# United Rentals, Inc.: Form 10-Q for the period ended Jun 30, 2025

- Company: [United Rentals, Inc.](/companies/uri.md) (CIK 1067701)
- Form: 10-Q
- Filed: 2025-07-23
- Accepted by EDGAR: Jul 23, 2025, 16:42 ET
- Period: 2025-06-30
- Accession: 0001628280-25-035756
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1067701/000162828025035756/uri-20250630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1067701/000162828025035756/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $872.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $1.76bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-04-01 to 2025-06-30 | $2.41bn | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2025-01-01 to 2025-06-30 | $4.77bn | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-04-01 to 2025-06-30 | $1.53bn | us-gaap:GrossProfit |
| Gross profit | 6 months, 2025-01-01 to 2025-06-30 | $2.89bn | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2025-04-01 to 2025-06-30 | $422.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2025-01-01 to 2025-06-30 | $859.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | $1.00bn | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | $1.81bn | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $217.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | $387.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | $622.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | $1.14bn | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | $9.59 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | $17.48 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | $9.59 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | $17.51 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 64,947,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 65,210,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | $2.75bn | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 6 months, 2025-01-01 to 2025-06-30 | $235.0m | us-gaap:PaymentsOfDividends |
| Share repurchases | 6 months, 2025-01-01 to 2025-06-30 | $720.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-06-30 | $548.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $3.52bn | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $29.21bn | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $4.10bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $20.17bn | us-gaap:Liabilities |
| Current portion of debt | at 2025-06-30 | $1.29bn | us-gaap:DebtCurrent |
| Shareholders' equity | at 2025-06-30 | $9.04bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 66,463 characters.

### Global Economic Conditions

Our operations are impacted by global economic conditions, including inflation, tariffs, interest rate fluctuations and supply chain constraints, and we take actions to modify our plans to address such economic conditions. To date, the impact from supply chain disruptions has been limited, but we may experience more severe supply chain disruptions in the future. Interest rates on our debt instruments have increased in recent years. For example, in March 2024, United Rentals (North America), Inc. (“URNA”) issued $1.1 billion aggregate principal amount of senior unsecured notes at a 6 1/8 percent interest rate, while URNA's issuance in August 2021 of $750 aggregate principal amount of senior unsecured notes was at a 3 ¾ percent interest rate. Additionally, the weighted average interest rates on our variable debt instruments were 5.6 percent and 1.4 percent for the six months ended June 30, 2025 and the year ended December 31, 2021, respectively. We have experienced and are continuing to experience inflationary pressures. A portion of inflationary cost increases is passed on to customers. The most significant cost increases that can be, in part, passed on to customers are for fuel and delivery, and there are other costs for which the pass through to customers is less direct, such as repairs and maintenance, and labor. Tariffs could result in the costs we incur being more than anticipated, as well as impact consumer confidence and/or result in declines in construction or industrial activity. The impact of inflation, tariffs and interest rate fluctuations may be significant in the future.

We continue to assess the economic environment in which we operate and take appropriate actions to address the economic challenges we face.

### Executive Overview

We are the largest equipment rental company in the world, with an integrated network of 1,713 rental locations. We primarily operate in the United States and Canada, and have a smaller presence in Europe, Australia and New Zealand. Although the equipment rental industry is highly fragmented and diverse, we believe that we are well positioned to take advantage of this environment because, as a larger company, we have more extensive resources and certain competitive advantages. These include a fleet of rental equipment with a total original equipment cost (“OEC”) of $22.1 billion, and a North American branch network that operates in 49 U.S. states and every Canadian province, and serves 99 of the 100 largest metropolitan areas in the U.S. Our size also gives us greater purchasing power, the ability to provide customers with a broader range of equipment and services, the ability to provide customers with equipment that is more consistently well-maintained and therefore more productive and reliable, and the ability to enhance the earning potential of our assets by transferring equipment among branches to satisfy customer needs.

We offer our equipment for rent to a diverse customer base that includes construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities. Our revenues are derived from the following sources: equipment rentals, sales of rental equipment, sales of new equipment, contractor supplies sales and service and other revenues. Equipment rentals represented 86 percent of total revenues for the six months ended June 30, 2025.

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

- ***A consistently superior standard of service to customers,*** often provided through a single lead contact who can coordinate the cross-selling of the various services we offer throughout our network. We utilize a proprietary software application, Total Control®, which provides our key customers with a single in-house software application that enables them to monitor and manage all their equipment needs. Total Control® is a unique customer offering that enables us to develop strong, long-term relationships with our larger customers. Our digital capabilities, including our Total Control® platform, allow our sales teams to provide contactless end-to-end customer service;
- ***The further optimization of our customer mix and fleet mix, with a dual objective:*** to enhance our performance in serving our current customer base, and to focus on the accounts and customer types that are best suited to our strategy for profitable growth. We believe these efforts will lead to even better service of our target accounts, primarily large construction and industrial customers, as well as select local contractors. Our fleet team's analyses are aligned with these objectives to identify trends in equipment categories and define action plans that can generate improved returns;
- ***A continued focus on “Lean” management techniques, including kaizen processes focused on continuous improvement.*** We have a dedicated team responsible for reducing waste in our operational processes, with the objectives of: condensing the cycle time associated with preparing equipment for rent; optimizing our resources for delivery and pickup of equipment; improving the effectiveness and efficiency of our repair and maintenance operations; and implementing customer service best practices;
- ***The continued expansion and cross-selling of adjacent specialty and services products, which enables us to provide a “one-stop” shop for our customers***. We believe that the expansion of our specialty business, as exhibited by our acquisition of Yak Access, LLC, Yak Mat, LLC and New South Access & Environmental Solutions, LLC (collectively, “Yak”) in March 2024, as well as our tools and onsite services offerings, further positions United Rentals as a single source provider of total jobsite solutions through our extensive product and service resources and technology offerings; and
- ***The pursuit of strategic acquisitions to continue to expand our core equipment rental business,*** as exhibited by our acquisition of assets of Ahern Rentals, Inc. (“Ahern Rentals”) in December 2022. Strategic acquisitions allow us to invest our capital to expand our business, further driving our ability to accomplish our strategic goals.

### Financial Overview

Prior to taking actions pertaining to our financial flexibility and liquidity, we assess our available sources and anticipated uses of cash, including, with respect to sources, cash generated from operations and from the sale of rental equipment. As of June 30, 2025, we had available liquidity of $2.996 billion, comprised of cash and cash equivalents, and availability under the ABL and accounts receivable securitization facilities.

