ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 86-0933835 | ||||
(States of Incorporation) | (I.R.S. Employer Identification Nos.) | ||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
☑ | Accelerated Filer | ☐ | |||||||||||||||
Non-Accelerated Filer | ☐ | Smaller Reporting Company | |||||||||||||||
Emerging Growth Company |
10-K Part and Item No. | Page No. | |||||||
PART I | ||||||||
Item 1 | ||||||||
Item 1A | ||||||||
Item 1B | ||||||||
Item 2 | ||||||||
Item 3 | ||||||||
Item 4 | ||||||||
PART II | ||||||||
Item 5 | ||||||||
Item 6 | ||||||||
Item 7 | ||||||||
Item 7A | ||||||||
Item 8 | ||||||||
Item 9 | ||||||||
Item 9A | ||||||||
Item 9B | ||||||||
PART III | ||||||||
Item 10 | ||||||||
Item 11 | ||||||||
Item 12 | ||||||||
Item 13 | ||||||||
Item 14 | ||||||||
PART IV | ||||||||
Item 15 |
2020 | 2019 | ||||||||||
PERFORMANCE MEASURES | |||||||||||
Total revenues (in millions) | $8,530 | $9,351 | |||||||||
Equipment rental revenue percent of total revenues | 84% | 85% | |||||||||
Equipment rental revenue variance components: | |||||||||||
Year-over-year change in average original equipment cost (“OEC”) | (2.2)% | 17.7% | |||||||||
Assumed year-over-year inflation impact (1) | (1.5)% | (1.5)% | |||||||||
Fleet productivity (2) | (6.9)% | (2.2)% | |||||||||
Contribution from ancillary and re-rent revenue (3) | 0.3% | 0.8% | |||||||||
Total equipment rental revenue variance | (10.3)% | 14.8% | |||||||||
Pro forma equipment rentals variance components (4): | |||||||||||
Year-over-year change in average OEC | 4.9% | ||||||||||
Assumed year-over-year inflation impact (1) | (1.5)% | ||||||||||
Fleet productivity (2) | 0.6% | ||||||||||
Contribution from ancillary and re-rent revenue (3) | 0.1% | ||||||||||
Total equipment rental revenue variance | 4.1% | ||||||||||
Key account percent of equipment rental revenue | 74% | 72% | |||||||||
National account percent of equipment rental revenue | 44% | 43% | |||||||||
FLEET | |||||||||||
Fleet OEC (in billions) | $13.78 | $14.63 | |||||||||
Equipment classes | 4,000 | 4,000 | |||||||||
Equipment units | 615,000 | 665,000 | |||||||||
Fleet age in months | 54.5 | 49.5 | |||||||||
Percent of fleet that is current on manufacturer's recommended maintenance | 81% | 81% | |||||||||
Equipment rental revenue percent by fleet type: | |||||||||||
General construction and industrial equipment | 43% | 43% | |||||||||
Aerial work platforms | 27% | 28% | |||||||||
General tools and light equipment | 8% | 8% | |||||||||
Power and HVAC (heating, ventilating and air conditioning) equipment | 9% | 8% | |||||||||
Trench safety equipment | 6% | 6% | |||||||||
Fluid solutions equipment | 7% | 7% | |||||||||
LOCATIONS/PERSONNEL | |||||||||||
Rental locations | 1,165 | 1,175 | |||||||||
Approximate range of branches per district | 4-11 | 4-11 | |||||||||
Approximate range of districts per region | 5-10 | 4-9 | |||||||||
Hourly employees | 12,550 | 13,400 | |||||||||
Salaried employees | 5,700 | 5,700 | |||||||||
Total employees | 18,250 | 19,100 | |||||||||
INDUSTRY | |||||||||||
Estimated North American market share | 13% | 13% | |||||||||
Estimated North American equipment rental industry revenue (decline) growth (2) | (12)% | 5% | |||||||||
2021 projected North American industry equipment rental revenue growth | 2% | - | |||||||||
CUSTOMERS/SUPPLIERS | |||||||||||
Largest customer percent of total revenues | 1% | 1% | |||||||||
Top 10 customers percent of total revenues | 4% | 4% | |||||||||
Largest supplier percent of capital expenditures | 9% | 12% | |||||||||
Top 10 supplier percent of capital expenditures | 45% | 52% | |||||||||
United States | |||||||||||||||||
● | Alabama (GR 23, TPF 6) | ● | Maine (GR 4) | ● | Oklahoma (GR 24, TPF 4) | ||||||||||||
● | Alaska (GR 2) | ● | Maryland (GR 13, TPF 7) | ● | Oregon (GR 10, TPF 4) | ||||||||||||
● | Arizona (GR 14, TPF 5) | ● | Massachusetts (GR 14, TPF 4) | ● | Pennsylvania (GR 19, TPF 6) | ||||||||||||
● | Arkansas (GR 12, TPF 1) | ● | Michigan (GR 9, TPF 4) | ● | Puerto Rico (GR 2) | ||||||||||||
● | California (GR 79, TPF 34) | ● | Minnesota (GR 10, TPF 3) | ● | Rhode Island (GR 2) | ||||||||||||
● | Colorado (GR 13, TPF 5) | ● | Mississippi (GR 12, TPF 1) | ● | South Carolina (GR 19, TPF 7) | ||||||||||||
● | Connecticut (GR 6, TPF 2) | ● | Missouri (GR 14, TPF 4) | ● | South Dakota (GR 2) | ||||||||||||
● | Delaware (GR 2, TPF 1) | ● | Montana (GR 1) | ● | Tennessee (GR 22, TPF 9) | ||||||||||||
● | Florida (GR 41, TPF 23) | ● | Nebraska (GR 2, TPF 1) | ● | Texas (GR 118, TPF 33) | ||||||||||||
● | Georgia (GR 34, TPF 8) | ● | Nevada (GR 7, TPF 4) | ● | Utah (GR 3, TPF 3) | ||||||||||||
● | Idaho (GR 3) | ● | New Hampshire (GR 1, TPF 1) | ● | Vermont (GR 2) | ||||||||||||
● | Illinois (GR 15, TPF 8) | ● | New Jersey (GR 10, TPF 6) | ● | Virginia (GR 22, TPF 8) | ||||||||||||
● | Indiana (GR 6, TPF 1) | ● | New Mexico (GR 7, TPF 1) | ● | Washington (GR 20, TPF 6) | ||||||||||||
● | Iowa (GR 9, TPF 2) | ● | New York (GR 20, TPF 1) | ● | West Virginia (GR 5, TPF 1) | ||||||||||||
● | Kansas (GR 12, TPF 2) | ● | North Carolina (GR 27, TPF 9) | ● | Wisconsin (GR 8, TPF 1) | ||||||||||||
● | Kentucky (GR 11, TPF 1) | ● | North Dakota (GR 5) | ● | Wyoming (GR 4) | ||||||||||||
● | Louisiana (GR 34, TPF 13) | ● | Ohio (GR 16, TPF 8) | ||||||||||||||
Canada | Europe | ||||||||||||||||
● | Alberta (GR 24, TPF 9) | ● | France (TPF 4) | ||||||||||||||
● | British Columbia (GR 22, TPF 5) | ● | Germany (TPF 4) | ||||||||||||||
● | Manitoba (GR 5) | ● | Netherlands (TPF 1) | ||||||||||||||
● | New Brunswick (GR 6, TPF 1) | ● | United Kingdom (TPF 2) | ||||||||||||||
● | Newfoundland (GR 6) | ||||||||||||||||
● | Nova Scotia (GR 4, TPF 1) | ||||||||||||||||
● | Ontario (GR 28, TPF 5) | ||||||||||||||||
● | Prince Edward Island (GR 1) | ||||||||||||||||
● | Quebec (GR 7, TPF 3) | ||||||||||||||||
● | Saskatchewan (GR 7, TPF 2) |
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) | |||||||||||||||||||
October 1, 2020 to October 31, 2020 | 23,435 | (1) | $ | 179.41 | — | ||||||||||||||||||
November 1, 2020 to November 30, 2020 | 770 | (1) | $ | 178.33 | — | ||||||||||||||||||
December 1, 2020 to December 31, 2020 | 5,638 | (1) | $ | 242.47 | — | ||||||||||||||||||
Total | 29,843 | $ | 191.29 | $ | — | $ | 243,081,785 |
Year Ended December 31, | |||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||||||||
Income statement data: | |||||||||||||||||||||||||||||
Total revenues (1) | $ | 8,530 | $ | 9,351 | $ | 8,047 | $ | 6,641 | $ | 5,762 | |||||||||||||||||||
Total cost of revenues | 5,347 | 5,681 | 4,683 | 3,872 | 3,359 | ||||||||||||||||||||||||
Gross profit | 3,183 | 3,670 | 3,364 | 2,769 | 2,403 | ||||||||||||||||||||||||
Selling, general and administrative expenses | 979 | 1,092 | 1,038 | 903 | 719 | ||||||||||||||||||||||||
Merger related costs | — | 1 | 36 | 50 | — | ||||||||||||||||||||||||
Restructuring charge | 17 | 18 | 31 | 50 | 14 | ||||||||||||||||||||||||
Non-rental depreciation and amortization | 387 | 407 | 308 | 259 | 255 | ||||||||||||||||||||||||
Operating income | 1,800 | 2,152 | 1,951 | 1,507 | 1,415 | ||||||||||||||||||||||||
Interest expense, net | 669 | 648 | 481 | 464 | 511 | ||||||||||||||||||||||||
Other income, net | (8) | (10) | (6) | (5) | (5) | ||||||||||||||||||||||||
Income before provision (benefit) for income taxes | 1,139 | 1,514 | 1,476 | 1,048 | 909 | ||||||||||||||||||||||||
Provision (benefit) for income taxes (2) | 249 | 340 | 380 | (298) | 343 | ||||||||||||||||||||||||
Net income (2) | 890 | 1,174 | 1,096 | 1,346 | 566 | ||||||||||||||||||||||||
Basic earnings per share (2) | $ | 12.24 | $ | 15.18 | $ | 13.26 | $ | 15.91 | $ | 6.49 | |||||||||||||||||||
Diluted earnings per share (2) | $ | 12.20 | $ | 15.11 | $ | 13.12 | $ | 15.73 | $ | 6.45 | |||||||||||||||||||
December 31, | |||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Balance sheet data: | |||||||||||||||||||||||||||||
Total assets | $ | 17,868 | $ | 18,970 | $ | 18,133 | $ | 15,030 | $ | 11,988 | |||||||||||||||||||
Total debt | 9,682 | 11,428 | 11,747 | 9,440 | 7,790 | ||||||||||||||||||||||||
Stockholders’ equity | 4,545 | 3,830 | 3,403 | 3,106 | 1,648 |
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Net income | $ | 890 | $ | 1,174 | $ | 1,096 | |||||||||||
Diluted earnings per share | $ | 12.20 | $ | 15.11 | $ | 13.12 |
Year Ended December 31, | |||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||
Tax rate applied to items below | 25.2 | % | 25.3 | % | 25.5 | % | |||||||||||||||||||||||||||||
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) | $ | (27) | $ | (0.32) | |||||||||||||||||||||||
Merger related intangible asset amortization (2) | (163) | (2.22) | (194) | (2.48) | (147) | (1.76) | |||||||||||||||||||||||||||||
Impact on depreciation related to acquired fleet and property and equipment (3) | (6) | (0.08) | (30) | (0.39) | (16) | (0.19) | |||||||||||||||||||||||||||||
Impact of the fair value mark-up of acquired fleet (4) | (37) | (0.51) | (56) | (0.72) | (49) | (0.59) | |||||||||||||||||||||||||||||
Restructuring charge (5) | (13) | (0.18) | (14) | (0.18) | (23) | (0.28) | |||||||||||||||||||||||||||||
Asset impairment charge (6) | (27) | (0.37) | (4) | (0.05) | — | — | |||||||||||||||||||||||||||||
Loss on extinguishment of debt securities and amendment of ABL facility (7) | (137) | (1.88) | (45) | (0.58) | — | — | |||||||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Net income | $ | 890 | $ | 1,174 | $ | 1,096 | |||||||||||
Provision for income taxes | 249 | 340 | 380 | ||||||||||||||
Interest expense, net | 669 | 648 | 481 | ||||||||||||||
Depreciation of rental equipment | 1,601 | 1,631 | 1,363 | ||||||||||||||
Non-rental depreciation and amortization | 387 | 407 | 308 | ||||||||||||||
EBITDA | 3,796 | 4,200 | 3,628 | ||||||||||||||
Merger related costs (1) | — | 1 | 36 | ||||||||||||||
Restructuring charge (2) | 17 | 18 | 31 | ||||||||||||||
Stock compensation expense, net (3) | 70 | 61 | 102 | ||||||||||||||
Impact of the fair value mark-up of acquired fleet (4) | 49 | 75 | 66 | ||||||||||||||
Adjusted EBITDA | $ | 3,932 | $ | 4,355 | $ | 3,863 | |||||||||||
Net income margin | 10.4 | % | 12.6 | % | 13.6 | % | |||||||||||
Adjusted EBITDA margin | 46.1 | % | 46.6 | % | 48.0 | % |
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Net cash provided by operating activities | $ | 2,658 | $ | 3,024 | $ | 2,853 | |||||||||||
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 | (14) | (15) | (12) | ||||||||||||||
Gain on sales of rental equipment | 332 | 313 | 278 | ||||||||||||||
Gain on sales of non-rental equipment | 8 | 6 | 6 | ||||||||||||||
Insurance proceeds from damaged equipment | 40 | 24 | 22 | ||||||||||||||
Merger related costs (1) | — | (1) | (36) | ||||||||||||||
Restructuring charge (2) | (17) | (18) | (31) | ||||||||||||||
Stock compensation expense, net (3) | (70) | (61) | (102) | ||||||||||||||
Loss on extinguishment of debt securities and amendment of ABL facility (5) | (183) | (61) | — | ||||||||||||||
Changes in assets and liabilities | 241 | 170 | 124 | ||||||||||||||
Cash paid for interest | 483 | 581 | 455 | ||||||||||||||
Cash paid for income taxes, net | 318 | 238 | 71 | ||||||||||||||
EBITDA | 3,796 | 4,200 | 3,628 | ||||||||||||||
Add back: | |||||||||||||||||
Merger related costs (1) | — | 1 | 36 | ||||||||||||||
Restructuring charge (2) | 17 | 18 | 31 | ||||||||||||||
Stock compensation expense, net (3) | 70 | 61 | 102 | ||||||||||||||
Impact of the fair value mark-up of acquired fleet (4) | 49 | 75 | 66 | ||||||||||||||
Adjusted EBITDA | $ | 3,932 | $ | 4,355 | $ | 3,863 |
Year Ended December 31, | Change | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | |||||||||||||||||||||||||
Equipment rentals* | $ | 7,140 | $ | 7,964 | $ | 6,940 | (10.3)% | 14.8% | |||||||||||||||||||||
Sales of rental equipment | 858 | 831 | 664 | 3.2% | 25.2% | ||||||||||||||||||||||||
Sales of new equipment | 247 | 268 | 208 | (7.8)% | 28.8% | ||||||||||||||||||||||||
Contractor supplies sales | 98 | 104 | 91 | (5.8)% | 14.3% | ||||||||||||||||||||||||
Service and other revenues | 187 | 184 | 144 | 1.6% | 27.8% | ||||||||||||||||||||||||
Total revenues | $ | 8,530 | $ | 9,351 | $ | 8,047 | (8.8)% | 16.2% | |||||||||||||||||||||
*Equipment rentals variance components: | |||||||||||||||||||||||||||||
Year-over-year change in average OEC | (2.2)% | 17.7% | |||||||||||||||||||||||||||
Assumed year-over-year inflation impact (1) | (1.5)% | (1.5)% | |||||||||||||||||||||||||||
Fleet productivity (2) | (6.9)% | (2.2)% | |||||||||||||||||||||||||||
Contribution from ancillary and re-rent revenue (3) | 0.3% | 0.8% | |||||||||||||||||||||||||||
Total change in equipment rentals | (10.3)% | 14.8% | |||||||||||||||||||||||||||
*Pro forma equipment rentals variance components (4): | |||||||||||||||||||||||||||||
Year-over-year change in average OEC | 4.9% | ||||||||||||||||||||||||||||
Assumed year-over-year inflation impact (1) | (1.5)% | ||||||||||||||||||||||||||||
Fleet productivity (2) | 0.6% | ||||||||||||||||||||||||||||
Contribution from ancillary and re-rent revenue (3) | 0.1% | ||||||||||||||||||||||||||||
Total change in equipment rentals | 4.1% | ||||||||||||||||||||||||||||
General rentals | Trench, power and fluid solutions | Total | |||||||||||||||
Year Ended December 31, 2020 | |||||||||||||||||
Equipment rentals | $ | 5,472 | $ | 1,668 | $ | 7,140 | |||||||||||
Sales of rental equipment | 785 | 73 | 858 | ||||||||||||||
Sales of new equipment | 214 | 33 | 247 | ||||||||||||||
Contractor supplies sales | 64 | 34 | 98 | ||||||||||||||
Service and other revenues | 164 | 23 | 187 | ||||||||||||||
Total revenue | $ | 6,699 | $ | 1,831 | $ | 8,530 | |||||||||||
Year Ended December 31, 2019 | |||||||||||||||||
Equipment rentals | $ | 6,202 | $ | 1,762 | $ | 7,964 | |||||||||||
Sales of rental equipment | 768 | 63 | 831 | ||||||||||||||
Sales of new equipment | 238 | 30 | 268 | ||||||||||||||
Contractor supplies sales | 71 | 33 | 104 | ||||||||||||||
Service and other revenues | 157 | 27 | 184 | ||||||||||||||
Total revenue | $ | 7,436 | $ | 1,915 | $ | 9,351 | |||||||||||
Year Ended December 31, 2018 | |||||||||||||||||
Equipment rentals | $ | 5,550 | $ | 1,390 | $ | 6,940 | |||||||||||
Sales of rental equipment | 619 | 45 | 664 | ||||||||||||||
Sales of new equipment | 186 | 22 | 208 | ||||||||||||||
Contractor supplies sales | 68 | 23 | 91 | ||||||||||||||
Service and other revenues | 127 | 17 | 144 | ||||||||||||||
Total revenue | $ | 6,550 | $ | 1,497 | $ | 8,047 |
General rentals | Trench, power and fluid solutions | Total | |||||||||||||||
2020 | |||||||||||||||||
Equipment Rentals Gross Profit | $ | 1,954 | $ | 765 | $ | 2,719 | |||||||||||
Equipment Rentals Gross Margin | 35.7 | % | 45.9 | % | 38.1 | % | |||||||||||
2019 | |||||||||||||||||
Equipment Rentals Gross Profit | $ | 2,407 | $ | 800 | $ | 3,207 | |||||||||||
Equipment Rentals Gross Margin | 38.8 | % | 45.4 | % | 40.3 | % | |||||||||||
2018 | |||||||||||||||||
Equipment Rentals Gross Profit | $ | 2,293 | $ | 670 | $ | 2,963 | |||||||||||
Equipment Rentals Gross Margin | 41.3 | % | 48.2 | % | 42.7 | % |
Year Ended December 31, | Change | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | |||||||||||||||||||||||||
Total gross margin | 37.3% | 39.2% | 41.8% | (190) bps | (260) bps | ||||||||||||||||||||||||
Equipment rentals | 38.1% | 40.3% | 42.7% | (220) bps | (240) bps | ||||||||||||||||||||||||
Sales of rental equipment | 38.7% | 37.7% | 41.9% | 100 bps | (420) bps | ||||||||||||||||||||||||
Sales of new equipment | 13.4% | 13.8% | 13.9% | (40) bps | (10) bps | ||||||||||||||||||||||||
Contractor supplies sales | 29.6% | 29.8% | 34.1% | (20) bps | (430) bps | ||||||||||||||||||||||||
Service and other revenues | 37.4% | 44.6% | 43.8% | (720) bps | 80 bps |
Year Ended December 31, | Change | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | |||||||||||||||||||||||||
Selling, general and administrative ("SG&A") expense | $ | 979 | $ | 1,092 | $ | 1,038 | (10.3)% | 5.2% | |||||||||||||||||||||
SG&A expense as a percentage of revenue | 11.5 | % | 11.7 | % | 12.9 | % | (20) bps | (120) bps | |||||||||||||||||||||
Merger related costs | — | 1 | 36 | (100.0)% | (97.2)% | ||||||||||||||||||||||||
Restructuring charge | 17 | 18 | 31 | (5.6)% | (41.9)% | ||||||||||||||||||||||||
Non-rental depreciation and amortization | 387 | 407 | 308 | (4.9)% | 32.1% | ||||||||||||||||||||||||
Interest expense, net | 669 | 648 | 481 | 3.2% | 34.7% | ||||||||||||||||||||||||
Other income, net | (8) | (10) | (6) | (20.0)% | 66.7% | ||||||||||||||||||||||||
Provision (benefit) for income taxes | 249 | 340 | 380 | (26.8)% | (10.5)% | ||||||||||||||||||||||||
Effective tax rate | 21.9 | % | 22.5 | % | 25.7 | % | (60) bps | (320) bps |
ABL facility: | |||||
Borrowing capacity, net of letters of credit | $ | 2,705 | |||
Outstanding debt, net of debt issuance costs (1) | 977 | ||||
Interest rate at December 31, 2020 | 1.4 | % | |||
Average month-end principal amount of debt outstanding (1) | 794 | ||||
Weighted-average interest rate on average debt outstanding | 1.9 | % | |||
Maximum month-end principal amount of debt outstanding (1) | 1,494 | ||||
Accounts receivable securitization facility: | |||||
Borrowing capacity | 166 | ||||
Outstanding debt, net of debt issuance costs | 634 | ||||
Interest rate at December 31, 2020 | 1.5 | % | |||
Average month-end principal amount of debt outstanding | 667 | ||||
Weighted-average interest rate on average debt outstanding | 1.8 | % | |||
Maximum month-end principal amount of debt outstanding | 811 |
Corporate Rating | Outlook | ||||||||||
Moody’s | Ba2 | Positive | |||||||||
Standard & Poor’s | BB | Stable |
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Net cash provided by operating activities | $ | 2,658 | $ | 3,024 | $ | 2,853 | |||||||||||
Purchases of rental equipment | (961) | (2,132) | (2,106) | ||||||||||||||
Purchases of non-rental equipment | (197) | (218) | (185) | ||||||||||||||
Proceeds from sales of rental equipment | 858 | 831 | 664 | ||||||||||||||
Proceeds from sales of non-rental equipment | 42 | 37 | 23 | ||||||||||||||
Insurance proceeds from damaged equipment | 40 | 24 | 22 | ||||||||||||||
Free cash flow | $ | 2,440 | $ | 1,566 | $ | 1,271 |
2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | Total | |||||||||||||||||
Debt and finance leases (1) | $ | 704 | $ | 47 | $ | 36 | $ | 1,004 | $ | 939 | $ | 7,025 | $ | 9,755 | |||||||||
Interest due on debt (2) | 376 | 371 | 370 | 357 | 351 | 853 | 2,678 | ||||||||||||||||
Operating leases (1) | 205 | 176 | 144 | 112 | 76 | 113 | 826 | ||||||||||||||||
Service agreements (3) | 16 | 15 | 16 | — | — | — | 47 | ||||||||||||||||
Purchase obligations (4) | 1,569 | — | — | — | — | — | 1,569 | ||||||||||||||||
Transition tax on unremitted foreign earnings and profits (5) | — | — | — | — | — | 5 | 5 | ||||||||||||||||
Total (6) | $ | 2,870 | $ | 609 | $ | 566 | $ | 1,473 | $ | 1,366 | $ | 7,996 | $ | 14,880 |
December 31, 2020 | |||||
Current assets | $496 | ||||
Long-term assets | 16,461 | ||||
Total assets | 16,957 | ||||
Current liabilities | 1,151 | ||||
Long-term liabilities | 11,261 | ||||
Total liabilities | 12,412 | ||||
Year Ended December 31, 2020 | |||||
Total revenues | $7,796 | ||||
Gross profit | 2,910 | ||||
Net income | 890 | ||||
Valuation of Goodwill | |||||
Description of the Matter | At December 31, 2020, the Company’s goodwill was $5.2 billion. As discussed in Note 2 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level. Auditing management’s annual goodwill impairment test was complex and highly judgmental due to the significant estimations required to determine the fair value of the reporting units. In particular, the fair value estimates were sensitive to significant assumptions, including the discount rates, revenue growth rates, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margin, capital expenditures, long-term growth rates and market multiples, all of which are affected by expectations about future operational, rental industry market or economic conditions, including the impact of COVID-19. | ||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s development and review of the significant assumptions described above and review of the reasonableness of the data utilized in the Company’s valuation analysis. To test the fair value of the Company’s reporting units, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. We compared the significant assumptions used by management to current industry and economic trends, including the impact of COVID-19, and key performance indicators, and evaluated whether changes in the company’s business would affect the significant assumptions. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions. In performing our testing, we utilized internal valuation specialists to assist us in evaluating the Company’s valuation model and related significant assumptions. In addition, we tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the Company. |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance for doubtful accounts of $ | |||||||||||
Inventory | |||||||||||
Prepaid expenses and other assets | |||||||||||
Total current assets | |||||||||||
Rental equipment, net | |||||||||||
Property and equipment, net | |||||||||||
Goodwill | |||||||||||
Other intangible assets, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Other long-term assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Short-term debt and current maturities of long-term debt | $ | $ | |||||||||
Accounts payable | |||||||||||
Accrued expenses and other liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Deferred taxes | |||||||||||
Operating lease liabilities | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Common stock—$ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Treasury stock at cost— | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Revenues: | |||||||||||||||||
