Letter to stockholders

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

1 Adjusted EPS, adjusted EBITDA and free cash flow are non-GAAP measures. Please see the reconciliation of these measures to the comparable GAAP measures contained in the “Management Discussion and Analysis of Financial Condition and Results of Operations” section in the accompanying Annual Report on Form 10-K for the year ended December 31, 2021, and in our fiscal 2021 earnings press release furnished on Form 8-K with the Securities and Exchange Commission on January 26, 2022. Net income margin and adjusted EBITDA margin represent net income or adjusted EBITDA divided by total revenue.