701
Operating lease right-of-use assets	0		183		413		67		0		0		663
Other long-term assets	13		16		0		1		0		0		30
Total assets	$	4,182	$	13,562	$	1,455	$	1,582	$	1,185	$	(4,058)	$	17,908
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Short-term debt and current maturities of long-term debt	$	0	$	63	$	0	$	3	$	634	$	0	$	700
Accounts payable	0		483		0		58		0		0		541
Accrued expenses and other liabilities	0		502		124		49		0		0		675
Total current liabilities	0		1,048		124		110		634		0		1,916
Long-term debt	0		9,332		6		13		0		0		9,351

Deferred taxes	21		1,697		0		100		0		0		1,818
Operating lease liabilities	0		141		328		55		0		0		524
Other long-term liabilities	0		138		0		0		0		0		138
Total liabilities	21		12,356		458		278		634		0		13,747

Total stockholders’ equity (deficit)	4,161		1,206		997		1,304		551		(4,058)		4,161
Total liabilities and stockholders’ equity (deficit)	$	4,182	$	13,562	$	1,455	$	1,582	$	1,185	$	(4,058)	$	17,908

Parent URNA
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations Total
Foreign SPV
ASSETS
Cash and cash equivalents $ —
$ 1
$ —
$ 42
$ —
$ —
$ 43
Accounts receivable, net —
—
—
159
1,386
—
1,545
Intercompany receivable (payable) 1,534
(1,423 ) (96 ) (15 ) —
—
—
Inventory —
96
—
13
—
—
109
Prepaid expenses and other assets —
60
—
4
—
—
64
Total current assets 1,534
(1,266 ) (96 ) 203
1,386
—
1,761
Rental equipment, net —
8,910
—
690
—
—
9,600
Property and equipment, net 57
462
40
55
—
—
614
Investments in subsidiaries 1,826
1,646
980
—
—
(4,452 ) —
Goodwill —
4,661
—
397
—
—
5,058
Other intangible assets, net —
1,004
—
80
—
—
1,084
Other long-term assets 9
7
—
—
—
—
16
Total assets $ 3,426
$ 15,424
$ 924
$ 1,425
$ 1,386
$ (4,452 ) $ 18,133
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Short-term debt and current maturities of long-term debt $ 1
$ 50
$ —
$ 2
$ 850
$ —
$ 903
Accounts payable —
481
—
55
—
—
536
Accrued expenses and other liabilities —
619
14
42
2
—
677
Total current liabilities 1
1,150
14
99
852
—
2,116
Long-term debt —
10,778
9
57
—
—
10,844
Deferred taxes 22
1,587
—
78
—
—
1,687
Other long-term liabilities —
83
—
—
—
—
83
Total liabilities 23
13,598
23
234
852
—
14,730
Total stockholders’ equity (deficit) 3,403
1,826
901
1,191
534
(4,452 ) 3,403
Total liabilities and stockholders’ equity (deficit) $ 3,426
$ 15,424
$ 924
$ 1,425
$ 1,386
$ (4,452 ) $ 18,133

Table of Contents

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

CONDENSED CONSOLIDATING ~~STATEMENT OF INCOME AND COMPREHENSIVE INCOME~~BALANCE SHEET

~~For the Three Months Ended September 30,~~December 31, 2019

Parent URNA
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations Total
Foreign SPV
Revenues:
Equipment rentals $ —
$ 1,971
$ —
$ 176
$ —
$ —
$ 2,147
Sales of rental equipment —
181
—
17
—
—
198
Sales of new equipment —
60
—
7
—
—
67
Contractor supplies sales —
24
—
3
—
—
27
Service and other revenues —
46
—
3
—
—
49
Total revenues —
2,282
—
206
—
—
2,488
Cost of revenues:
Cost of equipment rentals, excluding depreciation —
737
—
76
—
—
813
Depreciation of rental equipment —
378
—
39
—
—
417
Cost of rental equipment sales —
113
—
9
—
—
122
Cost of new equipment sales —
52
—
6
—
—
58
Cost of contractor supplies sales —
16
—
2
—
—
18
Cost of service and other revenues —
26
—
1
—
—
27
Total cost of revenues —
1,322
—
133
—
—
1,455
Gross profit —
960
—
73
—
—
1,033
Selling, general and administrative expenses (7 ) 251
—
25
4
—
273
Merger related costs —
—
—
—
—
—
—
Restructuring charge —
2
—
—
—
—
2
Non-rental depreciation and amortization 4
89
—
9
—
—
102
Operating income (loss) 3
618
—
39
(4 ) —
656
Interest (income) expense, net (18 ) 158
—
—
7
—
147
Other (income) expense, net (201 ) 230
—
15
(45 ) —
(1 )
Income before provision for income taxes 222
230
—
24
34
—
510
Provision for income taxes 56
48
—
6
9
—
119
Income before equity in net earnings (loss) of subsidiaries 166
182
—
18
25
—
391
Equity in net earnings (loss) of subsidiaries 225
43
12
—
—
(280 ) —
Net income (loss) 391
225
12
18
25
(280 ) 391
Other comprehensive (loss) income (23 ) (23 ) (12 ) (21 ) —
56
(23 )
Comprehensive income (loss) $ 368
$ 202
$ —
$ (3 ) $ 25
$ (224 ) $ 368


	Parent		URNA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries				Eliminations		Total
							Foreign		SPV
ASSETS
Cash and cash equivalents	$	0	$	28	$	0	$	24	$	0	$	0	$	52
Accounts receivable, net	0		0		0		171		1,359		0		1,530
Intercompany receivable (payable)	2,255		(2,130)		(112)		(14)		1		0		0
Inventory	0		108		0		12		0		0		120
Prepaid expenses and other assets	0		124		0		16		0		0		140

Total current assets	2,255		(1,870)		(112)		209		1,360		0		1,842
Rental equipment, net	0		8,995		0		792		0		0		9,787
Property and equipment, net	76		400		78		50		0		0		604
Investments in subsidiaries	1,509		1,636		1,069		0		0		(4,214)		0
Goodwill	0		4,759		0		395		0		0		5,154
Other intangible assets, net	0		833		0		62		0		0		895
Operating lease right-of-use assets	0		194		403		72		0		0		669
Other long-term assets	12		7		0		0		0		0		19
Total assets	$	3,852	$	14,954	$	1,438	$	1,580	$	1,360	$	(4,214)	$	18,970
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Short-term debt and current maturities of long-term debt	$	0	$	66	$	0	$	2	$	929	$	0	$	997
Accounts payable	0		395		0		59		0		0		454
Accrued expenses and other liabilities	0		572		118		55		2		0		747
Total current liabilities	0		1,033		118		116		931		0		2,198
Long-term debt	0		10,402		7		22		0		0		10,431

Deferred taxes	22		1,768		0		97		0		0		1,887
Operating lease liabilities	0		151		323		59		0		0		533
Other long-term liabilities	0		91		0		0		0		0		91
Total liabilities	22		13,445		448		294		931		0		15,140

Total stockholders’ equity (deficit)	3,830		1,509		990		1,286		429		(4,214)		3,830
Total liabilities and stockholders’ equity (deficit)	$	3,852	$	14,954	$	1,438	$	1,580	$	1,360	$	(4,214)	$	18,970

Table of Contents

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

CONDENSED CONSOLIDATING STATEMENT OF INCOME AND COMPREHENSIVE INCOME

For the Three Months Ended September 30, ~~2018~~2020




	Parent		URNA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries				Eliminations		Total
							Foreign		SPV
Revenues:
Equipment rentals	$	0	$	1,705	$	0	$	156	$	0	$	0	$	1,861
Sales of rental equipment	0		181		0		18		0		0		199
Sales of new equipment	0		47		0		7		0		0		54
Contractor supplies sales	0		22		0		3		0		0		25
Service and other revenues	0		42		0		6		0		0		48
Total revenues	0		1,997		0		190		0		0		2,187
Cost of revenues:
Cost of equipment rentals, excluding depreciation	0		641		0		48		0		0		689
Depreciation of rental equipment	0		363		—		32		0		0		395
Cost of rental equipment sales	0		114		0		9		0		0		123
Cost of new equipment sales	0		41		0		6		0		0		47
Cost of contractor supplies sales	0		16		0		2		0		0		18
Cost of service and other revenues	0		25		0		4		0		0		29
Total cost of revenues	0		1,200		0		101		0		0		1,301
Gross profit	0		797		0		89		0		0		886
Selling, general and administrative expenses	(9)		205		0		23		11		2		232

Restructuring charge	0		6		0		0		0		0		6
Non-rental depreciation and amortization	9		81		0		7		0		0		97
Operating income (loss)	0		505		0		59		(11)		(2)		551
Interest (income) expense, net	(10)		285		0		0		3		0		278

Other (income) expense, net	(178)		205		0		13		(40)		(2)		(2)
Income before provision (benefit) for income taxes	188		15		0		46		26		0		275
Provision (benefit) for income taxes	51		(4)		0		13		7		0		67
Income before equity in net earnings (loss) of subsidiaries	137		19		0		33		19		0		208
Equity in net earnings (loss) of subsidiaries	71		52		30		0		0		(153)		0
Net income (loss)	208		71		30		33		19		(153)		208
Other comprehensive income (loss)	33		33		23		33		0		(89)		33
Comprehensive income (loss)	$	241	$	104	$	53	$	66	$	19	$	(242)	$	241

Parent URNA
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations Total
Foreign SPV
Revenues:
Equipment rentals $ —
$ 1,715
$ —
$ 146
$ —
$ —
$ 1,861
Sales of rental equipment —
128
—
12
—
—
140
Sales of new equipment —
46
—
8
—
—
54
Contractor supplies sales —
22
—
2
—
—
24
Service and other revenues —
32
—
5
—
—
37
Total revenues —
1,943
—
173
—
—
2,116
Cost of revenues:
Cost of equipment rentals, excluding depreciation —
614
—
57
—
—
671
Depreciation of rental equipment —
316
—
27
—
—
343
Cost of rental equipment sales —
76
—
7
—
—
83
Cost of new equipment sales —
40
—
6
—
—
46
Cost of contractor supplies sales —
14
—
1
—
—
15
Cost of service and other revenues —
16
—
4
—
—
20
Total cost of revenues —
1,076
—
102
—
—
1,178
Gross profit —
867
—
71
—
—
938
Selling, general and administrative expenses 28
197
—
24
16
—
265
Merger related costs —
11
—
—
—
—
11
Restructuring charge —
8
—
1
—
—
9
Non-rental depreciation and amortization 3
65
—
7
—
—
75
Operating (loss) income (31 ) 586
—
39
(16 ) —
578
Interest (income) expense, net (11 ) 122
(1 ) 1
7
—
118
Other (income) expense, net (172 ) 196
—
13
(37 ) —
—
Income before provision for income taxes 152
268
1
25
14
—
460
Provision for income taxes 45
71
—
8
3
—
127
Income before equity in net earnings (loss) of subsidiaries 107
197
1
17
11
—
333
Equity in net earnings (loss) of subsidiaries 226
29
17
—
—
(272 ) —
Net income (loss) 333
226
18
17
11
(272 ) 333
Other comprehensive income (loss) 18
18
18
18
—
(54 ) 18
Comprehensive income (loss) $ 351
$ 244
$ 36
$ 35
$ 11
$ (326 ) $ 351

Table of Contents

UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

CONDENSED CONSOLIDATING STATEMENT OF INCOME AND COMPREHENSIVE INCOME

For the ~~Nine~~Three Months Ended September 30, 2019



	Parent			URNA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries						Eliminations			Total				Parent		URNA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries				Eliminations		Total
								Foreign			SPV																Foreign		SPV
Revenues:																				Revenues:
Equipment rentals	$	—		$	5,407	$	—	$	494		$	1		$	—		$	5,902		Equipment rentals	$	0	$	1,971	$	0	$	176	$	0	$	0	$	2,147
Sales of rental equipment	—			535		—		52			—			—			587			Sales of rental equipment	0		181		0		17		0		0		198
Sales of new equipment	—			166		—		23			—			—			189			Sales of new equipment	0		60		0		7		0		0		67
Contractor supplies sales	—			70		—		8			—			—			78			Contractor supplies sales	0		24		0		3		0		0		27
Service and other revenues	—			124		—		15			—			—			139			Service and other revenues	0		46		0		3		0		0		49
Total revenues	—			6,302		—		592			1			—			6,895			Total revenues	0		2,282		0		206		0		0		2,488
Cost of revenues:																				Cost of revenues:
Cost of equipment rentals, excluding depreciation	—			2,086		—		237			1			—			2,324			Cost of equipment rentals, excluding depreciation	0		737		0		76		0		0		813
Depreciation of rental equipment	—			1,109		—		102			—			—			1,211			Depreciation of rental equipment	0		378		0		39		0		0		417
Cost of rental equipment sales	—			334		—		29			—			—			363			Cost of rental equipment sales	0		113		0		9		0		0		122
Cost of new equipment sales	—			143		—		20			—			—			163			Cost of new equipment sales	0		52		0		6		0		0		58
Cost of contractor supplies sales	—			49		—		5			—			—			54			Cost of contractor supplies sales	0		16		0		2		0		0		18
Cost of service and other revenues	—			67		—		8			—			—			75			Cost of service and other revenues	0		26		0		1		0		0		27
Total cost of revenues	—			3,788		—		401			1			—			4,190			Total cost of revenues	0		1,322		0		133		0		0		1,455
Gross profit	—			2,514		—		191			—			—			2,705			Gross profit	0		960		0		73		0		0		1,033
Selling, general and administrative expenses	14			693		—		84			33			—			824			Selling, general and administrative expenses	(7)		251		0		25		4		0		273
Merger related costs	—			1		—		—			—			—			1

Restructuring charge	—			17		—		(1		)	—			—			16			Restructuring charge	0		2		0		0		0		0		2
Non-rental depreciation and amortization	14			271		—		26			—			—			311			Non-rental depreciation and amortization	4		89		0		9		0		0		102
Operating (loss) income	(28		)	1,532		—		82			(33		)	—			1,553
Operating income (loss)																				Operating income (loss)	3		618		0		39		(4)		0		656
Interest (income) expense, net	(51		)	506		—		—			23			—			478			Interest (income) expense, net	(18)		158		0		0		7		0		147

Other (income) expense, net	(560		)	640		—		44			(130		)	—			(6		)	Other (income) expense, net	(201)		230		0		15		(45)		0		(1)
Income before provision for income taxes	583			386		—		38			74			—			1,081			Income before provision for income taxes	222		230		0		24		34		0		510
Provision for income taxes	132			90		—		4			19			—			245			Provision for income taxes	56		48		0		6		9		0		119
Income before equity in net earnings (loss) of subsidiaries	451			296		—		34			55			—			836			Income before equity in net earnings (loss) of subsidiaries	166		182		0		18		25		0		391
Equity in net earnings (loss) of subsidiaries	385			89		24		—			—			(498		)	—			Equity in net earnings (loss) of subsidiaries	225		43		12		0		0		(280)		0
Net income (loss)	836			385		24		34			55			(498		)	836			Net income (loss)	391		225		12		18		25		(280)		391
Other comprehensive income (loss)	20			20		30		20			—			(70		)	20
Other comprehensive (loss) income																				Other comprehensive (loss) income	(23)		(23)		(12)		(21)		0		56		(23)
Comprehensive income (loss)	$	856		$	405	$	54	$	54		$	55		$	(568	)	$	856		Comprehensive income (loss)	$	368	$	202	$	0	$	(3)	$	25	$	(224)	$	368

