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 ~~March 31,~~September 30, 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 ~~April 27,~~October 26, 2020, there were ~~72,049,494~~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 ~~MARCH 31,~~SEPTEMBER 30, 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 ~~March 31,~~September 30, 2020 (unaudited) and December 31, 2019		6

			United Rentals, Inc. Condensed Consolidated Statements of Income for the Three and Nine Months Ended ~~March 31,~~September 30 , 2020 and 2019 (unaudited)		7

			United Rentals, Inc. Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended ~~March 31,~~September 30 , 2020 and 2019 (unaudited)		8

			United Rentals, Inc. Condensed Consolidated Statement of Stockholders’ Equity for the Three and Nine Months Ended ~~March 31,~~September 30 , 2020 and 2019 (unaudited)		9

			United Rentals, Inc. Condensed Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~March 31,~~September 30 , 2020 and 2019 (unaudited)		1011

			Notes to Unaudited Condensed Consolidated Financial Statements		1112

Item 2			Management’s Discussion and Analysis of Financial Condition and Results of Operations		3136

Item 3			Quantitative and Qualitative Disclosures About Market Risk		4354

Item 4			Controls and Procedures		4455

PART II			OTHER INFORMATION

Item 1			Legal Proceedings		4556

Item 1A			Risk Factors		4556

Item 2			Unregistered Sales of Equity Securities and Use of Proceeds		4556



Item 6			Exhibits		4757

			Signatures		4858

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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 ~~$11.6~~$10.1 billion at ~~March 31,~~September 30, 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, 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 (for example, due to COVID-19);

•rates we charge and time utilization we achieve being less than 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 (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, 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, 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)


	March 31, 2020			December 31, 2019				September 30, 2020		December 31, 2019
	(unaudited)							(unaudited)
ASSETS							ASSETS
Cash and cash equivalents	$	513		$	52		Cash and cash equivalents	$	174	$	52
Accounts receivable, net of allowance for doubtful accounts of $107 at March 31, 2020 and $103 at December 31, 2019	1,413			1,530
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	115			120			Inventory	108		120
Prepaid expenses and other assets	173			140			Prepaid expenses and other assets	122		140

Total current assets	2,214			1,842			Total current assets	1,728		1,842
Rental equipment, net	9,422			9,787			Rental equipment, net	9,041		9,787
Property and equipment, net	600			604			Property and equipment, net	598		604
Goodwill	5,122			5,154			Goodwill	5,147		5,154
Other intangible assets, net	823			895			Other intangible assets, net	701		895
Operating lease right-of-use assets	666			669			Operating lease right-of-use assets	663		669
Other long-term assets	21			19			Other long-term assets	30		19
Total assets	$	18,868		$	18,970		Total assets	$	17,908	$	18,970
LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt and current maturities of long-term debt	$	854		$	997		Short-term debt and current maturities of long-term debt	$	700	$	997
Accounts payable	484			454			Accounts payable	541		454
Accrued expenses and other liabilities	658			747			Accrued expenses and other liabilities	675		747
Total current liabilities	1,996			2,198			Total current liabilities	1,916		2,198
Long-term debt	10,743			10,431			Long-term debt	9,351		10,431

Deferred taxes	1,878			1,887			Deferred taxes	1,818		1,887
Operating lease liabilities	530			533			Operating lease liabilities	524		533
Other long-term liabilities	86			91			Other long-term liabilities	138		91
Total liabilities	15,233			15,140			Total liabilities	13,747		15,140
Common stock—$0.01 par value, 500,000,000 shares authorized, 114,061,646 and 72,048,137 shares issued and outstanding, respectively, at March 31, 2020 and 113,825,667 and 74,362,195 shares issued and outstanding, respectively, at December 31, 2019	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	2,435			2,440			Additional paid-in capital	2,463		2,440
Retained earnings	5,448			5,275			Retained earnings	5,868		5,275
Treasury stock at cost—42,013,509 and 39,463,472 shares at March 31, 2020 and December 31, 2019, respectively	(3,957		)	(3,700		)
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	(292		)	(186		)	Accumulated other comprehensive loss	(214)		(186)
Total stockholders’ equity	3,635			3,830			Total stockholders’ equity	4,161		3,830
Total liabilities and stockholders’ equity	$	18,868		$	18,970		Total liabilities and stockholders’ equity	$	17,908	$	18,970