In January 2024, our Board of Directors authorized a $1.5 billion share repurchase program, which was completed in the first quarter of 2025. In April 2025, our Board of Directors authorized a new $1.5 billion share repurchase program, and repurchases under this program began in April 2025. We have repurchased $417 under the current program through June 30, 2025. Subsequent to the enactment of the new federal tax legislation discussed below (see "Results of Operations-Other costs/(income)-effective tax rates”) on July 4, 2025, and with consideration of the expected cash flow benefit associated with the legislation, our Board of Directors approved an increase in the size of the current share repurchase program, from $1.5 billion to $2.0 billion. We intend to repurchase $1.65 billion under the $2.0 billion program in 2025, with the remaining $350 under the program carried into 2026. A 1 percent excise tax is imposed on “net repurchases” (certain purchases minus certain issuances) of common stock. The repurchases above (as well as the total program sizes) do not include the excise tax, which totaled $6 year-to-date through June 30, 2025 (the total excise tax amount relates to both the current program and the prior program that was completed in the first quarter of 2025).

Our Board of Directors also approved our first-ever quarterly dividend program in January 2023, and the first dividend under the program was paid in February 2023. During the six months ended June 30, 2025 and 2024, we paid dividends of $235 ($3.58 per share) and $219 ($3.26 per share), respectively. On July 23, 2025, our Board of Directors declared a quarterly dividend of $1.79 per share, payable on August 27, 2025 to stockholders of record on August 13, 2025.

***Merger Termination Benefit.*** In January 2025, we announced that we had signed a merger agreement to acquire H&E Equipment Services, Inc. d/b/a H&E Rentals (“H&E”). In February 2025, following the termination of that merger agreement, we received a break-up fee of $64. The merger agreement was terminated in the first quarter of 2025, and the merger termination had no impact on the results for the three months ended June 30, 2025. Our results for the six months ended June 30, 2025 include a net $39 merger termination benefit, which reflects this break-up fee, net of related transaction costs. The net merger termination benefit is comprised of $12 of professional fees recorded in selling, general and administrative ("SG&A") expenses, $13 of bridge financing fees recorded in interest expense, net, and the break-up fee of $64 recorded in other income, net. For the six months ended June 30, 2025, the impact of the merger termination was a $29 after-tax benefit, or $0.45 per diluted share, for net income and a $52 benefit for adjusted EBITDA (as defined below), cash flow from operating activities and free cash flow (as defined below). The cash flow impact reflects the fact that the associated taxes have not yet been paid.

***Net income.*** Net income and diluted earnings per share are presented below.

|  | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| Net income | $622 | $636 | $1,140 | $1,178 |
| Diluted earnings per share | $9.59 | $9.54 | $17.48 | $17.57 |

Net income and diluted earnings per share for the six months ended June 30, 2025 include the impact of the H&E merger termination benefit discussed above. The impact of the merger termination for the six months ended June 30, 2025 was a net after-tax benefit of $29, or $0.45 per diluted share. The merger termination did not impact the results for any other period above. Net income and diluted earnings per share include the after-tax impacts of the items below. The tax rates applied to the items below reflect the statutory rates in the applicable entities.

|  | Three Months Ended June 30, 2025 |  | 2024 |  | Six Months Ended June 30, 2025 |  | 2024 |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Tax rate applied to items below | 25.2% |  | 25.1% |  | 25.2% |  | 25.2% |  |
|  | **Contribution to net income (after-tax)** | **Impact on diluted earnings per share** | **Contribution to net income (after-tax)** | **Impact on diluted earnings per share** | **Contribution to net income (after-tax)** | **Impact on diluted earnings per share** | **Contribution to net income (after-tax)** | **Impact on diluted earnings per share** |
| Merger related intangible asset amortization (1) | $(31) | $(0.47) | $(39) | $(0.58) | $(65) | $(1.00) | $(72) | $(1.07) |
| Impact on depreciation related to acquired fleet and property and equipment (2) | (19) | (0.29) | (26) | (0.39) | (38) | (0.58) | (53) | (0.79) |
| Impact of the fair value mark-up of acquired fleet (3) | (6) | (0.08) | (12) | (0.18) | (14) | (0.21) | (25) | (0.37) |
| Restructuring charge (4) | — | (0.01) | — | (0.01) | (1) | (0.02) | (1) | (0.02) |
| Asset impairment charge (5) | (2) | (0.03) | — | — | (2) | (0.03) | — | (0.01) |
| Debt related losses | — | — | — | — | — | — | (1) | (0.01) |

(1) This reflects the amortization of the intangible assets acquired in the major acquisitions that significantly impact our operations (the “major acquisitions,” each of which had annual revenues of over $200 prior to acquisition).

(2) This reflects the impact of extending the useful lives of equipment acquired in certain major acquisitions, net of the impact of additional depreciation associated with the fair value mark-up of such equipment.

(3) This reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in certain major acquisitions that was subsequently sold.

(4) This primarily reflects severance and branch closure charges associated with our restructuring programs. For additional information on the restructuring charges, which generally involve the closure of a large number of branches over a short period of time, often in periods following a major acquisition, see “Results of Operations-Other costs/(income)-restructuring charges” below.

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

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

Adjusted EBITDA for the six months ended June 30, 2025 includes the impact of the H&E merger termination benefit discussed above. The impact of the merger termination for the six months ended June 30, 2025 was a net after-tax benefit of $29 for net income and a $52 benefit for adjusted EBITDA. The merger termination did not impact the results for any other period in the table below. The table below provides a reconciliation between net income and EBITDA and adjusted EBITDA:

|  | Three Months Ended June 30, 2025 | 2024 | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: | ---: | ---: |
| **Net income** | **$622** | **$636** | **$1,140** | **$1,178** |
| Provision for income taxes | 217 | 199 | 387 | 352 |
| Interest expense, net | 171 | 173 | 355 | 333 |
| Depreciation of rental equipment | 651 | 608 | 1,288 | 1,190 |
| Non-rental depreciation and amortization | 108 | 109 | 222 | 213 |
| **EBITDA** | **$1,769** | **$1,725** | **$3,392** | **$3,266** |
| Restructuring charge (1) | — | 1 | 1 | 2 |
| Stock compensation expense, net (2) | 34 | 27 | 70 | 55 |
| Impact of the fair value mark-up of acquired fleet (3) | 7 | 16 | 18 | 33 |
| **Adjusted EBITDA** | **$1,810** | **$1,769** | **$3,481** | **$3,356** |
| Net income margin | 15.8% | 16.9% | 14.9% | 16.2% |
| Adjusted EBITDA margin | 45.9% | 46.9% | 45.4% | 46.2% |