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

CONDENSED CONSOLIDATING STATEMENT OF INCOME AND COMPREHENSIVE INCOME

For the Nine Months Ended September 30, ~~2018~~2020



	Parent		URNA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries				Eliminations		Total
							Foreign		SPV
Revenues:
Equipment rentals	$	0	$	4,856	$	0	$	429	$	1	$	0	$	5,286
Sales of rental equipment	0		531		0		52		0		0		583
Sales of new equipment	0		148		0		21		0		0		169
Contractor supplies sales	0		64		0		9		0		0		73
Service and other revenues	0		125		0		15		0		0		140
Total revenues	0		5,724		0		526		1		0		6,251
Cost of revenues:
Cost of equipment rentals, excluding depreciation	0		1,907		0		175		1		0		2,083
Depreciation of rental equipment	0		1,119		0		97		0		0		1,216
Cost of rental equipment sales	0		327		0		26		0		0		353
Cost of new equipment sales	0		129		0		18		0		0		147
Cost of contractor supplies sales	0		46		0		6		0		0		52
Cost of service and other revenues	0		77		0		9		0		0		86
Total cost of revenues	0		3,605		0		331		1		0		3,937
Gross profit	0		2,119		0		195		0		0		2,314
Selling, general and administrative expenses	(3)		620		0		73		34		(3)		721

Restructuring charge	0		11		0		0		0		0		11
Non-rental depreciation and amortization	20		249		0		23		0		0		292
Operating (loss) income	(17)		1,239		0		99		(34)		3		1,290
Interest (income) expense, net	(37)		570		0		0		11		0		544

Other (income) expense, net	(508)		581		0		39		(121)		3		(6)
Income before provision (benefit) for income taxes	528		88		0		60		76		0		752
Provision (benefit) for income taxes	131		(7)		0		16		19		0		159
Income before equity in net earnings (loss) of subsidiaries	397		95		0		44		57		0		593
Equity in net earnings (loss) of subsidiaries	196		101		39		0		0		(336)		0
Net income (loss)	593		196		39		44		57		(336)		593
Other comprehensive (loss) income	(28)		(28)		(32)		(26)		0		86		(28)
Comprehensive income (loss)	$	565	$	168	$	7	$	18	$	57	$	(250)	$	565

Parent URNA
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations Total
Foreign SPV
Revenues:
Equipment rentals $ —
$ 4,568
$ —
$ 383
$ —
$ —
$ 4,951
Sales of rental equipment —
435
—
43
—
—
478
Sales of new equipment —
123
—
17
—
—
140
Contractor supplies sales —
58
—
8
—
—
66
Service and other revenues —
92
—
14
—
—
106
Total revenues —
5,276
—
465
—
—
5,741
Cost of revenues:
Cost of equipment rentals, excluding depreciation —
1,710
—
173
—
—
1,883
Depreciation of rental equipment —
911
—
77
—
—
988
Cost of rental equipment sales —
259
—
23
—
—
282
Cost of new equipment sales —
107
—
14
—
—
121
Cost of contractor supplies sales —
38
—
5
—
—
43
Cost of service and other revenues —
49
—
9
—
—
58
Total cost of revenues —
3,074
—
301
—
—
3,375
Gross profit —
2,202
—
164
—
—
2,366
Selling, general and administrative expenses 33
604
—
66
33
—
736
Merger related costs —
14
—
—
—
—
14
Restructuring charge —
14
—
1
—
—
15
Non-rental depreciation and amortization 11
185
—
17
—
—
213
Operating (loss) income (44 ) 1,385
—
80
(33 ) —
1,388
Interest (income) expense, net (26 ) 349
—
—
17
(1 ) 339
Other (income) expense, net (469 ) 529
—
37
(99 ) —
(2 )
Income before provision for income taxes 451
507
—
43
49
1
1,051
Provision for income taxes 105
135
—
13
12
—
265
Income before equity in net earnings (loss) of subsidiaries 346
372
—
30
37
1
786
Equity in net earnings (loss) of subsidiaries 440
68
30
—
—
(538 ) ��
Net income (loss) 786
440
30
30
37
(537 ) 786
Other comprehensive (loss) income (27 ) (27 ) (28 ) (95 ) —
150
(27 )
Comprehensive income (loss) $ 759
$ 413
$ 2
$ (65 ) $ 37
$ (387 ) $ 759

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

CONDENSED CONSOLIDATING STATEMENT OF INCOME AND COMPREHENSIVE INCOME

For the Nine Months Ended September 30, 2019



	Parent		URNA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries				Eliminations		Total
							Foreign		SPV
Revenues:
Equipment rentals	$	0	$	5,407	$	0	$	494	$	1	$	0	$	5,902
Sales of rental equipment	0		535		0		52		0		0		587
Sales of new equipment	0		166		0		23		0		0		189
Contractor supplies sales	0		70		0		8		0		0		78
Service and other revenues	0		124		0		15		0		0		139
Total revenues	0		6,302		0		592		1		0		6,895
Cost of revenues:
Cost of equipment rentals, excluding depreciation	0		2,086		0		237		1		0		2,324
Depreciation of rental equipment	0		1,109		0		102		0		0		1,211
Cost of rental equipment sales	0		334		0		29		0		0		363
Cost of new equipment sales	0		143		0		20		0		0		163
Cost of contractor supplies sales	0		49		0		5		0		0		54
Cost of service and other revenues	0		67		0		8		0		0		75
Total cost of revenues	0		3,788		0		401		1		0		4,190
Gross profit	0		2,514		0		191		0		0		2,705
Selling, general and administrative expenses	14		693		0		84		33		0		824
Merger related costs	0		1		0		0		0		0		1
Restructuring charge	0		17		0		(1)		0		0		16
Non-rental depreciation and amortization	14		271		0		26		0		0		311
Operating (loss) income	(28)		1,532		0		82		(33)		0		1,553
Interest (income) expense, net	(51)		506		0		0		23		0		478

Other (income) expense, net	(560)		640		0		44		(130)		0		(6)
Income before provision for income taxes	583		386		0		38		74		0		1,081
Provision for income taxes	132		90		0		4		19		0		245


Income before equity in net earnings (loss) of subsidiaries	451		296		0		34		55		0		836
Equity in net earnings (loss) of subsidiaries	385		89		24		0		0		(498)		0
Net income (loss)	836		385		24		34		55		(498)		836
Other comprehensive income (loss)	20		20		30		20		0		(70)		20
Comprehensive income (loss)	$	856	$	405	$	54	$	54	$	55	$	(568)	$	856

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Nine Months Ended September 30, 2020


	Parent		URNA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries				Eliminations		Total
							Foreign		SPV
Net cash provided by operating activities	$	41	$	1,871	$	0	$	146	$	230	$	0	$	2,288
Net cash used in investing activities	(41)		(235)		0		(10)		0		0		(286)
Net cash used in financing activities	0		(1,638)		0		(13)		(230)		0		(1,881)
Effect of foreign exchange rates	0		0		0		1		0		0		1
Net (decrease) increase in cash and cash equivalents	0		(2)		0		124		0		0		122
Cash and cash equivalents at beginning of period	0		28		0		24		0		0		52
Cash and cash equivalents at end of period	$	0	$	26	$	0	$	148	$	0	$	0	$	174

CONDENSED CONSOLIDATING CASH FLOW INFORMATION

For the Nine Months Ended September 30, 2019


	Parent		URNA		Guarantor Subsidiaries		Non-Guarantor Subsidiaries				Eliminations		Total
							Foreign		SPV
Net cash provided by operating activities	$	21	$	2,403	$	0	$	151	$	7	$	0	$	2,582
Net cash used in investing activities	(21)		(1,592)		0		(136)		0		0		(1,749)
Net cash used in financing activities	0		(777)		0		(32)		(7)		0		(816)
Effect of foreign exchange rates	0		0		0		0		0		0		0
Net increase (decrease) in cash and cash equivalents	0		34		0		(17)		0		0		17
Cash and cash equivalents at beginning of period	0		1		0		42		0		0		43
Cash and cash equivalents at end of period	$	0	$	35	$	0	$	25	$	0	$	0	$	60

Parent URNA
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations Total
Foreign SPV
Net cash provided by operating activities $ 21
$ 2,403
$ —
$ 151
$ 7
$ —
$ 2,582
Net cash used in investing activities (21 ) (1,592 ) —
(136 ) —
—
(1,749 )
Net cash used in financing activities —
(777 ) —
(32 ) (7 ) —
(816 )
Net increase (decrease) in cash and cash equivalents —
34
—
(17 ) —
—
17
Cash and cash equivalents at beginning of period —
1
—
42
—
—
43
Cash and cash equivalents at end of period $ —
$ 35
$ —
$ 25
$ —
$ —
$ 60

~~CONDENSED CONSOLIDATING CASH FLOW INFORMATION~~

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

COVID-19

As discussed in note 1 to our condensed consolidated financial statements, the ~~Nine Months Ended~~novel coronavirus (“COVID-19”) is a pandemic of respiratory disease spreading from person-to-person that poses a serious public health risk, which has significantly disrupted supply chains and businesses around the world. While visibility into future economic conditions remains limited, based on increased insight into near-term indicators, we reintroduced full-year 2020 guidance in July 2020, after having withdrawn it in April 2020. In October 2020, after reporting third quarter results, we raised our full-year 2020 guidance.

Prior to mid-March 2020, our performance was largely in line with expectations. In early-March, we initiated contingency planning ahead of the impact of COVID-19 on our end-markets. This planning has focused on five key work-streams that are the basis for our crisis response plan:

1.Ensuring the safety and well-being of our employees and customers: Above all else, we are committed to ensuring the health, safety and well-being of our employees and customers. We have implemented a variety of COVID-19 safety measures, including ensuring that branches have sufficient and adequate personal protection equipment. We have also implemented appropriate social distancing practices, and increased disinfecting of equipment and facilities.

2.Leveraging our competitive advantages to support the needs of customers: We have made modifications to enhance safety measures in our operating processes and protocols that support the needs of our customers. Additionally, our digital capabilities allow customers to perform fully contactless transactions.

3.Disciplined capital expenditures: We have a substantial degree of flexibility in managing our capital expenditures and fleet capacity. While the current environment remains fluid, we expect that our 2020 capital expenditures will be down significantly year-over-year.

4.Controlling core operating expenses: A significant portion of our cash operating costs are variable in nature. Since March, we have significantly reduced overtime and temporary labor primarily in response to the impact of COVID-19. Furthermore, we continue to leverage our current capacity to reduce the need for third-party delivery and repair services, and minimize other discretionary expenses across general and administrative areas.

5.Proactively managing the balance sheet with a focus on liquidity: We are focused on ensuring that we maintain ample liquidity to meet our business needs as the impact of COVID-19 evolves. As a result, our current $500 share repurchase program was paused in mid-March. At September 30, ~~2018~~2020, our total liquidity was $3.430 billion, comprised of cash and cash equivalents, and availability under the ABL and accounts receivable securitization facilities. As discussed below, in October 2020, we redeemed the $750 outstanding principal amount of our 4 5/8 percent Senior Notes due 2025, using borrowings available under our ABL facility. After the redemption of the 4 5/8 percent Senior Notes due 2025, we have no note maturities until 2026.

The impact of COVID-19 on our business is discussed throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As discussed below, the response plan above helped mitigate the impact of COVID-19 on our results.

Parent URNA
Guarantor
Subsidiaries

Non-Guarantor
Subsidiaries
Eliminations Total
Foreign SPV
Net cash provided by (used in) operating activities $ 22
$ 2,354
$ (1 ) $ (50 ) $ (202 ) $ —
$ 2,123
Net cash used in investing activities (22 ) (2,259 ) —
(112 ) —
—
(2,393 )
Net cash (used in) provided by financing activities —
(101 ) 1
(109 ) 202
—
(7 )
Effect of foreign exchange rates —
—
—
(10 ) —
—
(10 )
Net decrease in cash and cash equivalents —
(6 ) —
(281 ) —
—
(287 )
Cash and cash equivalents at beginning of period —
23
—
329
—
—
352
Cash and cash equivalents at end of period $ —
$ 17
$ —
$ 48
$ —
$ —
$ 65


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

Executive Overview

We are the largest equipment rental company in the world, with an integrated network of ~~1,183~~1,181 rental locations in the United States, Canada and Europe. ~~As discussed in note 3 to the condensed consolidated financial statements, in~~In July 2018, we completed the acquisition of BakerCorp International Holdings, Inc. (“BakerCorp”), which allowed for our entry into select European markets. Although the equipment rental industry is highly fragmented and diverse, we believe that we are well positioned to take advantage of this environment because, as a larger company, we have more extensive resources and certain competitive advantages. These include a fleet of rental equipment with a total original equipment cost (“OEC”) of ~~$15.0~~$14.2 billion, and a ~~national~~North American branch network that operates in 49 U.S. states and every Canadian province, and serves 99 of the 100 largest ~~100~~ metropolitan areas in the U.S. The BakerCorp acquisition discussed above added 11 European locations in France, Germany, the United Kingdom and the Netherlands to our branch network. Our size also gives us greater purchasing power, the ability to provide customers with a broader range of equipment and services, the ability to provide customers with equipment that is more consistently well-maintained and therefore more productive and reliable, and the ability to enhance the earning potential of our assets by transferring equipment among branches to satisfy customer needs.

We offer approximately 4,000 classes of equipment for rent to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities. Our revenues are derived from the following sources: equipment rentals, sales of rental equipment, sales of new equipment, contractor supplies sales and

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service and other revenues. Equipment rentals represented 8685 percent of total revenues for the nine months ended September 30, ~~2019.~~2020.