Equipment rentals | $ | $ | $ | ||||||||||||||
Sales of rental equipment | |||||||||||||||||
Sales of new equipment | |||||||||||||||||
Contractor supplies sales | |||||||||||||||||
Service and other revenues | |||||||||||||||||
Total revenues | |||||||||||||||||
Cost of revenues: | |||||||||||||||||
Cost of equipment rentals, excluding depreciation | |||||||||||||||||
Depreciation of rental equipment | |||||||||||||||||
Cost of rental equipment sales | |||||||||||||||||
Cost of new equipment sales | |||||||||||||||||
Cost of contractor supplies sales | |||||||||||||||||
Cost of service and other revenues | |||||||||||||||||
Total cost of revenues | |||||||||||||||||
Gross profit | |||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||
Merger related costs | |||||||||||||||||
Restructuring charge | |||||||||||||||||
Non-rental depreciation and amortization | |||||||||||||||||
Operating income | |||||||||||||||||
Interest expense, net | |||||||||||||||||
Other income, net | ( | ( | ( | ||||||||||||||
Income before provision (benefit) for income taxes | |||||||||||||||||
Provision (benefit) for income taxes | |||||||||||||||||
Net income | $ | $ | $ | ||||||||||||||
Basic earnings per share | $ | $ | $ | ||||||||||||||
Diluted earnings per share | $ | $ | $ |
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Net income | $ | $ | $ | ||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||
Foreign currency translation adjustments (1) | ( | ||||||||||||||||
Fixed price diesel swaps | ( | ||||||||||||||||
Other comprehensive income (loss) (1) | ( | ||||||||||||||||
Comprehensive income | $ | $ | $ |
Common Stock | Additional | Treasury Stock | Accumulated Other | ||||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | Paid-in Capital | Retained Earnings | Number of Shares | Amount | Comprehensive (Loss) Income | |||||||||||||||||||||||||||||||||||
Balance at January 1, 2018 | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | ( | ||||||||||||||||||||||||||||||||||||||||
Fixed price diesel swaps | ( | ||||||||||||||||||||||||||||||||||||||||
Stock compensation expense, net | |||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | ||||||||||||||||||||||||||||||||||||||||
Shares repurchased and retired | ( | ||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | ( | |||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | $ | $ | $ | ( | $ | ( |
Common Stock | Additional | Treasury Stock | Accumulated Other | ||||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | Paid-in Capital | Retained Earnings | Number of Shares | Amount | Comprehensive (Loss) Income | |||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | |||||||||||||||||||||||||||||||||||||||||
Fixed price diesel swaps | |||||||||||||||||||||||||||||||||||||||||
Stock compensation expense, net | — | ||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | ||||||||||||||||||||||||||||||||||||||||
Shares repurchased and retired | ( | ||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | ( | |||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | $ | ( | $ | ( |
Common Stock | Additional | Treasury Stock | Accumulated Other | ||||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | Paid-in Capital | Retained Earnings | Number of Shares | Amount | Comprehensive (Loss) Income (1) | |||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | |||||||||||||||||||||||||||||||||||||||||
Stock compensation expense, net | |||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | ||||||||||||||||||||||||||||||||||||||||
Shares repurchased and retired | ( | ||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | $ | ( | $ | ( |
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
(In millions) | |||||||||||||||||
Cash Flows From Operating Activities: | |||||||||||||||||
Net income | $ | $ | $ | ||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
Depreciation and amortization | |||||||||||||||||
Amortization of deferred financing costs and original issue discounts | |||||||||||||||||
Gain on sales of rental equipment | ( | ( | ( | ||||||||||||||
Gain on sales of non-rental equipment | ( | ( | ( | ||||||||||||||
Insurance proceeds from damaged equipment | ( | ( | ( | ||||||||||||||
Stock compensation expense, net | |||||||||||||||||
Merger related costs | |||||||||||||||||
Restructuring charge | |||||||||||||||||
Loss on repurchase/redemption of debt securities and amendment of ABL facility | |||||||||||||||||
(Decrease) increase in deferred taxes | ( | ||||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||
Decrease (increase) in accounts receivable | ( | ||||||||||||||||
Increase in inventory | ( | ( | ( | ||||||||||||||
(Increase) decrease in prepaid expenses and other assets | ( | ( | |||||||||||||||
Increase (decrease) in accounts payable | ( | ||||||||||||||||
Increase (decrease) in accrued expenses and other liabilities | ( | ( | |||||||||||||||
Net cash provided by operating activities | |||||||||||||||||
Cash Flows From Investing Activities: | |||||||||||||||||
Purchases of rental equipment | ( | ( | ( | ||||||||||||||
Purchases of non-rental equipment | ( | ( | ( | ||||||||||||||
Proceeds from sales of rental equipment | |||||||||||||||||
Proceeds from sales of non-rental equipment | |||||||||||||||||
Insurance proceeds from damaged equipment | |||||||||||||||||
Purchases of other companies, net of cash acquired | ( | ( | ( | ||||||||||||||
Purchases of investments | ( | ( | ( | ||||||||||||||
Net cash used in investing activities | ( | ( | ( | ||||||||||||||
Cash Flows From Financing Activities: | |||||||||||||||||
Proceeds from debt | |||||||||||||||||
Payments of debt | ( | ( | ( | ||||||||||||||
Payments of financing costs | ( | ( | ( | ||||||||||||||
Proceeds from the exercise of common stock options | |||||||||||||||||
Common stock repurchased | ( | ( | ( | ||||||||||||||
Net cash (used in) provided by financing activities | ( | ( | |||||||||||||||
Effect of foreign exchange rates | ( | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | ( | ||||||||||||||||
Cash and cash equivalents at beginning of year | |||||||||||||||||
Cash and cash equivalents at end of year | $ | $ | $ | ||||||||||||||
Supplemental disclosure of cash flow information: | |||||||||||||||||
Cash paid for interest | $ | $ | $ | ||||||||||||||
Cash paid for income taxes, net |
Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Topic 842 | Topic 606 | Total | Topic 842 | Topic 606 | Total | Topic 840 | Topic 606 | Total | |||||||||||||||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Owned equipment rentals | $ | $ | — | $ | $ | $ | — | $ | $ | $ | — | $ | |||||||||||||||||||||||||||||||||||||||||
Re-rent revenue | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Ancillary and other rental revenues: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Delivery and pick-up | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total ancillary and other rental revenues | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total equipment rentals | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales of rental equipment | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Sales of new equipment | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Contractor supplies sales | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Service and other revenues | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | $ | $ | $ | $ | $ |
Year ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
Acquired | |||||||||||||||||
Charged to costs and expenses (1) | |||||||||||||||||
Charged to revenue (2) | |||||||||||||||||
Deductions (3) | ( | ( | ( | ||||||||||||||
Ending balance | $ | $ | $ |
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Primarily rented by our general rentals segment: | |||||||||||||||||
General construction and industrial equipment | % | % | % | ||||||||||||||
Aerial work platforms | % | % | % | ||||||||||||||
General tools and light equipment | % | % | % | ||||||||||||||
Primarily rented by our trench, power and fluid solutions segment: | |||||||||||||||||
Power and HVAC equipment | % | % | % | ||||||||||||||
Trench safety equipment | % | % | % | ||||||||||||||
Fluid solutions equipment | % | % | % |
General rentals | Trench, power and fluid solutions | Total | |||||||||||||||
2020 | |||||||||||||||||
Equipment rentals | $ | $ | $ | ||||||||||||||
Sales of rental equipment | |||||||||||||||||
Sales of new equipment | |||||||||||||||||
Contractor supplies sales | |||||||||||||||||
Service and other revenues | |||||||||||||||||
Total revenue | |||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||
Equipment rentals gross profit | |||||||||||||||||
Capital expenditures | |||||||||||||||||
Total assets | $ | $ | $ | ||||||||||||||
2019 | |||||||||||||||||
Equipment rentals | $ | $ | $ | ||||||||||||||
Sales of rental equipment | |||||||||||||||||
Sales of new equipment | |||||||||||||||||
Contractor supplies sales | |||||||||||||||||
Service and other revenues | |||||||||||||||||
Total revenue | |||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||
Equipment rentals gross profit | |||||||||||||||||
Capital expenditures | |||||||||||||||||
Total assets | $ | $ | $ | ||||||||||||||
2018 | |||||||||||||||||
Equipment rentals | $ | $ | $ | ||||||||||||||
Sales of rental equipment | |||||||||||||||||
Sales of new equipment | |||||||||||||||||
Contractor supplies sales | |||||||||||||||||
Service and other revenues | |||||||||||||||||
Total revenue | |||||||||||||||||
Depreciation and amortization expense | |||||||||||||||||
Equipment rentals gross profit | |||||||||||||||||
Capital expenditures | |||||||||||||||||
Total assets | $ | $ | $ |
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Total equipment rentals gross profit | $ | $ | $ | ||||||||||||||
Gross profit from other lines of business | |||||||||||||||||
Selling, general and administrative expenses | ( | ( | ( | ||||||||||||||
Merger related costs | ( | ( | |||||||||||||||
Restructuring charge | ( | ( | ( | ||||||||||||||
Non-rental depreciation and amortization | ( | ( | ( | ||||||||||||||
Interest expense, net | ( | ( | ( | ||||||||||||||
Other income, net | |||||||||||||||||
Income before provision for income taxes | $ | $ | $ |
Domestic | Foreign | Total | |||||||||||||||
2020 | |||||||||||||||||
Equipment rentals | $ | $ | $ | ||||||||||||||
Sales of rental equipment | |||||||||||||||||
Sales of new equipment | |||||||||||||||||
Contractor supplies sales | |||||||||||||||||
Service and other revenues | |||||||||||||||||
Total revenue | |||||||||||||||||
Rental equipment, net | |||||||||||||||||
Property and equipment, net | |||||||||||||||||
Goodwill and other intangible assets, net | $ | $ | $ | ||||||||||||||
2019 | |||||||||||||||||
Equipment rentals | $ | $ | $ | ||||||||||||||
Sales of rental equipment | |||||||||||||||||
Sales of new equipment | |||||||||||||||||
Contractor supplies sales | |||||||||||||||||
Service and other revenues | |||||||||||||||||
Total revenue | |||||||||||||||||
Rental equipment, net | |||||||||||||||||
Property and equipment, net | |||||||||||||||||
Goodwill and other intangible assets, net | $ | $ | $ | ||||||||||||||
2018 | |||||||||||||||||
Equipment rentals | $ | $ | $ | ||||||||||||||
Sales of rental equipment | |||||||||||||||||
Sales of new equipment | |||||||||||||||||
Contractor supplies sales | |||||||||||||||||
Service and other revenues | |||||||||||||||||
Total revenue | $ | $ | $ |
Description | Beginning Reserve Balance | Charged to Costs and Expenses (1) | Payments and Other | Ending Reserve Balance | ||||||||||||||||||||||
Year Ended December 31, 2020: | ||||||||||||||||||||||||||
Branch closure charges | $ | $ | $ | ( | $ | |||||||||||||||||||||
Severance and other | ( | |||||||||||||||||||||||||
Total | $ | $ | $ | ( | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Equipment (1) | $ | $ | |||||||||
Insurance | |||||||||||
Advertising reimbursements (2) | |||||||||||
Income taxes | |||||||||||
Other (3) | |||||||||||
Prepaid expenses and other assets | $ | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Rental equipment | $ | $ | |||||||||
Less accumulated depreciation | ( | ( | |||||||||
Rental equipment, net (1) | $ | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Land | $ | $ | |||||||||
Buildings | |||||||||||
Non-rental vehicles | |||||||||||
Machinery and equipment | |||||||||||
Furniture and fixtures | |||||||||||
Leasehold improvements | |||||||||||
Less accumulated depreciation and amortization | ( | ( | |||||||||
Property and equipment, net | $ | $ |
General rentals | Trench, power and fluid solutions | Total | |||||||||||||||
Balance at January 1, 2018 (1) | $ | $ | $ | ||||||||||||||
Goodwill related to acquisitions (2) (3) | |||||||||||||||||
Foreign currency translation and other adjustments | ( | ( | ( | ||||||||||||||
Balance at December 31, 2018 (1) | |||||||||||||||||
Goodwill related to acquisitions (2) | |||||||||||||||||
Foreign currency translation and other adjustments | |||||||||||||||||
Balance at December 31, 2019 (1) | |||||||||||||||||
Goodwill related to acquisitions (2) | ( | ( | |||||||||||||||
Foreign currency translation and other adjustments | |||||||||||||||||
Balance at December 31, 2020 (1) | $ | $ | $ |
December 31, 2020 | |||||||||||||||||||||||
Weighted-Average Remaining Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net Amount | ||||||||||||||||||||
Non-compete agreements | $ | $ | $ | ||||||||||||||||||||
Customer relationships | $ | $ | $ | ||||||||||||||||||||
Trade names and associated trademarks | $ | $ | $ |
December 31, 2019 | |||||||||||||||||||||||
Weighted-Average Remaining Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net Amount | ||||||||||||||||||||
Non-compete agreements | $ | $ | $ | ||||||||||||||||||||
Customer relationships | $ | $ | $ | ||||||||||||||||||||
Trade names and associated trademarks | $ | $ | $ |
2021 | $ | ||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 | |||||
Thereafter | |||||
Total | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Self-insurance accruals | $ | $ | |||||||||
Accrued compensation and benefit costs | |||||||||||
Property and income taxes payable | |||||||||||
Restructuring reserves (1) | |||||||||||
Interest payable | |||||||||||
Deferred revenue (2) | |||||||||||
National accounts accrual | |||||||||||
Operating lease liability | |||||||||||
Other (3) | |||||||||||
Accrued expenses and other liabilities | $ | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Self-insurance accruals | $ | $ | |||||||||
Income taxes payable | |||||||||||
Accrued compensation and benefit costs | |||||||||||
Other long-term liabilities | $ | $ |
December 31, 2020 | December 31, 2019 | ||||||||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
Senior notes | $ | $ | $ | $ | |||||||||||||||||||
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Accounts receivable securitization facility expiring 2021 (1) | $ | $ | |||||||||
$ | |||||||||||
Term loan facility expiring 2025 (1) | |||||||||||
5 1/2 percent Senior Notes due 2025 (3) | |||||||||||
4 5/8 percent Senior Notes due 2025 (3) | |||||||||||
5 7/8 percent Senior Notes due 2026 | |||||||||||
6 1/2 percent Senior Notes due 2026 (3) | |||||||||||
5 1/2 percent Senior Notes due 2027 | |||||||||||
3 7/8 percent Senior Secured Notes due 2027 | |||||||||||
4 7/8 percent Senior Notes due 2028 (4) | |||||||||||
4 7/8 percent Senior Notes due 2028 (4) | |||||||||||
5 1/4 percent Senior Notes due 2030 | |||||||||||
3 7/8 percent Senior Notes due 2031 (6) | |||||||||||
Finance leases | |||||||||||
Total debt | |||||||||||
Less short-term portion | ( | ( | |||||||||
Total long-term debt | $ | $ |
ABL facility | Accounts receivable securitization facility | Term loan facility | |||||||||||||||
Borrowing capacity, net of letters of credit | $ | $ | $ | ||||||||||||||
Letters of credit | |||||||||||||||||
Interest rate at December 31, 2020 | % | % | % | ||||||||||||||
Average month-end debt outstanding | |||||||||||||||||
Weighted-average interest rate on average debt outstanding | % | % | % | ||||||||||||||
Maximum month-end debt outstanding |
2021 | $ | ||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 | |||||
Thereafter | |||||
Total | $ |
Classification | December 31, 2020 | December 31, 2019 | ||||||||||||
Assets | ||||||||||||||
Operating lease assets | Operating lease right-of-use assets | $ | $ | |||||||||||
Finance lease assets | Rental equipment | |||||||||||||
Less accumulated depreciation | ( | ( | ||||||||||||
Rental equipment, net | ||||||||||||||
Property and equipment, net: | ||||||||||||||
Non-rental vehicles | ||||||||||||||
Buildings | ||||||||||||||
Less accumulated depreciation and amortization | ( | ( | ||||||||||||
Property and equipment, net | ||||||||||||||
Total leased assets | ||||||||||||||
Liabilities | ||||||||||||||
Current | ||||||||||||||
Operating | Accrued expenses and other liabilities | |||||||||||||
Finance | Short-term debt and current maturities of long-term debt | |||||||||||||
Long-term | ||||||||||||||
Operating | Operating lease liabilities | |||||||||||||
Finance | Long-term debt | |||||||||||||
Total lease liabilities | $ | $ |
Lease cost | Classification | Year Ended December 31, 2020 | Year Ended December 31, 2019 | |||||||||||
Operating lease cost (1) | Cost of equipment rentals, excluding depreciation (1) | $ | $ | |||||||||||
Selling, general and administrative expenses | ||||||||||||||
Restructuring charge | ||||||||||||||
Finance lease cost | ||||||||||||||
Amortization of leased assets | Depreciation of rental equipment | |||||||||||||
Non-rental depreciation and amortization | ||||||||||||||
Interest on lease liabilities | Interest expense, net | |||||||||||||
Sublease income (2) | ( | ( | ||||||||||||
Net lease cost | $ | $ |
Maturity of lease liabilities (as of December 31, 2020) | Operating leases (1) | Finance leases (2) | |||||||||
2021 | $ | $ | |||||||||
2022 | |||||||||||
2023 | |||||||||||
2024 | |||||||||||
2025 | |||||||||||
Thereafter | |||||||||||
Total | |||||||||||
Less amount representing interest | ( | ( | |||||||||
Present value of lease liabilities | $ | $ |
Lease term and discount rate | December 31, 2020 | December 31, 2019 | |||||||||
Weighted-average remaining lease term (years) | |||||||||||
Operating leases | |||||||||||
Finance leases | |||||||||||
Weighted-average discount rate | |||||||||||
Operating leases | % | % | |||||||||
Finance leases | % | % |
Other information | Year Ended December 31, 2020 | Year Ended December 31, 2019 | |||||||||
Cash paid for amounts included in the measurement of lease liabilities | |||||||||||
Operating cash flows from operating leases | $ | $ | |||||||||
Operating cash flows from finance leases | |||||||||||
Financing cash flows from finance leases | |||||||||||
Leased assets obtained in exchange for new operating lease liabilities | |||||||||||
Leased assets obtained in exchange for new finance lease liabilities | $ | $ |
Capital leases | |||||
Depreciation of rental equipment | $ | ||||
Non-rental depreciation and amortization | |||||
Operating leases | |||||
Rent expense on non-cancelable leases (1) | $ |
Year ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Current | |||||||||||||||||
Federal | $ | $ | $ | ||||||||||||||
Foreign | ( | ||||||||||||||||
State and local | |||||||||||||||||
Deferred | |||||||||||||||||
Federal | ( | ||||||||||||||||
Foreign | |||||||||||||||||
State and local | ( | ||||||||||||||||
( | |||||||||||||||||
Total | $ | $ | $ |
Year ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Computed tax at statutory tax rate | $ | $ | $ | ||||||||||||||
State income taxes, net of federal tax benefit | |||||||||||||||||
Other permanent items | ( | ( | ( | ||||||||||||||
Change in valuation allowance | ( | ( | |||||||||||||||
Enactment of the Tax Act (1) | |||||||||||||||||
Foreign tax rate differential | ( | ||||||||||||||||
Total | $ | $ | $ |
December 31, 2020 | December 31, 2019 | ||||||||||
Reserves and allowances | $ | $ | |||||||||
Debt cancellation and other | |||||||||||
Net operating loss and credit carryforwards | |||||||||||
Operating lease assets | |||||||||||
Total deferred tax assets | |||||||||||
Less: valuation allowance (1) | ( | ( | |||||||||
Total net deferred tax assets | |||||||||||
Property and equipment, including rental equipment | ( | ( | |||||||||
Operating lease liabilities | ( | ( | |||||||||
Intangibles | ( | ( | |||||||||
Total deferred tax liability | ( | ( | |||||||||
Total net deferred tax liability | $ | ( | $ | ( |
Shares | Weighted-Average Exercise Price | ||||||||||
Outstanding at December 31, 2019 | |||||||||||
Granted | |||||||||||
Exercised | ( | ||||||||||
Canceled | ( | ||||||||||
Outstanding at December 31, 2020 | |||||||||||
Exercisable at December 31, 2020 | $ |
2020 | 2019 | 2018 | |||||||||||||||
Intrinsic value of options outstanding as of December 31 | $ | $ | |||||||||||||||
Intrinsic value of options exercisable as of December 31 | |||||||||||||||||
Intrinsic value of options exercised | |||||||||||||||||
Weighted-average grant date fair value per option | $ | $ | $ |
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
RSUs granted | |||||||||||||||||
Weighted-average grant date price per unit | $ | $ | $ |
Stock Units | Weighted-Average Grant Date Fair Value | ||||||||||
Nonvested as of December 31, 2019 | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited | ( | ||||||||||
Nonvested as of December 31, 2020 | $ |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | |||||||||||||||||||||||||
For the year ended December 31, 2020 (1): | |||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||||||||
Operating income | |||||||||||||||||||||||||||||
Net income (1) | |||||||||||||||||||||||||||||