	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 March 31, 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 December 31, 2019 74
$ 1
$ 2,440
$ 5,275
39
$ (3,700 ) $ (186 )
Net income 173

Foreign currency translation adjustments (3) (103 )
Fixed price diesel swaps (3 )
Stock compensation expense, net 1
13

Exercise of common stock options 1

Shares repurchased and retired (19 )
Repurchase of common stock (3 ) 3
(257 )
Balance at March 31, 2020 72
$ 1
$ 2,435
$ 5,448
42
$ (3,957 ) $ (292 )

Three Months Ended March 31, 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 175

Foreign currency translation adjustments 20
Fixed price diesel swaps 1
Stock compensation expense, net 1
15

Exercise of common stock options 4

Shares repurchased and retired (33 )
Repurchase of common stock (2 ) 2
(210 )
Balance at March 31, 2019 79
$ 1
$ 2,394
$ 4,276
35
$ (3,080 ) $ (216 )



	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
	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, 2019	74	$	1	$	2,440	$	5,275	39	$	(3,700)	$	(186)
Net income						593
Foreign currency translation adjustments											(26)
Fixed price diesel swaps											(2)

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


Shares repurchased and retired				(24)
Repurchase of common stock	(3)							3	(257)

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


	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)

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

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

~~(3)Primarily reflects a significant change in Canadian currency exchange rates.~~

See accompanying notes.

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)

Three Months Ended
March 31,
2020 2019
Cash Flows From Operating Activities:
Net income $ 173
$ 175
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 526
499
Amortization of deferred financing costs and original issue discounts 4
4
Gain on sales of rental equipment (83 ) (67 )
Gain on sales of non-rental equipment (1 ) (2 )
Gain on insurance proceeds from damaged equipment (6 ) (7 )
Stock compensation expense, net 13
15
Merger related costs —
1
Restructuring charge 2
8
Increase in deferred taxes 1
21
Changes in operating assets and liabilities, net of amounts acquired:
Decrease in accounts receivable 105
73
Decrease (increase) in inventory 5
(9 )
(Increase) decrease in prepaid expenses and other assets (30 ) 12
Increase in accounts payable 33
18
Decrease in accrued expenses and other liabilities (98 ) (74 )
Net cash provided by operating activities 644
667
Cash Flows From Investing Activities:
Purchases of rental equipment (208 ) (257 )
Purchases of non-rental equipment (53 ) (42 )
Proceeds from sales of rental equipment 208
192
Proceeds from sales of non-rental equipment 9
8
Insurance proceeds from damaged equipment 6
7
Purchases of other companies, net of cash acquired —
(173 )
Purchases of investments (1 ) —
Net cash used in investing activities (39 ) (265 )
Cash Flows From Financing Activities:
Proceeds from debt 2,517
1,427
Payments of debt (2,375 ) (1,572 )
Proceeds from the exercise of common stock options 1
4
Common stock repurchased (276 ) (243 )
Payments of financing costs (9 ) (9 )
Net cash used in financing activities (142 ) (393 )
Effect of foreign exchange rates (2 ) —
Net increase in cash and cash equivalents 461
9
Cash and cash equivalents at beginning of period 52
43
Cash and cash equivalents at end of period $ 513
$ 52
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net $ 3
$ 4
Cash paid for interest 174
179


	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, 2019 (the “~~2019~~“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 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 ~~highly~~ 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 ~~light of this economic disruption and uncertainty,~~October 2020, after reporting third quarter results, we ~~have withdrawn~~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 ~~end-market~~market restrictions. ~~All our branches in the U.S. and Canada remain open to provide essential services, and most of our European branches are also operating.~~ COVID-19 is discussed in more detail throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

New Accounting Pronouncements

Simplifying the Test for Goodwill Impairment. In January 2017, the 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. We will adopt this guidance for ~~any annual or interim~~the goodwill impairment ~~tests conducted in~~test that we will conduct as of October 1, 2020, ~~(through March 31, 2020, we have~~and do not ~~performed any such tests). The~~expect the adoption of the guidance ~~is not expected~~ to have a significant impact on our financial statements.

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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)

Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued guidance intended to simplify the accounting for income taxes. The guidance removes the following exceptions: 1) exception to the 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 be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction, 3) specifying that an entity 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 ~~are currently assessing whether we~~ will ~~early~~ adopt this guidance when it becomes effective, in the first quarter of 2021, and the impact on our financial statements is not ~~currently estimable.~~expected to be material.