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

~~In 2019, we have continued our disciplined focus~~We are currently managing the impact of COVID-19, as discussed above. Our general strategy focuses on ~~increasing our~~ profitability and return on invested ~~capital. In~~capital, and, in particular, calls for:

•A consistently superior standard of service to customers, often provided through a single lead contact who can coordinate the cross-selling of the various services we offer throughout our network. We utilize a proprietary software application, Total Control®, which provides our key customers with a single in-house software application that enables them to monitor and manage all their equipment needs. Total Control® is a unique customer offering that enables us to develop strong, long-term relationships with our larger customers. Our digital capabilities, including our Total Control® platform, allow our sales teams to provide contactless end-to-end customer service;

•The further optimization of our customer mix and fleet mix, with a dual objective: to enhance our performance in serving our current customer base, and to focus on the accounts and customer types that are best suited to our strategy ~~calls for:~~for profitable growth. We believe these efforts will lead to even better service of our target accounts, primarily large construction and industrial customers, as well as select local contractors. Our fleet team's analyses are aligned with these objectives to identify trends in equipment categories and define action plans that can generate improved returns;

•A continued focus on “Lean” management techniques, including kaizen processes focused on continuous improvement. We continue to implement Lean kaizen processes across our branch network, with the objectives of: reducing the cycle time associated with renting our equipment to customers; improving invoice accuracy and service quality; reducing the elapsed time for equipment pickup and delivery; and improving the effectiveness and efficiency of our repair and maintenance operations;

•A continued focus on Project XL, which is a set of eight specific work streams focused on driving profitable growth through revenue opportunities and generating incremental profitability through cost savings across our business;

•The continued expansion of our trench, power and fluid solutions footprint, as well as our tools and onsite services offerings, and the cross-selling of these services throughout our network, as exhibited by our recent acquisition of BakerCorp discussed above. We believe that the expansion of our trench, power and fluid solutions business, as well as our tools and onsite services offerings, will further position United Rentals as a single source provider of total jobsite solutions through our extensive product and service resources and technology offerings; and

•

~~A consistently superior standard of service to customers, often provided through a single point of contact;~~

•

~~The further optimization of our customer mix and fleet mix,~~ with a dual objective: to enhance our performance in serving our current customer base, and to focus on the accounts and customer types that are best suited to our strategy for profitable growth. We believe these efforts will lead to even better service of our target accounts, primarily large construction and industrial customers, as well as select local contractors. Our fleet team's analyses are aligned with these objectives to identify trends in equipment categories and define action plans that can generate improved returns;

•

~~A continued focus on “Lean” management techniques, including kaizen processes focused on continuous improvement~~. We continue to implement Lean kaizen processes across our branch network, with the objectives of: reducing the cycle time associated with renting our equipment to customers; improving invoice accuracy and service quality; reducing the elapsed time for equipment pickup and delivery; and improving the effectiveness and efficiency of our repair and maintenance operations;


•	~~A continued focus on Project XL,~~ ~~which is a set of eight specific work streams focused on driving profitable growth through revenue opportunities and generating incremental profitability through cost savings across our business;~~

•

~~The continued expansion of our trench, power and fluid solutions footprint, as well as our tools offering, and the cross-selling of these services throughout our network,~~ as exhibited by our acquisition of BakerCorp discussed in note 3 to the condensed consolidated financial statements. We believe that the expansion of our trench, power and fluid solutions business, as well as our tools offering, will further position United Rentals as a single source provider of total jobsite solutions through our extensive product and service resources and technology offerings; and

•

The pursuit of strategic acquisitions to continue to expand our core equipment rental business, as exhibited by our recently completed acquisitions of NES Rentals Holdings II, Inc. (“NES”), Neff Corporation ("Neff") and Vander Holding Corporation and its subsidiaries (“BlueLine”)~~, Neff Corporation ("Neff") and BlueLine (which is discussed further in note 3 to the condensed consolidated financial statements)~~. Strategic acquisitions allow us to invest our capital to expand our business, further driving our ability to accomplish our strategic goals.

Financial Overview

Prior to taking actions pertaining to our financial flexibility and liquidity, we considered the impact of COVID-19 on liquidity, and assessed our available sources and anticipated uses of cash, including, with respect to sources, cash generated from operations and from the sale of rental equipment. In ~~2019,~~2020, we took the following actions to improve our financial flexibility and liquidity, and to position us to invest the necessary capital in our business:


•	•Issued $750 principal amount of 4 percent Senior Notes due 2030; •Issued $1.1 billion principal amount of 3 7/8 percent Senior Notes due 2031; •Redeemed all $800 principal amount of our 5 1/2 percent Senior Notes due 2025; •Redeemed all $1.1 billion principal amount of our 6 1/2 percent Senior Notes due 2026; and •¹/₄ ~~percent Senior Notes due 2030;~~


•	~~Redeemed all of our 5~~ ³/₄ ~~percent Senior Notes;~~

~~Amended and extended our ABL facility, including an increase in the facility size from $3.0 billion to $3.75 billion; and~~

Amended and extended our accounts receivable securitization ~~facility.~~facility, including a reduction in the size of the facility from $975 to $800.

We have also used cash generated from operations to reduce borrowings under the ABL facility, and total debt has decreased $1.377 billion, or 12.0 percent, since December 31, 2019. In October 2020, we additionally redeemed all $750 principal amount of our 4 5/8 percent Senior Notes due 2025, using borrowings available under our ABL facility.

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As of September 30, ~~2019,~~2020, we had available liquidity of ~~$2.161~~$3.430 billion, ~~including~~comprised of cash and cash equivalents, and availability under the ABL and accounts receivable securitization facilities. As noted above, in October 2020, we redeemed all $750 principal amount of ~~$60.~~our 4 5/8 percent Senior Notes due 2025, using borrowings available under our ABL facility.

Net income. Net income and diluted earnings per share for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 are presented below.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Net income	$	208	$	391	$	593	$	836
Diluted earnings per share	$	2.87	$	5.08	$	8.12	$	10.66

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Net income $ 391
$ 333
$ 836
$ 786
Diluted earnings per share $ 5.08
$ 4.01
$ 10.66
$ 9.34

Net income and diluted earnings per share for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 include the after-tax impacts of the items below. The tax rates applied to the items below reflect the statutory rates in the applicable entities.


	Three Months Ended September 30,										Nine Months Ended September 30,
	2020					2019					2020					2019
Tax rate applied to items below	25.2		%			25.1		%			25.2		%			25.3		%
	Contribution to net income (after-tax)			Impact on diluted earnings per share		Contribution to net income (after-tax)			Impact on diluted earnings per share		Contribution to net income (after-tax)			Impact on diluted earnings per share		Contribution to net income (after-tax)			Impact on diluted earnings per share
Merger related costs (1)	$	—		$	—	$	—		$	—	$	—		$	—	$	(1)		$	(0.01)
Merger related intangible asset amortization (2)	(40)			(0.55)		(47)			(0.63)		(125)			(1.71)		(148)			(1.90)
Impact on depreciation related to acquired fleet and property and equipment (3)	(5)			(0.06)		(5)			(0.07)		(9)			(0.12)		(26)			(0.33)
Impact of the fair value mark-up of acquired fleet (4)	(8)			(0.12)		(11)			(0.14)		(25)			(0.35)		(43)			(0.55)


Restructuring charge (5)	(4)			(0.06)		(2)			(0.02)		(8)			(0.11)		(12)			(0.15)
Asset impairment charge (6)	(7)			(0.10)		(2)			(0.02)		(27)			(0.37)		(5)			(0.06)
Loss on repurchase/redemption of debt securities and amendment of ABL facility (7)	(119)			(1.64)		—			—		(119)			(1.63)		(24)			(0.30)

(1)This reflects transaction costs associated with the BakerCorp and BlueLine acquisitions that were completed in 2018. Merger related costs only include costs associated with major acquisitions that significantly impact our operations. For additional information, see "Results of Operations-Other costs/(income)-merger related costs" below.

(2)This reflects the amortization of the intangible assets acquired in the RSC, National Pump, NES, Neff, BakerCorp and BlueLine acquisitions.

(3)This reflects the impact of extending the useful lives of equipment acquired in the RSC, NES, Neff, BakerCorp and BlueLine acquisitions, net of the impact of additional depreciation associated with the fair value mark-up of such equipment.

(4)This reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC, NES, Neff and BlueLine acquisitions that was subsequently sold.

(5)This primarily reflects severance and branch closure charges associated with our restructuring programs. For additional information, see note 4 to our condensed consolidated financial statements.

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Three Months Ended September 30,
Nine Months Ended September 30,
2019
2018
2019
2018
Tax rate applied to items below 25.1 % 25.4 % 25.3 % 25.3 %
Contribution
to net income (after-tax)
Impact on
diluted earnings per share

Contribution
to net income (after-tax)

Impact on
diluted earnings per share
Contribution
to net income (after-tax)

Impact on
diluted earnings per share

Contribution
to net income (after-tax)

Impact on
diluted earnings per share
Merger related costs (1) $ —

$ —

$ (7 )
$ (0.09 )
$ (1 )
$ (0.01 )
$ (10 )
$ (0.12 )
Merger related intangible asset amortization (2) (47 )
(0.63 )
(35 )
(0.42 )
(148 )
(1.90 )
(99 )
(1.18 )
Impact on depreciation related to acquired fleet and property and equipment (3) (5 )
(0.07 )
(1 )
(0.02 )
(26 )
(0.33 )
(16 )
(0.19 )
Impact of the fair value mark-up of acquired fleet (4) (11 )
(0.14 )
(10 )
(0.11 )
(43 )
(0.55 )
(40 )
(0.47 )
Restructuring charge (5) (2 )
(0.02 )
(7 )
(0.09 )
(12 )
(0.15 )
(11 )
(0.13 )
Asset impairment charge (6) (2 )
(0.02 )
—

—

(5 )
(0.06 )
—

—
Loss on repurchase/redemption of debt securities and amendment of ABL facility —

—

—

—

(24 )
(0.30 )
—

—
(6)This reflects write-offs of leasehold improvements and other fixed assets. The three and nine months ended September 30, 2020 include asset impairment charges of $10 and $36, respectively, which were not related to COVID-19, primarily associated with the discontinuation of certain equipment programs.

(7)This primarily reflects the difference between the net carrying amount and the total purchase price of the redeemed notes. For additional information, see "Results of Operations-Other costs/(income)-Interest expense, net" below.

~~(1)~~

This reflects transaction costs associated with the NES and Neff acquisitions that were completed in 2017, and the BakerCorp and BlueLine acquisitions discussed in note 3 to our condensed consolidated financial statements. Merger related costs only include costs associated with major acquisitions that significantly impact our operations. For additional information, see "Results of Operations-Other costs/(income)-merger related costs" below.


~~(2)~~	~~This reflects the amortization of the intangible assets acquired in the RSC, National Pump, NES, Neff, BakerCorp and BlueLine acquisitions.~~


~~(3)~~	This reflects the impact of extending the useful lives of equipment acquired in the RSC, NES, Neff, BakerCorp and BlueLine acquisitions, net of the impact of additional depreciation associated with the fair value mark-up of such equipment.


~~(4)~~	This reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC, NES, Neff and BlueLine acquisitions that was subsequently sold.


~~(5)~~	~~This primarily reflects severance and branch closure charges associated with our restructuring programs. For additional information, see note 5 to our condensed consolidated financial statements.~~


~~(6)~~	~~This reflects write-offs of leasehold improvements and other fixed assets.~~

EBITDA GAAP Reconciliations. EBITDA represents the sum of net income, provision for income taxes, interest expense, net, depreciation of rental equipment and non-rental depreciation and amortization. Adjusted EBITDA represents EBITDA plus the sum of the merger related costs, restructuring charge, stock compensation expense, net and the impact of the fair value mark-up of the acquired fleet. These items are excluded from adjusted EBITDA internally when evaluating our operating performance and for strategic planning and forecasting purposes, and allow investors to make a more meaningful comparison between our core business operating results over different periods of time, as well as with those of other similar companies. The ~~EBITDA~~net income and adjusted EBITDA margins represent ~~EBITDA~~net income or adjusted EBITDA divided by total revenue. Management believes that EBITDA and adjusted EBITDA, when viewed with the Company’s results under GAAP and the accompanying reconciliations, provide useful information about operating performance and period-over-period growth, and provide additional information that is useful for evaluating the operating performance of our core business without regard to potential distortions. Additionally, management believes that EBITDA and adjusted EBITDA help investors gain an understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made and debt is serviced. However, EBITDA and adjusted EBITDA are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income or cash flow from operating activities as indicators of operating performance or liquidity.

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


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Net income	$	208		$	391		$	593		$	836
Provision for income taxes	67			119			159			245
Interest expense, net	278			147			544			478

Depreciation of rental equipment	395			417			1,216			1,211
Non-rental depreciation and amortization	97			102			292			311
EBITDA	$	1,045		$	1,176		$	2,804		$	3,081
Merger related costs (1)	—			—			—			1
Restructuring charge (2)	6			2			11			16
Stock compensation expense, net (3)	18			14			46			45
Impact of the fair value mark-up of acquired fleet (4)	12			15			34			58

Adjusted EBITDA	$	1,081		$	1,207		$	2,895		$	3,201
Net income margin	9.5		%	15.7		%	9.5		%	12.1		%
Adjusted EBITDA margin	49.4		%	48.5		%	46.3		%	46.4		%

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Net income $ 391
$ 333
$ 836
$ 786
Provision for income taxes 119
127
245
265
Interest expense, net 147
118
478
339
Depreciation of rental equipment 417
343
1,211
988
Non-rental depreciation and amortization 102
75
311
213
EBITDA $ 1,176
$ 996
$ 3,081
$ 2,591
Merger related costs (1) —
11
1
14
Restructuring charge (2) 2
9
16
15
Stock compensation expense, net (3) 14
30
45
73
Impact of the fair value mark-up of acquired fleet (4) 15
13
58
53
Adjusted EBITDA $ 1,207
$ 1,059
$ 3,201
$ 2,746

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

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	Nine Months Ended							Nine Months Ended
	September 30,							September 30,
	2019			2018				2020		2019
Net cash provided by operating activities	$	2,582		$	2,123		Net cash provided by operating activities	$	2,288	$	2,582
Adjustments for items included in net cash provided by operating activities but excluded from the calculation of EBITDA:							Adjustments for items included in net cash provided by operating activities but excluded from the calculation of EBITDA:
Amortization of deferred financing costs and original issue discounts	(11		)	(9		)	Amortization of deferred financing costs and original issue discounts	(11)		(11)
Gain on sales of rental equipment	224			196			Gain on sales of rental equipment	230		224
Gain on sales of non-rental equipment	3			4			Gain on sales of non-rental equipment	5		3
Gain on insurance proceeds from damaged equipment	18			18
Insurance proceeds from damaged equipment							Insurance proceeds from damaged equipment	34		18
Merger related costs (1)	(1		)	(14		)	Merger related costs (1)	—		(1)
Restructuring charge (2)	(16		)	(15		)	Restructuring charge (2)	(11)		(16)
Stock compensation expense, net (3)	(45		)	(73		)	Stock compensation expense, net (3)	(46)		(45)
Loss on repurchase/redemption of debt securities and amendment of ABL facility	(32		)	—
Loss on repurchase/redemption of debt securities and amendment of ABL facility (5)							Loss on repurchase/redemption of debt securities and amendment of ABL facility (5)	(159)		(32)

Changes in assets and liabilities	(217		)	(68		)	Changes in assets and liabilities	(203)		(217)
Cash paid for interest	480			379			Cash paid for interest	438		480
Cash paid for income taxes, net	96			50			Cash paid for income taxes, net	239		96
EBITDA	$	3,081		$	2,591		EBITDA	$	2,804	$	3,081
Add back:							Add back:
Merger related costs (1)	1			14			Merger related costs (1)	—		1
Restructuring charge (2)	16			15			Restructuring charge (2)	11		16
Stock compensation expense, net (3)	45			73			Stock compensation expense, net (3)	46		45
Impact of the fair value mark-up of acquired fleet (4)	58			53			Impact of the fair value mark-up of acquired fleet (4)	34		58

Adjusted EBITDA	$	3,201		$	2,746		Adjusted EBITDA	$	2,895	$	3,201

___________________

~~(1)~~


~~(2)~~	~~This primarily reflects severance and branch closure charges associated with our restructuring programs. For additional information, see note 5 to our condensed consolidated financial statements.~~


~~(3)~~	~~Represents non-cash, share-based payments associated with the granting of equity instruments.~~


~~(4)~~	This reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC, NES, Neff and BlueLine acquisitions that was subsequently sold.