Earnings per share—basic | |||||||||||||||||||||||||||||
Earnings per share—diluted (3) | |||||||||||||||||||||||||||||
For the year ended December 31, 2019 (2): | |||||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||||||||
Operating income | |||||||||||||||||||||||||||||
Net income (2) | |||||||||||||||||||||||||||||
Earnings per share—basic | |||||||||||||||||||||||||||||
Earnings per share—diluted (3) | |||||||||||||||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | |||||||||||||||||||||||||
For the year ended December 31, 2020: | |||||||||||||||||||||||||||||
Merger related intangible asset amortization (4) | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Impact on depreciation related to acquired fleet and property and equipment (5) | ( | ( | ( | ( | |||||||||||||||||||||||||
Impact of the fair value mark-up of acquired fleet (6) | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Restructuring charge (7) | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Asset impairment charge (8) | ( | ( | ( | ||||||||||||||||||||||||||
Loss on extinguishment of debt securities and amendment of ABL facility (9) | ( | ( | ( | ||||||||||||||||||||||||||
For the year ended December 31, 2019: | |||||||||||||||||||||||||||||
Merger related costs (10) | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||
Merger related intangible asset amortization (4) | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Impact on depreciation related to acquired fleet and property and equipment (5) | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Impact of the fair value mark-up of acquired fleet (6) | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Restructuring charge (7) | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Asset impairment charge (8) | ( | ( | ( | ( | |||||||||||||||||||||||||
Loss on extinguishment of debt securities and amendment of ABL facility (9) | ( | ( | ( | ||||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Numerator: | |||||||||||||||||
Net income available to common stockholders | $ | $ | $ | ||||||||||||||
Denominator: | |||||||||||||||||
Denominator for basic earnings per share—weighted-average common shares | |||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||
Employee stock options | |||||||||||||||||
Restricted stock units | |||||||||||||||||
Denominator for diluted earnings per share—adjusted weighted-average common shares | |||||||||||||||||
Basic earnings per share | $ | $ | $ | ||||||||||||||
Diluted earnings per share | $ | $ | $ |
Description | Balance at Beginning of Period | Acquired | Charged to Costs and Expenses | Charged to Revenue | Deductions | Balance at End of Period | ||||||||||||||||||||||||||||||||
Year Ended December 31, 2020: | ||||||||||||||||||||||||||||||||||||||
Allowance for doubtful accounts | $ | $ | $ | (a) | $ | (a) | $ | (b) | $ | |||||||||||||||||||||||||||||
Reserve for obsolescence and shrinkage | (c) | |||||||||||||||||||||||||||||||||||||
Self-insurance reserve | (d) | |||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2019: | ||||||||||||||||||||||||||||||||||||||
Allowance for doubtful accounts | $ | $ | $ | (a) | $ | (a) | $ | (b) | $ | |||||||||||||||||||||||||||||
Reserve for obsolescence and shrinkage | (c) | |||||||||||||||||||||||||||||||||||||
Self-insurance reserve | (d) | |||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2018: | ||||||||||||||||||||||||||||||||||||||
Allowance for doubtful accounts | $ | $ | $ | (a) | $ | (a) | $ | (b) | $ | |||||||||||||||||||||||||||||
Reserve for obsolescence and shrinkage | (c) | |||||||||||||||||||||||||||||||||||||
Self-insurance reserve | (d) |
Exhibit Number | Description of Exhibit | |||||||
2 | (a) | |||||||
2 | (b) | |||||||
2 | (c) | |||||||
2 | (d) | |||||||
2 | (e) | |||||||
2 | (f) | |||||||
Exhibit Number | Description of Exhibit | |||||||
2 | (g) | |||||||
3 | (a) | |||||||
3 | (b) | |||||||
3 | (c) | |||||||
3 | (d) | |||||||
4 | (a) | |||||||
4 | (b) | |||||||
4 | (c) | |||||||
4 | (d) | |||||||
4 | (e) | |||||||
4 | (f) | |||||||
4 | (g) | |||||||
4 | (h) | |||||||
Exhibit Number | Description of Exhibit | |||||||
4 | (i) | |||||||
4 | (j)* | |||||||
10 | (a) | |||||||
10 | (b) | |||||||
10 | (c) | |||||||
10 | (d) | |||||||
10 | (e) | |||||||
10 | (f) | |||||||
10 | (g) | |||||||
10 | (h) | |||||||
10 | (i) | |||||||
10 | (j) | |||||||
10 | (k) | |||||||
10 | (l) | |||||||
10 | (m) | |||||||
10 | (n) | |||||||
10 | (o) | |||||||
Exhibit Number | Description of Exhibit | |||||||
10 | (p) | |||||||
10 | (q) | |||||||
10 | (r) | |||||||
10 | (s) | |||||||
10 | (t) | |||||||
10 | (u) | |||||||
10 | (v) | |||||||
10 | (w) | |||||||
10 | (x) | |||||||
10 | (y) | |||||||
10 | (z) | |||||||
10 | (aa) | Board of Directors compensatory plans, as described under the caption "Director Compensation" in the United Rentals, Inc. definitive proxy statement to be filed with the Securities and Exchange Commission (in connection with the Annual Meeting of Stockholders) on or before March 23, 2021 | ||||||
10 | (bb)* | |||||||
10 | (cc)* | |||||||
10 | (dd) | |||||||
10 | (ee) | |||||||
10 | (ff) | |||||||
Exhibit Number | Description of Exhibit | |||||||
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Exhibit Number | Description of Exhibit | |||||||
10 | (vv) | |||||||
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10 | (xx) | |||||||
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Exhibit Number | Description of Exhibit | |||||||
10 | (fff) | |||||||
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10 | (mmm) | |||||||
10 | (nnn) | |||||||
10 | (ooo) | |||||||
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10 | (qqq) | |||||||
10 | (rrr) | |||||||
21 | * | |||||||
22 | * | |||||||
23 | * | |||||||
31 | (a)* | |||||||
31 | (b)* | |||||||
32 | (a)** | |||||||
32 | (b)** | |||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
UNITED RENTALS, INC. | ||||||||||||||
Date: | January 27, 2021 | By: | /S/ MATTHEW J. FLANNERY | |||||||||||
Matthew J. Flannery, Chief Executive Officer |
Signatures | Title | Date | ||||||||||||
/S/ MICHAEL J. KNEELAND | Chairman | January 27, 2021 | ||||||||||||
Michael J. Kneeland | ||||||||||||||
/S/ JOSÉ B. ALVAREZ | Director | January 27, 2021 | ||||||||||||
José B. Alvarez | ||||||||||||||
/S/ MARC A. BRUNO | Director | January 27, 2021 | ||||||||||||
Marc A. Bruno | ||||||||||||||
/S/ BOBBY J. GRIFFIN | Lead Independent Director | January 27, 2021 | ||||||||||||
Bobby J. Griffin | ||||||||||||||
/S/ KIM HARRIS JONES | Director | January 27, 2021 | ||||||||||||
Kim Harris Jones | ||||||||||||||
/S/ TERRI L. KELLY | Director | January 27, 2021 | ||||||||||||
Terri L. Kelly | ||||||||||||||
/S/ GRACIA MARTORE | Director | January 27, 2021 | ||||||||||||
Gracia Martore | ||||||||||||||
/S/ FILIPPO PASSERINI | Director | January 27, 2021 | ||||||||||||
Filippo Passerini | ||||||||||||||
/S/ DONALD C. ROOF | Director | January 27, 2021 | ||||||||||||
Donald C. Roof | ||||||||||||||
/S/ SHIV SINGH | Director | January 27, 2021 | ||||||||||||
Shiv Singh | ||||||||||||||
/S/ MATTHEW J. FLANNERY | Director and Chief Executive Officer (Principal Executive Officer) | January 27, 2021 | ||||||||||||
Matthew J. Flannery | ||||||||||||||
/S/ JESSICA T. GRAZIANO | Chief Financial Officer (Principal Financial Officer) | January 27, 2021 | ||||||||||||
Jessica T. Graziano | ||||||||||||||
/S/ ANDREW B. LIMOGES | Vice President, Controller (Principal Accounting Officer) | January 27, 2021 | ||||||||||||
Andrew B. Limoges |
Performance | Percentage of Units earned for a Performance Period* | ||||
Performance less than Threshold | 0% | ||||
Performance at Threshold | 50% | ||||
Performance at Target | 100% | ||||
Performance at or above Maximum | 200% |
Performance Level* | Revenue** ($M) 50% Weighting | ROIC** ($M) 50% Weighting | ||||||
Maximum | $10,001 | 11.25% | ||||||
Target | $9,651 | 10.40% | ||||||
Threshold | $8,951 | 8.66% |
Name of Company | Jurisdiction of Incorporation | ||||
UNITED RENTALS, INC. (f/k/a United Rentals Holdings, Inc.) | Delaware | ||||
A. United Rentals (North America), Inc. (f/k/a UR Merger Sub Corporation) | Delaware | ||||
1. United Rentals Highway Technologies Gulf, LLC (f/k/a United Rentals Highway Technologies Gulf, Inc.) | Delaware | ||||
(a) United Rentals of Canada, Inc. | Ontario | ||||
2. United Rentals (Delaware), Inc. | Delaware | ||||
3. United Rentals Realty, LLC (United Rentals (North America), Inc. is the sole member and United Rentals, Inc. is the manager) | Delaware | ||||
4. United Rentals Receivables LLC II (United Rentals (North America), Inc. is the sole member and United Rentals, Inc. is the manager) | Delaware | ||||
5. United Rentals International B.V. (d/b/a BakerCorp, a United Rentals Company) | Netherlands | ||||
(a) United Rentals UK Limited (d/b/a BakerCorp, a United Rentals Company) | United Kingdom | ||||
(b) United Rentals S.A.S. (d/b/a BakerCorp, a United Rentals Company) | France | ||||
(c) United Rentals B.V. (d/b/a BakerCorp, a United Rentals Company) | Netherlands | ||||
(d) United Rentals Management GmbH (d/b/a BakerCorp, a United Rentals Company) | Germany | ||||
6. URVI, Inc. | Virgin Islands | ||||
7. United Rentals PR, Inc. | Puerto Rico |
Name of Company | Jurisdiction of Incorporation | ||||
United Rentals Highway Technologies Gulf, LLC (f/k/a United Rentals Highway Technologies Gulf, Inc.) | Delaware | ||||
United Rentals (Delaware), Inc. | Delaware | ||||
United Rentals Realty, LLC | Delaware | ||||
January 27, 2021 | ||
/S/ MATTHEW J. FLANNERY | ||
Matthew J. Flannery | ||
Chief Executive Officer |
January 27, 2021 | ||
/s/ JESSICA T. GRAZIANO | ||
Jessica T. Graziano | ||
Chief Financial Officer |
/s/ MATTHEW J. FLANNERY | ||
Matthew J. Flannery | ||
Chief Executive Officer |
/s/ JESSICA T. GRAZIANO | ||
Jessica T. Graziano | ||
Chief Financial Officer |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 108 | $ 103 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 114,210,157 | 113,825,667 |
Common stock, shares outstanding (in shares) | 72,196,648 | 74,362,195 |
Treasury stock (in shares) | 42,013,509 | 39,463,472 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|||
Statement of Comprehensive Income [Abstract] | |||||
Net income | $ 890 | $ 1,174 | $ 1,096 | ||
Other comprehensive income (loss): | |||||
Foreign currency translation adjustments | [1] | 40 | 49 | (84) | |
Fixed price diesel swaps | 0 | 2 | (2) | ||
Other comprehensive income (loss) | [1] | 40 | 51 | (86) | |
Comprehensive income | $ 930 | $ 1,225 | $ 1,010 | ||
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | |||
Reclassification from AOCI, current period, net of tax, attributable to parent | $ 0 | $ 0 | $ 0 |
Other comprehensive income (loss), foreign currency translation adjustment, tax, portion attributable to parent | 0 | 0 | 0 |
Other comprehensive income (loss), tax, portion attributable to parent | $ 0 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions |
Total |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Treasury Stock |
Accumulated Other Comprehensive (Loss) Income |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance (in shares) at Dec. 31, 2017 | 84 | 28 | ||||||||||
Balance at Dec. 31, 2017 | $ 1 | $ 2,356 | $ 3,005 | $ (2,105) | $ (151) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | $ 1,096 | 1,096 | ||||||||||
Foreign currency translation adjustments | (84) | [1] | (84) | |||||||||
Fixed price diesel swaps | (2) | (2) | ||||||||||
Stock compensation expense, net (in shares) | 1 | |||||||||||
Stock compensation expense, net | 102 | |||||||||||
Exercise of common stock options | 2 | |||||||||||
Shares repurchased and retired | (52) | |||||||||||
Repurchase of common stock (in shares) | 5 | 5 | ||||||||||
Repurchase of common stock | $ (765) | |||||||||||
Balance (in shares) at Dec. 31, 2018 | 80 | 33 | ||||||||||
Balance at Dec. 31, 2018 | $ 1 | 2,408 | 4,101 | $ (2,870) | (237) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | 1,174 | 1,174 | ||||||||||
Foreign currency translation adjustments | 49 | [1] | 49 | |||||||||
Fixed price diesel swaps | 2 | 2 | ||||||||||
Stock compensation expense, net | 61 | |||||||||||
Exercise of common stock options | 11 | |||||||||||
Shares repurchased and retired | (40) | |||||||||||
Repurchase of common stock (in shares) | 6 | 6 | ||||||||||
Repurchase of common stock | $ (830) | |||||||||||
Balance (in shares) at Dec. 31, 2019 | 74 | 39 | ||||||||||
Balance at Dec. 31, 2019 | 3,830 | $ 1 | 2,440 | 5,275 | $ (3,700) | (186) | [2] | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | 890 | 890 | ||||||||||
Foreign currency translation adjustments | 40 | [1] | 40 | [2] | ||||||||
Fixed price diesel swaps | 0 | |||||||||||
Stock compensation expense, net (in shares) | 1 | |||||||||||
Stock compensation expense, net | 70 | |||||||||||
Exercise of common stock options | 1 | |||||||||||
Shares repurchased and retired | (29) | |||||||||||
Repurchase of common stock (in shares) | 3 | 3 | ||||||||||
Repurchase of common stock | $ (257) | |||||||||||
Balance (in shares) at Dec. 31, 2020 | 72 | 42 | ||||||||||
Balance at Dec. 31, 2020 | $ 4,545 | $ 1 | $ 2,482 | $ 6,165 | $ (3,957) | $ (146) | [2] | |||||
|
Organization, Description of Business and Consolidation |
12 Months Ended |
---|---|
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Description of Business and Consolidation | Organization, Description of Business and Consolidation United Rentals, Inc. ("Holdings") 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 stockholder. As used in this report, the terms the “Company,” “United Rentals,” “we,” “us,” and “our” refer to United Rentals, Inc. and its subsidiaries, unless otherwise indicated. We rent equipment to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and others in the United States, Canada and Europe. With the July 2018 acquisition of BakerCorp International Holdings, Inc. (“BakerCorp”), which added 11 European locations in France, Germany, the United Kingdom and the Netherlands to our branch network, we entered 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. The accompanying consolidated financial statements include our accounts and those of our controlled subsidiary companies. All significant intercompany accounts and transactions have been eliminated. We consolidate variable interest entities if we are deemed the primary beneficiary of the entity. COVID-19 The novel coronavirus (“COVID-19”) was first identified in people in late 2019. COVID-19 spread rapidly throughout the world and, in March 2020, the World Health Organization characterized COVID-19 as a pandemic. COVID-19 is a pandemic of respiratory disease spreading from person-to-person that poses a serious public health risk. It has significantly disrupted supply chains and businesses around the world. The extent and duration of the COVID-19 impact, on the operations and financial position of United Rentals, and on the global economy, is uncertain. See "Item 1. Business- Industry Overview and Economic Outlook" above for a discussion of market performance in 2020. The health and safety of our employees and customers remains our top priority, and we have also engaged in extensive contingency planning to manage the business impact of the pandemic. Prior to mid-March 2020, our results were largely in line with expectations. We began to experience a decline in revenues in March 2020, when rental volume declined in response to shelter-in-place orders and other market restrictions. COVID-19 is discussed in more detail throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Cash Equivalents We consider all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents. Our cash equivalents at December 31, 2020 and 2019 consist of direct obligations of financial institutions rated A or better. Allowance for Doubtful Accounts We maintain allowances for doubtful accounts. These allowances 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 allowance for doubtful accounts as of December 31, 2020 included an adjustment for the estimated impact of COVID-19 on future collectibility that was not material to our financial statements. 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 note 3 to our consolidated financial statements for further detail. Inventory Inventory consists of new equipment, contractor supplies, tools, parts, fuel and related supply items. Inventory is stated at the lower of cost or market. Cost is determined, depending on the type of inventory, using either a specific identification, weighted-average or first-in, first-out method. Rental Equipment Rental equipment, which includes service and delivery vehicles, is recorded at cost and depreciated over the estimated useful life of the equipment using the straight-line method. The range of estimated useful lives for rental equipment is to 20 years. Rental equipment is depreciated to a salvage value of zero to 10 percent of cost. Rental equipment is depreciated whether or not it is out on rent. Property and Equipment Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. The range of estimated useful lives for property and equipment is to 39 years. Ordinary repair and maintenance costs are charged to expense as incurred. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the remaining life of the lease, whichever is shorter. Acquisition Accounting We have made a number of acquisitions in the past and may continue to make acquisitions in the future. The assets acquired and liabilities assumed are recorded based on their respective fair values at the date of acquisition. Long-lived assets (principally rental equipment), goodwill and other intangible assets generally represent the largest components of our acquisitions. Rental equipment is valued utilizing either a cost, market or income approach, or a combination of certain of these methods, depending on the asset being valued and the availability of market or income data. The intangible assets that we have acquired are non-compete agreements, customer relationships and trade names and associated trademarks. The estimated fair values of these intangible assets reflect various assumptions about discount rates, revenue growth rates, operating margins, terminal values, useful lives and other prospective financial information. Goodwill is calculated as the excess of the cost of the acquired entity over the net of the fair value of the assets acquired and the liabilities assumed. Non-compete agreements, customer relationships and trade names and associated trademarks are valued based on an excess earnings or income approach based on projected cash flows. Determining the fair value of the assets and liabilities acquired is judgmental in nature and can involve the use of significant estimates and assumptions. The judgments made in determining the estimated fair value assigned to the assets acquired, as well as the estimated life of the assets, can materially impact net income in periods subsequent to the acquisition through depreciation and amortization, and in certain instances through impairment charges, if the asset becomes impaired in the future. As discussed below, we regularly review for impairments. When we make an acquisition, we also acquire other assets and assume liabilities. These other assets and liabilities typically include, but are not limited to, parts inventory, accounts receivable, accounts payable and other working capital items. Because of their short-term nature, the fair values of these other assets and liabilities generally approximate the book values on the acquired entities' balance sheets. Evaluation of Goodwill Impairment Goodwill is tested for impairment annually or more frequently if an event or circumstance indicates that an impairment loss may have been incurred. Application of the goodwill impairment test requires judgment, including: the identification of reporting units; assignment of assets and liabilities to reporting units; assignment of goodwill to reporting units; determination of the fair value of each reporting unit; and an assumption as to the form of the transaction in which the reporting unit would be acquired by a market participant (either a taxable or nontaxable transaction). We estimate the fair value of our reporting units (which are our regions) using a combination of an income approach based on the present value of estimated future cash flows and a market approach based on market price data of shares of our Company and other corporations engaged in similar businesses as well as acquisition multiples paid in recent transactions within our industry (including our own acquisitions). We believe this approach, which utilizes multiple valuation techniques, yields the most appropriate evidence of fair value. As discussed below (see "Guidance Adopted in 2020-Simplifying the Test for Goodwill Impairment"), in 2020, we adopted accounting guidance that eliminated the second step from the goodwill impairment test (this guidance did not have a significant impact on our financial statements). 