Guidance Adopted in 2020

Measurement of Credit Losses on Financial Instruments. In June 2016, the FASB issued 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 revenues) are the only material financial asset we have that is impacted by this guidance. 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. This guidance does not apply to receivables arising from operating lease revenues. 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 7778 percent of our total revenues for the ~~three~~nine months ended ~~March 31,~~September 30, 2020). 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 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 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 (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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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,
			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

Three Months Ended March 31,
2020 2019
Topic 842 Topic 606 Total Topic 842 Topic 606 Total
Revenues:
Owned equipment rentals $ 1,522
$ —
$ 1,522
$ 1,530
$ —
$ 1,530
Re-rent revenue 34
—
34
35
—
35
Ancillary and other rental revenues:
Delivery and pick-up —
119
119
—
119
119
Other 81
27
108
80
31
111
Total ancillary and other rental revenues 81
146
227
80
150
230
Total equipment rentals 1,637
146
1,783
1,645
150
1,795
Sales of rental equipment —
208
208
—
192
192
Sales of new equipment —
62
62
—
62
62
Contractor supplies sales —
25
25
—
24
24
Service and other revenues —
47
47
—
44
44
Total revenues $ 1,637
$ 488
$ 2,125
$ 1,645
$ 472
$ 2,117


	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 3 and 10 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 ~~three~~nine months ended ~~March 31,~~September 30, 2020, 8078 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 3 and 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 72 percent of total revenues for the ~~three~~nine months ended ~~March 31,~~September 30, 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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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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

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

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

We record amounts billed to customers in excess of recognizable revenue as deferred revenue on our balance sheet. We had deferred revenue (associated with both Topic 842 and Topic 606) of ~~$49~~$57 and $55 as of ~~March 31,~~September 30, 2020 and December 31, 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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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 7778 percent of our total revenues for the ~~three~~nine months ended ~~March 31,~~September 30, 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.

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 ~~three~~nine months ended ~~March 31,~~September 30, 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 ~~March 31,~~September 30, 2020 and December 31, 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 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. 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 ~~March 31,~~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 7778 percent of our total revenues for the ~~three~~nine months ended ~~March 31,~~September 30, 2020, and these revenues account for corresponding portions of the ~~$1.413~~$1.324 billion of net accounts receivable and the associated allowance for doubtful accounts of ~~$107~~$114 reported on our condensed consolidated balance sheet as of ~~March 31,~~September 30, 2020). During the three and nine months ended ~~March 31,~~September 30, 2020, we recognized total bad debt expenses for our non-lease trade receivables, within selling, general and administrative expenses on our condensed consolidated statement of income, of $4$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 ~~March 31,~~September 30, 2020 or 2) total bad debt expenses recognized associated with our allowance for doubtful accounts for the three and nine months ended ~~March 31,~~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

Three Months Ended March 31, 2020 Three Months Ended March 31, 2019
Beginning balance $ 103
$ 93
Acquired —
4
Charged to costs and expenses (1) 4
3
Charged to revenue (2) 8
12
Deductions (3) (8 ) (8 )
Ending balance $ 107
$ 104

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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 and nine months ended ~~March 31,~~September 30, 2020 or 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 ~~March 31,~~September 30, 2020 and 2019 were 0t material. We also do not expect to recognize material revenue in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of ~~March 31,~~September 30, 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.

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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

3. 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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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

General
rentals
Trench, power and fluid solutions Total
Three Months Ended March 31, 2020
Equipment rentals $ 1,394
$ 389
$ 1,783
Sales of rental equipment 190
18
208
Sales of new equipment 53
9
62
Contractor supplies sales 16
9
25
Service and other revenues 41
6
47
Total revenue 1,694
431
2,125
Depreciation and amortization expense 437
89
526
Equipment rentals gross profit 448
162
610
Capital expenditures 198
63
261
Three Months Ended March 31, 2019
Equipment rentals $ 1,423
$ 372
$ 1,795
Sales of rental equipment 178
14
192
Sales of new equipment 55
7
62
Contractor supplies sales 17
7
24
Service and other revenues 37
7
44
Total revenue 1,710
407
2,117
Depreciation and amortization expense 412
87
499
Equipment rentals gross profit 501
157
658
Capital expenditures 236
63
299