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

|  | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: |
| **Net cash provided by operating activities** | **$2,753** | **$2,294** |
| 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 | (8) | (7) |
| Gain on sales of rental equipment | 313 | 360 |
| Gain on sales of non-rental equipment | 10 | 8 |
| Insurance proceeds from damaged equipment | 23 | 24 |
| Restructuring charge (1) | (1) | (2) |
| Stock compensation expense, net (2) | (70) | (55) |
| Debt related activity (4) | (13) | (1) |
| Changes in assets and liabilities | (494) | (278) |
| Cash paid for interest | 339 | 317 |
| Cash paid for income taxes, net | 540 | 606 |
| **EBITDA** | **$3,392** | **$3,266** |
| Add back: |  |  |
| Restructuring charge (1) | 1 | 2 |
| Stock compensation expense, net (2) | 70 | 55 |
| Impact of the fair value mark-up of acquired fleet (3) | 18 | 33 |
| **Adjusted EBITDA** | **$3,481** | **$3,356** |

(1) This primarily reflects severance and branch closure charges associated with our restructuring programs. For additional information on the restructuring charges, which generally involve the closure of a large number of branches over a short period of time, often in periods following a major acquisition, see “Results of Operations-Other costs/(income)-restructuring charges” below.

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

(3) This reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in certain major acquisitions that was subsequently sold.

(4) The amount for the six months ended June 30, 2025 reflects bridge financing fees associated with the terminated H&E acquisition discussed above.

For the three months ended June 30, 2025, net income decreased $14, or 2.2 percent, to $622. Net income margin decreased 110 basis points to 15.8 percent, primarily driven by decreased gross margin from equipment rentals, which reflected the impact of inflation and normal cost variability, particularly in delivery and labor and benefits costs. The impact of an increase in the effective tax rate, which was primarily due to state tax benefits recognized in 2024, was offset by a decrease in interest expense as a percentage of revenue, which primarily reflected decreased variable debt interest rates.

For the three months ended June 30, 2025, adjusted EBITDA increased $41, or 2.3 percent, to $1.810 billion. Adjusted EBITDA margin decreased 100 basis points to 45.9 percent, primarily reflecting decreases in gross margin from equipment rentals (excluding depreciation and stock compensation expense) and gross margin from used equipment sales (excluding the adjustment for the impact of the fair value mark-up of acquired fleet). The decreased gross margin from equipment rentals reflected the impact of inflation and normal cost variability, particularly in delivery and labor and benefits costs. The decreased gross margin from sales of rental equipment primarily reflected the normalization of the used equipment market, including pricing.

For the six months ended June 30, 2025, net income decreased $38, or 3.2 percent, to $1.140 billion, which included the $29 after-tax H&E merger termination benefit discussed above. Net income margin decreased 130 basis points to 14.9 percent, primarily driven by 1) decreased gross margin from equipment rentals, particularly for the specialty segment, as discussed below (see “Results of Operations-Segment Equipment Rentals Gross Profit”), 2) decreased gross margin from used equipment sales, which primarily reflected the normalization of the used equipment market, including pricing, and 3) increased SG&A expenses, which included the professional fees associated with the terminated H&E acquisition, partially offset by 4) the impact of the H&E break-up fee discussed above.

For the six months ended June 30, 2025, adjusted EBITDA increased $125, or 3.7 percent, to $3.481 billion, which included the $52 merger termination benefit discussed above. Adjusted EBITDA margin decreased 80 basis points to 45.4 percent, primarily reflecting 1) decreased gross margin from equipment rentals (excluding depreciation and stock compensation expense), 2) decreased gross margin from sales of rental equipment (excluding the adjustment for the impact of the fair value mark-up of acquired fleet), which primarily reflected the normalization of the used equipment market, including pricing, and 3) higher SG&A expenses, which included the professional fees associated with the terminated H&E acquisition, partially offset by 4) the impact of the H&E break-up fee discussed above. The decreased gross margin from equipment rentals is discussed below (see “Results of Operations-Segment Equipment Rentals Gross Profit”). While the gross margin discussion below includes the impact of depreciation, the other non-depreciation items discussed below, including inflation, normal cost variability, and a higher proportion of 2025 revenue from ancillary revenues, which generate lower margins than owned equipment rentals, for the specialty segment, were the primary drivers of the decrease in gross margin from equipment rentals on the adjusted EBITDA basis (excluding depreciation and stock compensation expense).

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

|  | Three Months Ended June 30, 2025 | 2024 | Change | Six Months Ended June 30, 2025 | 2024 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Equipment rentals\* | $3,415 | $3,215 | 6.2% | $6,560 | $6,144 | 6.8% |
| Sales of rental equipment | 317 | 365 | (13.2)% | 694 | 748 | (7.2)% |
| Sales of new equipment | 75 | 61 | 23.0% | 145 | 109 | 33.0% |
| Contractor supplies sales | 41 | 42 | (2.4)% | 77 | 78 | (1.3)% |
| Service and other revenues | 95 | 90 | 5.6% | 186 | 179 | 3.9% |
| **Total revenues** | **$3,943** | **$3,773** | **4.5%** | **$7,662** | **$7,258** | **5.6%** |
| \*Equipment rentals variance components: |  |  |  |  |  |  |
| Year-over-year change in average OEC |  |  | 3.6% |  |  | 3.5% |
| Assumed year-over-year inflation impact (1) |  |  | (1.5)% |  |  | (1.5)% |
| Fleet productivity (2) |  |  | 3.3% |  |  | 3.2% |
| Contribution from ancillary and re-rent revenue (3) |  |  | 0.8% |  |  | 1.6% |
| **Total change in equipment rentals** |  |  | **6.2%** |  |  | **6.8%** |

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

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

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

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

For the three months ended June 30, 2025, total revenues of $3.943 billion increased 4.5 percent compared with 2024. Equipment rentals and sales of rental equipment are our largest revenue types (together, they accounted for 95 percent of total revenue for the three months ended June 30, 2025). Equipment rentals increased $200, or 6.2 percent, primarily due to a 3.6 percent increase in average OEC and a 3.3 percent increase in fleet productivity. Sales of rental equipment decreased $48, or 13.2 percent, primarily due to the normalization of used equipment pricing.

