10-K: United Rentals Reports Strong 2024 Results, Announces Acquisition of H&E Equipment Services

• United Rentals, the world's largest equipment rental company, reported total revenues of $15.345 billion for the year ended December 31, 2024, an increase of 7.1% compared to 2023.
• Equipment rental revenue increased by 8.0% year-over-year, driven by a 4.1% increase in fleet productivity and a 3.5% increase in average original equipment cost (OEC).
• The company's net income for 2024 was $2.575 billion, or $38.69 per diluted share, compared to $2.424 billion, or $35.28 per diluted share, in 2023.
• United Rentals announced a definitive agreement to acquire H&E Equipment Services for $92 per share in cash, representing a total enterprise value of approximately $4.8 billion, including $1.4 billion of net debt.
• The acquisition of H&E is expected to close in the first quarter of 2025 and will add approximately 160 branches in over 30 U.S. states.
• The company's Board of Directors has declared a quarterly dividend of $1.79 per share, payable on February 26, 2025.
• As of December 31, 2024, United Rentals had available liquidity of $2.845 billion, comprised of cash and cash equivalents, and availability under the ABL and accounts receivable securitization facilities.
• The company estimates its North American market share to be approximately 15% as of December 31, 2024.

Score: 7

Explanation: The document presents a positive outlook with strong financial results and a strategic acquisition, but also acknowledges challenges such as indebtedness and competitive pressures.

• Strategic acquisition of Yak Access, LLC completed in March 2024, expanding specialty services.
• Continued focus on Lean management techniques to improve operational efficiencies.
• Expansion and cross-selling of adjacent specialty and services products.
• Strong brand recognition as the largest equipment rental company in the world.
• Geographic and customer diversity reduces dependence on any particular customer.
• Commitment to employee training and development, with approximately 1.2 million hours of training provided in 2024.
• Voluntary employee turnover remains relatively low at 11.9% for 2024.

• Adjusted EBITDA margin decreased by 110 basis points to 46.7% due to lower equipment rentals gross margin and gross margin from sales of rental equipment.
• Significant indebtedness of $13.4 billion, expected to increase with the H&E acquisition, requires substantial cash flow for debt service.
• Exposure to risks associated with strategic transactions and investments, including potential integration challenges and undiscovered liabilities.
• Fluctuations in operating results could affect the trading value of securities.
• Dependence on key suppliers for equipment and other supplies on acceptable terms.

• Challenging economic conditions and unforeseen events could adversely impact the business.
• The industry is highly competitive, potentially leading to decreased market share or pricing pressures.
• Trends in oil and natural gas prices could affect the level of exploration and production activity of certain customers.
• Severe weather events and other natural occurrences may materially adversely impact operations and markets.
• Significant indebtedness exposes the company to various risks, including difficulty in refinancing debt and noncompliance with debt covenants.
• Growth strategies may be unsuccessful if the company is unable to identify and complete future acquisitions and successfully integrate acquired businesses or assets.
• Cybersecurity risks and failure to comply with data privacy and protection laws and regulations could subject the company to legal liability and adversely affect its reputation and financial performance.
• Regulators and stakeholders requirements and expectations on environmental, social and sustainability-related topics continue to evolve and diverge, and our ability to meet these requirements and expectations may have a material adverse impact on our results of operations.

The company expects to complete the acquisition of H&E Equipment Services in the first quarter of 2025 and intends to complete the share repurchase program, re-evaluating the timing as H&E is integrated and other potential uses of capital are assessed.

The North American equipment rental industry revenue grew an estimated 8 percent year-over-year in 2024, according to the American Rental Association (ARA). United Rentals' full year rental revenue increased by 8.0 percent year-over-year, which included the impact of the Yak acquisition. The company estimates its North American market share to be approximately 15% as of December 31, 2024.

• United Rentals' estimated North American market share of approximately 15% is based on 2024 total equipment rental industry revenues (excluding party and event rentals) as measured by the ARA.
• Competitors primarily include small, independent businesses with one or two rental locations; regional competitors that operate in one or more states; public companies or divisions of public companies that operate nationally or internationally; and equipment vendors and dealers who both sell and rent equipment directly to customers.
• H&E Equipment Services, which United Rentals is acquiring, had revenues of $1.518 billion for the 12 months ending September 30, 2024, and has approximately $2.9 billion of rental fleet at original cost as of September 30, 2024.

• Shareholders will benefit from the acquisition of H&E and the continued dividend program.
• Employees will have opportunities for growth and development through training programs.
• Customers will have access to a broader range of equipment and services.
• Suppliers will benefit from the company's strategic approach to maintaining a minimum number of suppliers per equipment category.
• Creditors will be impacted by the company's significant indebtedness and ability to service its debt.

• Complete the acquisition of H&E Equipment Services in the first quarter of 2025.
• Integrate H&E Equipment Services and assess other potential uses of capital.
• Continue to execute the share repurchase program, re-evaluating the timing.
• Pay the quarterly dividend of $1.79 per share on February 26, 2025.

• 1997: United Rentals, Inc. incorporated in Delaware.
• December 2022: Completed the acquisition of assets of Ahern Rentals, Inc.
• January 2023: Board of Directors approved first-ever quarterly dividend program.
• February 2023: First dividend under the quarterly dividend program was paid.
• March 2024: Completed the acquisition of Yak Access, LLC, Yak Mat, LLC and New South Access & Environmental Solutions, LLC.
• January 13, 2025: Entered into an Agreement and Plan of Merger to acquire H&E Equipment Services, Inc.
• January 28, 2025: Commenced a tender offer to acquire all of the outstanding shares of H&E common stock.
• January 29, 2025: Board of Directors declared a quarterly dividend of $1.79 per share.
• February 26, 2025: Quarterly dividend of $1.79 per share payable to stockholders of record as of February 12, 2025.
• First quarter 2025: Expected closing of the acquisition of H&E Equipment Services, Inc.