March 31,
2020 December 31,
2019
Total reportable segment assets
General rentals $ 15,994
$ 16,036
Trench, power and fluid solutions 2,874
2,934
Total assets $ 18,868
$ 18,970


	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

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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)

~~(2)~~

Borrowings under the accounts receivable securitization facility are permitted only to the extent that the face amount of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans. As of ~~March 31, 2020~~, there were $857 of receivables, net of applicable reserves and other deductions, in the collateral pool. As explained further below, in April 2020, we amended the accounts receivable securitization facility to adjust 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 are intended to make compliance with such tests more likely, and are not expected to materially impact our financial statements. The accounts receivable securitization facility expires on June 26, 2020, and we expect to renew the facility in the second quarter of 2020.

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.

~~(3)~~

The decrease in the outstanding debt under the ABL facility since December 31, 2019 primarily reflects using proceeds from the issuance of 4 percent Senior Notes (the “4 percent Notes”) discussed below to reduce borrowings under the ABL facility. At the time of the offering of the 4 percent Notes, we indicated our expectation that we would re-borrow an amount equal to net proceeds from the offering (discussed below), along with additional borrowings under the ABL facility, to redeem our 5 ¹/₂ ~~percent Senior Notes due 2025 on or after July 15, 2020. Prior to redeeming any 5~~ ¹/₂ percent Senior Notes due 2025, due primarily to the potential impact of COVID-19 on liquidity, we plan to assess our available sources and anticipated uses of cash, including, with respect to sources, cash generated from operations and from the sale of rental equipment. We currently expect to make a decision regarding the redemption of 5 ¹/₂ ~~percent Senior Notes due 2025 during the second half of 2020.~~


~~(4)~~	~~URNA separately issued 4~~ ⁷/₈ ~~percent Senior Notes in August 2017 and in September 2017. Following the issuances, URNA consummated an exchange offer pursuant to which most of the 4~~ ⁷/₈ ~~percent Senior Notes issued in September 2017 were exchanged for additional notes fungible with the 4~~ ⁷/₈ ~~percent Senior Notes issued in August 2017.~~

~~(5)~~

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 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.


~~(6)~~	~~As of March 31, 2020, our short-term debt primarily reflects $795 of borrowings under our accounts receivable securitization facility.~~

Loan Covenants and Compliance

As of ~~March 31,~~September 30, 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 covenant that currently exists under the ABL facility is the fixed charge coverage ratio. Subject to certain limited exceptions specified in the ABL facility, the fixed charge coverage ratio covenant under the ABL facility will only apply in the future if specified availability under the ABL facility falls below 10 percent of the maximum revolver amount under the ABL facility. When certain conditions are met, cash and cash equivalents and borrowing base collateral in excess of the ABL facility size may be included when calculating specified availability under the ABL facility. As of ~~March 31,~~September 30, 2020, specified availability under the ABL facility exceeded the required threshold and, as a result, this financial covenant was inapplicable. Under our accounts receivable securitization facility, we are required, among other things, to maintain certain financial tests relating to: (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding.

~~Table of Contents~~

~~UNITED RENTALS, INC.~~

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

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

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.

On April 27, 2020, URI, URNA and the special purpose vehicle that is party to the accounts receivable securitization facility entered into an amendment to the Third Amended and Restated Receivables Purchase Agreement (the “Purchase Agreement”), dated as of September 24, 2012, with the other parties to the Purchase Agreement, which include Liberty Street Funding LLC (“Liberty”) and Gotham Funding Corporation (“Gotham”), as Purchasers, The Bank of Nova Scotia (“Scotia”), as Purchaser Agent for Liberty, as Administrative Agent and as a Bank, PNC Bank, National Association, as Purchaser Agent for itself and as a Bank, Truist Bank, as Purchaser Agent for itself and as a Bank, MUFG Bank, Ltd. (formerly known as the Bank of Tokyo-Mitsubishi UFJ, Ltd.) (“BTMU”), as Purchaser Agent for Gotham and as a Bank, and The Toronto-Dominion Bank (“TD”), as Purchaser Agent for itself and as a Bank. The amendment made certain adjustments to 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 are intended to make compliance with such tests more likely, and are not expected to materially impact our financial statements. The accounts receivable securitization facility expires on June 26, 2020, and we expect to renew the facility in the second quarter of 2020.