(2)This primarily reflects severance and branch closure charges associated with our restructuring programs. For additional information, see note 4 to our condensed consolidated financial statements.

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

(5)This primarily reflects the difference between the net carrying amount and the total purchase price of the redeemed notes. For additional information, see "Results of Operations-Other costs/(income)-Interest expense, net" below.

For the three months ended September 30, ~~2019, EBITDA increased $180,~~2020, net income decreased $183, or ~~18.1~~46.8 percent, and ~~adjusted EBITDA increased $148, or 14.0~~net income margin decreased 620 basis points to 9.5 percent. For the three months ended September 30, ~~2019,~~2020, adjusted EBITDA decreased $126, or 10.4 percent, and adjusted EBITDA margin increased 2090 basis points to ~~47.3~~49.4 percent.

The year-over-year decrease in net income margin primarily reflected 1) increased interest expense and 2) decreased gross margin from equipment rentals, partially offset by 3) decreased income tax expense. Net interest expense increased $131 year-over-year primarily due to a loss of $159 associated with the full redemption of our 5 1/2 percent Senior Notes due 2025 and 6 1/2 percent Senior Notes due 2026, partially offset by decreases in average debt and the average cost of debt. Gross margin from equipment rentals decreased 90 basis points year-over-year, with 180 basis points of the margin decline due to depreciation expense, which decreased 5.3 percent, but increased as a percentage of revenue. The 90 basis point increase in equipment rentals gross margin excluding the depreciation impact was primarily due to the combined impact of actions we have taken to manage operating costs, such as leveraging our current capacity to reduce the need for third-party delivery and repair services, and a majority of approximately $20 of non-recurring benefits recognized in the three months ended September 30, 2020, notably benefits from certain insurance recoveries. Year-over-year, the effective income tax rate was largely flat, but income tax expense decreased as a percentage of revenue.

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The year-over-year increase in the adjusted EBITDA margin included a 90 basis point increase in gross margin from equipment rentals (excluding depreciation), which reflects the combined impact of actions we have taken to manage operating costs, such as leveraging our current capacity to reduce the need for third-party delivery and repair services, and the majority of the non-recurring benefits discussed above. Adjusted EBITDA margin also benefited from a decrease in selling, general and administrative ("SG&A") expense, which included significant reductions in professional fees and travel and entertainment expenses, as a percentage of revenue. Excluding the $20 of non-recurring benefits discussed above, adjusted EBITDA margin was flat year-over-year.

For the nine months ended September 30, 2020, net income decreased $243, or 29.1 percent, and net income margin decreased 260 basis points to 9.5 percent. For the nine months ended September 30, 2020, adjusted EBITDA decreased $306, or 9.6 percent, and adjusted EBITDA margin decreased ~~150~~10 basis points to ~~48.5~~46.3 percent. ~~As discussed~~

The year-over-year decrease in ~~note 3~~net income margin primarily reflected 1) decreased gross margin from equipment rentals and 2) increased interest expense, partially offset by lower year-over-year 3) income tax expense and 4) SG&A expense as a percentage of revenue. Gross margin from equipment rentals decreased 250 basis points year-over-year, with all of the margin decline due to ~~our condensed consolidated financial statements, we completed~~an increase in depreciation expense as a percentage of revenue. The increase in depreciation expense included a $31 asset impairment charge, which was not related to COVID-19, associated with the ~~acquisitions~~discontinuation of ~~BakerCorp in July 2018 and BlueLine in October 2018, and EBITDA and adjusted EBITDA for 2019 include~~certain equipment programs. Excluding the impact of ~~BakerCorp~~the asset impairment charge, depreciation expense decreased slightly from 2019, but increased as a percentage of revenue, primarily due to COVID-19. See "Results of Operations-Gross Margin" below for further discussion of equipment rentals gross margin. Interest expense, net increased $66 year-over-year. Interest expense, net for the nine months ended September 30, 2020 and ~~BlueLine.~~ September 30, 2019 included debt redemption losses of $159 and $32, respectively. Excluding the impact of these losses, interest expense, net for nine months ended September 30, 2020 decreased primarily due to decreases in average debt and the average cost of debt. Year-over-year, the effective income tax rate was largely flat, but income tax expense decreased as a percentage of revenue. SG&A expense as a percentage of revenue decreased primarily due to significant reductions in professional fees and travel and entertainment expenses, which were implemented in response to COVID-19, partially offset by an increase in salaries, net of reduced bonuses, as a percentage of revenue, which also reflects the impact of COVID-19.

The decrease in the adjusted EBITDA margin primarily reflects i)1) lower margins from sales of rental equipment (excluding the adjustment reflected in the table above for the impact of the ~~BakerCorp~~fair value mark-up of acquired fleet) and ~~BlueLine acquisitions, ii) changes~~service and other revenues and 2) a reduction in ~~revenue mix~~the proportion of revenues from higher margin (excluding depreciation) equipment rentals, partially offset by 3) the impact of decreased SG&A expenses and iii) increased operating costs. Operating costs were impacted by repair and repositioning initiatives that resulted in increased repairs and maintenance and delivery expenses, which increased 27.3 percent and 22.5 percent, respectively, both4) approximately $20 of ~~which exceeded the total revenue increase of 17.6 percent.~~

~~For~~non-recurring benefits, notably including insurance recovery benefits, recognized during the nine months ended September 30, ~~2019, EBITDA increased $490, or 18.9 percent, and~~2020. Excluding the non-recurring benefits, adjusted ~~EBITDA increased $455, or 16.6 percent. For the nine months ended September 30, 2019,~~ EBITDA margin decreased 40 basis points ~~to 44.7 percent, and adjusted EBITDA~~year-over-year. Gross margin ~~decreased 140 basis points to 46.4 percent. As discussed in note 3 to our condensed consolidated financial statements, we completed~~from sales of rental equipment (excluding the ~~acquisitions of BakerCorp in July 2018 and BlueLine in October 2018, and EBITDA and adjusted EBITDA for 2019 include the impact of BakerCorp and BlueLine. The decrease~~adjustment reflected in the ~~adjusted EBITDA margin primarily reflects i)~~table above for the impact of the ~~BakerCorp and BlueLine acquisitions, ii)~~fair value mark-up of acquired fleet) decreased primarily due to changes in ~~revenue~~pricing and the mix of equipment sold. The decreased gross margin from service and ~~iii)~~

~~increased operating costs. Operating costs were impacted by repair and repositioning initiatives that~~other revenues reflected the impact of COVID-19, which resulted in ~~increased repairs~~reduced training revenue without a proportionate reduction in costs. SG&A expense as a percentage of revenue decreased primarily due to significant reductions in professional fees and ~~maintenance,~~travel and entertainment expenses, which ~~increased 25.7 percent,~~were implemented in response to COVID-19, partially offset by an increase in salaries, net of reduced bonuses, as a percentage of revenue, which ~~exceeded~~also reflects the ~~total revenue increase~~impact of ~~20.1 percent.~~COVID-19.

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

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	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018		Change		2019		2018		Change			2020		2019		Change		2020		2019		Change
Equipment rentals*	$	2,147	$	1,861	15.4	%	$	5,902	$	4,951	19.2	%	Equipment rentals*	$	1,861	$	2,147	(13.3)	%	$	5,286	$	5,902	(10.4)	%
Sales of rental equipment	198		140		41.4	%	587		478		22.8	%	Sales of rental equipment	199		198		0.5	%	583		587		(0.7)	%
Sales of new equipment	67		54		24.1	%	189		140		35.0	%	Sales of new equipment	54		67		(19.4)	%	169		189		(10.6)	%
Contractor supplies sales	27		24		12.5	%	78		66		18.2	%	Contractor supplies sales	25		27		(7.4)	%	73		78		(6.4)	%
Service and other revenues	49		37		32.4	%	139		106		31.1	%	Service and other revenues	48		49		(2.0)	%	140		139		0.7	%
Total revenues	$	2,488	$	2,116	17.6	%	$	6,895	$	5,741	20.1	%	Total revenues	$	2,187	$	2,488	(12.1)	%	$	6,251	$	6,895	(9.3)	%
*Equipment rentals variance components:													*Equipment rentals variance components:
Year-over-year change in average OEC					18.1	%					21.5	%	Year-over-year change in average OEC					(4.6)	%					(1.1)	%
Assumed year-over-year inflation impact (1)					(1.5	)%					(1.5	)%	Assumed year-over-year inflation impact (1)					(1.5)	%					(1.5)	%
Fleet productivity (2)					(1.3	)%					(1.9	)%	Fleet productivity (2)					(8.0)	%					(8.0)	%
Contribution from ancillary and re-rent revenue (3)					0.1	%					1.1	%	Contribution from ancillary and re-rent revenue (3)					0.8	%					0.2	%
Total change in equipment rentals					15.4	%					19.2	%	Total change in equipment rentals					(13.3)	%					(10.4)	%
*Pro forma equipment rentals variance components (4):
Year-over-year change in average OEC					4.4	%					5.2	%
Assumed year-over-year inflation impact (1)					(1.5	)%					(1.5	)%
Fleet productivity (2)					1.7	%					1.4	%
Contribution from ancillary and re-rent revenue (3)					(0.4	)%					0.2	%
Total change in equipment rentals					4.2	%					5.3	%

___________________


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

~~(2)~~

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


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


~~(4)~~	As discussed in note 3 to the condensed consolidated financial statements, we completed the acquisitions of BakerCorp and BlueLine in July 2018 and October 2018, respectively. The pro forma information includes the standalone, pre-acquisition results of BakerCorp and BlueLine.

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

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

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

Equipment rentals include our revenues from renting equipment, as well as revenue related to the fees we charge customers: for equipment delivery and pick-up; to protect the customer against liability for damage to our equipment while on rent; for fuel; and for environmental costs. Sales of rental equipment represent our revenues from the sale of used rental equipment. Sales of new equipment represent our revenues from the sale of new equipment. Contractor supplies sales represent our sales of supplies utilized by contractors, which include construction consumables, tools, small equipment and safety supplies. Services and other revenues primarily represent our revenues earned from providing repair and maintenance services on our customers’ fleet (including parts sales). See note 2 to the condensed consolidated financial statements for a discussion of our revenue recognition accounting.

For the three months ended September 30, ~~2019,~~2020, total revenues of ~~$2.488~~$2.187 billion ~~increased 17.6~~decreased 12.1 percent compared with ~~2018.~~2019. Equipment rentals and sales of rental equipment are our largest revenue types (together, they accounted for 94 percent of total revenue for the three months ended September 30, ~~2019)~~2020). Equipment rentals ~~increased 15.4~~decreased 13.3 percent. COVID-19 began to impact our operations in March, and, since then, equipment rentals have decreased year-over-year, primarily due to the impact of COVID-19. Fleet productivity decreased 8.0 percent, primarily due to ~~an 18.1 percent increase in average OEC, which includes~~ the impact of COVID-19, which resulted in decreased rental volume in response to shelter-in-place orders and other market restrictions. Fleet productivity improved sequentially for the ~~BakerCorp and BlueLine acquisitions discussed~~quarter by 560 basis points, primarily reflecting better fleet absorption in ~~note 3 to~~ the ~~condensed consolidated financial statements. As explained further above, fleet productivity is a measure of the~~

decisions made to optimize the balance of rental rates, time utilization and mix to produce revenue and drive efficient growth. On a pro forma basis including the standalone, pre-acquisition results of BakerCorp and BlueLine, equipment rentals increased 4.2three months ended September 30, 2020. Average OEC decreased 4.6 percent ~~primarily due to a 4.4 percent increase in average OEC and a fleet productivity increase of 1.7 percent, partially offset by the impact of inflation.~~year-over-year. Sales of rental equipment ~~increased 41.4 percent primarily due to increased volume, which included the impact of the BlueLine acquisition, driven by a larger fleet size in a strong used equipment market.~~did not change materially year-over-year.

For the nine months ended September 30, ~~2019,~~2020, total revenues of ~~$6.895~~$6.251 billion ~~increased 20.1~~decreased 9.3 percent compared with ~~2018.~~2019. Equipment rentals ~~increased 19.2~~and sales of rental equipment are our largest revenue types (together, they accounted for 94 percent of total revenue for the nine months ended September 30, 2020). Equipment rentals decreased 10.4 percent. COVID-19 began to impact our operations in March. Through February, equipment rentals were up slightly year-over-year. Since March, equipment rentals have decreased year-over-year, primarily due to the impact of COVID-19. Fleet productivity decreased 8.0 percent, primarily due to ~~a 21.5 percent increase in average OEC, which includes~~ the impact of ~~the BakerCorp~~COVID-19 since March, when rental volume declined in response to shelter-in-place orders and BlueLine acquisitions discussed in note 3 to the condensed consolidated financial statements. On a pro forma basis including the standalone, pre-acquisition results of BakerCorp and BlueLine, equipment rentals increased 5.3 percent, primarily due to a 5.2 percent increase in average OEC and aother market restrictions. Through February, fleet productivity ~~increase of 1.4 percent, partially offset by the impact of inflation.~~was flat year-over-year and in line with expectations. Sales of rental equipment ~~increased 22.8 percent primarily due to increased volume, which included the impact of the BlueLine acquisition, driven by a larger fleet size in a strong used equipment market.~~did not change materially year-over-year.

Results of Operations

As discussed in note 43 to our condensed consolidated financial statements, our reportable segments are general rentals and trench, power and fluid solutions. The general rentals segment includes the rental of construction, aerial, industrial and

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homeowner equipment and related services and activities. The general rentals segment’s customers include construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities. ~~The general rentals~~This segment operates throughout the United States and Canada. The trench, power and fluid solutions segment is comprised of i) the Trench Safety region, which rents 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) the Power and HVAC region, which rents power and HVAC equipment such as portable diesel generators, electrical distribution equipment, and temperature control equipment including heating and cooling equipment, and iii) the Fluid Solutions and iv) Fluid Solutions Europe regions, both of which rent equipment primarily used for fluid containment, transfer and treatment. The trench, power and fluid solutions segment’s customers include construction companies involved in infrastructure projects, municipalities and industrial companies. ~~The trench, power and fluid solutions~~This segment operates throughout the United States and in Canada and Europe.