For the six months ended June 30, 2025, total revenues of $7.662 billion increased 5.6 percent compared with 2024. Equipment rentals and sales of rental equipment are our largest revenue types (together, they accounted for 95 percent of total revenue for the six months ended June 30, 2025). Equipment rentals increased $416, or 6.8 percent, primarily due to a 3.5 percent increase in average OEC, and a 3.2 percent increase in fleet productivity, which includes the impact of the Yak acquisition. Fleet productivity increased 2.6 percent on a pro forma basis including the pre-acquisition results of Yak for 2024. Sales of rental equipment did not change significantly year-over-year.

### Results of Operations

As discussed in note 3 to our condensed consolidated financial statements, our reportable segments are general rentals and specialty. The general rentals segment includes the rental of construction, aerial, industrial and homeowner equipment and related services and activities. The general rentals segment’s customers include construction and industrial companies, manufacturers, utilities, municipalities, homeowners and government entities. This segment operates throughout the United States and Canada. The specialty segment rents products (and provides setup and other services on such rented equipment) including (i) trench safety equipment, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers and line testing equipment for underground work, (ii) power and HVAC equipment, such as portable diesel generators, electrical distribution equipment, and temperature control equipment, (iii) fluid solutions equipment primarily used for fluid containment, transfer and treatment, (iv) mobile storage equipment and modular office space and (v) surface protection mats. The specialty segment’s customers include construction companies involved in infrastructure projects, municipalities and industrial companies. This segment primarily operates in the United States and Canada, and has a smaller presence in Europe, Australia and New Zealand.

As discussed in note 3 to our condensed consolidated financial statements, we aggregate our four geographic divisions—Central, Northeast, Southeast and West—into our general rentals reporting segment. Historically, there have occasionally been variances in the levels of equipment rentals gross margins achieved by these divisions, though such variances have generally been small (close to or less than 10 percent, measured versus the equipment rentals gross margins of the aggregated general rentals' divisions). For the five year period ended June 30, 2025, there was no general rentals' division with an equipment rentals gross margin that differed materially from the equipment rentals gross margin of the aggregated general rentals' divisions. The rental industry is cyclical, and there historically have occasionally been divisions with equipment rentals gross margins that varied by greater than 10 percent from the equipment rentals gross margins of the aggregated general rentals' divisions, though the specific divisions with margin variances of over 10 percent have fluctuated, and such variances have generally not exceeded 10 percent by a significant amount. We monitor the margin variances and confirm margin similarity between divisions on a quarterly basis.

We believe that the divisions that are aggregated into our segments have similar economic characteristics, as each division is capital intensive, offers similar products to similar customers, uses similar methods to distribute its products, and is subject to similar competitive risks. The aggregation of our divisions also reflects the management structure that we use for making operating decisions and assessing performance. Although we believe aggregating these divisions into our reporting segments for segment reporting purposes is appropriate, to the extent that there are significant margin variances that do not converge, we may be required to disaggregate the divisions into separate reporting segments. Any such disaggregation would have no impact on our consolidated results of operations.

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

Revenues by segment were as follows:

| Three Months Ended June 30, 2025 | General rentals | Specialty | Total |
| --- | ---: | ---: | ---: |
| Equipment rentals | $2,268 | $1,147 | $3,415 |
| Sales of rental equipment | 272 | 45 | 317 |
| Sales of new equipment | 49 | 26 | 75 |
| Contractor supplies sales | 22 | 19 | 41 |
| Service and other revenues | 87 | 8 | 95 |
| **Total revenue** | **$2,698** | **$1,245** | **$3,943** |
| **Three Months Ended June 30, 2024** |  |  |  |
| Equipment rentals | $2,209 | $1,006 | $3,215 |
| Sales of rental equipment | 313 | 52 | 365 |
| Sales of new equipment | 27 | 34 | 61 |
| Contractor supplies sales | 23 | 19 | 42 |
| Service and other revenues | 81 | 9 | 90 |
| **Total revenue** | **$2,653** | **$1,120** | **$3,773** |
| **Six Months Ended June 30, 2025** |  |  |  |
| Equipment rentals | $4,367 | $2,193 | $6,560 |
| Sales of rental equipment | 602 | 92 | 694 |
| Sales of new equipment | 92 | 53 | 145 |
| Contractor supplies sales | 42 | 35 | 77 |
| Service and other revenues | 168 | 18 | 186 |
| **Total revenue** | **$5,271** | **$2,391** | **$7,662** |
| **Six Months Ended June 30, 2024** |  |  |  |
| Equipment rentals | $4,279 | $1,865 | $6,144 |
| Sales of rental equipment | 659 | 89 | 748 |
| Sales of new equipment | 56 | 53 | 109 |
| Contractor supplies sales | 43 | 35 | 78 |
| Service and other revenues | 162 | 17 | 179 |
| **Total revenue** | **$5,199** | **$2,059** | **$7,258** |

***Equipment rentals*** represented 87 percent of total revenues for the three months ended June 30, 2025. For the three months ended June 30, 2025, equipment rentals of $3.415 billion increased $200, or 6.2 percent, as compared to the same period in 2024, primarily due to a 3.6 percent increase in average OEC and a 3.3 percent increase in fleet productivity.

For the three months ended June 30, 2025, equipment rentals represented 84 percent of total revenues for the general rentals segment. For the three months ended June 30, 2025, general rentals equipment rentals increased $59, or 2.7 percent, as compared to the same period in 2024.

For the three months ended June 30, 2025, equipment rentals represented 92 percent of total revenues for the specialty segment. For the three months ended June 30, 2025, specialty equipment rentals increased $141, or 14.0 percent, as compared to the same period in 2024, primarily due to increased average OEC.

For the six months ended June 30, 2025, equipment rentals represented 86 percent of total revenues. For the six months ended June 30, 2025, equipment rentals of $6.560 billion increased $416, or 6.8 percent, as compared to the same period in 2024, primarily due to a 3.5 percent increase in average OEC, and a 3.2 percent increase in fleet productivity, which includes the impact of the Yak acquisition. Fleet productivity increased 2.6 percent on a pro forma basis including the pre-acquisition results of Yak for 2024.

For the six months ended June 30, 2025, equipment rentals represented 83 percent of total revenues for the general rentals segment. For the six months ended June 30, 2025, general rentals equipment rentals increased $88, or 2.1 percent, as compared to the same period in 2024.