7. Leases

As discussed in note 2 to the condensed consolidated financial statements, most of our equipment rental revenue is accounted for as lease revenue under Topic 842 (such lease revenue represented 7778 percent of our total revenues for the ~~three~~nine months ended ~~March 31,~~September 30, 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).

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 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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UNITED RENTALS, INC.

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 this re-rent revenue, 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 as of ~~March 31,~~September 30, 2020 and December 31, 2019, and for the three and nine months ended ~~March 31,~~September 30, 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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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Classification March 31, 2020 December 31, 2019
Assets
Operating lease assets Operating lease right-of-use assets $ 666
$ 669
Finance lease assets Rental equipment 296
286
Less accumulated depreciation (87 ) (89 )
Rental equipment, net 209
197
Property and equipment, net:
Non-rental vehicles 8
8
Buildings 18
18
Less accumulated depreciation and amortization (9 ) (15 )
Property and equipment, net 17
11
Total leased assets 892
877
Liabilities
Current
Operating Accrued expenses and other liabilities 177
178
Finance Short-term debt and current maturities of long-term debt 49
58
Long-term
Operating Operating lease liabilities 530
533
Finance Long-term debt 97
69
Total lease liabilities $ 853
$ 838


Lease cost	Classification	Three Months Ended March 31, 2020			Three Months Ended March 31, 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)	$	92		$	89		Operating lease cost (1)	Cost of equipment rentals, excluding depreciation (1)	$	95	$	95	$	273	$	270
	Selling, general and administrative expenses	3			3				Selling, general and administrative expenses	2		3		8		8
	Restructuring charge	1			6				Restructuring charge	1		1		3		14
Finance lease cost								Finance lease cost
Amortization of leased assets	Depreciation of rental equipment	7			7			Amortization of leased assets	Depreciation of rental equipment	8		7		23		21
	Non-rental depreciation and amortization	—			1				Non-rental depreciation and amortization	0		1		1		2
Interest on lease liabilities	Interest expense, net	3			2			Interest on lease liabilities	Interest expense, net	3		2		9		5
Sublease income (2)		(34		)	(38		)	Sublease income (2)		(41)		(42)		(105)		(114)
Net lease cost		$	72		$	70		Net lease cost		$	68	$	67	$	212	$	206

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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)

Other information Three Months Ended March 31, 2020 Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases $ 52
$ 50
Operating cash flows from finance leases 3
2
Financing cash flows from finance leases 12
10
Leased assets obtained in exchange for new operating lease liabilities 48
75
Leased assets obtained in exchange for new finance lease liabilities $ 34
$ 8


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.

9.9. 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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UNITED RENTALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Three Months Ended
March 31,
2020 2019
Numerator:
Net income available to common stockholders 173
175
Denominator:
Denominator for basic earnings per share—weighted-average common shares 74,041
79,401
Effect of dilutive securities:
Employee stock options 15
294
Restricted stock units 210
352
Denominator for diluted earnings per share—adjusted weighted-average common shares 74,266
80,047
Basic earnings per share $ 2.33
$ 2.21
Diluted earnings per share $ 2.33
$ 2.19

~~Table of Contents~~

~~UNITED RENTALS, INC.~~

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

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

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 ~~March 31,~~September 30, 2020, the amount available for distribution under the most restrictive of these covenants was ~~$445.~~$915. The Company’s total available capacity for making share repurchases and dividend payments includes the intercompany receivable balance of Parent. As of ~~March 31,~~September 30, 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 ~~$2.906~~$3.774 billion.

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

2528


	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	$	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


	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

Table of Contents

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


~~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 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 ~~light of the economic disruption and uncertainty caused by COVID-19,~~October 2020, after reporting third quarter results, we ~~have withdrawn~~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:

~~Ensuring employee safety and well-being:~~

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, 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.

~~Leveraging our competitive advantages to support the needs of customers:~~ All our branches in the U.S. and Canada remain open to provide essential services, and most of our European branches are also operating. 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.

~~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.

~~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 March 31, 2020, our total liquidity was $3.083 billion, including $513 in cash and cash equivalents. Additionally, we have no long-term debt maturities until 2025.

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.

Executive Overview

We are the largest equipment rental company in the world, with an integrated network of 1,181 rental locations 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. 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 ~~$14.3~~$14.2 billion, and a North American branch network that operates in 49 U.S. states and every Canadian province, and serves 99 of the 100 largest metropolitan areas in the U.S. 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 8485 percent of total revenues for the ~~three~~nine months ended ~~March 31,~~September 30, 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.