As discussed in note 43 to our condensed consolidated financial statements, we aggregate our 11 geographic regions—Carolinas, Gulf South, Industrial (which serves the geographic Gulf region and has a strong industrial presence), Mid-Atlantic, Mid Central, Midwest, Northeast, Pacific West, South, Southeast and Western Canada—into our general rentals reporting segment. Historically, there have been variances in the levels of equipment rentals gross margins achieved by these regions. For the five year period ended September 30, ~~2019,~~2020, three of our general rentals' regions had an equipment rentals gross margin that varied by between 10 percent and 1925 percent from the equipment rentals gross margins of the aggregated general rentals' regions over the same period. For the five year period ended September 30, 2020, the general rentals' region with the lowest equipment rentals gross margin was Western Canada. The Western Canada region's equipment rentals gross margin of 31.3 percent for the five year period ended September 30, 2020 was 25 percent less than the equipment rentals gross margins of the aggregated general rentals' regions over the same period. The Western Canada region's equipment rentals gross margin was less than the other general rentals' regions during this period primarily due to declines in the oil and gas business in the region. The rental industry is cyclical, and there historically have been regions with equipment rentals gross margins that varied by greater than 10 percent from the equipment rentals gross margins of the aggregated general rentals' regions, though the specific regions with margin variances of over 10 percent have fluctuated. We expect margin convergence going forward given the cyclical nature of the rental industry, and monitor the margin variances and confirm the expectation of future convergence on a quarterly basis. When monitoring for margin convergence, we include projected future results.

We similarly monitor the margin variances for the regions in the trench, power and fluid solutions segment. The trench, power and fluid solutions segment includes the locations acquired in the July 2018 BakerCorp acquisition discussed ~~in note 3 to the condensed consolidated financial statements.~~above. As such, there is not a long history of the acquired locations' rental margins included in the trench, power and ~~pump~~fluid solutions segment. When monitoring for margin convergence, we include projected future results. We monitor the trench, power and fluid solutions segment margin variances and confirm the expectation of future convergence on a quarterly basis. The historic, pre-acquisition margins for the acquired BakerCorp locations are lower than the margins achieved at the other locations in the segment. We expect that the margins at the acquired locations will increase as we realize synergies following the acquisition, as a result of which, we expect future margin convergence.

We believe that the regions that are aggregated into our segments have similar economic characteristics, as each region 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 regions also reflects the management structure that we use for making operating decisions and assessing performance. Although we believe aggregating these regions into our reporting segments for segment reporting purposes is appropriate, to the extent that there are significant margin variances that do not converge, we may be required to disaggregate the regions into separate reporting segments. Any such disaggregation would have no impact on our consolidated results of operations.

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

Revenues by segment were as follows:

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								General rentals		Trench, power and fluid solutions		Total
	General rentals		Trench, power and fluid solutions		Total
Three Months Ended September 30, 2020							Three Months Ended September 30, 2020
Equipment rentals							Equipment rentals	$	1,391	$	470	$	1,861
Sales of rental equipment							Sales of rental equipment	182		17		199
Sales of new equipment							Sales of new equipment	47		7		54
Contractor supplies sales							Contractor supplies sales	17		8		25
Service and other revenues							Service and other revenues	42		6		48
Total revenue							Total revenue	$	1,679	$	508	$	2,187
Three Months Ended September 30, 2019							Three Months Ended September 30, 2019
Equipment rentals	$	1,642	$	505	$	2,147	Equipment rentals	$	1,642	$	505	$	2,147
Sales of rental equipment	183		15		198		Sales of rental equipment	183		15		198
Sales of new equipment	60		7		67		Sales of new equipment	60		7		67
Contractor supplies sales	17		10		27		Contractor supplies sales	17		10		27
Service and other revenues	42		7		49		Service and other revenues	42		7		49
Total revenue	$	1,944	$	544	$	2,488	Total revenue	$	1,944	$	544	$	2,488
Three Months Ended September 30, 2018
Nine Months Ended September 30, 2020							Nine Months Ended September 30, 2020
Equipment rentals	$	1,444	$	417	$	1,861	Equipment rentals	$	4,040	$	1,246	$	5,286
Sales of rental equipment	130		10		140		Sales of rental equipment	530		53		583
Sales of new equipment	50		4		54		Sales of new equipment	145		24		169
Contractor supplies sales	17		7		24		Contractor supplies sales	48		25		73
Service and other revenues	33		4		37		Service and other revenues	122		18		140
Total revenue	$	1,674	$	442	$	2,116	Total revenue	$	4,885	$	1,366	$	6,251
Nine Months Ended September 30, 2019							Nine Months Ended September 30, 2019
Equipment rentals	$	4,592	$	1,310	$	5,902	Equipment rentals	$	4,592	$	1,310	$	5,902
Sales of rental equipment	541		46		587		Sales of rental equipment	541		46		587
Sales of new equipment	167		22		189		Sales of new equipment	167		22		189
Contractor supplies sales	53		25		78		Contractor supplies sales	53		25		78
Service and other revenues	119		20		139		Service and other revenues	119		20		139
Total revenue	$	5,472	$	1,423	$	6,895	Total revenue	$	5,472	$	1,423	$	6,895
Nine Months Ended September 30, 2018
Equipment rentals	$	3,977	$	974	$	4,951
Sales of rental equipment	446		32		478
Sales of new equipment	125		15		140
Contractor supplies sales	50		16		66
Service and other revenues	95		11		106
Total revenue	$	4,693	$	1,048	$	5,741

Equipment rentals. For the three months ended September 30, ~~2019,~~2020, equipment rentals of ~~$2.147~~$1.861 billion ~~increased~~decreased $286, or ~~15.4~~13.3 percent, as compared to the same period in ~~2018, primarily due~~2019. COVID-19 began to ~~an 18.1 percent increase~~impact our operations in ~~average OEC, which includes the impact of the BakerCorp~~March, and, ~~BlueLine acquisitions discussed in note 3 to our condensed consolidated financial statements. On a pro forma basis including the standalone, pre-acquisition results of BakerCorp and BlueLine,~~since then, equipment ~~rental revenue increased 4.2 percent~~rentals have decreased year-over-year, primarily due to ~~a 4.4 percent increase in average OEC and a fleet productivity increase of 1.7 percent, partially offset by~~ the impact of ~~inflation.~~COVID-19. As explained further above (see "Financial Overview-Revenues"), fleet productivity is a comprehensive measure of the combined impact of key decisions made daily by our managers regarding rental rates, time utilization and mix on the year-over-year change in owned equipment rental revenue. Fleet productivity decreased 8.0 percent, primarily due to the impact of COVID-19, which resulted in decreased rental volume in response to shelter-in-place orders and other market restrictions. Fleet productivity improved sequentially for the quarter by 560 basis points, primarily reflecting better fleet absorption in the three months ended September 30, 2020. Average OEC decreased 4.6 percent year-over-year. Equipment rentals represented 8685 percent of total revenues for the three months ended September 30, ~~2019.~~2020.

For the nine months ended September 30, ~~2019,~~2020, equipment rentals of ~~$5.902~~$5.286 billion ~~increased $951,~~decreased $616, or ~~19.2~~10.4 percent, as compared to the same period in ~~2018, primarily due~~2019. COVID-19 began to ~~a 21.5 percent increase~~impact our operations in average OEC, which includes the impact of the BakerCorp and BlueLine acquisitions discussed in note 3 to our condensed consolidated financial statements. On a pro forma basis including the standalone, pre-acquisition results of BakerCorp and BlueLine,March. Through February, equipment ~~rental revenue increased~~

~~5.3 percent~~rentals were up slightly year-over-year. Since March, equipment rentals have decreased year-over-year, primarily due to ~~a 5.2 percent increase in average OEC and a fleet productivity increase of 1.4 percent, partially offset by~~ the impact of ~~inflation.~~COVID-19. Fleet productivity decreased 8.0 percent, primarily due to the impact of COVID-19 since March, when rental volume declined in response to shelter-in-place orders and other market restrictions. Through February, fleet productivity was flat year-over-year and in line with expectations. Equipment rentals represented 8685 percent of total revenues for the nine months ended September 30, ~~2019.~~2020.

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For the three months ended September 30, ~~2019,~~2020, general rentals equipment rentals ~~increased $198,~~decreased $251, or ~~13.7~~15.3 percent, as compared to the same period in ~~2018,~~2019, primarily due to COVID-19. As noted above, COVID-19 began to impact our operations in March, and, since then, equipment rentals have decreased year-over-year in response to shelter-in-place orders and other market restrictions. As discussed above, disciplined management of capital expenditures and fleet capacity is a ~~17.0 percent increase in~~component of our COVID-19 response plan, and average OEC which includes the impact of the BlueLine acquisition. The equipment rentals increase was less than the average OEC increase primarily due to the impact of the BlueLine acquisition and decreases in time utilization in certain locations. Additionally, in 2019, we adopted an updated lease accounting standard (see note 8 to the condensed consolidated financial statements for further detail) that requires that we recognize doubtful accounts associated with lease revenues as a reduction to equipment rentals revenue which decreased equipment rentals revenue in 2019. On a pro forma basis including the standalone, pre-acquisition results of BlueLine, equipment rental revenue increased 1.6 percent year-over-year, primarily due to a 3.2 percent increase in average OEC, partially offset by the impact of inflation.year-over-year. For the three months ended September 30, ~~2019,~~2020, equipment rentals represented 8483 percent of total revenues for the general rentals segment.

For the nine months ended September 30, ~~2019,~~2020, general rentals equipment rentals ~~increased $615,~~decreased $552, or ~~15.5~~12.0 percent, as compared to the same period in ~~2018,~~2019, primarily due to ~~an 18.5 percent increase~~COVID-19. As noted above, COVID-19 began to impact our operations in ~~average OEC, which includes the impact of the BlueLine acquisition. The equipment rentals increase was less than the average OEC increase primarily due~~March, when rental volume declined in response to ~~1) the impact of the BlueLine acquisition, 2) decreases in time utilization in certain locations~~shelter-in-place orders and 3) the impact of the change in accounting for doubtful accounts discussed above. On a pro forma basis including the standalone, pre-acquisition results of BlueLine, equipment rental revenue increased 3.0 percent year-over-year, primarily due to a 4.1 percent increase in average OEC, partially offset by the impact of inflation.other market restrictions. For the nine months ended September 30, ~~2019,~~2020, equipment rentals represented 8483 percent of total revenues for the general rentals segment.

For the three months ended September 30, ~~2019,~~2020, trench, power and fluid solutions equipment rentals ~~increased $88,~~decreased $35, or ~~21.1~~6.9 percent, as compared to the same period in 2018, primarily reflecting the impact of acquisitions, including BakerCorp, and cold starts. On a pro forma basis including the standalone, pre-acquisition results of BakerCorp, equipment rental revenue increased 13.9 percent year-over-year,2019, primarily due to ~~a 14.3 percent increase~~COVID-19. As noted above, COVID-19 began to impact our operations in ~~average OEC. The pro forma increase~~March, and, since then, equipment rentals have decreased year-over-year in ~~average OEC includes the impact of cold starts~~response to shelter-in-place orders and ~~acquisitions~~ other ~~than BakerCorp.~~market restrictions. For the three months ended September 30, ~~2019,~~2020, equipment rentals represented 93 percent of total revenues for the trench, power and fluid solutions segment.

For the nine months ended September 30, ~~2019,~~2020, trench, power and fluid solutions equipment rentals ~~increased $336,~~decreased $64, or ~~34.5~~4.9 percent, as compared to the same period in 2018, primarily reflecting the impact of acquisitions, including BakerCorp, and cold starts. On a pro forma basis including the standalone, pre-acquisition results of BakerCorp, equipment rental revenue increased 14.3 percent year-over-year,2019, primarily due to COVID-19, partially offset by a ~~14.3~~4.8 percent increase in average OEC. ~~The pro forma increase~~As noted above, COVID-19 began to impact our operations in ~~average OEC includes the impact of cold starts~~March, when rental volume declined in response to shelter-in-place orders and ~~acquisitions~~ other ~~than BakerCorp.~~market restrictions. For the nine months ended September 30, ~~2019,~~2020, equipment rentals represented 9291 percent of total revenues for the trench, power and fluid solutions segment.

Sales of rental equipment. For the nine months ended September 30, ~~2019,~~2020, sales of rental equipment represented approximately 9 percent of our total revenues. Our general rentals segment accounted for most of these sales. For the three and nine months ended September 30, ~~2019,~~2020, sales of rental equipment increased 41.4 percent and 22.8 percent, respectively, from the same periods in 2018. Sales of rental equipment for the three and nine months ended September 30, 2019 increased primarily due to increased volume, which included the impact of the BlueLine acquisition, driven by a larger fleet size in a strong used equipment market.did not change materially year-over-year.

Sales of new equipment. For the nine months ended September 30, ~~2019,~~2020, sales of new equipment represented approximately 3 percent of our total revenues. Our general rentals segment accounted for most of these sales. For the three and nine months ended September 30, ~~2019,~~2020, sales of new equipment ~~increased 24.1~~decreased 19.4 percent and ~~35.0~~10.6 percent, respectively, from the same periods in ~~2018~~2019 primarily due to ~~increased volume driven by broad-based demand.~~the impact of COVID-19.

Contractor supplies sales. Contractor supplies sales represent our revenues associated with selling a variety of supplies, including construction consumables, tools, small equipment and safety supplies. For the nine months ended September 30, ~~2019,~~2020, contractor supplies sales represented approximately 1 percent of our total revenues. Our general rentals segment accounted for most of these sales. Contractor supplies sales for the three and nine months ended September 30, ~~2019 increased 12.5~~2020 decreased 7.4 percent and ~~18.2~~6.4 percent, respectively, from the same periods in ~~2018~~2019 primarily due to the impact of ~~the BakerCorp acquisition.~~COVID-19.

Service and other revenues. Service and other revenues primarily represent our revenues earned from providing repair and maintenance services on our customers’ fleet (including parts sales). For the nine months ended September 30, ~~2019,~~2020, service and other revenues represented approximately 2 percent of our total revenues. Our general rentals segment accounted for most of these sales. For the three and nine months ended September 30, ~~2019,~~2020, service and other revenues ~~increased 32.4 percent and 31.1 percent, respectively,~~did not change materially from the same periods in ~~2018, primarily reflecting an increased emphasis on this line of business and the impact of the BlueLine acquisition.~~2019.