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. We did not perform this second step for the goodwill impairment test conducted as of October 1, 2020 or 2019 (for 2020, because the adopted accounting guidance eliminated the second step, and, for 2019, because there was no indication that an impairment may have existed). The first step of the impairment test requires comparing the fair value of a reporting unit with its carrying amount. Financial Accounting Standards Board ("FASB") guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In connection with our goodwill impairment test that was conducted as of October 1, 2020, we bypassed the qualitative assessment for each reporting unit and quantitatively compared the fair values of our reporting units with their carrying amounts. We considered the impact of COVID-19 when performing the test, and it did not have a material impact on the test results. Our goodwill impairment testing as of this date indicated that all of our reporting units, excluding our Fluid Solutions Europe reporting unit, had estimated fair values which exceeded their respective carrying amounts by at least 42 percent. As discussed above, in July 2018, we completed the acquisition of BakerCorp. All of the assets in the Fluid Solutions Europe reporting unit were acquired in the BakerCorp acquisition. The estimated fair value of our Fluid Solutions Europe reporting unit exceeded its carrying amount by 22 percent. As all of the assets in the Fluid Solutions Europe reporting unit were recorded at fair value as of the July 2018 acquisition date, we expected the percentage by which the Fluid Solutions Europe reporting unit’s fair value exceeded its carrying value to be significantly less than the equivalent percentages determined for our other reporting units. In connection with our goodwill impairment test that was conducted as of October 1, 2019, we bypassed the qualitative assessment for each reporting unit and proceeded directly to the first step of the goodwill impairment test. Our goodwill impairment testing as of this date indicated that all of our reporting units, excluding our Fluid Solutions Europe reporting unit, had estimated fair values which exceeded their respective carrying amounts by at least 32 percent. As discussed above, in July 2018, we completed the acquisition of BakerCorp. All of the assets in the Fluid Solutions Europe reporting unit were acquired in the BakerCorp acquisition. The estimated fair value of our Fluid Solutions Europe reporting unit exceeded its carrying amount by 12 percent. As all of the assets in the Fluid Solutions Europe reporting unit were recorded at fair value as of the July 2018 acquisition date, we expected the percentage by which the Fluid Solutions Europe reporting unit’s fair value exceeded its carrying value to be significantly less than the equivalent percentages determined for our other reporting units. Restructuring Charges Costs associated with exit or disposal activities, including lease termination costs and certain employee severance costs associated with restructuring, branch closings or other activities, are recognized at fair value when they are incurred. Other Intangible Assets Other intangible assets consist of non-compete agreements, customer relationships and trade names and associated trademarks. The non-compete agreements are being amortized on a straight-line basis over initial periods of approximately 5 years. The customer relationships are being amortized either using the sum of the years' digits method or on a straight-line basis over initial periods ranging from 5 to 15 years. The trade names and associated trademarks are being amortized using the sum of the years' digits method over initial periods of approximately 5 years. We believe that the amortization methods used reflect the estimated pattern in which the economic benefits will be consumed. Long-Lived Assets Long-lived assets are recorded at the lower of amortized cost or fair value. As part of an ongoing review of the valuation of long-lived assets, we assess the carrying value of such assets if facts and circumstances suggest they may be impaired. If this review indicates the carrying value of such an asset may not be recoverable, as determined by an undiscounted cash flow analysis over the remaining useful life, the carrying value would be reduced to its estimated fair value. Translation of Foreign Currency Assets and liabilities of our foreign subsidiaries that have a functional currency other than U.S. dollars are translated into U.S. dollars using exchange rates at the balance sheet date. Revenues and expenses are translated at average exchange rates effective during the year. Foreign currency translation gains and losses are included as a component of accumulated other comprehensive (loss) income within stockholders’ equity. Revenue Recognition As discussed in note 3 to our consolidated financial statements, 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). As discussed in note 13 to our consolidated financial statements, in 2019, we adopted Topic 842. Topic 842 replaced Topic 840, which was the lease accounting standard in effect for the year ended December 31, 2018. As discussed in note 3, most of our revenue is accounted for under Topic 842. The discussion below addresses our primary revenue types based on the accounting standard used to determine the accounting. Lease revenues (Topic 842) The accounting for the significant types of revenue that are accounted for under Topic 842 is discussed below. Owned equipment rentals: Owned equipment rentals represent revenues from renting equipment that we own. We account for such rentals as operating leases. 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. Revenues from contracts with customers (Topic 606) The accounting for the significant types of revenue that are accounted for under Topic 606 is discussed below. Delivery and pick-up: Delivery and pick-up revenue associated with renting equipment is recognized when the service is performed. 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. See note 3 to our consolidated financial statements for further discussion of our revenue accounting. Delivery Expense Equipment rentals include our revenues from fees we charge for equipment delivery. Delivery costs are charged to operations as incurred, and are included in cost of revenues on our consolidated statements of income. Advertising Expense We promote our business through local and national advertising in various media, including television, trade publications, branded sponsorships, yellow pages, the internet, radio and direct mail. Advertising costs are generally expensed as incurred. These costs may include the development costs for branded content and advertising campaigns. Advertising expense, net of the qualified advertising reimbursements discussed below, was immaterial for the years ended December 31, 2020, 2019 and 2018. We receive reimbursements for advertising that promotes a vendor’s products or services. Such reimbursements that meet the applicable criteria under U.S. generally accepted accounting principles (“GAAP”) are offset against advertising costs in the period in which we recognize the incremental advertising cost. The amounts of qualified advertising reimbursements that reduced advertising expense were $22, $49 and $41 for the years ended December 31, 2020, 2019 and 2018, respectively. Insurance We are insured for general liability, workers’ compensation and automobile liability, subject to deductibles or self-insured retentions per occurrence. Losses within the deductible amounts are accrued based upon the aggregate liability for reported claims incurred, as well as an estimated liability for claims incurred but not yet reported. These liabilities are not discounted. We are also self-insured for group medical claims but purchase “stop loss” insurance as protection against any one significant loss. Income Taxes We use the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities and are measured using the tax rates and laws that are expected to be in effect when the differences are expected to reverse. Recognition of deferred tax assets is limited to amounts considered by management to be more likely than not to be realized in future periods. The most significant positive evidence that we consider in the recognition of deferred tax assets is the expected reversal of cumulative deferred tax liabilities resulting from book versus tax depreciation of our rental equipment fleet that is well in excess of the deferred tax assets. We use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return regarding uncertainties in income tax positions. The first step is recognition: we determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume that the position will be examined by the appropriate taxing authority with full knowledge of all relevant information. The second step is measurement: a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset or an increase in a deferred tax liability. We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes were provided on such earnings prior to the fourth quarter of 2020. In the fourth quarter of 2020, we identified $135 of cash in our foreign operations in excess of near-term working capital needs, and determined that this amount could no longer be considered indefinitely reinvested. As a result, our prior assertion that all undistributed earnings of our foreign subsidiaries should be considered indefinitely reinvested has changed, and, in the fourth quarter of 2020, we recorded the immaterial taxes on a distribution of the $135 of cash. We continue to expect that the remaining balance of our undistributed foreign earnings will be indefinitely reinvested. If we determine that all or a portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes. The Tax Cuts and Jobs Act (the "Tax Act") was enacted in December 2017, and required a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign investments, which we primarily recognized upon adoption of the Tax Act in 2017. As discussed in note 14 to the consolidated financial statements, we completed our accounting for the tax effects of enactment of the Tax Act in 2018. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates impact the calculation of the allowance for doubtful accounts, depreciation and amortization, income taxes and reserves for claims. Actual results could materially differ from those estimates. Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk include cash and cash equivalents and accounts receivable. We maintain cash and cash equivalents with high quality financial institutions. Concentration of credit risk with respect to receivables is limited because a large number of geographically diverse customers makes up our customer base (see note 3 to our consolidated financial statements for further detail). We manage credit risk through credit approvals, credit limits and other monitoring procedures. Stock-Based Compensation We measure stock-based compensation at the grant date based on the fair value of the award and recognize stock-based compensation expense over the requisite service period. Determining the fair value of stock option awards requires judgment, including estimating stock price volatility and expected option life. Restricted stock awards are valued based on the fair value of the stock on the grant date and the related compensation expense is recognized over the service period. Similarly, for time-based restricted stock awards subject to graded vesting, we recognize compensation cost on a straight-line basis over the requisite service period. For performance-based restricted stock units ("RSUs"), compensation expense is recognized if satisfaction of the performance condition is considered probable. We recognize forfeitures of stock-based compensation as they occur. New Accounting Pronouncements 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 will adopt this guidance when it becomes effective, in the first quarter of 2021, and the impact on our financial statements is not expected to be 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 3 to the consolidated financial statements, most of our equipment rental revenue is accounted for as lease revenue (such revenue represented 77 percent of our total revenues for the year ended December 31, 2020). We adopted this guidance in 2020, and the impact of adoption on our financial statements was not material. See note 3 (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. 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. We adopted the guidance for the goodwill impairment test that we conducted as of October 1, 2020, and adoption of the guidance did not have a significant impact on our financial statements.
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Revenue Recognition | Revenue Recognition Revenue Recognition Accounting Standards In March 2016, the FASB issued updated lease accounting guidance ("Topic 842"), as explained further in note 13 to the consolidated financial statements. We adopted Topic 842 on January 1, 2019. Topic 842 is an update to Topic 840, which was the lease accounting standard in place through December 31, 2018. As reflected below, most of our revenue is accounted for under Topic 842 (Topic 840 for 2018). There were no significant changes to our revenue accounting upon adoption of Topic 842. 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, as discussed above, addresses lease revenue). Under Topic 606, revenue from contracts with customers is measured based on the consideration specified in the contract with the customer, and excludes any sales incentives and amounts collected on behalf of third parties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account under Topic 606. As reflected below, most of our revenue is accounted for under Topic 842. Our contracts with customers generally do not include multiple performance obligations. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for such products or services. Nature of goods and services In the following table, revenue is summarized by type and by the applicable accounting standard.
Revenues by reportable segment and geographical market are presented in note 4 of the consolidated financial statements using the revenue captions reflected in our consolidated statements of operations. The majority of our revenue is recognized in our general rentals segment and in the U.S. (for the year ended December 31, 2020, 79 percent and 91 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 note 4, depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Lease revenues (Topic 842) The accounting for the types of revenue that are accounted for under Topic 842 is discussed below. Owned equipment rentals represent our most significant revenue type (they accounted for 71 percent of total revenues for the year ended December 31, 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. 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 $51 and $55 as of December 31, 2020 and 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 (significantly less than a year). 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 As reflected above, most of our equipment rental revenue is accounted for under Topic 842 (such revenue represented 77 percent of our total revenues for the year ended December 31, 2020). The customers that are responsible for the remaining revenue that is accounted for under Topic 606 are generally the same customers that rent our equipment. We manage credit risk associated with our accounts receivables at the customer level. Because the same customers generate the revenues that are accounted for under both Topic 606 and Topic 842, the discussions below on credit risk and our allowances for doubtful accounts address receivables arising from revenues from both Topic 606 and Topic 842 (Topic 840 for 2018). Concentration of credit risk with respect to our receivables is limited because a large number of geographically diverse customers makes up our customer base. Our largest customer accounted for less than one percent of total revenues in each of 2020, 2019, and 2018. Our customer with the largest receivable balance represented approximately two percent and one percent of total receivables at December 31, 2020 and 2019, respectively. 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 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 December 31, 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 77 percent of our total revenues for the year ended December 31, 2020), and these revenues account for corresponding portions of the $1.315 billion of net accounts receivable and the associated allowance for doubtful accounts of $108 reported on our consolidated balance sheet as of December 31, 2020). During the year ended December 31, 2020, we recognized total bad debt expenses for our non-lease trade receivables, within selling, general and administrative expenses on our consolidated statement of income, of $9 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 consolidated balance sheet as of December 31, 2020 or 2) total bad debt expenses recognized associated with our allowance for doubtful accounts for the year ended December 31, 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 842/840) is shown below.
_________________ (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). We adopted Topic 842 in 2019 using a transition method that does not require application to periods prior to adoption. (3) Represents write-offs of accounts, net of immaterial recoveries. We do not have material contract assets, or impairment losses associated therewith, or material contract liabilities, associated with contracts with customers. Our contracts with customers do not generally result in material amounts billed to customers in excess of recognizable revenue. We did not recognize material revenue during the years ended December 31, 2020 and December 31, 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 years ended December 31, 2020 and December 31, 2019 were not material. We also do not expect to recognize material revenue in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of December 31, 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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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | 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 table presents the percentage of equipment rental revenue by equipment type for the years ended December 31, 2020, 2019 and 2018:
The accounting policies for our segments are the same as those described in the summary of significant accounting policies in note 2. Certain corporate costs, including those related to selling, finance, legal, risk management, human resources, corporate management and information technology systems, are deemed to be of an operating nature and are allocated to our segments based primarily on rental fleet size. The following table sets forth financial information by segment as of and for the years ended December 31, 2020, 2019 and 2018:
Equipment rentals gross profit is the primary measure management reviews to make operating decisions and assess segment performance. The following is a reconciliation of equipment rentals gross profit to income before provision for income taxes:
We operate in the United States, Canada and Europe. In July 2018, we completed the acquisition of BakerCorp, which allowed for our entry into select European markets. Our presence in Europe is limited, and the foreign information in the table below primarily reflects Canada. The following table presents geographic area information for the years ended December 31, 2020, 2019 and 2018, except for balance sheet information, which is presented as of December 31, 2020 and 2019:
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Restructuring and Asset Impairment Charges |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Asset Impairment Charges | Restructuring and Asset Impairment Charges Restructuring charges primarily include severance costs associated with headcount reductions, as well as branch closure charges. We incur severance costs and branch closure charges in the ordinary course of our business. We only include such costs that are part of a restructuring program as restructuring charges. Since the first such program was initiated in 2008, we have completed five restructuring programs and have incurred total restructuring charges of $350. Closed Restructuring Programs Our closed restructuring programs were initiated either in recognition of a challenging economic environment or following the completion of certain significant acquisitions. As of December 31, 2020, the total liability associated with the closed restructuring programs was $14. As of December 31, 2020, we have incurred total restructuring charges under the closed restructuring programs of $334, comprised of $193 of branch closure charges and $141 of severance and other costs. 2020-2021 Cost Savings Restructuring Program In the fourth quarter of 2019, we initiated a restructuring program associated with the consolidation of certain common functions, the relocation of our shared-service facilities and certain other cost reduction measures. We expect to complete the restructuring program in the first half of 2021. The total costs expected to be incurred in connection with the program are not currently estimable, as we are still identifying the actions that will be undertaken. The table below provides certain information concerning our restructuring charges under the 2020-2021 Cost Savings restructuring program:
________________ (1) Reflected in our consolidated statements of income as “Restructuring charge” (such charge also includes activity under our other restructuring programs). The restructuring charges are not allocated to our segments. As of December 31, 2020, we have incurred total restructuring charges under the 2020-2021 Cost Savings restructuring program of $16, comprised of $8 of branch closure charges and $8 of severance and other costs. Asset Impairment Charges In addition to the restructuring charges discussed above, during the year ended December 31, 2020, we recorded asset impairment charges of $36 primarily in our general rentals segment. The asset impairment charges, which were not related to COVID-19, are primarily reflected in depreciation of rental equipment in our consolidated statements of income and principally relate to the discontinuation of certain equipment programs. There were no material asset impairment charges during the years ended December 31, 2019 and 2018.