For the six months ended June 30, 2025, equipment rentals represented 92 percent of total revenues for the specialty segment. For the six months ended June 30, 2025, specialty equipment rentals increased $328, or 17.6 percent, as compared to the same period in 2024, primarily due to the impact of the Yak acquisition and increased average OEC. Specialty equipment rentals increased 14.4 percent year-over-year on a pro forma basis including the pre-acquisition results of Yak for 2024.

***Sales of rental equipment.*** For the six months ended June 30, 2025, sales of rental equipment represented approximately 9 percent of our total revenues. For the three months ended June 30, 2025, sales of rental equipment decreased $48, or 13.2 percent, primarily due to the normalization of used equipment pricing. For the six months ended June 30, 2025, sales of rental equipment did not change significantly year-over-year.

***Sales of new equipment.*** For the six months ended June 30, 2025, sales of new equipment represented approximately 2 percent of our total revenues. For the three and six months ended June 30, 2025, sales of new equipment increased 23.0 percent and 33.0 percent year-over-year, respectively, primarily due to supply chain normalization.

***Contractor supplies sales*** represent our revenues associated with selling a variety of supplies, including construction consumables, tools, small equipment and safety supplies. For the six months ended June 30, 2025, contractor supplies sales represented approximately 1 percent of our total revenues. Contractor supplies sales for the three and six months ended June 30, 2025 did not change significantly year-over-year.

***Service and other revenues*** primarily represent our revenues earned from providing repair and maintenance services on our customers’ fleet (including parts sales). For the six months ended June 30, 2025, service and other revenues represented approximately 2 percent of our total revenues. For the three and six months ended June 30, 2025, service and other revenues did not change significantly year-over-year.

### Segment Equipment Rentals Gross Profit

See note 3 to our condensed consolidated financial statements for additional information on segment performance. Segment equipment rentals gross profit and gross margin were as follows:

| Three Months Ended June 30, 2025 | General rentals | Specialty | Total |
| --- | ---: | ---: | ---: |
| Equipment Rentals Gross Profit | $796 | $525 | $1,321 |
| Equipment Rentals Gross Margin | 35.1% | 45.8% | 38.7% |
| **Three Months Ended June 30, 2024** |  |  |  |
| Equipment Rentals Gross Profit | $802 | $483 | $1,285 |
| Equipment Rentals Gross Margin | 36.3% | 48.0% | 40.0% |
| **Six Months Ended June 30, 2025** |  |  |  |
| Equipment Rentals Gross Profit | $1,475 | $976 | $2,451 |
| Equipment Rentals Gross Margin | 33.8% | 44.5% | 37.4% |
| **Six Months Ended June 30, 2024** |  |  |  |
| Equipment Rentals Gross Profit | $1,483 | $905 | $2,388 |
| Equipment Rentals Gross Margin | 34.7% | 48.5% | 38.9% |

***General rentals***. For the three months ended June 30, 2025, equipment rentals gross profit decreased by $6, and equipment rentals gross margin decreased by 120 basis points year-over-year. Gross margin decreased primarily due to inflation and normal cost variability, particularly in delivery and labor and benefits costs.

For the six months ended June 30, 2025, equipment rentals gross profit decreased by $8, and equipment rentals gross margin decreased by 90 basis points year-over-year. Gross margin decreased primarily due to inflation and normal cost variability, particularly in delivery and labor and benefits costs.

***Specialty***. For the three months ended June 30, 2025, equipment rentals gross profit increased by $42, and equipment rentals gross margin decreased by 220 basis points, year-over-year. Gross margin decreased primarily due to inflation and normal cost variability, particularly in delivery and labor and benefits costs, and higher depreciation expense due, in part, to growth in our matting business, which is primarily comprised of locations acquired in the Yak acquisition. The increase in delivery costs also related in part to repositioning fleet to efficiently support strong demand.

For the six months ended June 30, 2025, equipment rentals gross profit increased by $71, and equipment rentals gross margin decreased by 400 basis points, year-over-year. Gross margin decreased primarily due to 1) increased depreciation expense, including the impact of the Yak acquisition and growth in the acquired Yak locations, 2) the impact of a higher proportion of 2025 revenue from ancillary revenues, which generate lower margins than owned equipment rentals, and 3) inflation and normal cost variability, particularly in delivery and labor and benefits costs. The increase in delivery costs related in part to repositioning fleet to efficiently support strong demand.

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

|  | Three Months Ended June 30, 2025 | 2024 | Change | Six Months Ended June 30, 2025 | 2024 | Change |
| --- | ---: | ---: | --- | ---: | ---: | --- |
| Total gross margin | 38.9% | 40.2% | (130) bps | 37.7% | 39.5% | (180) bps |
| Equipment rentals | 38.7% | 40.0% | (130) bps | 37.4% | 38.9% | (150) bps |
| Sales of rental equipment | 46.1% | 47.4% | (130) bps | 45.1% | 48.1% | (300) bps |
| Sales of new equipment | 18.7% | 19.7% | (100) bps | 19.3% | 20.2% | (90) bps |
| Contractor supplies sales | 31.7% | 31.0% | 70 bps | 29.9% | 30.8% | (90) bps |
| Service and other revenues | 41.1% | 38.9% | 220 bps | 39.8% | 39.1% | 70 bps |

For the three months ended June 30, 2025, total gross margin decreased 130 basis points from 2024. Equipment rentals gross margin decreased 130 basis points from 2024, primarily due to inflation and normal cost variability, particularly in delivery and labor and benefits costs, as well as increased depreciation expense in the specialty segment, all of which are discussed above. Gross margin from sales of rental equipment decreased 130 basis points from 2024, which primarily reflected the normalization of the used equipment market, including pricing. The gross margin fluctuations from sales of new equipment, contractor supplies sales and service and other revenues generally reflect normal variability, and such revenue types did not account for a significant portion of total gross profit (gross profit for these revenue types represented 4 percent of total gross profit for the three months ended June 30, 2025).

For the six months ended June 30, 2025, total gross margin decreased 180 basis points from 2024. Equipment rentals gross margin decreased 150 basis points from 2024, primarily due to reduced margins in the specialty segment, as discussed above. Additionally, as discussed above, equipment rentals gross margin for the general rentals segment decreased primarily due to inflation and normal cost variability, particularly in delivery and labor and benefits costs. Gross margin from sales of rental equipment decreased 300 basis points from 2024, which primarily reflected the normalization of the used equipment market, including pricing. The gross margin fluctuations from sales of new equipment, contractor supplies sales and service and other revenues generally reflect normal variability, and such revenue types did not account for a significant portion of total gross profit (gross profit for these revenue types represented 4 percent of total gross profit for the six months ended June 30, 2025).