Segment Equipment Rentals Gross Profit

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

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General
rentals
Trench, power and fluid solutions Total
Three Months Ended September 30, 2019
Equipment Rentals Gross Profit $ 671
$ 246
$ 917
Equipment Rentals Gross Margin 40.9 % 48.7 % 42.7 %
Three Months Ended September 30, 2018
Equipment Rentals Gross Profit $ 629
$ 218
$ 847
Equipment Rentals Gross Margin 43.6 % 52.3 % 45.5 %
Nine Months Ended September 30, 2019
Equipment Rentals Gross Profit $ 1,765
$ 602
$ 2,367
Equipment Rentals Gross Margin 38.4 % 46.0 % 40.1 %
Nine Months Ended September 30, 2018
Equipment Rentals Gross Profit $ 1,598
$ 482
$ 2,080
Equipment Rentals Gross Margin 40.2 % 49.5 % 42.0 %


	General rentals			Trench, power and fluid solutions			Total
Three Months Ended September 30, 2020
Equipment Rentals Gross Profit	$	543		$	234		$	777
Equipment Rentals Gross Margin	39.0		%	49.8		%	41.8		%
Three Months Ended September 30, 2019
Equipment Rentals Gross Profit	$	671		$	246		$	917
Equipment Rentals Gross Margin	40.9		%	48.7		%	42.7		%
Nine Months Ended September 30, 2020
Equipment Rentals Gross Profit	$	1,410		$	577		$	1,987
Equipment Rentals Gross Margin	34.9		%	46.3		%	37.6		%
Nine Months Ended September 30, 2019
Equipment Rentals Gross Profit	$	1,765		$	602		$	2,367
Equipment Rentals Gross Margin	38.4		%	46.0		%	40.1		%

General rentals. For the three months ended September 30, ~~2019,~~2020, equipment rentals gross profit decreased by $128, and equipment rentals gross margin decreased 190 basis points, from 2019, with 220 basis points of the margin decline due to depreciation expense, which decreased 6.5 percent from 2019, but increased ~~by $42,~~as a percentage of revenue, primarily due to ~~increased~~COVID-19. As noted above, COVID-19 began to impact our operations in March, and, since then, equipment rentals ~~including the impact of the BlueLine acquisition. As discussed above,~~have remained down year-over-year in response to shelter-in-place orders and other market restrictions. The 30 basis point increase in equipment rentals ~~increased 13.7 percent, primarily due to a 17.0 percent increase in average OEC, which includes~~gross margin excluding the depreciation impact ~~of the BlueLine acquisition. The equipment rentals increase~~ was ~~less than the average OEC increase~~ primarily due to the combined impact of actions we have taken to manage operating costs, such as leveraging our current capacity to reduce the ~~BlueLine acquisition~~need for third-party delivery and decreases in time utilization in certain locations. Additionally, in 2019, we adopted an updated lease accounting standard (see note 8 to the condensed consolidated financial statements for further detail) that requires that we recognize doubtful accounts associated with lease revenues as a reduction to equipment rentals revenue which decreased equipment rentals revenue in 2019. Equipment rentals gross margin decreased 270 basis points from 2018, due primarily to the impact of the BlueLine acquisition and increased operating costs. Depreciation of rental equipment increased 19.6 percent, which exceeded the equipment rentals increase of 13.7 percent,repair services, and the BlueLine acquisition was a significant driver of the depreciation increase. Operating costs were impacted by repair and repositioning initiatives that resulted in increased repairs and maintenance and delivery expenses, which increased 27.0 percent and 19.6 percent, respectively.~~Additionally, the change in accounting for doubtful accounts~~one-time benefits discussed above ~~decreased the equipment rentals gross margin in 2019.~~(see "Financial Overview").

For the nine months ended September 30, ~~2019,~~2020, equipment rentals gross profit ~~increased~~decreased by ~~$167, primarily~~$355, and equipment rentals gross margin decreased 350 basis points, from 2019, with 310 basis points of the margin decline due to ~~increased~~an increase in depreciation expense as a percentage of revenue. The increase in depreciation expense includes a $27 asset impairment charge, which was not related to COVID-19, associated with the discontinuation of certain equipment ~~rentals, including~~programs. Excluding the impact of the ~~BlueLine acquisition. As discussed above, equipment rentals~~asset impairment charge, depreciation expense decreased slightly from 2019, but increased ~~15.5 percent,~~as a percentage of revenue, primarily due to ~~an 18.5 percent increase~~COVID-19. As noted above, COVID-19 began to impact our operations in ~~average OEC, which includes the impact of the BlueLine acquisition. The~~March, and, since then, equipment rentals ~~increase was less than the average OEC increase primarily due~~have remained down year-over-year in response to ~~1) the impact of the BlueLine acquisition, 2) decreases~~shelter-in-place orders and other market restrictions. The remaining 40 basis point decline in ~~time utilization in certain locations and 3) the impact of the change in accounting for doubtful accounts discussed above. Equipment~~equipment rentals gross margin ~~decreased 180 basis points from 2018,~~was primarily due ~~primarily~~ to the impact of COVID-19, partially offset by the ~~BlueLine acquisition~~combined impact of 1) actions we have taken to manage operating costs, such as the reduction of overtime and ~~increased operating costs. Depreciation of rental equipment increased 20.0 percent, which exceeded the equipment rentals increase of 15.5 percent,~~temporary labor, and the ~~BlueLine acquisition was a significant driver~~leveraging of our current capacity to reduce the ~~depreciation increase. Operating costs were impacted by~~need for third-party delivery and repair services, and ~~repositioning initiatives that resulted in increased repairs and maintenance, which increased 22.2 percent. Additionally,~~2) the ~~change in accounting for doubtful accounts~~one-time benefits discussed above ~~decreased the equipment rentals gross margin in 2019.~~(see "Financial Overview").

Trench, power and fluid solutions. For the three months ended September 30, ~~2019,~~2020, equipment rentals gross profit ~~increased~~decreased by ~~$28~~$12 and equipment rentals gross margin ~~decreased~~increased by ~~360~~110 basis points from ~~2018.~~2019. The increase in equipment rentals gross profit primarily reflects increased equipment rentals revenue on a larger fleet. Year-over-year, trench, power and fluid solutions equipment rentals increased 21.1 percent and average OEC increased 26.3 percent primarily due to the impact of acquisitions, including BakerCorp, and cold starts. The equipment rentals increase was less than the average OEC increase

primarily due to the impact of the BakerCorp acquisition. On a pro forma basis including the standalone, pre-acquisition results of BakerCorp, equipment rental revenue increased 13.9 percent year-over-year, primarily due to a 14.3 percent increase in average OEC. The decrease in the equipment rentals gross margin was primarily due to ~~the impact of acquisitions, including BakerCorp, and cold starts, and, to a lesser extent, higher than anticipated~~decreases in certain operating costs, including repairs and ~~maintenance. The historic, pre-acquisition margins~~labor, partially offset by increases in depreciation expense and certain fixed expenses, such as facility costs, as a percentage of revenue. As noted above, we have reduced overtime and temporary labor primarily in response to the impact of COVID-19, and have leveraged our current capacity to reduce the need for ~~the acquired BakerCorp locations are lower than the margins achieved at the other locations in the segment, although we expect that the margins will improve over time~~third-party repair services. Depreciation expense was largely flat year-over-year, but increased as ~~we realize synergies following the acquisition.~~a percentage of revenue, primarily due to COVID-19.

For the nine months ended September 30, ~~2019,~~2020, equipment rentals gross profit ~~increased~~decreased by ~~$120~~$25, and equipment rentals gross margin ~~decreased~~increased by ~~350~~30 basis points from ~~2018.~~2019. The ~~increase~~increased gross margin primarily reflected decreases in ~~equipment rentals gross profit~~certain operating costs, including delivery, repairs and labor, offset by increases in depreciation expense and certain fixed expenses, such as facility costs, as a percentage of revenue. As noted above, we have reduced overtime and temporary labor primarily reflects increased equipment rentals revenue on a larger fleet. Year-over-year, trench, power and fluid solutions equipment rentals increased 34.5 percent and average OEC increased 46.4 percent primarily duein response to the impact of ~~acquisitions, including BakerCorp,~~COVID-19, and ~~cold starts. The equipment rentals increase~~have leveraged our current capacity to reduce the need for third-party delivery and repair services. Depreciation expense was ~~less than the average OEC increase~~largely flat year-over-year, but increased as a percentage of revenue, primarily due to the impact of the BakerCorp acquisition. On a pro forma basis including the standalone, pre-acquisition results of BakerCorp, equipment rental revenue increased 14.3 percent year-over-year, primarily due to a 14.3 percent increase in average OEC. The decrease in the equipment rentals gross margin was primarily due to the impact of acquisitions, including BakerCorp, and cold starts, and, to a lesser extent, higher than anticipated operating costs including repairs and maintenance.COVID-19.

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

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Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 Change 2019 2018 Change
Total gross margin 41.5 % 44.3 % (280) bps 39.2% 41.2% (200) bps
Equipment rentals 42.7 % 45.5 % (280) bps 40.1% 42.0% (190) bps
Sales of rental equipment 38.4 % 40.7 % (230) bps 38.2% 41.0% (280) bps
Sales of new equipment 13.4 % 14.8 % (140) bps 13.8% 13.6% 20 bps
Contractor supplies sales 33.3 % 37.5 % (420) bps 30.8% 34.8% (400) bps
Service and other revenues 44.9 % 45.9 % (100) bps 46.0% 45.3% 70 bps


	Three Months Ended September 30,					Nine Months Ended September 30,
	2020		2019		Change	2020	2019	Change
Total gross margin	40.5	%	41.5	%	(100) bps	37.0%	39.2%	(220) bps
Equipment rentals	41.8	%	42.7	%	(90) bps	37.6%	40.1%	(250) bps
Sales of rental equipment	38.2	%	38.4	%	(20) bps	39.5%	38.2%	130 bps
Sales of new equipment	13.0	%	13.4	%	(40) bps	13.0%	13.8%	(80) bps
Contractor supplies sales	28.0	%	33.3	%	(530) bps	28.8%	30.8%	(200) bps
Service and other revenues	39.6	%	44.9	%	(530) bps	38.6%	46.0%	(740) bps

For the three months ended September 30, ~~2019,~~2020, total gross margin decreased ~~280~~100 basis points from the same period in ~~2018.~~2019. Equipment rentals gross margin decreased ~~280~~90 basis points year-over-year, ~~due primarily to the impact~~with 180 basis points of the ~~BlueLine and BakerCorp acquisitions and~~margin decline due to depreciation expense, which decreased 5.3 percent from 2019, but increased operating costs. Depreciation of rental equipment increased 21.6 percent, which exceeded the equipment rentals increase of 15.4 percent, and the BlueLine and BakerCorp acquisitions were significant drivers of the depreciation increase. Operating costs were impacted by repair and repositioning initiatives that resulted in increased repairs and maintenance and delivery expenses, which increased 27.3 percent and 22.5 percent, respectively. Additionally, in 2019, we adopted an updated lease accounting standard (see note 8 to the condensed consolidated financial statements for further detail) that requires that we recognize doubtful accounts associated with lease revenues as a ~~reduction~~percentage of revenue, primarily due to ~~equipment rentals revenue which decreased~~COVID-19. The 90 basis point increase in equipment rentals gross margin ~~in 2019. On a pro forma basis including~~excluding the ~~standalone, pre-acquisition results of BakerCorp and BlueLine, equipment rental revenue increased 4.2 percent year-over-year,~~depreciation impact was primarily due to a 4.4 percent increase in average OEC and a fleet productivity increase of 1.7 percent, partially offset by the impact of inflation. As explained further above (see "Financial Overview-Revenues"), fleet productivity is a comprehensive measure of the combined impact of ~~key decisions made daily by~~actions we have taken to manage operating costs, such as leveraging our ~~managers regarding rental rates, time utilization~~current capacity to reduce the need for third-party delivery and ~~mix on~~repair services, and the year-over-year change in owned equipment rental revenue. Gross margin from sales of rental equipment decreased 230 basis points from the same period in 2018 primarily due to changes in the mix of equipment sold and channel mix.one-time benefits discussed above (see "Financial Overview"). The gross margin fluctuations from sales of new equipment, contractor supplies sales and service and other revenues generally reflect normal variability and, to varying degrees, the impact of COVID-19, and such ~~margins~~revenue types did not ~~have~~account for a significant ~~impact on~~portion of total gross ~~margin~~profit (gross profit for these revenue types represented 4 percent of total gross profit for the three months ended September 30, ~~2019)~~2020).

Gross margin from service and other revenues was particularly impacted by COVID-19, which resulted in reduced training revenue without a proportionate reduction in costs.

For the nine months ended September 30, ~~2019,~~2020, total gross margin decreased ~~200~~220 basis points from the same period in ~~2018.~~2019. Equipment rentals gross margin decreased ~~190~~250 basis points year-over-year, with all of the margin decline due ~~primarily~~ to depreciation expense. Depreciation expense included a $31 asset impairment charge, which was not related to COVID-19, associated with the discontinuation of certain equipment programs. Excluding the impact of the ~~BlueLine~~asset impairment charge, depreciation expense decreased slightly from 2019, but increased as a percentage of revenue, primarily due to COVID-19. As noted above, COVID-19 began to impact our operations in March, and, ~~BakerCorp acquisitions and increased operating costs. Depreciation of rental equipment increased 22.6 percent, which exceeded the~~since then, equipment rentals ~~increase of 19.2 percent,~~have remained down year-over-year in response to shelter-in-place orders and ~~the BlueLine and BakerCorp acquisitions were significant drivers of~~other market restrictions. Excluding the depreciation increase. Operating costs were impacted by repair and repositioning initiatives that resulted in increased repairs and maintenance expense, which increased 25.7 percent. Additionally, the change in accounting for doubtful accounts discussed above decreased theimpact, equipment rentals gross margin ~~in 2019. On a pro forma basis including the standalone, pre-acquisition results of BakerCorp and BlueLine, equipment rental revenue increased 5.3 percent~~was flat year-over-year, primarily ~~due to a 5.2 percent increase in average OEC and a fleet productivity increase~~reflecting the impact of ~~1.4 percent, partially~~COVID-19, offset by the combined impact of ~~inflation.~~

actions we have taken to manage operating costs, such as leveraging our current capacity to reduce the need for third-party delivery and repair services, and the one-time benefits discussed above (see "Financial Overview"). Gross margin from sales of rental equipment ~~decreased 280~~increased 130 basis points from the same period in ~~2018~~2019 primarily due to lower margin sales of fleet acquired in the BlueLine acquisition ~~and changes~~ in ~~the mix of equipment sold and channel mix.~~2019. The gross margin fluctuations from sales of new equipment, contractor supplies sales and service and other revenues generally reflect normal variability and, to varying degrees, the impact of COVID-19, and such ~~margins~~revenue types did not ~~have~~account for a significant ~~impact on~~portion of total gross ~~margin~~profit (gross profit for these revenue types represented 4 percent of total gross profit for the nine months ended September 30, ~~2019)~~2020). Gross margin from service and other revenues was particularly impacted by COVID-19, which resulted in reduced training revenue without a proportionate reduction in costs.