We are currently managing the impact of COVID-19, as discussed above. Our general strategy focuses on profitability and return on invested capital, and, in particular, calls for:

•

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

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

•A continued focus on “Lean” management techniques, including kaizen processes focused on continuous improvement. We 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

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

•

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

•

~~A continued focus on “Lean” management techniques, including kaizen processes focused on continuous improvement~~. We 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

•

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”). Strategic acquisitions allow us to invest our capital to expand our business, further driving our ability to accomplish our strategic goals.

Financial Overview

In February 2020, we issued $750 principal amount of 4 percent Senior Notes due 2030. We used the net proceeds from the offering of the notes to reduce borrowings under the ABL facility. At the time of the offering, we indicated our expectation that we would re-borrow an amount equal to those net proceeds, 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 any 5~~ ¹/₂ ~~percent Senior Notes due 2025, due primarily~~taking actions pertaining to our financial flexibility and liquidity, we considered the ~~potential~~ impact of COVID-19 on liquidity, ~~we plan to assess~~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. ~~We currently expect~~In 2020, we took the following actions to ~~make a decision regarding~~improve our financial flexibility and liquidity, and to position us to invest the ~~redemption~~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

•Amended and extended our accounts receivable securitization 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, ~~during the second half~~using borrowings available under our ABL facility.

Table of ~~2020.~~Contents

As of ~~March 31,~~September 30, 2020, we had available liquidity of ~~$3.083~~$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 ~~$513.~~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 ~~March 31,~~September 30, 2020 and 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
March 31,
2020 2019
Net income $ 173
$ 175
Diluted earnings per share $ 2.33
$ 2.19

Net income and diluted earnings per share for the three and nine months ended ~~March 31,~~September 30, 2020 and 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 March 31,
2020
2019
Tax rate applied to items below 25.2 % 25.4 %

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) $ —

$ —

$ —

$ (0.01 )
Merger related intangible asset amortization (2) (44 )
(0.59 )
(52 )
(0.64 )
Impact on depreciation related to acquired fleet and property and equipment (3) (2 )
(0.03 )
(11 )
(0.14 )
Impact of the fair value mark-up of acquired fleet (4) (9 )
(0.12 )
(20 )
(0.25 )
Restructuring charge (5) (1 )
(0.02 )
(6 )
(0.07 )
Asset impairment charge (6) (19 )
(0.26 )
—

(0.01 )
(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 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.~~


~~(6)~~	This reflects write-offs of leasehold improvements and other fixed assets. 2020 includes a $26 pre-tax asset impairment charge, which was not related to COVID-19, primarily associated with the discontinuation of certain equipment programs.

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
March 31,
2020 2019
Net income $ 173
$ 175
Provision for income taxes 53
45
Interest expense, net 136
151
Depreciation of rental equipment 426
395
Non-rental depreciation and amortization 100
104
EBITDA $ 888
$ 870
Merger related costs (1) —
1
Restructuring charge (2) 2
8
Stock compensation expense, net (3) 13
15
Impact of the fair value mark-up of acquired fleet (4) 12
27
Adjusted EBITDA $ 915
$ 921

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

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	Three Months Ended							Nine Months Ended
	March 31,							September 30,
	2020			2019				2020		2019
Net cash provided by operating activities	$	644		$	667		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	(4		)	(4		)	Amortization of deferred financing costs and original issue discounts	(11)		(11)
Gain on sales of rental equipment	83			67			Gain on sales of rental equipment	230		224
Gain on sales of non-rental equipment	1			2			Gain on sales of non-rental equipment	5		3
Gain on insurance proceeds from damaged equipment	6			7
Insurance proceeds from damaged equipment							Insurance proceeds from damaged equipment	34		18
Merger related costs (1)	—			(1		)	Merger related costs (1)	—		(1)
Restructuring charge (2)	(2		)	(8		)	Restructuring charge (2)	(11)		(16)
Stock compensation expense, net (3)	(13		)	(15		)	Stock compensation expense, net (3)	(46)		(45)
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	(4		)	(28		)	Changes in assets and liabilities	(203)		(217)
Cash paid for interest	174			179			Cash paid for interest	438		480
Cash paid for income taxes, net	3			4			Cash paid for income taxes, net	239		96
EBITDA	$	888		$	870		EBITDA	$	2,804	$	3,081
Add back:							Add back:
Merger related costs (1)	—			1			Merger related costs (1)	—		1
Restructuring charge (2)	2			8			Restructuring charge (2)	11		16
Stock compensation expense, net (3)	13			15			Stock compensation expense, net (3)	46		45
Impact of the fair value mark-up of acquired fleet (4)	12			27			Impact of the fair value mark-up of acquired fleet (4)	34		58