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Prepaid Expenses and Other Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Assets | Prepaid Expenses and Other Assets Prepaid expenses and other assets consist of the following:
_________________ (1) Reflects refundable deposits on expected rental equipment purchases pursuant to advanced purchase agreements. Such deposits are presented as a component of our cash flows from operations. We expect to purchase and receive the equipment in 2021. (2) Reflects reimbursements due for advertising that promotes a vendor’s products or services. See note 2 ("Advertising Expense") for further detail. (3) Includes multiple items, none of which are individually significant.
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Rental Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rental Equipment | Rental Equipment Rental equipment consists of the following:
_________________ (1) As discussed above, disciplined management of capital expenditures and fleet capacity is a component of our COVID-19 response plan, which contributed to the year-over-year decrease in net rental equipment. Property and Equipment Property and equipment consist of the following:
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Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Rental Equipment Rental equipment consists of the following:
_________________ (1) As discussed above, disciplined management of capital expenditures and fleet capacity is a component of our COVID-19 response plan, which contributed to the year-over-year decrease in net rental equipment. Property and Equipment Property and equipment consist of the following:
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible AssetsThe following table presents the changes in the carrying amount of goodwill for each of the three years in the period ended December 31, 2020:
_________________ (1) The total carrying amount of goodwill for all periods in the table above is reflected net of $1.557 billion of accumulated impairment charges, which were primarily recorded in our general rentals segment. (2) Includes goodwill adjustments for the effect on goodwill of changes to net assets acquired during the measurement period, which were not significant to our previously reported operating results or financial condition. (3) The acquisitions of BakerCorp and BlueLine in July 2018 and October 2018, respectively, accounted for most of the 2018 goodwill related to acquisitions. Other intangible assets were comprised of the following at December 31, 2020 and 2019:
Amortization expense for other intangible assets was $250, $290 and $213 for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020, estimated amortization expense for other intangible assets for each of the next five years and thereafter was as follows:
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Accrued Expenses and Other Liabilities and Other Long-Term Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Liabilities and Other Long-Term Liabilities | Accrued Expenses and Other Liabilities and Other Long-Term Liabilities Accrued expenses and other liabilities consist of the following:
_________________ (1) Primarily relates to branch closure charges and severance costs. See note 5 for additional detail. (2) Reflects amounts billed to customers in excess of recognizable revenue. See note 3 for additional detail. (3) Other includes multiple items, none of which are individually significant. Other long-term liabilities consist of the following:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements As of December 31, 2020 and 2019, the amounts of our assets and liabilities that were accounted for at fair value were immaterial. Fair value measurements are categorized in one of the following three levels based on the lowest level input that is significant to the fair value measurement in its entirety: Level 1—Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs other than quoted prices in active markets for identical assets or liabilities include: a) quoted prices for similar assets or liabilities in active markets; b) quoted prices for identical or similar assets or liabilities in inactive markets; c) inputs other than quoted prices that are observable for the asset or liability; d) inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3—Inputs to the valuation methodology are unobservable (i.e., supported by little or no market activity) and significant to the fair value measure. Fair Value of Financial Instruments The carrying amounts reported in our consolidated balance sheets for accounts receivable, accounts payable and accrued expenses and other liabilities approximate fair value due to the immediate to short-term maturity of these financial instruments. The fair values of our ABL, accounts receivable securitization and term loan facilities and finance leases approximated their book values as of December 31, 2020 and 2019. The estimated fair values of our other financial instruments, all of which are categorized in Level 1 of the fair value hierarchy, as of December 31, 2020 and 2019 have been calculated based upon available market information, and were as follows:
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Debt, net of unamortized original issue premiums and unamortized debt issuance costs, consists of the following:
(1) The table below presents financial information associated with our variable rate indebtedness as of and for the year ended December 31, 2020. We have borrowed the full available amount under the term loan facility. The principal obligation under the term loan facility is required to be repaid in quarterly installments in an aggregate amount equal to 1.0 percent per annum, with the balance due at the maturity of the facility. The average amount of debt outstanding under the term loan facility decreases slightly each quarter due to the requirement to repay a portion of the principal obligation.
(2) The decrease in the outstanding debt under the ABL facility since December 31, 2019 primarily reflects the use of proceeds from operations to reduce borrowings under the ABL facility. As discussed above, disciplined management of capital expenditures and fleet capacity is a component of our COVID-19 response plan, and, in 2020, capital expenditures decreased significantly year-over-year. The decreased capital expenditures contributed to our ability to use proceeds from operations to reduce borrowings under the ABL facility. (3) URNA redeemed all of its 5 1/2 percent Senior Notes due 2025 and 6 1/2 percent Senior Notes due 2026 in August 2020, and redeemed all of its 4 5/8 percent Senior Notes due 2025 in October 2020. During the year ended December 31, 2020, we recognized an aggregate debt redemption loss, in interest expense, net in our consolidated statement of income, of $183 (comprised of $27, $132 and $24 for the 5 1/2 percent Senior Notes due 2025, 6 1/2 percent Senior Notes due 2026 and 4 5/8 percent Senior Notes due 2025, respectively). The loss reflects the difference between the net carrying amount and the total purchase price of the redeemed notes. Prior to redeeming the notes, we considered the impact of COVID-19 on liquidity, and assessed our available sources and anticipated uses of cash, including, with respect to sources, cash generated from operations and from the sale of rental equipment. (4) URNA separately issued 4 7/8 percent Senior Notes in August 2017 and in September 2017. Following the issuances, we 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 due 2030. See below for additional detail on the issued debt. (6) In August 2020, URNA issued $1.100 billion aggregate principal amount of 3 7/8 percent Senior Notes due 2031. See below for additional detail on the issued debt. Short-term debt As of December 31, 2020, our short-term debt primarily reflects $634 of borrowings under our accounts receivable securitization facility. Accounts receivable securitization facility. In 2020, the accounts receivable securitization facility was amended, primarily to (a) extend the maturity date, (b) reduce the size of the facility and (c) adjust the financial tests (including the method of calculation) relating to (i) the default ratio, (ii) the delinquency ratio, (iii) the dilution ratio and (iv) days sales outstanding. The amended facility expires on June 25, 2021, has a facility size of $800, and may be extended on a 364-day basis by mutual agreement of the Company and the lenders under the facility. Borrowings under the facility are reflected as short-term debt on our consolidated balance sheets. Key provisions of the facility include the following: •borrowings are permitted only to the extent that the face amount of the receivables in the collateral pool, net of applicable reserves, exceeds the outstanding loans by a specified amount. As of December 31, 2020, there were $922 of receivables, net of applicable reserves, in the collateral pool; •the receivables in the collateral pool are the lenders’ only source of repayment; •upon early termination of the facility, no new amounts will be advanced under the facility and collections on the receivables securing the facility will be used to repay the outstanding borrowings; and •standard termination events including, without limitation, a change of control of Holdings, URNA or certain of its subsidiaries, a failure to make payments, a failure to comply with standard default, delinquency, dilution and days sales outstanding covenants, or breach of the fixed charge coverage ratio covenant under the ABL facility (if applicable). See the table above for financial information associated with the accounts receivable securitization facility. Long-term debt ABL facility. In June 2008, Holdings, URNA, and certain of our subsidiaries entered into a credit agreement providing for a five-year $1.25 billion ABL facility, a portion of which is available for borrowing in Canadian dollars. The ABL facility was subsequently upsized and extended, and a portion of the facility is also now available for borrowing in British Pounds and Euros by certain subsidiaries of URNA in Europe. The size of the ABL facility was $3.75 billion as of December 31, 2020. See the table above for financial information associated with the ABL facility. The ABL facility is subject to, among other things, the terms of a borrowing base derived from the value of eligible rental equipment and eligible inventory. The borrowing base is subject to certain reserves and caps customary for financings of this type. All amounts borrowed under the credit agreement must be repaid on or before February 2024. Loans under the credit agreement bear interest, at URNA’s option: (i) in the case of loans in U.S. dollars, at a rate equal to the London interbank offered rate or an alternate base rate, in each case plus a spread, (ii) in the case of loans in Canadian dollars, at a rate equal to the Canadian prime rate or an alternate rate (Bankers' Acceptance Rate), in each case plus a spread, (iii) in the case of loans in Euros, at a rate equal to the London interbank offered rate or an alternate base rate, in each case plus a spread, or (iv) in the case of loans in British pounds, at a rate equal to the London interbank offered rate or an alternate base rate, in each case plus a spread. The interest rates under the credit agreement are subject to change based on the availability in the facility. A commitment fee accrues on any unused portion of the commitments under the credit agreement at a fixed rate per annum. Ongoing extensions of credit under the credit agreement are subject to customary conditions, including sufficient availability under the borrowing base. As discussed below (see “Loan Covenants and Compliance”), the only financial covenant that currently exists in the ABL facility is the fixed charge coverage ratio. As of December 31, 2020, availability under the ABL facility has exceeded the required threshold and, as a result, this financial covenant was inapplicable. In addition, the credit agreement contains customary negative covenants applicable to Holdings, URNA and our subsidiaries, including negative covenants that restrict the ability of such entities to, among other things, (i) incur additional indebtedness or engage in certain other types of financing transactions, (ii) allow certain liens to attach to assets, (iii) repurchase, or pay dividends or make certain other restricted payments on, capital stock and certain other securities, (iv) prepay certain indebtedness and (v) make acquisitions and investments. The U.S. dollar borrowings under the credit agreement are secured by substantially all of our assets and substantially all of the assets of certain of our U.S. subsidiaries (other than real property and certain accounts receivable). The U.S. dollar borrowings under the credit agreement are guaranteed by Holdings and by URNA and, subject to certain exceptions, our domestic subsidiaries. Borrowings under the credit agreement by URNA’s Canadian subsidiaries are also secured by substantially all the assets of URNA’s Canadian subsidiaries and supported by guarantees from the Canadian subsidiaries and from Holdings and URNA, and, subject to certain exceptions, our domestic subsidiaries. Borrowings under the credit agreement by URNA’s subsidiaries in Europe and Puerto Rico are guaranteed by Holdings, URNA, URNA’s Canadian subsidiaries and, subject to certain exceptions, our domestic subsidiaries and secured by substantially all the assets of our U.S. subsidiaries (other than real property and certain accounts receivable) and substantially all the assets of URNA’s Canadian subsidiaries. Under the ABL facility, a change of control (as defined in the credit agreement) constitutes an event of default, entitling our lenders, among other things, to terminate our ABL facility and to require us to repay outstanding borrowings. Term loan facility. In October 2018, Holdings, URNA, and certain of our subsidiaries entered into a $1 billion senior secured term loan facility. See the table above for financial information associated with the term loan facility. The term loan facility is guaranteed by Holdings and the same domestic subsidiaries that guarantee the U.S. dollar borrowings under the ABL facility. In addition, the obligations under the term loan facility are secured by first priority security interests in the same collateral that secures the U.S. dollar borrowings under the ABL facility, on a pari passu basis with the ABL facility. The principal obligations under the term loan facility are to be repaid in quarterly installments in an aggregate amount equal to 1.0 percent per annum, with the balance due at the maturity of the term loan facility. The term loan facility matures on October 31, 2025. Amounts drawn under the term loan facility bear annual interest, at URNA’s option, at either the London interbank offered rate plus a margin of 1.75 percent or at an alternative base rate plus a margin of 0.75 percent. The term loan facility contains customary negative covenants applicable to URNA and its subsidiaries, including negative covenants that restrict the ability of such entities to, among other things, (i) incur additional indebtedness; (ii) incur additional liens; (iii) make dividends and other restricted payments; and (iv) engage in mergers, acquisitions and dispositions. The term loan facility does not include any financial covenants. Under the term loan facility, a change of control (as defined in the credit agreement) constitutes an event of default, entitling our lenders to, among other things, terminate the term loan facility and require us to repay outstanding loans. 5 7/8 percent Senior Notes due 2026. In May 2016, URNA issued $750 aggregate principal amount of 5 7/8 percent Senior Notes (the “5 7/8 percent Notes”) which are due September 15, 2026. In February 2017, URNA issued $250 aggregate principal amount of 5 7/8 percent Notes as an add-on to the existing 5 7/8 percent Notes, after which the aggregate principal amount of outstanding 5 7/8 percent Notes was $1.0 billion. The notes issued in February 2017 have identical terms, and are fungible, with the existing 5 7/8 percent Notes. The net proceeds from the issuances were approximately $999 (including the original issue premium and after deducting offering expenses). The 5 7/8 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 5 7/8 percent Notes may be redeemed on or after September 15, 2021, at specified redemption prices that range from 102.938 percent in 2021, to 100 percent in 2024 and thereafter, plus accrued and unpaid interest, if any. The indenture governing the 5 7/8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates; and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 5 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. The carrying value of the 5 7/8 percent Notes includes the $8 unamortized portion of the original issue premium recognized in conjunction with the February 2017 issuance, which is being amortized through the maturity date in 2026. The effective interest rate on the 5 7/8 percent Notes is 5.7 percent. 5 1/2 percent Senior Notes due 2027. In November 2016, URNA issued $750 aggregate principal amount of 5 1/2 percent Senior Notes which are due May 15, 2027 (the “2027 5 1/2 percent Notes”). In February 2017, URNA issued $250 aggregate principal amount of 2027 5 1/2 percent Notes as an add-on to the existing 2027 5 1/2 percent Notes, after which the aggregate principal amount of outstanding 2027 5 1/2 percent Notes was $1.0 billion. The notes issued in February 2017 have identical terms, and are fungible, with the existing 2027 5 1/2 percent Notes. The net proceeds from the issuances were approximately $991 (including the original issue premium and after deducting offering expenses). The 2027 5 1/2 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 2027 5 1/2 percent Notes may be redeemed on or after May 15, 2022, at specified redemption prices that range from 102.75 percent in 2022, to 100 percent in 2025 and thereafter, plus accrued and unpaid interest, if any. The indenture governing the 2027 5 1/2 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) additional indebtedness; (iii) mergers, consolidations and acquisitions; (iv) sales, transfers and other dispositions of assets; (v) loans and other investments; (vi) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (vii) restrictions affecting subsidiaries; (viii) transactions with affiliates; and (ix) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. 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 2027 5 1/2 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. The carrying value of the 2027 5 1/2 percent Notes includes the $2 unamortized portion of the original issue premium recognized in conjunction with the February 2017 issuance, which is being amortized through the maturity date in 2027. The effective interest rate on the 2027 5 1/2 percent Notes is 5.5 percent. 3 7/8 percent Senior Secured Notes due 2027. In November 2019, URNA issued $750 aggregate principal amount of 3 7/8 percent Senior Secured Notes (the “3 7/8 percent Notes”) which are due November 15, 2027. The net proceeds from the issuance were approximately $741 (after deducting offering expenses). The 3 7/8 percent Notes are guaranteed by Holdings and certain domestic subsidiaries of URNA and are secured on a second-priority basis by liens on substantially all of URNA’s and the guarantors’ assets that secure the ABL facility and the term loan facility, subject to certain exceptions. The 3 7/8 percent Notes may be redeemed on or after November 15, 2022, at specified redemption prices that range from 101.938 percent in 2022, to 100 percent in 2025 and thereafter, in each case, plus accrued and unpaid interest, if any. In addition, at any time on or prior to November 15, 2022, 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, to give further assurances 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. 4 7/8 percent Senior Notes due 2028. In August 2017, URNA issued $925 principal amount of 4 7/8 percent Senior Notes (the “Initial 4 7/8 percent Notes”) which are due January 15, 2028. The net proceeds from the issuance were approximately $913 (after deducting offering expenses). The Initial 4 7/8 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The Initial 4 7/8 percent Notes may be redeemed on or after January 15, 2023, at specified redemption prices that range from 102.438 percent in 2023, to 100 percent in 2026 and thereafter, in each case, plus accrued and unpaid interest, if any. The indenture governing the Initial 4 7/8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; (iii) sales, transfers and other dispositions of assets; (iv) dividends and other distributions, stock repurchases and redemptions and other restricted payments; and (v) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the Initial 4 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 Initial 4 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. In September 2017, URNA issued $750 principal amount of 4 7/8 percent Senior Notes (the “Subsequent 4 7/8 percent Notes”) which are due January 15, 2028. The net proceeds from the issuance were approximately $743 (including the original issue premium and after deducting offering expenses). The Subsequent 4 7/8 percent Notes represent a separate a distinct series of notes from the Initial 4 7/8 percent Notes. The Subsequent 4 7/8 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The Subsequent 4 7/8 percent Notes may be redeemed on or after January 15, 2023, at specified redemption prices that range from 102.438 percent in 2023, to 100 percent in 2026 and thereafter, in each case, plus accrued and unpaid interest, if any. The indenture governing the Subsequent 4 7/8 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; (iii) sales, transfers and other dispositions of assets; (iv) dividends and other distributions, stock repurchases and redemptions and other restricted payments; and (v) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the Subsequent 4 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 Subsequent 4 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. The effective interest rate on the Subsequent 4 7/8 percent Notes is 4.84 percent. In December 2017, we consummated an exchange offer pursuant to which approximately $744 principal amount of Subsequent 4 7/8 percent Notes were exchanged for additional Initial 4 7/8 percent Notes issued under the indenture governing the Initial 4 7/8 percent Notes and fungible with the Initial 4 7/8 percent Notes. As of December 31, 2020, the principal amounts outstanding were $1.669 billion for the Initial 4 7/8 percent Notes and $4 for the Subsequent 4 7/8 percent Notes. The carrying value of the Initial 4 7/8 percent Notes includes $1 of the unamortized original issue premium, which is being amortized through the maturity date in 2028. The effective interest rate on the Initial 4 7/8 percent Notes is 4.86 percent. 5 1/4 percent Senior Notes due 2030. In May 2019, URNA issued $750 aggregate principal amount of 5 1/4 percent Senior Notes (the “5 1/4 percent Notes”) which are due January 15, 2030. The net proceeds from the issuance were approximately $741 (after deducting offering expenses). The 5 1/4 percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The 5 1/4 percent Notes may be redeemed on or after January 15, 2025, at specified redemption prices that range from 102.625 percent in 2025, to 100 percent in 2028 and thereafter, in each case, plus accrued and unpaid interest, if any. In addition, at any time on or prior to January 15, 2023, up to 40 percent of the aggregate principal amount of the 5 1/4 percent Notes may be redeemed with the net cash proceeds of certain equity offerings at a redemption price equal to 105.250 percent of the aggregate principal amount of the notes plus accrued and unpaid interest, if any. The indenture governing the 5 1/4 percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; and (iii) dividends and other distributions, stock repurchases and redemptions and other restricted payments, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the 5 1/4 percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding 5 1/4 percent Notes tendered at a purchase price in cash equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest, if any, thereon. 4 percent Senior Notes due 2030. 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. 3 7/8 percent Senior Notes due 2031. 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. Loan Covenants and Compliance As of December 31, 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 December 31, 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. 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. Maturities Debt maturities (exclusive of any unamortized original issue premiums and unamortized debt issuance costs) for each of the next five years and thereafter at December 31, 2020 are as follows:
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Leases | Leases Adoption of Accounting Standards Codification (“ASC”) Topic 842, “Leases” In March 2016, the FASB issued guidance ("Topic 842") to increase transparency and comparability among organizations by requiring (1) recognition of lease assets and lease liabilities on the balance sheet and (2) disclosure of key information about leasing arrangements. Some changes to the lessor accounting guidance were made to align both of the following: (1) the lessor accounting guidance with certain changes made to the lessee accounting guidance and (2) key aspects of the lessor accounting model with revenue recognition guidance. We adopted Topic 842 at the required adoption date of January 1, 2019, using the transition method that allowed us to initially apply Topic 842 as of January 1, 2019 and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We used the package of practical expedients permitted under the transition guidance that allowed us to not reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. We additionally used, for our real estate operating leases, the practical expedient that allows lessees to treat the lease and non-lease components of leases as a single lease component. We did not recognize a material adjustment to the opening balance of retained earnings upon adoption. Because of the transition method we used to adopt Topic 842, Topic 842 was not applied to periods prior to adoption and the adoption of Topic 842 had no impact on our previously reported results. As discussed in note 3 to the consolidated financial statements, most of our equipment rental revenues, which accounted for 84 percent of total revenues for the year ended December 31, 2020, were accounted for under the previous lease accounting standard through December 31, 2018 and are accounted for under Topic 842 following adoption. There were no significant changes to our revenue accounting upon adoption of Topic 842. See note 3 for a discussion of our revenue accounting (such discussion includes lessor disclosures required under Topic 842). The adoption of Topic 842 resulted in the recognition of right-of-use (“ROU”) assets and lease liabilities on our consolidated balance sheet, as discussed further below. The adoption of Topic 842 did not have a material impact on our consolidated income statement (as noted above, although a significant portion of our revenue is accounted for under Topic 842 following adoption, there were no significant changes to our revenue accounting upon adoption) or our consolidated cash flow statement. Lease Accounting We determine if an arrangement is a lease at inception. Our material lease contracts are generally for real estate or vehicles, and the determination of whether such contracts contain leases generally does not require significant estimates or judgments. We lease real estate and equipment under operating leases. We lease a significant portion of our branch locations, and also lease other premises used for purposes such as district and regional offices and service centers. Our finance lease obligations consist primarily of rental equipment (primarily vehicles) and building leases. Operating leases result in the recognition of ROU 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 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 3 to the consolidated financial statements. Apart from the re-rent revenue discussed in note 3, 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 account for the lease and non-lease components as a single lease component. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The tables below present financial information associated with our leases. This information is only presented as of, and for the years ended, December 31, 2020 and December 31, 2019 because, as noted above, we adopted Topic 842 using a transition method that does not require application to periods prior to adoption.