### Other costs/(income)

The table below includes the other costs/(income) in our condensed consolidated statements of income, as well as key associated metrics:

|  | Three Months Ended June 30, 2025 | 2024 | Change | Six Months Ended June 30, 2025 | 2024 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Selling, general and administrative ("SG&A") expense | $422 | $404 | 4.5% | $859 | $793 | 8.3% |
| SG&A expense as a percentage of revenue | 10.7% | 10.7% | — bps | 11.2% | 10.9% | 30 bps |
| Restructuring charge | — | 1 | (100.0)% | 1 | 2 | (50.0)% |
| Non-rental depreciation and amortization | 108 | 109 | (0.9)% | 222 | 213 | 4.2% |
| Interest expense, net | 171 | 173 | (1.2)% | 355 | 333 | 6.6% |
| Other income, net | (7) | (4) | 75.0% | (75) | (7) | 971.4% |
| Provision for income taxes | 217 | 199 | 9.0% | 387 | 352 | 9.9% |
| Effective tax rate | 25.9% | 23.8% | 210 bps | 25.3% | 23.0% | 230 bps |

***SG&A expense*** primarily includes sales force compensation, information technology costs, third party professional fees, management salaries, bad debt expense and clerical and administrative overhead. The year-over-year increase in SG&A expense as a percentage of revenue for the six months ended June 30, 2025 includes the impact of the professional fees associated with the terminated H&E acquisition discussed above.

The ***restructuring charges*** primarily reflect severance and branch closure charges associated with our restructuring programs. 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. The designated restructuring programs generally involve the closure of a large number of branches over a short period of time, often in periods following a major acquisition, and result in significant costs that we would not normally incur absent a major acquisition or other triggering event that results in the initiation of a restructuring program. Since the first such program was initiated in 2008, we have completed seven restructuring programs and have incurred total restructuring charges of $384. We currently have no open restructuring programs, and the total liability associated with our restructuring programs was $16 as of June 30, 2025.

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

***Interest expense, net*** for the three months ended June 30, 2025 decreased slightly year-over-year, as the impact of decreased variable debt interest rates was partially offset by a slight increase in average debt. The weighted average interest rates on our variable debt instruments were 5.6 percent and 6.6 percent for the three months ended June 30, 2025 and 2024, respectively. Interest expense, net for the six months ended June 30, 2025 increased by 6.6 percent year-over-year, primarily reflecting the impact of the bridge financing fees associated with the terminated H&E acquisition discussed above and increased average debt, including the debt issued to partially fund the March 2024 acquisition of Yak discussed above, partially offset by decreased variable debt interest rates. The weighted average interest rates on our variable debt instruments were 5.6 percent and 6.6 percent for the six months ended June 30, 2025 and 2024, respectively.

***Other income, net*** primarily includes (i) currency gains and losses, (ii) finance charges, (iii) gains and losses on sales of non-rental equipment and (iv) other miscellaneous items. Other income, net for the six months ended June 30, 2025 includes $64 of income associated with the receipt of the break-up fee associated with the terminated H&E acquisition discussed above.

The ***effective tax rates*** for 2025 and 2024 differed from the federal statutory rate of 21 percent primarily due to the geographical mix of income between foreign and domestic operations, the impact of state and local taxes, stock compensation, and other deductible and nondeductible charges. The year-over-year increases in the effective tax rates for the three and six months ended June 30, 2025 primarily reflected benefits recognized in 2024 associated with decreases to the average state tax rates and changes to tax laws in certain states.

On July 4, 2025, new federal tax legislation (“H.R.1”) was enacted. The primary effects of this legislation include making 100 percent bonus depreciation permanent, the permanent restoration of the ability of taxpayers to immediately expense certain domestic research and experimental expenditures, and the restoration of EBITDA-based interest deduction limitations. In addition, H.R.1 includes international tax provisions, including eliminating the net deemed tangible income return, decreasing the tax rates and taxable income computations applicable to global intangible low-taxed income (“GILTI”) and foreign derived intangible income (“FDII”), and permanently increasing the base erosion and anti-abuse minimum tax (“BEAT”) rate. The potential impact of these changes on our financial statements is currently under evaluation, and the impact on our effective tax rate is not expected to be material in 2025. We currently expect that these provisions will both decrease our 2025 cash income tax liability and increase our deferred tax liability, and we continue to evaluate the provisions of the legislation and its potential effects on our financial position, results of operations, and cash flows. The effects of the legislation will be reflected in our financial statements in the period of enactment (in the third quarter of 2025), and disclosures addressing the financial statement impact will be provided in future periods as the impact of the legislation is determined.

***Balance sheet.*** Prepaid expenses and other assets increased by $127, or 54.0 percent, from December 31, 2024 to June 30, 2025, primarily due to an increase in income taxes receivable which reflected required tax payments exceeding the estimated tax accruals. Accounts payable increased by $691, or 92.4 percent, from December 31, 2024 to June 30, 2025, primarily due to seasonal increases in capital expenditures and business activities. See the condensed consolidated statements of cash flows for further information on changes in cash and cash equivalents, the condensed consolidated statements of stockholders’ equity for further information on changes in stockholders’ equity and note 5 to the condensed consolidated financial statements for further information on debt changes.

### Liquidity and Capital Resources

We manage our liquidity using internal cash management practices, which are subject to (i) the policies and cooperation of the financial institutions we utilize to maintain and provide cash management services, (ii) the terms and other requirements of the agreements to which we are a party and (iii) the statutes, regulations and practices of each of the local jurisdictions in which we operate.

In January 2024, our Board of Directors authorized a $1.5 billion share repurchase program, which was completed in the first quarter of 2025. In April 2025, our Board of Directors authorized a new $1.5 billion share repurchase program, and repurchases under this program began in April 2025. We have repurchased $417 under the current $1.5 billion program through June 30, 2025. Subsequent to the enactment of the new federal tax legislation discussed above (see "Results of Operations-Other costs/(income)-effective tax rates”) on July 4, 2025, and with consideration of the expected cash flow benefit associated with the legislation, our Board of Directors approved an increase in the size of the current share repurchase program, from $1.5 billion to $2.0 billion. We intend to repurchase $1.65 billion under the $2.0 billion program in 2025, with the remaining $350 under the program carried into 2026. A 1 percent excise tax is imposed on “net repurchases” (certain purchases minus certain issuances) of common stock. The repurchases above (as well as the total program sizes) do not include the excise tax, which totaled $6 year-to-date through June 30, 2025 (the total excise tax amount relates to both the current program and the prior program that was completed in the first quarter of 2025). Since 2012, we have repurchased a total of $8.151 billion (inclusive of immaterial excise taxes, which were first imposed in 2023) of Holdings' common stock under our share repurchase programs (comprised of nine programs that have ended, including the program that was completed in the first quarter of 2025).

