United Rentals(URI) - 2023 Q3 - Quarterly Report

Financial Performance - Total revenues for Q3 2023 reached $3,765 million, a 23.4% increase from $3,051 million in Q3 2022[22] - Net income for Q3 2023 was $703 million, compared to $606 million in Q3 2022, representing a growth of 16.0%[22] - Basic earnings per share for Q3 2023 increased to $10.30 from $8.69 in Q3 2022, a rise of 18.5%[22] - The company reported a gross profit of $1,585 million for Q3 2023, compared to $1,366 million in Q3 2022, reflecting a 16.0% increase[22] - Operating income for Q3 2023 was $1,099 million, up from $921 million in Q3 2022, marking a growth of 19.4%[22] - Net income for the nine months ended September 30, 2023, was $1,745 million, an increase from $1,466 million in the same period of 2022[36] - Total revenues for the nine months ended September 30, 2023, were $10,604 million, up from $8,346 million in 2022[47] Revenue Sources - Equipment rentals contributed $3,224 million to revenues in Q3 2023, up from $2,732 million in Q3 2022, reflecting an increase of 18.0%[22] - Owned equipment rentals accounted for 70% of total revenues for the nine months ended September 30, 2023[48] - Revenue from equipment rentals accounted for 76% of total revenues for the nine months ended September 30, 2023, amounting to $2.277 billion in net accounts receivable[66] - Equipment rentals accounted for 84% of total revenues for the nine months ended September 30, 2023[137] Cash Flow and Liquidity - Net cash provided by operating activities for the nine months ended September 30, 2023, was $3,290 million, compared to $3,182 million in 2022[36] - The company reported a net increase in cash and cash equivalents of $178 million for the nine months ended September 30, 2023[36] - The company had available liquidity of $2.685 billion as of September 30, 2023, which includes cash and cash equivalents[140] - Free cash flow for the nine months ended September 30, 2023 was $1.157 billion, reflecting a slight increase of $17 million compared to $1.140 billion in 2022[208] Debt and Financing - Total liabilities increased to $18,076 million as of September 30, 2023, compared to $17,121 million at the end of 2022, a rise of 5.6%[19] - Total debt as of September 30, 2023, was $12.028 billion, an increase from $11.370 billion as of December 31, 2022[120] - The average interest rate on average debt outstanding was 6.1% as of September 30, 2023, compared to 5.9% in the previous year[121] - The company was in compliance with all covenants and provisions of its debt agreements as of September 30, 2023, ensuring no adverse effects on liquidity and operations[125] Acquisitions - The acquisition of Ahern Rentals was completed for $1.988 billion, funded through $1.5 billion in Senior Secured Notes and a revolving credit facility[78] - The fair value of identifiable assets acquired from Ahern Rentals totaled $2.103 billion, with net identifiable assets acquired amounting to $1.841 billion[80] - Goodwill from the Ahern Rentals acquisition was recorded at $147 million, expected to be primarily deductible for income tax purposes[80] - The company executed a strategic acquisition of Ahern Rentals to expand its core equipment rental business[144] Expenses and Margins - Selling, general and administrative (SG&A) expenses for the three months ended September 30, 2023 were $374 million, an increase of 5.1% year-over-year, while SG&A as a percentage of revenue decreased by 180 basis points to 9.9%[186] - Interest expense, net increased by 53.8% to $163 million for the three months ended September 30, 2023, and by 51.4% to $474 million for the nine months, primarily due to increased average debt and higher variable interest rates[191] - Total gross margin for the three months ended September 30, 2023 decreased by 270 basis points to 42.1%, and for the nine months, it decreased by 190 basis points to 40.1% compared to the same periods in 2022[182][185] Shareholder Returns - The company declared dividends of $102 million in Q3 2023, compared to $0 in Q3 2022, indicating a new strategy in returning value to shareholders[29] - The company declared dividends of $1.48 and $4.44 per share during the three and nine months ended September 30, 2023, respectively[32] - The company paid dividends totaling $305 million during the nine months ended September 30, 2023, equating to $4.44 per share[142] - A share repurchase program of $1.25 billion was authorized, with $750 million repurchased through September 30, 2023[141] Operational Efficiency - The company continues to focus on improving operational efficiencies and customer service through proprietary software applications like Total Control®[139] - The company initiated a restructuring program following the Ahern Rentals acquisition, expecting to incur approximately $5 million in additional expenses under this program in 2023[188]