_________________ (1) Includes variable lease costs, which are immaterial. Cost of equipment rentals, excluding depreciation for the years ended December 31, 2020 and 2019 includes $124 and $142, respectively, of short-term lease costs associated with equipment that we rent from vendors and then rent to our customers, as discussed further above. Apart from these costs, short-term lease costs are immaterial. (2) Primarily reflects re-rent revenue as discussed further above.
_________________ (1) Reflects payments for non-cancelable operating leases with initial or remaining terms of one year or more as of December 31, 2020. The table above does not include any legally binding minimum lease payments for leases signed but not yet commenced, and such leases are not material in the aggregate. (2) The table above does not include any legally binding minimum lease payments for leases signed but not yet commenced, and such leases are not material in the aggregate.
As discussed above, we adopted Topic 842 on January 1, 2019. Topic 842 is an update to Topic 840, which was the lease accounting standard in place through December 31, 2018. Upon adoption of Topic 842, the leases that were previously classified as capital leases through December 31, 2018 were classified as finance leases. There were no significant changes to the accounting upon this change in classification. The following table presents historic financial statement information for our leases (accounted for under Topic 840) for the year ended December 31, 2018:
_________________ (1) Rent expense on non-cancelable operating leases does not include short-term lease costs associated with equipment that we rent from vendors and then rent to our customers (which is a component of the 2020 and 2019 operating lease costs under Topic 842 as reflected in the table above). Under Topic 840, rental payments under leases with terms of a month or less that were not renewed are not included in rent expense, and we excluded such expenses because of the short-term duration of the arrangements under which we rented equipment from vendors and then rented such equipment to our customers. The amount of such rentals was $121 for the year ended December 31, 2018.
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Leases | Leases Adoption of Accounting Standards Codification (“ASC”) Topic 842, “Leases” In March 2016, the FASB issued guidance ("Topic 842") to increase transparency and comparability among organizations by requiring (1) recognition of lease assets and lease liabilities on the balance sheet and (2) disclosure of key information about leasing arrangements. Some changes to the lessor accounting guidance were made to align both of the following: (1) the lessor accounting guidance with certain changes made to the lessee accounting guidance and (2) key aspects of the lessor accounting model with revenue recognition guidance. We adopted Topic 842 at the required adoption date of January 1, 2019, using the transition method that allowed us to initially apply Topic 842 as of January 1, 2019 and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We used the package of practical expedients permitted under the transition guidance that allowed us to not reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. We additionally used, for our real estate operating leases, the practical expedient that allows lessees to treat the lease and non-lease components of leases as a single lease component. We did not recognize a material adjustment to the opening balance of retained earnings upon adoption. Because of the transition method we used to adopt Topic 842, Topic 842 was not applied to periods prior to adoption and the adoption of Topic 842 had no impact on our previously reported results. As discussed in note 3 to the consolidated financial statements, most of our equipment rental revenues, which accounted for 84 percent of total revenues for the year ended December 31, 2020, were accounted for under the previous lease accounting standard through December 31, 2018 and are accounted for under Topic 842 following adoption. There were no significant changes to our revenue accounting upon adoption of Topic 842. See note 3 for a discussion of our revenue accounting (such discussion includes lessor disclosures required under Topic 842). The adoption of Topic 842 resulted in the recognition of right-of-use (“ROU”) assets and lease liabilities on our consolidated balance sheet, as discussed further below. The adoption of Topic 842 did not have a material impact on our consolidated income statement (as noted above, although a significant portion of our revenue is accounted for under Topic 842 following adoption, there were no significant changes to our revenue accounting upon adoption) or our consolidated cash flow statement. Lease Accounting We determine if an arrangement is a lease at inception. Our material lease contracts are generally for real estate or vehicles, and the determination of whether such contracts contain leases generally does not require significant estimates or judgments. We lease real estate and equipment under operating leases. We lease a significant portion of our branch locations, and also lease other premises used for purposes such as district and regional offices and service centers. Our finance lease obligations consist primarily of rental equipment (primarily vehicles) and building leases. Operating leases result in the recognition of ROU 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 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 3 to the consolidated financial statements. Apart from the re-rent revenue discussed in note 3, 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 account for the lease and non-lease components as a single lease component. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The tables below present financial information associated with our leases. This information is only presented as of, and for the years ended, December 31, 2020 and December 31, 2019 because, as noted above, we adopted Topic 842 using a transition method that does not require application to periods prior to adoption.
_________________ (1) Includes variable lease costs, which are immaterial. Cost of equipment rentals, excluding depreciation for the years ended December 31, 2020 and 2019 includes $124 and $142, respectively, of short-term lease costs associated with equipment that we rent from vendors and then rent to our customers, as discussed further above. Apart from these costs, short-term lease costs are immaterial. (2) Primarily reflects re-rent revenue as discussed further above.
_________________ (1) Reflects payments for non-cancelable operating leases with initial or remaining terms of one year or more as of December 31, 2020. The table above does not include any legally binding minimum lease payments for leases signed but not yet commenced, and such leases are not material in the aggregate. (2) The table above does not include any legally binding minimum lease payments for leases signed but not yet commenced, and such leases are not material in the aggregate.
As discussed above, we adopted Topic 842 on January 1, 2019. Topic 842 is an update to Topic 840, which was the lease accounting standard in place through December 31, 2018. Upon adoption of Topic 842, the leases that were previously classified as capital leases through December 31, 2018 were classified as finance leases. There were no significant changes to the accounting upon this change in classification. The following table presents historic financial statement information for our leases (accounted for under Topic 840) for the year ended December 31, 2018:
_________________ (1) Rent expense on non-cancelable operating leases does not include short-term lease costs associated with equipment that we rent from vendors and then rent to our customers (which is a component of the 2020 and 2019 operating lease costs under Topic 842 as reflected in the table above). Under Topic 840, rental payments under leases with terms of a month or less that were not renewed are not included in rent expense, and we excluded such expenses because of the short-term duration of the arrangements under which we rented equipment from vendors and then rented such equipment to our customers. The amount of such rentals was $121 for the year ended December 31, 2018.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The components of the provision (benefit) for income taxes for each of the three years in the period ended December 31, 2020 are as follows:
A reconciliation of the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rate of 21 percent to the income before provision (benefit) for income taxes for each of the three years in the period ended December 31, 2020 is as follows:
_________________ (1) The Tax Act was enacted in December 2017 and required (i) the revaluation of our net deferred tax liability based on a U.S. federal tax rate of 21 percent and (ii) a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign investments. We primarily recognized the accounting for the enactment of the Tax Act upon adoption in 2017, and finalized the accounting in 2018. The components of deferred income tax assets (liabilities) are as follows:
_________________ (1) Relates to foreign tax credits, state net operating loss carryforwards, and state tax credits that may not be realized. All of the remaining valuation allowance for foreign tax credits was released in 2020. We file income tax returns in the U.S., Canada and Europe. Without exception, we have completed our domestic and international income tax examinations, or the statute of limitations has expired in the respective jurisdictions, for years prior to 2011. For financial reporting purposes, income before provision for income taxes for our foreign subsidiaries was $83, $62 and $71 for the years ended December 31, 2020, 2019 and 2018, respectively. We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes were provided on such earnings prior to the fourth quarter of 2020. In the fourth quarter of 2020, we identified $135 of cash in our foreign operations in excess of near-term working capital needs, and determined that this amount could no longer be considered indefinitely reinvested. As a result, our prior assertion that all undistributed earnings of our foreign subsidiaries should be considered indefinitely reinvested has changed, and, in the fourth quarter of 2020, we recorded the immaterial taxes on a distribution of the $135 of cash. We continue to expect that the remaining balance of our undistributed foreign earnings will be indefinitely reinvested. If we determine that all or a portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes. At December 31, 2020, unremitted earnings of foreign subsidiaries were $840. Determination of the amount of unrecognized deferred tax liability on these unremitted earnings is not practicable. We have net operating loss carryforwards (“NOLs”) of $759 for federal income tax purposes that expire from 2030 through 2037, $3 for foreign income tax purposes that expire from 2024 through 2029 and $744 for state income tax purposes that expire from 2021 through 2034.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We are subject to a number of claims and proceedings that generally arise in the ordinary conduct of our business. These matters include, but are not limited to, general liability claims (including personal injury, product liability, and property and automobile claims), indemnification and guarantee obligations, employee injuries and employment-related claims, self-insurance obligations and contract and real estate matters. Based on advice of counsel and available information, including current status or stage of proceeding, and taking into account accruals included in our consolidated balance sheets for matters where we have established them, we currently believe that any liabilities ultimately resulting from these ordinary course claims and proceedings will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of operations or cash flows. Indemnification The Company indemnifies its officers and directors pursuant to indemnification agreements and may in addition indemnify these individuals as permitted by Delaware law. Employee Benefit Plans We currently sponsor two defined contribution 401(k) retirement plans, which are subject to the provisions of the Employee Retirement Income Security Act of 1974. We also sponsor a deferred profit sharing plan and a registered retirement savings plan for the benefit of the full-time employees of our Canadian subsidiaries. Under these plans, we match a percentage of the participants’ contributions up to a specified amount. Company contributions to the plans were $33, $37 and $31 in the years ended December 31, 2020, 2019 and 2018, respectively. Environmental Matters The Company and its operations are subject to various laws and related regulations governing environmental matters. Under such laws, an owner or lessee of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in, or emanating from, such property, as well as investigation of property damage. We incur ongoing expenses associated with the performance of appropriate remediation at certain locations.
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Common Stock |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Common Stock We have 500 million authorized shares of common stock, $0.01 par value. At December 31, 2020 and 2019, there were 0.0 million shares of common stock reserved for issuance pursuant to options granted under our stock option plans. As of December 31, 2020, there were an aggregate of 0.8 million outstanding time and performance-based RSUs and 2.0 million shares available for grants of stock and options under our 2019 Long Term Incentive Plan. A summary of the transactions within the Company’s stock option plans follows (shares in thousands):
The following table presents information associated with stock options as of December 31, 2020 and 2019, and for the years ended December 31, 2020, 2019 and 2018:
In addition to stock options, the Company issues time-based and performance-based RSUs to certain officers and key executives under various equity incentive plans. The RSUs automatically convert to shares of common stock on a one-for-one basis as the awards vest. The time-based RSUs typically vest over a three year vesting period beginning 12 months from the grant date and thereafter annually on the anniversary of the grant date. The performance-based RSUs vest based on the achievement of the performance conditions during the applicable performance periods (currently the calendar year). There were 360 thousand shares of common stock issued upon vesting of RSUs during 2020, net of 207 thousand shares surrendered to satisfy tax obligations. The Company measures the value of RSUs at fair value based on the closing price of the underlying common stock on the grant date. The Company amortizes the fair value of outstanding RSUs as stock-based compensation expense over the requisite service period on a straight-line basis, or sooner if the employee effectively vests upon termination of employment under certain circumstances. For performance-based RSUs, compensation expense is recognized to the extent that the satisfaction of the performance condition is considered probable. A summary of RSUs granted follows (RSUs in thousands):
As of December 31, 2020, the total pretax compensation cost not yet recognized by the Company with regard to unvested RSUs was $49. The weighted-average period over which this compensation cost is expected to be recognized is 2.0 years. A summary of RSU activity for the year ended December 31, 2020 follows (RSUs in thousands):
The total fair value of RSUs vested during the fiscal years ended December 31, 2020, 2019 and 2018 was $75, $80, and $114, respectively. Dividend Policy. Holdings has not paid dividends on its common stock since inception. The payment of any future dividends or the authorization of stock repurchases or other recapitalizations will be determined by our Board of Directors in light of conditions then existing, including earnings, financial condition and capital requirements, financing agreements, business conditions, stock price and other factors. The terms of certain agreements governing our outstanding indebtedness contain certain limitations on our ability to move operating cash flows to Holdings and/or to pay dividends on, or effect repurchases of, our common stock. In addition, under Delaware law, dividends may only be paid out of surplus or current or prior year’s net profits. Stockholders’ Rights Plan. Our stockholders' rights plan expired in accordance with its terms in 2011. Our Board of Directors elected not to renew or extend the plan.
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Quarterly Financial Information (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information (Unaudited) | Quarterly Financial Information (Unaudited)
(1) As discussed in note 12 to our consolidated financial statements, in the fourth quarter of 2020, we redeemed all of our 4 5/8 percent Senior Notes due 2025, and recognized a redemption loss of $24 in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes. (2) In the fourth quarter of 2019, we issued $750 aggregate principal amount of 3 7/8 percent Senior Secured Notes due 2027 and redeemed all of our 4 5/8 percent Senior Secured Notes. Upon redemption, we recognized a loss of $29 in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes. (3) Diluted earnings per share includes the after-tax impacts of the following:
(4)This reflects the amortization of the intangible assets acquired in the RSC, National Pump, NES, Neff, BakerCorp and BlueLine acquisitions. (5)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. (6)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 and subsequently sold. (7)As discussed in note 5 to our consolidated financial statements, this primarily reflects severance costs and branch closure charges associated with our restructuring programs. (8)This reflects write-offs of leasehold improvements and other fixed assets. As discussed in note 5 to our consolidated financial statements, the 2020 charges primarily reflect the discontinuation of certain equipment programs, and were not related to COVID-19. (9)This primarily reflects the difference between the net carrying amount and the total purchase price of the redeemed notes. (10)This reflects transaction costs associated with the BakerCorp and BlueLine acquisitions that were completed in 2018.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per ShareBasic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares plus the effect of dilutive potential common shares outstanding during the period. The following table sets forth the computation of basic and diluted earnings per share (shares in thousands):
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Schedule II - Valuation and Qualifying Accounts |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEC Schedule, 12-09, Schedule of Valuation and Qualifying Accounts Disclosure | The rollforward of our allowance for doubtful accounts (in total, and associated with revenues arising from both Topic 606 and Topic 842/840) is shown below.
_________________ (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). We adopted Topic 842 in 2019 using a transition method that does not require application to periods prior to adoption. (3) Represents write-offs of accounts, net of immaterial recoveries. SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS UNITED RENTALS, INC. (In millions)
The above information reflects the continuing operations of the Company for the periods presented. Additionally, because the Company has retained certain self-insurance liabilities associated with the discontinued traffic control business, those amounts have been included as well. (a) Amounts charged to cost and expenses reflect bad debt expenses recognized within selling, general and administrative expenses. The amounts charged to revenue primarily reflect doubtful accounts associated with lease revenues that were recognized as a reduction to equipment rentals revenue. In 2019, we adopted an updated lease accounting standard (see note 13 to the consolidated financial statements for further detail) that requires that we recognize doubtful accounts associated with lease revenues as a reduction to equipment rentals revenue. We adopted the updated lease accounting standard using a transition method that does not require application to periods prior to adoption. (b) Represents write-offs of accounts, net of recoveries. (c) Represents write-offs. (d) Represents payments.
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Summary of Significant Accounting Policies (Policies) |
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Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Cash Equivalents | Cash Equivalents We consider all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents. Our cash equivalents at December 31, 2020 and 2019 consist of direct obligations of financial institutions rated A or better. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts We maintain allowances for doubtful accounts. These allowances 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 allowance for doubtful accounts as of December 31, 2020 included an adjustment for the estimated impact of COVID-19 on future collectibility that was not material to our financial statements. 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. |
Inventory | Inventory Inventory consists of new equipment, contractor supplies, tools, parts, fuel and related supply items. Inventory is stated at the lower of cost or market. Cost is determined, depending on the type of inventory, using either a specific identification, weighted-average or first-in, first-out method. |
Rental Equipment | Rental Equipment Rental equipment, which includes service and delivery vehicles, is recorded at cost and depreciated over the estimated useful life of the equipment using the straight-line method. The range of estimated useful lives for rental equipment is to 20 years. Rental equipment is depreciated to a salvage value of zero to 10 percent of cost. Rental equipment is depreciated whether or not it is out on rent.
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Property and Equipment | Property and Equipment Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. The range of estimated useful lives for property and equipment is to 39 years. Ordinary repair and maintenance costs are charged to expense as incurred. Leasehold improvements are amortized using the straight-line method over their estimated useful lives or the remaining life of the lease, whichever is shorter.
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Acquisition Accounting | Acquisition Accounting We have made a number of acquisitions in the past and may continue to make acquisitions in the future. The assets acquired and liabilities assumed are recorded based on their respective fair values at the date of acquisition. Long-lived assets (principally rental equipment), goodwill and other intangible assets generally represent the largest components of our acquisitions. Rental equipment is valued utilizing either a cost, market or income approach, or a combination of certain of these methods, depending on the asset being valued and the availability of market or income data. The intangible assets that we have acquired are non-compete agreements, customer relationships and trade names and associated trademarks. The estimated fair values of these intangible assets reflect various assumptions about discount rates, revenue growth rates, operating margins, terminal values, useful lives and other prospective financial information. Goodwill is calculated as the excess of the cost of the acquired entity over the net of the fair value of the assets acquired and the liabilities assumed. Non-compete agreements, customer relationships and trade names and associated trademarks are valued based on an excess earnings or income approach based on projected cash flows. Determining the fair value of the assets and liabilities acquired is judgmental in nature and can involve the use of significant estimates and assumptions. The judgments made in determining the estimated fair value assigned to the assets acquired, as well as the estimated life of the assets, can materially impact net income in periods subsequent to the acquisition through depreciation and amortization, and in certain instances through impairment charges, if the asset becomes impaired in the future. As discussed below, we regularly review for impairments. When we make an acquisition, we also acquire other assets and assume liabilities. These other assets and liabilities typically include, but are not limited to, parts inventory, accounts receivable, accounts payable and other working capital items. Because of their short-term nature, the fair values of these other assets and liabilities generally approximate the book values on the acquired entities' balance sheets.