Our Board of Directors also approved our first-ever quarterly dividend program in January 2023, and the first dividend under the program was paid in February 2023. During the six months ended June 30, 2025 and 2024, we paid dividends totaling $235 ($3.58 per share) and $219 ($3.26 per share), respectively. On April 23, 2025, our Board of Directors declared a quarterly dividend of $1.79 per share, payable on August 27, 2025 to stockholders of record on August 13, 2025.

Our principal existing sources of cash are cash generated from operations and from the sale of rental equipment, and borrowings available under our ABL and accounts receivable securitization facilities. As of June 30, 2025, we had cash and cash equivalents of $548. We believe that our existing sources of cash will be sufficient to support our existing operations over the next 12 months. The table below presents financial information associated with our principal sources of cash as of and for the six months ended June 30, 2025:

| ABL facility: |  |
| --- | ---: |
| Borrowing capacity, net of letters of credit | $2,133 |
| Outstanding debt, net of debt issuance costs (1) | 2,091 |
| Interest rate at June 30, 2025 | 5.5% |
| Average month-end principal amount of debt outstanding (1) | 1,670 |
| Weighted-average interest rate on average debt outstanding | 5.5% |
| Maximum month-end principal amount of debt outstanding (1) | 2,096 |
| **Accounts receivable securitization facility:** |  |
| Borrowing capacity | 315 |
| Outstanding debt, net of debt issuance costs | 1,184 |
| Interest rate at June 30, 2025 | 5.3% |
| Average month-end principal amount of debt outstanding | 1,308 |
| Weighted-average interest rate on average debt outstanding | 5.3% |
| Maximum month-end principal amount of debt outstanding | 1,420 |

(1) The outstanding and maximum amounts of debt under the ABL facility exceeded the average outstanding amount primarily due to the use of borrowings under the facility to fund seasonal expenditures.

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

To access the capital markets, we rely on credit rating agencies to assign ratings to our securities as an indicator of credit quality. Lower credit ratings generally result in higher borrowing costs and reduced access to debt capital markets. Credit ratings also affect the costs of derivative transactions, including interest rate and foreign currency derivative transactions. As a result, negative changes in our credit ratings could adversely impact our costs of funding. Our credit ratings as of July 21, 2025 were as follows:

|  | Corporate Rating | Outlook |
| --- | --- | --- |
| Moody’s | Ba1 | Stable |
| Standard & Poor’s | BB+ | Stable |

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

***Loan Covenants and Compliance.*** As of June 30, 2025, we were in compliance with the covenants and other provisions of the ABL, accounts receivable securitization and term loan facilities and our 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 for five consecutive business days. 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 June 30, 2025, 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.

Covenants in the agreements governing our ABL facility, term loan facility and certain other debt instruments impose limitations on our ability to make share repurchases and dividend payments, subject to important exceptions that would allow us to make such repurchases or payments under certain conditions. Based on our current total indebtedness leverage ratio (as defined in the applicable debt agreements) and usage of the ABL facility as of June 30, 2025, we met the criteria under the applicable debt agreements for these exceptions, and as a result we were not restricted in our ability to make share repurchases and dividend payments.

***Sources and Uses of Cash.*** During the six months ended June 30, 2025, we (i) generated cash from operating activities of $2.753 billion, including the $52 H&E merger termination benefit discussed above, and (ii) generated cash from the sale of rental and non-rental equipment of $725. We used cash during this period principally to (i) make payments for purchases of rental and non-rental equipment and intangible assets of $2.303 billion, (ii) make debt payments, net of proceeds, of $123, (iii) purchase shares of our common stock for $720 and (iv) pay dividends of $235. During the six months ended June 30, 2024, we (i) generated cash from operating activities of $2.294 billion, (ii) generated cash from the sale of rental and non-rental equipment of $778 and (iii) received cash from debt proceeds, net of payments, of $1.314 billion. We used cash during this period principally to (i) make payments for purchases of rental and non-rental equipment and intangible assets of $2.031 billion, (ii) purchase other companies for $1.234 billion, (iii) purchase shares of our common stock for $791 and (iv) pay dividends of $219.

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

|  | Six Months Ended June 30, 2025 | 2024 |
| --- | ---: | ---: |
| **Net cash provided by operating activities** | **$2,753** | **$2,294** |
| Payments for purchases of rental equipment | (2,121) | (1,866) |
| Payments for purchases of non-rental equipment and intangible assets | (182) | (165) |
| Proceeds from sales of rental equipment | 694 | 748 |
| Proceeds from sales of non-rental equipment | 31 | 30 |
| Insurance proceeds from damaged equipment | 23 | 24 |
| **Free cash flow** | **$1,198** | **$1,065** |

Net cash provided by operating activities and free cash flow for the six months ended June 30, 2025 both include the $52 H&E merger termination benefit discussed above (as noted above, the associated taxes have not yet been paid). The year-over-year increase in free cash flow for the six months ended June 30, 2025 also reflects the impact of working capital activities, partially offset by higher net payments for rental capital expenditures (payments for purchases of rental equipment less the proceeds from sales of rental equipment).

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

### Information Regarding Guarantors of URNA Indebtedness

URNA is 100 percent owned by Holdings and has certain outstanding indebtedness that is guaranteed by both Holdings and, with the exception of its U.S. special purpose vehicle which holds receivable assets relating to the Company’s accounts receivable securitization facility (the “SPV”) and a foreign subsidiary holding company acquired in connection with the General Finance acquisition, all of URNA’s U.S. subsidiaries (the “guarantor subsidiaries”). Other than the guarantee by our Canadian subsidiary of URNA's indebtedness under the ABL facility, none of URNA’s indebtedness is guaranteed by URNA's foreign subsidiaries, the SPV, or the foreign subsidiary holding company acquired in connection with the General Finance acquisition (together, the “non-guarantor subsidiaries”). The receivable assets owned by the SPV have been sold or contributed by URNA to the SPV and are not available to satisfy the obligations of URNA or Holdings’ other subsidiaries. Holdings consolidates each of URNA and the guarantor subsidiaries in its consolidated financial statements. URNA and the guarantor subsidiaries are all 100 percent-owned and controlled by Holdings. Holdings’ guarantees of URNA’s indebtedness are full and unconditional, except that the guarantees may be automatically released and relieved upon satisfaction of the requirements for legal defeasance or covenant defeasance under the applicable indenture being met. The Holdings guarantees are also subject to subordination provisions (to the same extent that the obligations of the issuer under the relevant notes are subordinated to other debt of the issuer) and to a standard limitation which provides that the maximum amount guaranteed by Holdings will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws.