Adjusted EBITDA	$	915		$	921		Adjusted EBITDA	$	2,895	$	3,201



	March 31, 2020				December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Senior notes	$	8,500	$	8,203	$	7,755	$	8,176


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


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


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

	March 31, 2020			December 31, 2019
Accounts Receivable Securitization Facility expiring 2020 (1) (2)	$	795		$	929
$3.75 billion ABL Facility expiring 2024 (1) (3)	1,179			1,638
Term loan facility expiring 2025 (1)	977			979
5 ¹/₂ percent Senior Notes due 2025 (3)	795			795
4 ⁵/₈ percent Senior Notes due 2025	743			742

5 1/2 percent Senior Notes due 2025 (4)							5 1/2 percent Senior Notes due 2025 (4)	0		795
4 5/8 percent Senior Notes due 2025 (5)							4 5/8 percent Senior Notes due 2025 (5)	743		742
5 ⁷/₈ percent Senior Notes due 2026	999			999			5 7/8 percent Senior Notes due 2026	999		999
6 ¹/₂ percent Senior Notes due 2026	1,089			1,089
6 1/2 percent Senior Notes due 2026 (6)							6 1/2 percent Senior Notes due 2026 (6)	0		1,089
5 ¹/₂ percent Senior Notes due 2027	993			992			5 1/2 percent Senior Notes due 2027	993		992
3 ⁷/₈ percent Senior Secured Notes due 2027	741			741			3 7/8 percent Senior Secured Notes due 2027	742		741
4 ⁷/₈ percent Senior Notes due 2028 (4)	1,653			1,652
4 ⁷/₈ percent Senior Notes due 2028 (4)	4			4
4 7/8 percent Senior Notes due 2028 (7)							4 7/8 percent Senior Notes due 2028 (7)	1,654		1,652
4 7/8 percent Senior Notes due 2028 (7)							4 7/8 percent Senior Notes due 2028 (7)	4		4
5 ¹/₄ percent Senior Notes due 2030	742			741			5 1/4 percent Senior Notes due 2030	742		741
4 percent Senior Notes due 2030 (5)	741			—
4 percent Senior Notes due 2030 (8)							4 percent Senior Notes due 2030 (8)	741		—
3 7/8 percent Senior Notes due 2031 (9)							3 7/8 percent Senior Notes due 2031 (9)	1,087		—
Finance leases	146			127			Finance leases	141		127

Total debt	11,597			11,428			Total debt	10,051		11,428
Less short-term portion (6)	(854		)	(997		)
Less short-term portion (10)							Less short-term portion (10)	(700)		(997)
Total long-term debt	$	10,743		$	10,431		Total long-term debt	$	9,351	$	10,431



	ABL facility			Accounts receivable securitization facility			Term loan facility
Borrowing capacity, net of letters of credit	$	2,508		$	62		$	—
Letters of credit	52
Interest rate at March 31, 2020	2.2		%	2.1		%	2.7		%
Average month-end debt outstanding	1,097			804			987
Weighted-average interest rate on average debt outstanding	2.7		%	2.4		%	3.2		%
Maximum month-end debt outstanding	1,494			811			988



	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



	Three Months Ended March 31,
			2020						2019
	Topic 842		Topic 606		Total		Topic 842		Topic 606		Total
Revenues:
Owned equipment rentals	$	1,522	$	—	$	1,522	$	1,530	$	—	$	1,530
Re-rent revenue	34		—		34		35		—		35
Ancillary and other rental revenues:
Delivery and pick-up	—		119		119		—		119		119
Other	81		27		108		80		31		111
Total ancillary and other rental revenues	81		146		227		80		150		230
Total equipment rentals	1,637		146		1,783		1,645		150		1,795
Sales of rental equipment	—		208		208		—		192		192
Sales of new equipment	—		62		62		—		62		62
Contractor supplies sales	—		25		25		—		24		24
Service and other revenues	—		47		47		—		44		44
Total revenues	$	1,637	$	488	$	2,125	$	1,645	$	472	$	2,117