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Evaluation of Goodwill Impairment | Evaluation of Goodwill Impairment Goodwill is tested for impairment annually or more frequently if an event or circumstance indicates that an impairment loss may have been incurred. Application of the goodwill impairment test requires judgment, including: the identification of reporting units; assignment of assets and liabilities to reporting units; assignment of goodwill to reporting units; determination of the fair value of each reporting unit; and an assumption as to the form of the transaction in which the reporting unit would be acquired by a market participant (either a taxable or nontaxable transaction). We estimate the fair value of our reporting units (which are our regions) using a combination of an income approach based on the present value of estimated future cash flows and a market approach based on market price data of shares of our Company and other corporations engaged in similar businesses as well as acquisition multiples paid in recent transactions within our industry (including our own acquisitions). We believe this approach, which utilizes multiple valuation techniques, yields the most appropriate evidence of fair value. As discussed below (see "Guidance Adopted in 2020-Simplifying the Test for Goodwill Impairment"), in 2020, we adopted accounting guidance that eliminated the second step from the goodwill impairment test (this guidance did not have a significant impact on our financial statements). 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. We did not perform this second step for the goodwill impairment test conducted as of October 1, 2020 or 2019 (for 2020, because the adopted accounting guidance eliminated the second step, and, for 2019, because there was no indication that an impairment may have existed). The first step of the impairment test requires comparing the fair value of a reporting unit with its carrying amount. Financial Accounting Standards Board ("FASB") guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In connection with our goodwill impairment test that was conducted as of October 1, 2020, we bypassed the qualitative assessment for each reporting unit and quantitatively compared the fair values of our reporting units with their carrying amounts. We considered the impact of COVID-19 when performing the test, and it did not have a material impact on the test results. Our goodwill impairment testing as of this date indicated that all of our reporting units, excluding our Fluid Solutions Europe reporting unit, had estimated fair values which exceeded their respective carrying amounts by at least 42 percent. As discussed above, in July 2018, we completed the acquisition of BakerCorp. All of the assets in the Fluid Solutions Europe reporting unit were acquired in the BakerCorp acquisition. The estimated fair value of our Fluid Solutions Europe reporting unit exceeded its carrying amount by 22 percent. As all of the assets in the Fluid Solutions Europe reporting unit were recorded at fair value as of the July 2018 acquisition date, we expected the percentage by which the Fluid Solutions Europe reporting unit’s fair value exceeded its carrying value to be significantly less than the equivalent percentages determined for our other reporting units. In connection with our goodwill impairment test that was conducted as of October 1, 2019, we bypassed the qualitative assessment for each reporting unit and proceeded directly to the first step of the goodwill impairment test. Our goodwill impairment testing as of this date indicated that all of our reporting units, excluding our Fluid Solutions Europe reporting unit, had estimated fair values which exceeded their respective carrying amounts by at least 32 percent. As discussed above, in July 2018, we completed the acquisition of BakerCorp. All of the assets in the Fluid Solutions Europe reporting unit were acquired in the BakerCorp acquisition. The estimated fair value of our Fluid Solutions Europe reporting unit exceeded its carrying amount by 12 percent. As all of the assets in the Fluid Solutions Europe reporting unit were recorded at fair value as of the July 2018 acquisition date, we expected the percentage by which the Fluid Solutions Europe reporting unit’s fair value exceeded its carrying value to be significantly less than the equivalent percentages determined for our other reporting units.
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Restructuring Charges | Restructuring ChargesCosts associated with exit or disposal activities, including lease termination costs and certain employee severance costs associated with restructuring, branch closings or other activities, are recognized at fair value when they are incurred. |
Other Intangible Assets | Other Intangible Assets Other intangible assets consist of non-compete agreements, customer relationships and trade names and associated trademarks. The non-compete agreements are being amortized on a straight-line basis over initial periods of approximately 5 years. The customer relationships are being amortized either using the sum of the years' digits method or on a straight-line basis over initial periods ranging from 5 to 15 years. The trade names and associated trademarks are being amortized using the sum of the years' digits method over initial periods of approximately 5 years. We believe that the amortization methods used reflect the estimated pattern in which the economic benefits will be consumed.
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Long-Lived Assets | Long-Lived Assets Long-lived assets are recorded at the lower of amortized cost or fair value. As part of an ongoing review of the valuation of long-lived assets, we assess the carrying value of such assets if facts and circumstances suggest they may be impaired. If this review indicates the carrying value of such an asset may not be recoverable, as determined by an undiscounted cash flow analysis over the remaining useful life, the carrying value would be reduced to its estimated fair value.
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Translation of Foreign Currency | Translation of Foreign Currency Assets and liabilities of our foreign subsidiaries that have a functional currency other than U.S. dollars are translated into U.S. dollars using exchange rates at the balance sheet date. Revenues and expenses are translated at average exchange rates effective during the year. Foreign currency translation gains and losses are included as a component of accumulated other comprehensive (loss) income within stockholders’ equity. |
Revenue Recognition | Revenue Recognition As discussed in note 3 to our consolidated financial statements, 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). As discussed in note 13 to our consolidated financial statements, in 2019, we adopted Topic 842. Topic 842 replaced Topic 840, which was the lease accounting standard in effect for the year ended December 31, 2018. As discussed in note 3, most of our revenue is accounted for under Topic 842. The discussion below addresses our primary revenue types based on the accounting standard used to determine the accounting. Lease revenues (Topic 842) The accounting for the significant types of revenue that are accounted for under Topic 842 is discussed below. Owned equipment rentals: Owned equipment rentals represent revenues from renting equipment that we own. We account for such rentals as operating leases. 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. Revenues from contracts with customers (Topic 606) The accounting for the significant types of revenue that are accounted for under Topic 606 is discussed below. Delivery and pick-up: Delivery and pick-up revenue associated with renting equipment is recognized when the service is performed. 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. Delivery Expense Equipment rentals include our revenues from fees we charge for equipment delivery. Delivery costs are charged to operations as incurred, and are included in cost of revenues on our consolidated statements of income. We receive reimbursements for advertising that promotes a vendor’s products or services. Such reimbursements that meet the applicable criteria under U.S. generally accepted accounting principles (“GAAP”) are offset against advertising costs in the period in which we recognize the incremental advertising cost.
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Advertising Expense | Advertising Expense We promote our business through local and national advertising in various media, including television, trade publications, branded sponsorships, yellow pages, the internet, radio and direct mail. Advertising costs are generally expensed as incurred. These costs may include the development costs for branded content and advertising campaigns. Advertising expense, net of the qualified advertising reimbursements discussed below, was immaterial for the years ended December 31, 2020, 2019 and 2018. We receive reimbursements for advertising that promotes a vendor’s products or services. Such reimbursements that meet the applicable criteria under U.S. generally accepted accounting principles (“GAAP”) are offset against advertising costs in the period in which we recognize the incremental advertising cost.
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Insurance | Insurance We are insured for general liability, workers’ compensation and automobile liability, subject to deductibles or self-insured retentions per occurrence. Losses within the deductible amounts are accrued based upon the aggregate liability for reported claims incurred, as well as an estimated liability for claims incurred but not yet reported. These liabilities are not discounted. We are also self-insured for group medical claims but purchase “stop loss” insurance as protection against any one significant loss.
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Income Taxes | Income Taxes We use the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities and are measured using the tax rates and laws that are expected to be in effect when the differences are expected to reverse. Recognition of deferred tax assets is limited to amounts considered by management to be more likely than not to be realized in future periods. The most significant positive evidence that we consider in the recognition of deferred tax assets is the expected reversal of cumulative deferred tax liabilities resulting from book versus tax depreciation of our rental equipment fleet that is well in excess of the deferred tax assets. We use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return regarding uncertainties in income tax positions. The first step is recognition: we determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume that the position will be examined by the appropriate taxing authority with full knowledge of all relevant information. The second step is measurement: a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset or an increase in a deferred tax liability. We have historically considered the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, no taxes were provided on such earnings prior to the fourth quarter of 2020. In the fourth quarter of 2020, we identified $135 of cash in our foreign operations in excess of near-term working capital needs, and determined that this amount could no longer be considered indefinitely reinvested. As a result, our prior assertion that all undistributed earnings of our foreign subsidiaries should be considered indefinitely reinvested has changed, and, in the fourth quarter of 2020, we recorded the immaterial taxes on a distribution of the $135 of cash. We continue to expect that the remaining balance of our undistributed foreign earnings will be indefinitely reinvested. If we determine that all or a portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes. The Tax Cuts and Jobs Act (the "Tax Act") was enacted in December 2017, and required a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign investments, which we primarily recognized upon adoption of the Tax Act in 2017. As discussed in note 14 to the consolidated financial statements, we completed our accounting for the tax effects of enactment of the Tax Act in 2018.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates impact the calculation of the allowance for doubtful accounts, depreciation and amortization, income taxes and reserves for claims. Actual results could materially differ from those estimates. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk include cash and cash equivalents and accounts receivable. We maintain cash and cash equivalents with high quality financial institutions. Concentration of credit risk with respect to receivables is limited because a large number of geographically diverse customers makes up our customer base (see note 3 to our consolidated financial statements for further detail). We manage credit risk through credit approvals, credit limits and other monitoring procedures. |
Stock-Based Compensation | Stock-Based Compensation We measure stock-based compensation at the grant date based on the fair value of the award and recognize stock-based compensation expense over the requisite service period. Determining the fair value of stock option awards requires judgment, including estimating stock price volatility and expected option life. Restricted stock awards are valued based on the fair value of the stock on the grant date and the related compensation expense is recognized over the service period. Similarly, for time-based restricted stock awards subject to graded vesting, we recognize compensation cost on a straight-line basis over the requisite service period. For performance-based restricted stock units ("RSUs"), compensation expense is recognized if satisfaction of the performance condition is considered probable. We recognize forfeitures of stock-based compensation as they occur. |
New Accounting Pronouncements | New Accounting Pronouncements 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 will adopt this guidance when it becomes effective, in the first quarter of 2021, and the impact on our financial statements is not expected to be 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 3 to the consolidated financial statements, most of our equipment rental revenue is accounted for as lease revenue (such revenue represented 77 percent of our total revenues for the year ended December 31, 2020). We adopted this guidance in 2020, and the impact of adoption on our financial statements was not material. See note 3 (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. 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. We adopted the guidance for the goodwill impairment test that we conducted as of October 1, 2020, and adoption of the guidance did not have a significant impact on our financial statements.
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Schedule of changes in accounting principles | In the following table, revenue is summarized by type and by the applicable accounting standard.
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SEC Schedule, 12-09, Schedule of Valuation and Qualifying Accounts Disclosure | The rollforward of our allowance for doubtful accounts (in total, and associated with revenues arising from both Topic 606 and Topic 842/840) is shown below.
_________________ (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). We adopted Topic 842 in 2019 using a transition method that does not require application to periods prior to adoption. (3) Represents write-offs of accounts, net of immaterial recoveries. SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS UNITED RENTALS, INC. (In millions)
The above information reflects the continuing operations of the Company for the periods presented. Additionally, because the Company has retained certain self-insurance liabilities associated with the discontinued traffic control business, those amounts have been included as well. (a) Amounts charged to cost and expenses reflect bad debt expenses recognized within selling, general and administrative expenses. The amounts charged to revenue primarily reflect doubtful accounts associated with lease revenues that were recognized as a reduction to equipment rentals revenue. In 2019, we adopted an updated lease accounting standard (see note 13 to the consolidated financial statements for further detail) that requires that we recognize doubtful accounts associated with lease revenues as a reduction to equipment rentals revenue. We adopted the updated lease accounting standard using a transition method that does not require application to periods prior to adoption. (b) Represents write-offs of accounts, net of recoveries. (c) Represents write-offs. (d) Represents payments.
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Segment Information (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equipment rental revenue by equipment type | The following table presents the percentage of equipment rental revenue by equipment type for the years ended December 31, 2020, 2019 and 2018:
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Financial information by segment | The following table sets forth financial information by segment as of and for the years ended December 31, 2020, 2019 and 2018:
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Reconciliation of segment operating income to total Company operating income | The following is a reconciliation of equipment rentals gross profit to income before provision for income taxes:
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Geographic area information | The following table presents geographic area information for the years ended December 31, 2020, 2019 and 2018, except for balance sheet information, which is presented as of December 31, 2020 and 2019:
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Restructuring and Asset Impairment Charges (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restructuring charges | The table below provides certain information concerning our restructuring charges under the 2020-2021 Cost Savings restructuring program:
________________ (1) Reflected in our consolidated statements of income as “Restructuring charge” (such charge also includes activity under our other restructuring programs). The restructuring charges are not allocated to our segments. As of December 31, 2020, we have incurred total restructuring charges under the 2020-2021 Cost Savings restructuring program of $16, comprised of $8 of branch closure charges and $8 of severance and other costs.
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Prepaid Expenses and Other Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure | Prepaid expenses and other assets consist of the following:
_________________ (1) Reflects refundable deposits on expected rental equipment purchases pursuant to advanced purchase agreements. Such deposits are presented as a component of our cash flows from operations. We expect to purchase and receive the equipment in 2021. (2) Reflects reimbursements due for advertising that promotes a vendor’s products or services. See note 2 ("Advertising Expense") for further detail. (3) Includes multiple items, none of which are individually significant.
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Rental Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of rental equipment | Rental equipment consists of the following:
_________________ (1) As discussed above, disciplined management of capital expenditures and fleet capacity is a component of our COVID-19 response plan, which contributed to the year-over-year decrease in net rental equipment. Property and equipment consist of the following:
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Property and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment | Rental equipment consists of the following:
_________________ (1) As discussed above, disciplined management of capital expenditures and fleet capacity is a component of our COVID-19 response plan, which contributed to the year-over-year decrease in net rental equipment. Property and equipment consist of the following:
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Goodwill and Other Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in carrying amount of goodwill | The following table presents the changes in the carrying amount of goodwill for each of the three years in the period ended December 31, 2020:
_________________ (1) The total carrying amount of goodwill for all periods in the table above is reflected net of $1.557 billion of accumulated impairment charges, which were primarily recorded in our general rentals segment. (2) Includes goodwill adjustments for the effect on goodwill of changes to net assets acquired during the measurement period, which were not significant to our previously reported operating results or financial condition. (3) The acquisitions of BakerCorp and BlueLine in July 2018 and October 2018, respectively, accounted for most of the 2018 goodwill related to acquisitions.
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Components of intangible assets | Other intangible assets were comprised of the following at December 31, 2020 and 2019:
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Estimated future amortization expense of intangible assets | As of December 31, 2020, estimated amortization expense for other intangible assets for each of the next five years and thereafter was as follows:
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Accrued Expenses and Other Liabilities and Other Long-Term Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued expenses and other liabilities | Accrued expenses and other liabilities consist of the following:
_________________ (1) Primarily relates to branch closure charges and severance costs. See note 5 for additional detail. (2) Reflects amounts billed to customers in excess of recognizable revenue. See note 3 for additional detail. (3) Other includes multiple items, none of which are individually significant.
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Summary of other long-term liabilities | Other long-term liabilities consist of the following:
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Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the fair value of financial instruments | The estimated fair values of our other financial instruments, all of which are categorized in Level 1 of the fair value hierarchy, as of December 31, 2020 and 2019 have been calculated based upon available market information, and were as follows:
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt instruments | Debt, net of unamortized original issue premiums and unamortized debt issuance costs, consists of the following:
(1) The table below presents financial information associated with our variable rate indebtedness as of and for the year ended December 31, 2020. We have borrowed the full available amount under the term loan facility. The principal obligation under the term loan facility is required to be repaid in quarterly installments in an aggregate amount equal to 1.0 percent per annum, with the balance due at the maturity of the facility. The average amount of debt outstanding under the term loan facility decreases slightly each quarter due to the requirement to repay a portion of the principal obligation.
(2) The decrease in the outstanding debt under the ABL facility since December 31, 2019 primarily reflects the use of proceeds from operations to reduce borrowings under the ABL facility. As discussed above, disciplined management of capital expenditures and fleet capacity is a component of our COVID-19 response plan, and, in 2020, capital expenditures decreased significantly year-over-year. The decreased capital expenditures contributed to our ability to use proceeds from operations to reduce borrowings under the ABL facility. (3) URNA redeemed all of its 5 1/2 percent Senior Notes due 2025 and 6 1/2 percent Senior Notes due 2026 in August 2020, and redeemed all of its 4 5/8 percent Senior Notes due 2025 in October 2020. During the year ended December 31, 2020, we recognized an aggregate debt redemption loss, in interest expense, net in our consolidated statement of income, of $183 (comprised of $27, $132 and $24 for the 5 1/2 percent Senior Notes due 2025, 6 1/2 percent Senior Notes due 2026 and 4 5/8 percent Senior Notes due 2025, respectively). The loss reflects the difference between the net carrying amount and the total purchase price of the redeemed notes. Prior to redeeming the notes, we considered the impact of COVID-19 on liquidity, and assessed our available sources and anticipated uses of cash, including, with respect to sources, cash generated from operations and from the sale of rental equipment. (4) URNA separately issued 4 7/8 percent Senior Notes in August 2017 and in September 2017. Following the issuances, we 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 due 2030. See below for additional detail on the issued debt. (6) In August 2020, URNA issued $1.100 billion aggregate principal amount of 3 7/8 percent Senior Notes due 2031. See below for additional detail on the issued debt.
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Schedule of the maturities of debt | Debt maturities (exclusive of any unamortized original issue premiums and unamortized debt issuance costs) for each of the next five years and thereafter at December 31, 2020 are as follows:
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Leases (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and liabilities, lessee | The tables below present financial information associated with our leases. This information is only presented as of, and for the years ended, December 31, 2020 and December 31, 2019 because, as noted above, we adopted Topic 842 using a transition method that does not require application to periods prior to adoption.
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Lease, cost |
_________________ (1) Includes variable lease costs, which are immaterial. Cost of equipment rentals, excluding depreciation for the years ended December 31, 2020 and 2019 includes $124 and $142, respectively, of short-term lease costs associated with equipment that we rent from vendors and then rent to our customers, as discussed further above. Apart from these costs, short-term lease costs are immaterial. (2) Primarily reflects re-rent revenue as discussed further above.
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Finance lease, liability, maturity |
_________________ (1) Reflects payments for non-cancelable operating leases with initial or remaining terms of one year or more as of December 31, 2020. The table above does not include any legally binding minimum lease payments for leases signed but not yet commenced, and such leases are not material in the aggregate. (2) The table above does not include any legally binding minimum lease payments for leases signed but not yet commenced, and such leases are not material in the aggregate.
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Lessee, operating lease, liability, maturity |
_________________ (1) Reflects payments for non-cancelable operating leases with initial or remaining terms of one year or more as of December 31, 2020. The table above does not include any legally binding minimum lease payments for leases signed but not yet commenced, and such leases are not material in the aggregate. (2) The table above does not include any legally binding minimum lease payments for leases signed but not yet commenced, and such leases are not material in the aggregate.
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Schedule of capital leased assets | The following table presents historic financial statement information for our leases (accounted for under Topic 840) for the year ended December 31, 2018:
_________________ (1) Rent expense on non-cancelable operating leases does not include short-term lease costs associated with equipment that we rent from vendors and then rent to our customers (which is a component of the 2020 and 2019 operating lease costs under Topic 842 as reflected in the table above). Under Topic 840, rental payments under leases with terms of a month or less that were not renewed are not included in rent expense, and we excluded such expenses because of the short-term duration of the arrangements under which we rented equipment from vendors and then rented such equipment to our customers. The amount of such rentals was $121 for the year ended December 31, 2018.
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the components of the provision (benefit) for income taxes | The components of the provision (benefit) for income taxes for each of the three years in the period ended December 31, 2020 are as follows:
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Schedule of effective income tax rate reconciliation | A reconciliation of the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rate of 21 percent to the income before provision (benefit) for income taxes for each of the three years in the period ended December 31, 2020 is as follows:
_________________ (1) The Tax Act was enacted in December 2017 and required (i) the revaluation of our net deferred tax liability based on a U.S. federal tax rate of 21 percent and (ii) a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign investments. We primarily recognized the accounting for the enactment of the Tax Act upon adoption in 2017, and finalized the accounting in 2018.
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Schedule of deferred tax assets and liabilities | The components of deferred income tax assets (liabilities) are as follows:
_________________ (1) Relates to foreign tax credits, state net operating loss carryforwards, and state tax credits that may not be realized. All of the remaining valuation allowance for foreign tax credits was released in 2020.