Other costs/(income)

The table below includes the other costs/(income) in our condensed consolidated statements of income, as well as key associated metrics, for the three and nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:

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	Three Months Ended September 30,			Nine Months Ended September 30,				Three Months Ended September 30,			Nine Months Ended September 30,
	2019	2018	Change	2019	2018	Change		2020	2019	Change	2020	2019	Change
Selling, general and administrative ("SG&A") expense	$273	$265	3.0%	$824	$736	12.0%	Selling, general and administrative ("SG&A") expense	$232	$273	(15.0)%	$721	$824	(12.5)%
SG&A expense as a percentage of revenue	11.0%	12.5%	(150) bps	12.0%	12.8%	(80) bps	SG&A expense as a percentage of revenue	10.6%	11.0%	(40) bps	11.5%	12.0%	(50) bps
Merger related costs	—	11	(100.0)%	1	14	(92.9)%	Merger related costs	—	—	—%	—	1	(100.0)%
Restructuring charge	2	9	(77.8)%	16	15	6.7%	Restructuring charge	6	2	200.0%	11	16	(31.3)%
Non-rental depreciation and amortization	102	75	36.0%	311	213	46.0%	Non-rental depreciation and amortization	97	102	(4.9)%	292	311	(6.1)%
Interest expense, net	147	118	24.6%	478	339	41.0%	Interest expense, net	278	147	89.1%	544	478	13.8%
Other income, net	(1)	—	—%	(6)	(2)	200.0%	Other income, net	(2)	(1)	100.0%	(6)	(6)	—%
Provision for income taxes	119	127	(6.3)%	245	265	(7.5)%	Provision for income taxes	67	119	(43.7)%	159	245	(35.1)%
Effective tax rate	23.3%	27.6%	(430) bps	22.7%	25.2%	(250) bps	Effective tax rate	24.4%	23.3%	110 bps	21.1%	22.7%	(160) bps

SG&A expense primarily includes sales force compensation, information technology costs, third party professional fees, management salaries, bad debt expense and clerical and administrative overhead. SG&A expense as a percentage of revenue for the three and nine months ended September 30, ~~2019~~2020 decreased from the same periods in ~~2018~~2019 primarily due to ~~a reduction~~significant reductions in ~~stock compensation~~professional fees and travel and entertainment expenses, which were implemented in response to COVID-19, partially offset by an increase in salaries, net of reduced bonuses, as a percentage of ~~revenue.~~revenue, which also reflects the impact of COVID-19.

The merger related costs reflect transaction costs associated with ~~the NES~~BakerCorp and ~~Neff~~BlueLine acquisitions that were completed in ~~2017, and the BakerCorp and BlueLine acquisitions discussed in note 3 to our condensed consolidated financial statements.~~2018. We have made a number of acquisitions in the past and may continue to make acquisitions in the future. Merger related costs only include costs associated with major acquisitions that significantly impact our operations. The historic acquisitions that have included merger related costs are RSC, which had annual revenues of approximately $1.5 billion prior to the acquisition, ~~and~~ National Pump, which had annual revenues of over $200 prior to the ~~acquisition.~~acquisition, NES, which had annual revenues of approximately $369 ~~and~~prior to the acquisition, Neff, which had annual revenues of approximately ~~$413. As discussed in note 3~~$413 prior to ~~our condensed consolidated financial statements,~~the acquisition, BakerCorp, which had annual revenues of approximately $295 prior to the acquisition, and BlueLine, which had annual revenues of approximately ~~$786.~~$786 prior to the acquisition.

The restructuring charges primarily reflect severance and branch closure charges associated with our restructuring programs. In the ~~third~~fourth quarter of ~~2018,~~2019, we initiated a restructuring program ~~following the closing of the BakerCorp acquisition discussed in note 3 to the condensed consolidated financial statements. The restructuring program also includes actions undertaken~~ associated with the ~~BlueLine acquisition, which is also discussed in note 3.~~consolidation of certain common functions, the relocation of our shared-service facilities and certain other cost reduction measures. For additional information, see note 54 to the condensed consolidated financial statements.

Non-rental depreciation and amortization includes i) the amortization of other intangible assets and ii) depreciation expense associated with equipment that is not offered for rent (such as computers and office equipment) and amortization expense associated with leasehold improvements. Our other intangible assets consist of customer relationships, non-compete agreements and trade names and associated trademarks. ~~The year-over-year increases in non-rental depreciation and amortization~~

Interest expense, net for the three and nine months ended September 30, ~~2019 primarily reflect the impact of the BakerCorp~~2020 increased 89.1 percent and ~~BlueLine acquisitions discussed in note 3 to the condensed consolidated financial statements.~~

13.8 percent year-over-year, respectively. Interest expense, net for the three months ended September 30, ~~2019 increased year-over-year primarily due to the impact~~2020 included a debt redemption loss of ~~higher average debt.~~$159. Interest expense, net for the nine months ended September 30, 2020 and September 30, 2019 included ~~a loss~~debt redemption losses of $159 and $32, respectively. The debt redemption losses primarily ~~associated with~~reflect the ~~full redemption~~difference between the net carrying amount and the total purchase price of ~~our 5~~³/₄ ~~percent Senior Notes.~~the redeemed notes. Excluding the impact of ~~this loss,~~these losses, interest expense, net for the three and nine months ended September 30, ~~2019 increased~~2020 decreased by 19.0 percent and 13.7 percent year-over-year, respectively, primarily due to ~~the impact of higher averag~~

~~e debt. The year-over-year increases~~decreases in average debt ~~include~~and the ~~impact~~average cost of ~~the debt used to finance the BakerCorp and BlueLine acquisitions discussed in note 3 to the condensed consolidated financial statements.~~debt.

The differences between the ~~2019~~2020 and ~~2018~~2019 effective tax rates and the federal statutory rate of 21 percent primarily reflect the geographical mix of income between foreign and domestic operations, the impact of state and local taxes, ~~and~~ certain deductible and nondeductible ~~charges.~~charges, and releases of valuation allowances on foreign tax credits.

In March 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act”) was enacted. The ~~year-over-year decreases in~~CARES Act, among other things, includes provisions relating to net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, technical corrections to tax depreciation methods for qualified improvement property and deferral of employer payroll taxes. The CARES Act did not materially impact our effective tax ~~rates primarily reflect the release of foreign tax credit valuation allowances in 2019 and 2018 transition tax adjustments associated with accounting~~rate for the three and nine months ended September 30, 2020, and is not expected to impact our effective tax ~~effects~~rate in 2020, although it will impact the timing of cash payments for taxes. As of September 30, 2020, we have deferred employer payroll taxes of $36

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under the CARES Act, with approximately half of the ~~enactment~~deferral due in each of 2021 and 2022. We may defer additional future employer payroll taxes under the ~~Tax Cuts and Jobs Act of 2017.~~CARES Act.

Balance sheet. As discussed in note 8 to the condensed consolidated financial statement, in 2019, we adopted an updated lease accounting standard that resulted in the recognition of operating lease right-of-use assets and lease liabilities. We adopted this standard using a transition method that does not require application to periods prior to adoption. Accrued expenses and other liabilities increasedAccounts receivable, net decreased by ~~$154,~~$206, or ~~22.7~~13.5 percent, from December 31, ~~2018~~2019 to September 30, ~~2019,~~2020, primarily due to reduced revenue, which reflected the ~~accounting for operating leases under the updated accounting standard (accrued expenses~~impact of both COVID-19 and ~~other liabilities as of September 30, 2019 includes $174 of current operating lease liabilities).~~seasonality. Accounts payable increased by ~~$303,~~$87, or ~~56.5~~19.2 percent, from December 31, ~~2018~~2019 to September 30, ~~2019,~~2020, primarily due to a seasonal increase in capital expenditures.

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Liquidity and Capital Resources

We manage our liquidity using internal cash management practices, which are subject to (i) the policies and cooperation of the financial institutions we utilize to maintain and provide cash management services, (ii) the terms and other requirements of the agreements to which we are a party and (iii) the statutes, regulations and practices of each of the local jurisdictions in which we operate. See "Financial Overview" above for a summary of recent capital structure actions taken to improve our financial flexibility and liquidity.

Since 2012, we have repurchased a total of ~~$2.45~~$3.7 billion of Holdings' common stock under ~~four~~five completed share repurchase programs. ~~Additionally, in April 2018,~~On January 28, 2020, our Board of Directors authorized a new ~~$1.25 billion~~$500 share repurchase program, which commenced in ~~July 2018. As~~the first quarter of ~~September 30, 2019,~~2020. Through March 18, 2020, when the program was paused due to the COVID-19 pandemic, we ~~have~~ repurchased ~~$1.050 billion~~$257 of ~~Holdings'~~ common stock under the ~~$1.25 billion share repurchase~~program. We are currently unable to estimate when, or if, the program ~~which~~will be restarted, and we ~~intend~~expect to ~~complete in 2019.~~provide an update at a future date.

Our principal existing sources of cash are cash generated from operations and from the sale of rental equipment, and borrowings available under our ABL facility and accounts receivable securitization facility. As of September 30, ~~2019,~~2020, we had cash and cash equivalents of $60.$174. Cash equivalents at September 30, ~~2019~~2020 consist of direct obligations of financial institutions rated A or better. We believe that our existing sources of cash will be sufficient to support our existing operations over the next 12 months. The table below presents financial information associated with our principal sources of cash as of and for the nine months ended September 30, ~~2019:~~2020:



ABL facility:
Borrowing capacity, net of letters of credit	$	3,091
Outstanding debt, net of debt issuance costs (1)	598
Interest rate at September 30, 2020	1.4		%
Average month-end principal amount of debt outstanding (1)	730
Weighted-average interest rate on average debt outstanding	2.1		%
Maximum month-end principal amount of debt outstanding (1)	1,494
Accounts receivable securitization facility (2):
Borrowing capacity	165
Outstanding debt, net of debt issuance costs	634
Interest rate at September 30, 2020	1.5		%
Average month-end principal amount of debt outstanding	671
Weighted-average interest rate on average debt outstanding	1.9		%
Maximum month-end principal amount of debt outstanding	811

___________________

(1)The outstanding amount of debt under the ABL facility and the average outstanding amount are less than the maximum outstanding amount primarily due to the use of proceeds (i) from the issuance of 4 percent Senior Notes discussed in note 6 to the condensed consolidated financial statements and (ii) from operations to reduce borrowings under the facility. At the time of the 4 percent Senior Notes offering, we indicated our expectation that we would re-borrow an amount equal to the net proceeds from the offering, along with additional borrowings under the ABL facility, to redeem the $800 principal amount of our 5 1/2 percent Senior Notes due 2025 on or after July 15, 2020. Prior to redeeming the 5 1/2 percent Senior Notes due 2025, we considered the impact of COVID-19 on liquidity, and assessed our available sources and anticipated uses of cash, including, with respect to sources, cash generated from operations and from the sale of rental equipment. In August 2020, we redeemed the 5 1/2 percent Senior Notes due 2025.

(2)As discussed in note 6 to the condensed consolidated financial statements, in April 2020, we amended the accounts receivable securitization facility to adjust, on a temporary basis, the financial tests relating to: (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding. The adjustments to these tests were intended to make compliance with such tests more likely for the calendar months ending April 30, 2020 and May 31, 2020, and we were in compliance with such tests for these months. In June 2020, the accounts receivable securitization facility was further amended to (a) extend the maturity date, which may be further extended on a 364-day basis by mutual agreement with the purchasers under the facility, to June 25, 2021, (b) reduce the size of the facility from $975 to $800 and (c) adjust, for the calendar months ending on or after June 30, 2020, the financial tests (including the method of calculation) relating to (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding.

ABL facility:
Borrowing capacity, net of letters of credit $ 2,051
Outstanding debt, net of debt issuance costs 1,630
Interest rate at September 30, 2019 3.4 %
Average month-end principal amount of debt outstanding 1,585
Weighted-average interest rate on average debt outstanding 3.8 %
Maximum month-end principal amount of debt outstanding 1,691
Accounts receivable securitization facility:
Borrowing capacity 50
Outstanding debt, net of debt issuance costs 925
Interest rate at September 30, 2019 2.9 %
Average month-end principal amount of debt outstanding 914
Weighted-average interest rate on average debt outstanding 3.2 %
Maximum month-end principal amount of debt outstanding 967

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We expect that our principal needs for cash relating to our operations over the next 12 months will be to fund (i) operating activities and working capital, (ii) the purchase of rental equipment and inventory items offered for sale, (iii) payments due under operating leases, (iv) debt service, (v) share repurchases and (vi) acquisitions. We plan to fund such cash requirements from our existing sources of cash. In addition, we may seek additional financing through the securitization of some of our real estate, the use of additional operating leases or other financing sources as market conditions permit.

To access the capital markets, we rely on credit rating agencies to assign ratings to our securities as an indicator of credit quality. Lower credit ratings generally result in higher borrowing costs and reduced access to debt capital markets. Credit ratings also affect the costs of derivative transactions, including interest rate and foreign currency derivative transactions. As a result, negative changes in our credit ratings could adversely impact our costs of funding. Our credit ratings as of October ~~14, 2019~~26, 2020 were as follows:



	Corporate Rating	Outlook
Moody’s	Ba2	Stable
Standard & Poor’s	BB	Stable

A security rating is not a recommendation to buy, sell or hold securities. There is no assurance that any rating will remain in effect for a given period of time or that any rating will not be revised or withdrawn by a rating agency in the future.

Loan Covenants and Compliance. As of September 30, ~~2019~~,2020, we were in compliance with the covenants and other provisions of the ABL, accounts receivable securitization and term loan 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 ~~maintenance~~ covenant that currently exists under the ABL facility is the fixed charge coverage ratio. Subject to certain limited exceptions specified in the ABL facility, the fixed charge coverage ratio covenant under the ABL facility will only apply in the future if specified availability under the ABL facility falls below 10 percent of the maximum revolver amount under the ABL facility. When certain conditions are met, cash and cash equivalents and borrowing base collateral in excess of the ABL facility size may be included when calculating specified availability under the ABL facility. As of September 30, ~~2019,~~2020, specified availability under the ABL facility exceeded the required threshold and, as a result, this financial ~~maintenance~~ 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.~~outstanding (as noted above, in April 2020 and in June 2020, we amended the accounts receivable securitization facility to adjust these financial tests). 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.

URNA’s payment capacity is restricted under the covenants in the ABL and term loan facilities and the indentures governing its outstanding indebtedness. Although this restricted capacity limits our ability to move operating cash flows to Holdings, because of certain intercompany arrangements, we do not expect any material adverse impact on Holdings’ ability to meet its cash obligations.

Sources and Uses of Cash. During the nine months ended September 30, 2020, we (i) generated cash from operating activities of $2.288 billion and (ii) generated cash from the sale of rental and non-rental equipment of $614. We used cash during this period principally to (i) purchase rental and non-rental equipment of $930, (ii) make debt payments, net of proceeds, of $1.578 billion and (ii) purchase shares of our common stock for $281. During the nine months ended September 30, 2019, we (i) generated cash from operating activities of $2.582 billion and (ii) generated cash from the sale of rental and non-rental equipment of $613. We used cash during this period principally to (i) purchase rental and non-rental equipment of $2.131 billion, (ii) purchase other companies for $247, (iii) make debt payments, net of proceeds, of $144 and (iv) purchase shares of our common stock for $664. During the nine months ended September 30, 2018, we (i) generated cash from operating activities of $2.123 billion, (ii) generated cash from the sale of rental and non-rental equipment of $491 and (iii) received cash from debt proceeds, net of payments, of $598. We used cash during this period principally to (i) purchase rental and non-rental equipment of $2.096 billion, (ii) purchase other companies for $805 and (iii) purchase shares of our common stock for $606.