	General rentals		Trench, power and fluid solutions		Total
Three Months Ended March 31, 2020
Equipment rentals	$	1,394	$	389	$	1,783
Sales of rental equipment	190		18		208
Sales of new equipment	53		9		62
Contractor supplies sales	16		9		25
Service and other revenues	41		6		47
Total revenue	1,694		431		2,125
Depreciation and amortization expense	437		89		526
Equipment rentals gross profit	448		162		610
Capital expenditures	198		63		261
Three Months Ended March 31, 2019
Equipment rentals	$	1,423	$	372	$	1,795
Sales of rental equipment	178		14		192
Sales of new equipment	55		7		62
Contractor supplies sales	17		7		24
Service and other revenues	37		7		44
Total revenue	1,710		407		2,117
Depreciation and amortization expense	412		87		499
Equipment rentals gross profit	501		157		658
Capital expenditures	236		63		299



	March 31, 2020		December 31, 2019
Total reportable segment assets
General rentals	$	15,994	$	16,036
Trench, power and fluid solutions	2,874		2,934
Total assets	$	18,868	$	18,970


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.~~


Maturity of lease liabilities (as of March 31, 2020)	Operating leases (1)			Finance leases (2)
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	$	157		$	45		2020	$	53	$	15
2021	186			55			2021	201		65
2022	149			31			2022	168		36
2023	115			18			2023	134		25
2024	81			2			2024	100		4
Thereafter	103			6			Thereafter	145		5
Total	791			157			Total	801		150
Less amount representing interest	(84		)	(11		)	Less amount representing interest	(99)		(9)
Present value of lease liabilities	$	707		$	146		Present value of lease liabilities	$	702	$	141


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	%


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


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


~~(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.~~



ABL facility:
Borrowing capacity, net of letters of credit	$	2,508
Outstanding debt, net of debt issuance costs	1,179
Interest rate at March 31, 2020	2.2		%
Average month-end principal amount of debt outstanding (1)	1,097
Weighted-average interest rate on average debt outstanding	2.7		%
Maximum month-end principal amount of debt outstanding (1)	1,494
Accounts receivable securitization facility (2):
Borrowing capacity	62
Outstanding debt, net of debt issuance costs	795
Interest rate at March 31, 2020	2.1		%
Average month-end principal amount of debt outstanding	804
Weighted-average interest rate on average debt outstanding	2.4		%
Maximum month-end principal amount of debt outstanding	811


~~(2)~~	~~As discussed in note 6 to the condensed consolidated financial statements, in April 2020, we amended the accounts~~Accounts receivable securitization facility to adjust 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 are intended to make compliance with such tests more likely, and are not expected to materially impact our financial statements. The accounts receivable securitization facility expires(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 ~~June 26, 2020, and we expect to renew the facility in the second quarter~~average debt outstanding	1.9	%
Maximum month-end principal amount of ~~2020.~~debt outstanding	811



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


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


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


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)~~	In January 2020, February 2020 and March 2020, 52,493, 448 and 92,715 shares, respectively, were withheld by Holdings to satisfy tax withholding obligations upon the vesting of restricted stock unit awards. These shares were not acquired pursuant to any repurchase plan or program.


~~(2)~~	On January 28, 2020, our Board authorized a $500 million share repurchase program, which commenced in the first quarter of 2020. The table above reflects repurchases through March 18, 2020, when the program was paused 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.




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)

4		Indenture for the ~~4 percent~~3.875% Senior Notes due ~~2030,~~2031, dated as of ~~February 25,~~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~~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 ~~February 25, 2020~~August 10, 2020))

10*10		~~Amendment No. 11~~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 ~~Third Amended~~Exhibit 10.1 of the United Rentals, Inc. and ~~Restated Receivables Purchase Agreement, dated as of April 27, 2020, by and among~~ United Rentals (North America), Inc., United Rentals Receivables LLC II, United Rentals, Inc., Liberty Street Funding LLC, Gotham Funding Corporation, The Bank of Nova Scotia, PNC Bank, National Association, Truist Bank (successor by merger to SunTrust Bank), MUFG Bank, Ltd. (formerly known as the Bank of Tokyo-Mitsubishi UFJ, Ltd.) and The Toronto-Dominion Bank 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

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101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

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101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document


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