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Common Stock (Tables) |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock option activity | A summary of the transactions within the Company’s stock option plans follows (shares in thousands):
The following table presents information associated with stock options as of December 31, 2020 and 2019, and for the years ended December 31, 2020, 2019 and 2018:
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Summary of restricted stock units activity | A summary of RSUs granted follows (RSUs in thousands):
A summary of RSU activity for the year ended December 31, 2020 follows (RSUs in thousands):
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Quarterly Financial Information (Unaudited) (Tables) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of quarterly financial information |
(1) As discussed in note 12 to our consolidated financial statements, in the fourth quarter of 2020, we redeemed all of our 4 5/8 percent Senior Notes due 2025, and recognized a redemption loss of $24 in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes. (2) In the fourth quarter of 2019, we issued $750 aggregate principal amount of 3 7/8 percent Senior Secured Notes due 2027 and redeemed all of our 4 5/8 percent Senior Secured Notes. Upon redemption, we recognized a loss of $29 in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes. (3) Diluted earnings per share includes the after-tax impacts of the following:
(4)This reflects the amortization of the intangible assets acquired in the RSC, National Pump, NES, Neff, BakerCorp and BlueLine acquisitions. (5)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. (6)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 and subsequently sold. (7)As discussed in note 5 to our consolidated financial statements, this primarily reflects severance costs and branch closure charges associated with our restructuring programs. (8)This reflects write-offs of leasehold improvements and other fixed assets. As discussed in note 5 to our consolidated financial statements, the 2020 charges primarily reflect the discontinuation of certain equipment programs, and were not related to COVID-19. (9)This primarily reflects the difference between the net carrying amount and the total purchase price of the redeemed notes. (10)This reflects transaction costs associated with the BakerCorp and BlueLine acquisitions that were completed in 2018.
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share | The following table sets forth the computation of basic and diluted earnings per share (shares in thousands):
|
Organization, Description of Business and Consolidation (Narrative) (Details) |
Jul. 31, 2018
location
|
---|---|
France, Germany, United Kingdom, and Netherlands | BakerCorp | |
Business Acquisition [Line Items] | |
Number of branch locations | 11 |
Revenue Recognition (Allowance for Doubtful Accounts Rollforward) (Details) - Allowance for doubtful accounts - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning balance | $ 103 | $ 93 | $ 68 |
Acquired | 0 | 2 | 14 |
Charged to costs and expenses | 9 | 8 | 45 |
Charged to revenue | 25 | 34 | 0 |
Deductions | (29) | (34) | (34) |
Ending balance | $ 108 | $ 103 | $ 93 |
Segment Information (Narrative) (Details) |
Dec. 31, 2020
region
|
---|---|
General rentals | |
Segment Reporting Information [Line Items] | |
Number of geographic regions entity operates in | 11 |
Restructuring and Asset Impairment Charges (Narrative) (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2020
USD ($)
restructuring_program
| |
Restructuring Cost and Reserve [Line Items] | |
Restructuring charges incurred to date | $ 350 |
Asset impairment charges | $ 36 |
Closed Restructuring Programs | |
Restructuring Cost and Reserve [Line Items] | |
Number of restructuring programs | restructuring_program | 5 |
Restructuring charges incurred to date | $ 334 |
Restructuring reserve | 14 |
Closed Restructuring Programs | Branch closure charges | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring charges incurred to date | 193 |
Closed Restructuring Programs | Severance and other | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring charges incurred to date | $ 141 |
Prepaid Expenses and Other Assets (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Equipment | $ 300 | $ 0 |
Insurance | 18 | 12 |
Advertising reimbursements | 11 | 27 |
Income taxes | 4 | 51 |
Other | 42 | 50 |
Prepaid expenses and other assets | $ 375 | $ 140 |
Rental Equipment (Details) - Rental equipment, net - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Rental equipment | $ 14,216 | $ 14,852 |
Less accumulated depreciation | (5,511) | (5,065) |
Property and equipment, net | $ 8,705 | $ 9,787 |
Property and Equipment (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Property and equipment, net | ||
Property, Plant and Equipment [Line Items] | ||
Equipment | $ 1,392 | $ 1,312 |
Less accumulated depreciation and amortization | (788) | (708) |
Property and equipment, net | 604 | 604 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Equipment | 111 | 101 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Equipment | 215 | 210 |
Non-rental vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Equipment | 168 | 168 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Equipment | 164 | 157 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Equipment | 338 | 328 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Equipment | $ 396 | $ 348 |
Goodwill and Other Intangible Assets (Goodwill) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Goodwill [Roll Forward] | |||
Balance at beginning of period | $ 5,154 | $ 5,058 | $ 4,082 |
Goodwill related to acquisitions | (2) | 83 | 999 |
Foreign currency translation and other adjustments | 16 | 13 | (23) |
Balance at end of period | 5,168 | 5,154 | 5,058 |
Goodwill accumulated impairment loss | 1,557 | 1,557 | 1,557 |
General rentals | |||
Goodwill [Roll Forward] | |||
Balance at beginning of period | 4,362 | 4,342 | 3,607 |
Goodwill related to acquisitions | 1 | 10 | 752 |
Foreign currency translation and other adjustments | 5 | 10 | (17) |
Balance at end of period | 4,368 | 4,362 | 4,342 |
Trench, power and fluid solutions | |||
Goodwill [Roll Forward] | |||
Balance at beginning of period | 792 | 716 | 475 |
Goodwill related to acquisitions | (3) | 73 | 247 |
Foreign currency translation and other adjustments | 11 | 3 | (6) |
Balance at end of period | $ 800 | $ 792 | $ 716 |
Accrued Expenses and Other Liabilities and Other Long-Term Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Accrued expenses and other liabilities | ||
Self-insurance accruals | $ 54 | $ 59 |
Accrued compensation and benefit costs | 79 | 86 |
Property and income taxes payable | 45 | 26 |
Restructuring reserves | 19 | 20 |
Interest payable | 133 | 142 |
Deferred revenue | 51 | 55 |
National accounts accrual | 84 | 87 |
Operating lease liability | 178 | 178 |
Other | 77 | 94 |
Accrued expenses and other liabilities | 720 | 747 |
Other long-term liabilities | ||
Self-insurance accruals | 73 | 62 |
Income taxes payable | 5 | 14 |
Accrued compensation and benefit costs | 60 | 15 |
Other long-term liabilities | $ 138 | $ 91 |
Fair Value Measurements (Financial Instruments) (Details) - Senior notes - Level 1 - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instrument | $ 6,965 | $ 7,755 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt instrument | $ 7,470 | $ 8,176 |
Debt (Short Term Debt Narrative) (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Short-term Debt [Line Items] | ||
Short-term debt | $ 9,682,000,000 | $ 11,428,000,000 |
Line of credit | Accounts receivable securitization facility expiring 2019 | ||
Short-term Debt [Line Items] | ||
Short-term debt | 634,000,000 | |
Maximum borrowing capacity | $ 800,000,000 | |
Extension period | 364 days | |
Collateral amount | $ 922,000,000 |
Debt (Schedule of Debt Maturity) (Details) $ in Millions |
Dec. 31, 2020
USD ($)
|
---|---|
Maturity profile: | |
2021 | $ 704 |
2022 | 47 |
2023 | 36 |
2024 | 1,004 |
2025 | 939 |
Thereafter | 7,025 |
Total | $ 9,755 |
Leases (Narrative) (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Lessee, Lease, Description [Line Items] | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesCurrent | us-gaap:AccruedLiabilitiesCurrent |
Revenues | Product concentration risk | ||
Lessee, Lease, Description [Line Items] | ||
Percentage of equipment rental revenue | 84.00% | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, operating lease, renewal term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, operating lease, renewal term | 5 years |
Leases (Summary of Financial Information Associated with Leases) (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Assets | ||
Operating lease right-of-use assets | $ 688 | $ 669 |
Total leased assets | 913 | 877 |
Current | ||
Accrued expenses and other liabilities | 178 | 178 |
Short-term debt and current maturities of long-term debt | 60 | 58 |
Long-term | ||
Operating lease liabilities | 549 | 533 |
Long-term debt | 75 | 69 |
Total lease liabilities | 862 | 838 |
Rental equipment, net | ||
Assets | ||
Finance lease, right-of-use asset, before accumulated amortization | 295 | 286 |
Accumulated depreciation | (86) | (89) |
Finance lease, right-of-use asset | 209 | 197 |
Property and equipment, net | ||
Assets | ||
Accumulated depreciation | (11) | (15) |
Finance lease, right-of-use asset | 16 | 11 |
Non-rental vehicles | ||
Assets | ||
Finance lease, right-of-use asset, before accumulated amortization | 8 | 8 |
Buildings | ||
Assets | ||
Finance lease, right-of-use asset, before accumulated amortization | $ 19 | $ 18 |
Leases (Lease Cost) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Lessee, Lease, Description [Line Items] | ||
Sublease income | $ (142) | $ (157) |
Net lease cost | 280 | 275 |
Short-term lease, cost | 124 | 142 |
Cost of equipment rentals, excluding depreciation | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease cost | 366 | 370 |
Selling, general and administrative expenses | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease cost | 10 | 10 |
Restructuring charge | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease cost | 9 | 16 |
Depreciation of rental equipment | ||
Lessee, Lease, Description [Line Items] | ||
Finance lease cost | 31 | 28 |
Non-rental depreciation and amortization | ||
Lessee, Lease, Description [Line Items] | ||
Finance lease cost | 1 | 2 |
Interest expense, net | ||
Lessee, Lease, Description [Line Items] | ||
Interest on lease liabilities | $ 5 | $ 6 |
Leases (Maturity of Lease Liabilities) (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Operating leases | ||
2021 | $ 205 | |
2022 | 176 | |
2023 | 144 | |
2024 | 112 | |
2025 | 76 | |
Thereafter | 113 | |
Total lease payments | 826 | |
Less amount representing interest | (99) | |
Present value of lease liabilities | 727 | |
Finance leases | ||
2021 | 63 | |
2022 | 40 | |
2023 | 28 | |
2024 | 10 | |
2025 | 1 | |
Thereafter | 3 | |
Total lease payments | 145 | |
Less amount representing interest | (10) | |
Present value of lease liabilities | $ 135 | $ 127 |
Leases (Lease Term and Discount Rate) (Details) |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Weighted-average remaining lease term (years) | ||
Operating leases | 5 years | 4 years 9 months 18 days |
Finance leases | 3 years | 3 years 2 months 12 days |
Weighted-average discount rate | ||
Operating leases | 4.20% | 4.70% |
Finance leases | 3.40% | 4.00% |
Leases (Other Information) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Leases [Abstract] | ||
Operating cash flows from operating leases | $ 207 | $ 202 |
Operating cash flows from finance leases | 5 | 6 |
Financing cash flows from finance leases | 53 | 47 |
Leased assets obtained in exchange for new operating lease liabilities | 202 | 201 |
Leased assets obtained in exchange for new finance lease liabilities | $ 64 | $ 55 |
Leases (Capital Lease Obligations) (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Operating Leased Assets [Line Items] | |
Rent expense on non-cancelable leases | $ 179 |
Rental equipment, net | |
Operating Leased Assets [Line Items] | |
Depreciation and amortization | 22 |
Rent expense on short term non-cancelable leases | 121 |
Non-rental depreciation and amortization | |
Operating Leased Assets [Line Items] | |
Depreciation and amortization | $ 1 |
Income Taxes (Components of income tax expense and reconciliation of effective tax rate) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Current | |||
Federal | $ 290 | $ 97 | $ 47 |
Foreign | 15 | (6) | 18 |
State and local | 65 | 45 | 58 |
Current income tax expense | 370 | 136 | 123 |
Deferred | |||
Federal | (107) | 185 | 243 |
Foreign | 6 | 14 | 3 |
State and local | (20) | 5 | 11 |
Deferred income tax expense (benefit) | (121) | 204 | 257 |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||
Computed tax at statutory tax rate | 239 | 318 | 310 |
State income taxes, net of federal tax benefit | 31 | 43 | 54 |
Other permanent items | (3) | (17) | (1) |
Change in valuation allowance | (22) | (3) | 7 |
Enactment of the Tax Act | 0 | 0 | 6 |
Foreign tax rate differential | 4 | (1) | 4 |
Total | $ 249 | $ 340 | $ 380 |
Income Taxes (Components of deferred tax assets and liabilities) (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Reserves and allowances | $ 129 | $ 111 |
Debt cancellation and other | 10 | 8 |
Net operating loss and credit carryforwards | 242 | 371 |
Operating lease assets | 183 | 182 |
Total deferred tax assets | 564 | 672 |
Valuation allowance | (21) | (43) |
Total net deferred tax assets | 543 | 629 |
Property and equipment, including rental equipment | (1,962) | (2,135) |
Operating lease liabilities | (183) | (182) |
Intangibles | (166) | (199) |
Total deferred tax liability | (2,311) | (2,516) |
Total net deferred tax liability | $ (1,768) | $ (1,887) |
Income Taxes (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Operating Loss Carryforwards [Line Items] | ||||
Income before income taxes, foreign | $ 83 | $ 62 | $ 71 | |
Foreign earnings repatriated | $ 135 | |||
Undistributed earnings of foreign subsidiaries amount | 840 | 840 | ||
Federal Jurisdiction | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards | 759 | 759 | ||
State and Local Jurisdiction | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards | 744 | 744 | ||
Foreign Tax Authority | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards | $ 3 | $ 3 |
Commitments and Contingencies (Employee Benefits Narrative) (Details) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020
USD ($)
plans
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Commitments and Contingencies Disclosure [Abstract] | |||
Number of defined contribution 401 (k) plans | plans | 2 | ||
Defined contribution plan, contributions | $ | $ 33 | $ 37 | $ 31 |
Common Stock (Schedule of Stock Option Activity) (Details) shares in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2020
$ / shares
shares
| |
Shares | |
Outstanding at beginning of period (in shares) | shares | 37 |
Granted (in shares) | shares | 0 |
Exercised (shares) | shares | (26) |
Canceled (in shares) | shares | (1) |
Outstanding at end of period (in shares) | shares | 10 |
Exercisable (in shares) | shares | 10 |
Weighted-Average Exercise Price | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 50.40 |
Granted (in dollars per share) | $ / shares | 0 |
Exercised (in dollars per share) | $ / shares | 45.88 |
Canceled (in dollars per share) | $ / shares | 43.63 |
Outstanding at end of period (in dollars per share) | $ / shares | 61.93 |
Exercisable (in dollars per share) | $ / shares | $ 61.93 |
Common Stock (Schedule of Intrinsic Value of Options Exercised) (Details) - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Share-based Payment Arrangement [Abstract] | |||
Intrinsic value of options outstanding as of December 31 | $ 2 | $ 4 | |
Intrinsic value of options exercisable as of December 31 | 2 | 4 | |
Intrinsic value of options exercised | $ 3 | $ 45 | $ 13 |
Weighted-average grant date fair value per option (in dollars per share) | $ 0 | $ 0 | $ 0 |
Common Stock (Schedule of Restricted Stock Unit Activity) (Details) - Restricted Stock Units (RSUs) - $ / shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Stock Units | |||
Nonvested as of December 31, 2019 (in shares) | 461 | ||
Granted (in shares) | 643 | 456 | 566 |
Vested (in shares) | (520) | ||
Forfeited (in shares) | (67) | ||
Nonvested as of December 31, 2020 (in shares) | 517 | 461 | |
Weighted-Average Grant Date Fair Value | |||
Nonvested as of December 31, 2019 (in dollars per share) | $ 104.40 | ||
Granted (in dollars per share) | 140.99 | $ 124.37 | $ 175.79 |
Vested (in dollars per share) | 138.48 | ||
Forfeited (in dollars per share) | 135.44 | ||
Nonvested as of December 31, 2020 (in dollars per share) | $ 164.62 | $ 104.40 |
Quarterly Financial Information (Unaudited) (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Nov. 30, 2019 |
|
Selected Quarterly Financial Information [Abstract] | ||||||||||||
Revenues | $ 2,279,000,000 | $ 2,187,000,000 | $ 1,939,000,000 | $ 2,125,000,000 | $ 2,456,000,000 | $ 2,488,000,000 | $ 2,290,000,000 | $ 2,117,000,000 | $ 8,530,000,000 | $ 9,351,000,000 | $ 8,047,000,000 | |
Gross profit | 869,000,000 | 886,000,000 | 701,000,000 | 727,000,000 | 965,000,000 | 1,033,000,000 | 911,000,000 | 761,000,000 | 3,183,000,000 | 3,670,000,000 | 3,364,000,000 | |
Operating income | 510,000,000 | 551,000,000 | 381,000,000 | 358,000,000 | 599,000,000 | 656,000,000 | 529,000,000 | 368,000,000 | 1,800,000,000 | 2,152,000,000 | 1,951,000,000 | |
Net income | $ 297,000,000 | $ 208,000,000 | $ 212,000,000 | $ 173,000,000 | $ 338,000,000 | $ 391,000,000 | $ 270,000,000 | $ 175,000,000 | $ 890,000,000 | $ 1,174,000,000 | $ 1,096,000,000 | |
Earnings per share - basic (in dollars per share) | $ 4.11 | $ 2.88 | $ 2.94 | $ 2.33 | $ 4.51 | $ 5.10 | $ 3.45 | $ 2.21 | $ 12.24 | $ 15.18 | $ 13.26 | |
Earnings per share - diluted (in dollars per share) | 4.09 | 2.87 | 2.93 | 2.33 | 4.49 | 5.08 | 3.44 | 2.19 | $ 12.20 | $ 15.11 | $ 13.12 | |
Effect of Fourth Quarter Events [Line Items] | ||||||||||||
Loss on extinguishment of debt | $ 183,000,000 | $ 61,000,000 | $ 0 | |||||||||
Earnings Per Share, Diluted, Other Disclosures [Abstract] | ||||||||||||
Merger related costs (in dollars per share) | 0 | 0 | 0 | (0.01) | $ (0.01) | |||||||
Merger related intangible asset amortization (in dollars per share) | (0.52) | (0.55) | (0.59) | (0.59) | (0.60) | (0.63) | (0.64) | (0.64) | $ (2.22) | (2.48) | ||
Impact on depreciation related to acquired fleet and property and equipment (in dollars per share) | 0.04 | (0.06) | (0.02) | (0.03) | (0.05) | (0.07) | (0.12) | (0.14) | (0.08) | (0.39) | ||
Impact of the fair value mark-up of acquired fleet (in dollars per share) | (0.16) | (0.12) | (0.10) | (0.12) | (0.16) | (0.14) | (0.15) | (0.25) | (0.51) | (0.72) | ||
Restructuring charge (in dollars per share) | (0.06) | (0.06) | (0.04) | (0.02) | (0.03) | (0.02) | (0.06) | (0.07) | (0.18) | (0.18) | ||
Asset impairment charge (in dollars per share) | 0 | (0.10) | 0 | (0.26) | 0.01 | (0.02) | (0.03) | (0.01) | (0.37) | (0.05) | ||
Loss on extinguishment of debt securities and amendment of ABL facility (in dollars per share) | $ (0.25) | $ (1.64) | $ 0 | $ 0 | $ (0.28) | $ 0 | $ (0.30) | $ 0 | $ (1.88) | $ (0.58) | ||
Senior notes | 4 5/8 Senior Notes due 2025 | ||||||||||||
Effect of Fourth Quarter Events [Line Items] | ||||||||||||
Loss on extinguishment of debt | $ 24,000,000 | $ 24,000,000 | ||||||||||
Senior notes | 3 7/8 percent Senior Secured Notes due 2027 | ||||||||||||
Effect of Fourth Quarter Events [Line Items] | ||||||||||||
Loss on extinguishment of debt | $ 29,000,000 | |||||||||||
Senior notes | 3 7/8 percent Senior Secured Notes due 2027 | Subsidiaries | ||||||||||||
Effect of Fourth Quarter Events [Line Items] | ||||||||||||
Debt instrument, face amount | $ 750,000,000 | $ 750,000,000 | $ 750,000,000 |
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Allowance for doubtful accounts | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning balance | $ 103 | $ 93 | $ 68 |
Acquired | 0 | 2 | 14 |
Charged to costs and expenses | 9 | 8 | 45 |
Charged to revenue | 25 | 34 | 0 |
Deductions | 29 | 34 | 34 |
Ending balance | 108 | 103 | 93 |
Reserve for obsolescence and shrinkage | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning balance | 10 | 5 | 7 |
Acquired | 0 | 4 | 1 |
Charged to costs and expenses | 34 | 40 | 26 |
Charged to revenue | 0 | 0 | 0 |
Deductions | 36 | 39 | 29 |
Ending balance | 8 | 10 | 5 |
Self-insurance reserve | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning balance | 121 | 106 | 100 |
Acquired | 0 | 0 | 5 |
Charged to costs and expenses | 169 | 180 | 144 |
Charged to revenue | 0 | 0 | 0 |
Deductions | 163 | 165 | 143 |
Ending balance | $ 127 | $ 121 | $ 106 |
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