Letter to stockholdersFrom Our CEO and Chairman
In 2021, as our markets recovered, we executed strongly in the field and
deployed our resources to achieve new milestones in profitable growth.
It was a pivotal year for our company and our industry. Construction and
industrial demand continued to gain traction, rebounding from 2020
pandemic lows more quickly than initially forecast. We were well-prepared
for the upturn, having made a strategic decision to retain our customer
service capacity from the onset of Covid-19.
By year-end 2021, the rebound had become a new upcycle, with demand in our
core markets trending higher than pre-pandemic levels. We acted decisively
in this new environment, making opportunistic investments in organic
growth, M&A, talent and fleet.
For our customers, as for our investors, scale increases our ability to
deliver value. In May, we completed the acquisition of General Finance
Corporation, which expanded our footprint and diversified our service
offering. In total, we integrated $1.4 billion of acquisitions and opened
30 specialty rental cold-starts, increasing our growth capacity to
approximately 1,345 rental locations and 20,400 employees in 2021.
For the full year, we reported record total revenue of $9.7 billion, GAAP
diluted earnings per share of $19.04, and adjusted EPS1 of $22.06. Net
income was $1.4 billion, with a margin of 14.3%. Adjusted EBITDA was also
a record at $4.4 billion, at a margin of 45.4%1. We generated $3.7 billion
of net cash from operating activities, and $1.5 billion of free cash flow1
after investing $3 billion of gross capital expenditures on rental fleet.
At year-end, our return on invested capital (ROIC) improved 140 basis
points to 10.3%, comfortably exceeding our weighted average cost of
capital. Total liquidity was a robust $2.9 billion, and our net leverage
ratio was 2.2x.
Progress on all fronts
2021 presented a unique set of dynamics for our industry, primarily because
the pandemic persisted as end markets recovered. This required rigorous
measures to protect our people and safeguard the interests of our investors.
Our employees did an excellent job of maintaining daily safety standards and
Covid-19 protocols, delivering one of the best OSHA recordable rates in our
history.
We continue to prioritize safety as part of the environmental, social and
governance framework that informs our culture and makes United Rentals a great
place to work. Our turnover rate throughout the pandemic has remained
consistent with pre-pandemic levels, reflecting the strong support our
employees receive. In 2021, our company earned rating upgrades from leading
ESG agencies based on our reporting of key cultural and operational
initiatives — these include our goal of reducing the greenhouse gas emissions
intensity of our business by 35% by 2030, from 2018.
Importantly, our employees are engaged in our progress on every front. They
understand the benefits of making ongoing improvements in operations and
customer service, and they can see that these efficiencies count for a lot as
we add revenue in an environment of improving demand.
The recovery in the construction and industrial sectors has been steadily
moving the needle higher for months, and the economy is heading in the right
direction despite some lingering challenges. For the first time since the
pandemic arrived, we’re seeing a sustained improvement in longer-term
visibility, which provides some insight into future market conditions.
The positive indicators are compelling: demand trending up across diverse
verticals, coupled with new multi-year tailwinds. We’ll benefit from U.S.
legislation authorizing $550 billion of infrastructure spending over the next
five years, as well as from the onshoring of manufacturing facilities.
Onshoring is a nascent trend that creates demand for our construction
equipment, followed by the need for our industrial support services.
Outlook
United Rentals has always been a growth story, with an eye on the big picture.
Through two years of uncharted pandemic waters, we stayed focused on our
strategy, our positioning and our earnings power. Now the market tailwinds
have returned, and we’ll continue to look for ways to leverage our competitive
advantages — always with the goal of creating value for all of our key
constituents.
We expect 2022 to be another strong year for our company. The guidance we
issued in January is for total revenue of $10.65 billion to $11.05 billion,
and adjusted EBITDA of $4.95 billion to $5.15 billion. We anticipate net
rental capex of $1.85 billion to $2.05 billion, after gross purchases of $2.9
billion to $3.1 billion. We’re also guiding to net cash from operating
activities of $3.5 billion to $3.9 billion, and free cash flow of $1.5 billion
to $1.7 billion.
Looking forward, our strategy is in the hands of seasoned leaders, executed by
an impressive field organization. We have critical scale, a cohesive customer
service network and the financial resources1 to extend our market-leading
position. These are all significant advantages for our investors now and in
the future.
March 22, 2022
Matthew J. Flannery
Chief Executive Officer
Michael J. Kneeland
Chair of the Board