Free Cash Flow GAAP Reconciliation. We define “free cash flow” as net cash provided by operating activities less purchases of, and plus proceeds from, equipment. The equipment purchases and proceeds are included in cash flows from investing activities. Management believes that free cash flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements. However, free cash flow is not a measure of financial performance or liquidity under GAAP. Accordingly, free cash flow should not be considered an alternative to net income or cash flow from operating activities as an indicator of operating performance or liquidity. The table below provides a reconciliation between net cash provided by operating activities and free cash flow.

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Nine Months Ended
September 30,
2019 2018
Net cash provided by operating activities $ 2,582
$ 2,123
Purchases of rental equipment (1,974 ) (1,962 )
Purchases of non-rental equipment (157 ) (134 )
Proceeds from sales of rental equipment 587
478
Proceeds from sales of non-rental equipment 26
13
Insurance proceeds from damaged equipment 18
18
Free cash flow $ 1,082
$ 536


	Nine Months Ended
	September 30,
	2020		2019
Net cash provided by operating activities	$	2,288	$	2,582
Purchases of rental equipment	(785)		(1,974)
Purchases of non-rental equipment	(145)		(157)
Proceeds from sales of rental equipment	583		587
Proceeds from sales of non-rental equipment	31		26
Insurance proceeds from damaged equipment	34		18

Free cash flow	$	2,006	$	1,082

Free cash flow for the nine months ended September 30, ~~2019~~2020 was ~~$1.082~~$2.006 billion, an increase of ~~$546~~$924 as compared to ~~$536~~$1.082 billion for the nine months ended September 30, ~~2018.~~2019. Free cash flow increased primarily due to ~~increased~~decreased net ~~cash provided by operating activities. Net~~ rental capital expenditures (defined as purchases of rental equipment less the proceeds from sales of rental equipment), partially offset by reduced net cash provided by operating activities. Net rental capital expenditures decreased ~~$97,~~$1.185 billion, or 785 percent, year-over-year.

Certain Information Concerning Contractual Obligations. The table below provides certain information concerning the payments coming due under certain categories of our existing contractual obligations as of September 30, 2020:


	2020		2021		2022		2023		2024		Thereafter		Total
Debt and finance leases (1)	$	17	$	707	$	43	$	33	$	1,371	$	7,965	$	10,136
Interest due on debt (2)	97		381		376		375		357		1,202		2,788
Operating leases (1)	53		201		168		134		100		145		801
Service agreements (3)	4		15		33		—		—		—		52
Purchase obligations (4)	212		5		—		—		—		—		217
Transition tax on unremitted foreign earnings and profits (5)	—		—		—		—		—		5		5
Total (6)	$	383	$	1,309	$	620	$	542	$	1,828	$	9,317	$	13,999

_________________

(1) The payments due with respect to a period represent (i) in the case of debt and finance leases, the scheduled principal payments due in such period, and (ii) in the case of operating leases, the payments due in such period for non-cancelable operating leases with initial or remaining terms of one year or more. See note 6 to the condensed consolidated financial statements for further debt information, and note 7 for further finance lease and operating lease information. As discussed in note 6, in October 2020, we redeemed all $750 principal amount of our 4 5/8 percent Senior Notes due 2025, using borrowings available under our ABL facility. The 4 5/8 percent Senior Notes due 2025 are reflected in the table above using the 2024 maturity date of the ABL facility.

(2) Estimated interest payments have been calculated based on the principal amount of debt and the applicable interest rates as of September 30, 2020. As discussed above, in October 2020, we redeemed all $750 principal amount of our 4 5/8 percent Senior Notes due 2025, using borrowings available under our ABL facility. Interest on the 4 5/8 percent Senior Notes due 2025 is reflected in the table above using the interest rate on the ABL facility and the 2024 maturity date of the ABL facility.

(3) These primarily represent service agreements with third parties to provide wireless and network services.

(4) As of September 30, 2020, we had outstanding purchase orders, which were negotiated in the ordinary course of business, with our equipment and inventory suppliers. These purchase commitments can generally be cancelled by us with 30 days' notice and without cancellation penalties. The equipment and inventory receipts from the suppliers for these purchases and related payments to the suppliers are primarily expected to be completed in 2020. As of December 31, 2019, we had $1.552 billion of outstanding purchase orders, which we could generally cancel with 30 days' notice and without cancellation penalties. In 2020, due primarily to COVID-19, we canceled a significant portion of our purchase orders. We will make future purchase order determinations based on our continuing assessment of the impact of COVID-19.

(5) The Tax Cuts and Jobs Act, which was enacted in December 2017, included a transition tax on unremitted foreign earnings and profits. We have elected to pay the transition tax amount payable of $55 over an eight-year period. The amount that we expect to pay as reflected in the table above represents the total we owe, net of an overpayment of federal taxes, which we are required to apply to the transition tax.

(6) This information excludes $12 of unrecognized tax benefits. It is not possible to estimate the time period during which these unrecognized tax benefits may be paid to tax authorities. Additionally, we are exposed to various claims relating to our business, including those for which we retain portions of the losses through the application of deductibles and self-insured

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retentions, which we sometimes refer to as “self-insurance.” Our self-insurance reserves totaled $121 at September 30, 2020. Self-insurance liabilities are based on estimates and actuarial assumptions and can fluctuate in both amount and in timing of cash settlement because historical trends are not necessarily predictive of the future, and, accordingly, are not included in the table above.

Relationship between Holdings and URNA. Holdings is principally a holding company and primarily conducts its operations through its wholly owned subsidiary, URNA, and subsidiaries of URNA. Holdings licenses its tradename and other intangibles and provides certain services to URNA in connection with its operations. These services principally include: (i) senior management services; (ii) finance and tax-related services and support; (iii) information technology systems and support; (iv) acquisition-related services; (v) legal services; and (vi) human resource support. In addition, Holdings leases certain equipment and real property that are made available for use by URNA and its subsidiaries.


~~Item 3.~~	~~Quantitative and Qualitative Disclosures about Market Risk~~

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Item 3.Quantitative and Qualitative Disclosures about Market Risk

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

Interest Rate Risk. As of September 30, ~~2019~~,2020, we had an aggregate of ~~$3.5~~$2.2 billion of indebtedness that bears interest at variable rates, comprised of borrowings under the ABL, accounts receivable securitization and term loan facilities. The amount of variable rate indebtedness outstanding under these facilities may fluctuate significantly. See note 76 to the condensed consolidated financial statements for the amounts outstanding, and the interest rates thereon, as of September 30, ~~2019~~2020 under these facilities. As of September 30, ~~2019,~~2020, based upon the amount of our variable rate debt outstanding, our annual after-tax earnings would decrease by approximately ~~$27~~$17 for each one percentage point increase in the interest rates applicable to our variable rate debt.

At September 30, ~~2019,~~2020, we had an aggregate of ~~$8.1~~$7.8 billion of indebtedness that bears interest at fixed rates. A one percentage point decrease in market interest rates as of September 30, ~~2019~~2020 would increase the fair value of our fixed rate indebtedness by approximately ~~six~~seven percent. For additional information concerning the fair value of our fixed rate debt, see note 65 (see “Fair Value of Financial Instruments”) to our condensed consolidated financial statements.

Currency Exchange Risk. We operate in the U.S., Canada and Europe. ~~As discussed in note 3 to the condensed consolidated financial statements, in~~In July 2018, we completed the acquisition of BakerCorp, which allowed for our entry into select European markets. During the nine months ended September 30, ~~2019,~~2020, our foreign subsidiaries accounted for ~~$592,~~$526, or 98 percent, of our total revenue of ~~$6.895~~$6.251 billion, and ~~$38,~~$60, or 48 percent, of our total pretax income of ~~$1.081 billion.~~$752. Based on the size of our foreign operations relative to the Company as a whole, we do not believe that a 10 percent change in exchange rates would have a material impact on our earnings. We do not engage in purchasing forward exchange contracts for speculative purposes.


~~Item 4.~~	~~Controls and Procedures~~

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Item 4.Controls and Procedures

Disclosure Controls and Procedures

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

The Company’s management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a–15(e) and 15d–15(e) of the Exchange Act, as of September 30, ~~2019~~.2020. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of September 30, ~~2019~~.2020.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, ~~2019~~2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION


~~Item 1.~~	~~Legal Proceedings~~

Item 1.Legal Proceedings

The information set forth under note 98 to our unaudited condensed consolidated financial statements of this quarterly report on Form 10-Q is incorporated by reference in answer to this item. Such information is limited to certain recent developments.

Item 1A.Risk Factors


~~Item 1A.~~	~~Risk Factors~~

Our results of operations and financial condition are subject to numerous risks and uncertainties described in our ~~2018~~2019 Form 10-K and first quarter 2020 Form 10-Q, which risk factors are incorporated herein by reference. You should carefully consider ~~these~~the risk factors in our 2019 Form 10-K and first quarter 2020 Form 10-Q in conjunction with the other information contained in this report. Should any of these risks materialize, our business, financial condition and future prospects could be negatively impacted.


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

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

(c) The following table provides information about purchases of Holdings’ common stock by Holdings during the third quarter of ~~2019:~~2020:


Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Program (2)
July 1, 2020 to July 31, 2020	1,221	(1)	$	152.28		—
August 1, 2020 to August 31, 2020	26,980	(1)	$	178.39		—
September 1, 2020 to September 30, 2020	870	(1)	$	178.30		—
Total	29,071		$	177.29	—	$	243,081,785

(1)All shares purchased were withheld by Holdings to satisfy tax withholding obligations upon the vesting of restricted stock unit awards. These shares were not acquired pursuant to any repurchase plan or program.

(2)On January 28, 2020, our Board authorized a $500 million share repurchase program, which commenced in the first quarter of 2020. The program was paused on March 18, 2020 due to the COVID-19 pandemic. We are currently unable to estimate when, or if, the program will be restarted, and we expect to provide an update at a future date.

Period
Total Number of
Shares Purchased

Average Price
Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Program (2)
July 1, 2019 to July 31, 2019 546,936
(1) $ 128.38
545,267
—
August 1, 2019 to August 31, 2019 620,191
(1) $ 113.35
617,725
—
September 1, 2019 to September 30, 2019 557,911
(1) $ 125.89
556,004
—
Total 1,725,038
$ 122.17
1,718,996
$ 200,071,794

Table of Contents

Item 6.Exhibits


~~(1)~~	In July 2019, August 2019 and September 2019, 1,669, 2,466 and 1,907 shares, respectively, were withheld by Holdings to satisfy tax withholding obligations upon the vesting of restricted stock unit awards. These shares were not acquired pursuant to any repurchase plan or program.


~~(2)~~	~~On April 17, 2018, our Board authorized a $1.25 billion share repurchase program which commenced in July 2018. We intend to complete the program in 2019.~~


~~Item 6.~~	~~Exhibits~~




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)		Agreement and Plan of Merger, dated as of September 10, 2018, by and among United Rentals, Inc., UR Merger Sub V Corporation, Vander Holding Corporation and Platinum Equity Advisors, LLC, solely in its capacity as the initial Holder Representative thereunder (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 September 10, 2018)

3(a)		~~Fourth~~Fifth Amended and Restated Certificate of Incorporation of United Rentals, Inc., dated ~~June 1, 2017~~May 7, 2020 (incorporated by reference to Exhibit 3.2 of the ~~United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on June 2, 2017~~)

~~3(b)~~	~~Amended and Restated By-Laws of United Rentals, Inc., amended as of May 4, 2017 (incorporated by reference to Exhibit 3.4 of the~~ United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on May ~~4, 2017~~8, 2020))

3(b)		Amended and Restated By-Laws of United Rentals, Inc., amended as of May 7, 2020 (incorporated by reference to Exhibit 3.3 of the United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on May 8, 2020)

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)

31(a)*4		Indenture for the 3.875% Senior Notes due 2031, dated as of August 10, 2020, among United Rentals (North America), Inc., United Rentals, Inc., each of United Rentals (North America), Inc.’s subsidiaries named therein and Wells Fargo Bank, National Association, as trustee (including the form of note) (incorporated by reference to Exhibit 4.1 of the United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on August 10, 2020)

10		Severance Agreement and General Release, dated September 21, 2020, between the Company and Paul McDonnell (including a form of Consulting Agreement) (incorporated by reference to Exhibit 10.1 of the United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on September 22, 2020)

























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

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

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

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

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

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document


*	~~Filed herewith.~~


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


‡	~~Management contract, compensatory plan or arrangement.~~

* Filed herewith.

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

Table of Contents

SIGNATURES

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

UNITED RENTALS, INC.

Dated:

October ~~16, 2019~~28, 2020

By:

/S/ ANDREW B. LIMOGES

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

UNITED RENTALS (NORTH AMERICA), INC.

Dated:

October ~~16, 2019~~28, 2020

By:

/S/ ANDREW B. LIMOGES

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

5758



	Fair value		Life (years)
Customer relationships	$	166	8
Trade names and associated trademarks	5		5
Total	$	171



	Three Months Ended											Nine Months Ended
	September 30, 2018											September 30, 2018
	United Rentals		BlueLine			BakerCorp			Total			United Rentals		BlueLine			BakerCorp			Total
Historic/pro forma revenues	$	2,116	$	219		$	28		$	2,363		$	5,741	$	601		$	184		$	6,526
Historic/combined pretax income (loss)	460		—			(63		)	397			1,051		(30		)	(84		)	937
Pro forma adjustments to pretax income (loss):
Impact of fair value mark-ups/useful life changes on depreciation (1)			(2		)	(2		)	(4		)			(5		)	(8		)	(13		)
Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2)			(5		)	—			(5		)			(13		)	—			(13		)
Intangible asset amortization (3)			(20		)	(4		)	(24		)			(58		)	(24		)	(82		)
Interest expense (4)			(28		)	(2		)	(30		)			(82		)	(14		)	(96		)
Elimination of historic interest (5)			32			9			41					95			30			125
Elimination of merger related costs (6)			3			65			68					5			66			71
Restructuring charges (7)			(3		)	5			2					(26		)	(4		)	(30		)
Pro forma pretax income									$	445										$	899



	September 30, 2019		December 31, 2018
Total reportable segment assets
General rentals	$	16,383	$	15,597
Trench, power and fluid solutions	3,022		2,536
Total assets	$	19,405	$	18,133



	Reserve Balance at		Charged to Costs and Expenses (1)		Payments and Other			Reserve Balance at
	December 31, 2018		Charged to Costs and Expenses (1)		Payments and Other			September 30, 2019
Branch closure charges	$	3	$	14	$	(5	)	$	12
Severance and other	9		6		(13		)	2
Total	$	12	$	20	$	(18	)	$	14



ABL facility:
Borrowing capacity, net of letters of credit	$	2,051
Outstanding debt, net of debt issuance costs	1,630
Interest rate at September 30, 2019	3.4		%
Average month-end principal amount of debt outstanding	1,585
Weighted-average interest rate on average debt outstanding	3.8		%
Maximum month-end principal amount of debt outstanding	1,691
Accounts receivable securitization facility:
Borrowing capacity	50
Outstanding debt, net of debt issuance costs	925
Interest rate at September 30, 2019	2.9		%
Average month-end principal amount of debt outstanding	914
Weighted-average interest rate on average debt outstanding	3.2		%
Maximum month-end principal amount of debt outstanding	967