The guarantees of Holdings and the guarantor subsidiaries are made on a joint and several basis. The guarantees of the guarantor subsidiaries are not full and unconditional because a guarantor subsidiary can be automatically released and relieved of its obligations under certain circumstances, including sale of the guarantor subsidiary, the sale of all or substantially all of the guarantor subsidiary's assets, the requirements for legal defeasance or covenant defeasance under the applicable indenture being met, designating the guarantor subsidiary as an unrestricted subsidiary for purposes of the applicable covenants or the notes being rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA. Like the Holdings guarantees, the guarantees of the guarantor subsidiaries are subject to subordination provisions (to the same extent that the obligations of the issuer under the relevant notes are subordinated to other debt of the issuer) and to a standard limitation which provides that the maximum amount guaranteed by each guarantor will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws.

All of the existing guarantees by Holdings and the guarantor subsidiaries rank equally in right of payment with all of the guarantors' existing and future senior indebtedness. The secured indebtedness of Holdings and the guarantor subsidiaries (including guarantees of URNA’s existing and future secured indebtedness) will rank effectively senior to guarantees of any unsecured indebtedness to the extent of the value of the assets securing such indebtedness. Future guarantees of subordinated indebtedness will rank junior to any existing and future senior indebtedness of the guarantors. The guarantees of URNA’s indebtedness are effectively junior to any indebtedness of our subsidiaries that are not guarantors, including our foreign subsidiaries. As of June 30, 2025, the indebtedness of our non-guarantors was comprised of (i) $1.184 billion of outstanding borrowings by the SPV in connection with the Company’s accounts receivable securitization facility, (ii) $126 of outstanding borrowings under the ABL facility by non-guarantor subsidiaries and (iii) $13 of finance leases of our non-guarantor subsidiaries.

Covenants in the agreements governing our ABL facility, term loan facility and certain other debt instruments impose limitations on our ability to make share repurchases and dividend payments, subject to important exceptions that would allow us to make such repurchases or payments under certain conditions. Based on our current total indebtedness leverage ratio (as defined in the applicable debt agreements) and usage of the ABL facility as of June 30, 2025, we met the criteria under the applicable debt agreements for these exceptions, and as a result we were not restricted in our ability to make share repurchases and dividend payments.

Based on our understanding of Rule 3-10 of Regulation S-X (“Rule 3-10”), we believe that Holdings’ guarantees of URNA indebtedness comply with the conditions set forth in Rule 3-10, which enables us to present summarized financial information for Holdings, URNA and the consolidated guarantor subsidiaries in accordance with Rule 13-01 of Regulation S-X. The summarized financial information excludes the financial information of the non-guarantor subsidiaries. In accordance with Rule 3-10, separate financial statements of the guarantor subsidiaries have not been presented. Our presentation below excludes the investment in the non-guarantor subsidiaries and the related income from the non-guarantor subsidiaries.

The summarized financial information of Holdings, URNA and the guarantor subsidiaries on a combined basis is as follows:

|  | June 30, 2025 |
| --- | ---: |
| Current receivable from non-guarantor subsidiaries | $4 |
| Other current assets | 582 |
| **Total current assets** | **586** |
| Long-term assets | 23,307 |
| **Total assets** | **23,893** |
| Current liabilities | 2,621 |
| Long-term liabilities | 15,628 |
| **Total liabilities** | **18,249** |
|  | **Six Months Ended June 30, 2025** |
| Total revenues | $6,986 |
| Gross profit | 2,671 |
| Net income | 1,010 |

38

## Market risk

As filed, 2,045 characters.

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

***Interest Rate Risk.*** As of June 30, 2025, we had an aggregate of $4.3 billion of indebtedness that bears interest at variable rates, comprised of borrowings under the ABL, accounts receivable securitization and term loan facilities. The amount of variable rate indebtedness outstanding under these facilities may fluctuate significantly. See note 5 to the condensed consolidated financial statements for the amounts outstanding, and the interest rates thereon, as of June 30, 2025 under these facilities. As of June 30, 2025, based upon the amount of our variable rate debt outstanding, our annual after-tax earnings would decrease by approximately $32 for each one percentage point increase in the interest rates applicable to our variable rate debt.

At June 30, 2025, we had an aggregate of $9.1 billion of indebtedness that bears interest at fixed rates. A one percentage point decrease in market interest rates as of June 30, 2025 would increase the fair value of our fixed rate indebtedness by approximately 3 percent. For additional information concerning the fair value of our fixed rate debt, see note 4 (see “Fair Value of Financial Instruments”) to our condensed consolidated financial statements.

***Currency Exchange Risk***. We primarily operate in the U.S. and Canada, and have a smaller presence in Europe, Australia and New Zealand. During the six months ended June 30, 2025, our foreign subsidiaries accounted for $675, or 9 percent, of our total revenue of $7.662 billion, and $84, or 6 percent, of our total pretax income of $1.527 billion. Based on the size of our foreign operations relative to the Company as a whole, we do not believe that a 10 percent change in exchange rates would have a material impact on our earnings. We do not engage in purchasing forward exchange contracts for speculative purposes.

## Controls and procedures

As filed, 1,332 characters.

### Disclosure Controls and Procedures

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

The Company’s management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a–15(e) and 15d–15(e) of the Exchange Act, as of June 30, 2025. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2025.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 448 characters.

Our results of operations and financial condition are subject to numerous risks and uncertainties described in our 2024 Form 10-K, which risk factors are incorporated herein by reference. You should carefully consider the risk factors in our 2024 Form 10-K in conjunction with the other information contained in this report. Should any of these risks materialize, our business, financial condition and future prospects could be negatively impacted.

Filed Jul 23, 2025.
Source: SEC EDGAR, the filing index for accession 0001628280-25-035756. Last ingested by Listed: Oct 29, 2026, 16:18 ET. No prices; not investment advice.