UNITED RENTALS INC

Previous wording

Our operations are impacted by global economic conditions, including inflation, increased interest rates and supply chain constraints, and we take actions to modify our plans to address such economic conditions. In 2022, for example, we intentionally held back on sales of rental equipment to ensure we had sufficient rental capacity for our customers. To date, our supply chain disruptions have been limited, but we may experience more severe supply chain disruptions in the future. Interest rates on our debt instruments have increased recently. For example, in March 2024, URNA issued $1.1 billion aggregate principal amount of senior unsecured notes at a 61/8 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 6.6 percent and 1.4 percent for the three months ended March 31, 2024 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 are 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. The impact of inflation and increased interest rates may continue to be significant in the future.

Current wording

Our operations are impacted by global economic conditions, including inflation, increased interest rates and supply chain constraints, and we take actions to modify our plans to address such economic conditions. In 2022, for example, we intentionally held back on sales of rental equipment to ensure we had sufficient rental capacity for our customers. To date, our supply chain disruptions have been limited, but we may experience more severe supply chain disruptions in the future. Interest rates on our debt instruments have increased recently. For example, in March 2024, United Rentals (North America), Inc. (“URNA”) issued $1.1 billion aggregate principal amount of senior unsecured notes at a 61/8 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 6.6 percent and 1.4 percent for the six months ended June 30, 2024 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 are 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. The impact of inflation and increased interest rates may continue to be significant in the future.

Previous wording

We are the largest equipment rental company in the world, with an integrated network of 1,600 rental locations. We primarily operate in the United States and Canada, and have a limited 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 $20.6 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.

Current wording

We are the largest equipment rental company in the world, with an integrated network of 1,647 rental locations. We primarily operate in the United States and Canada, and have a limited 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 $21.3 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.

Previous wording

We offer approximately 4,800 classes of 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 84 percent of total revenues for the three months ended March 31, 2024.

Current wording

We offer approximately 4,800 classes of 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 85 percent of total revenues for the six months ended June 30, 2024.

Previous wording

•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 in March 2024, which is discussed in note 3 to our condensed consolidated financial statements, as well as our tools and onsite services offerings, will further position United Rentals as a single source provider of total jobsite solutions through our extensive product and service resources and technology offerings; and

Current wording

•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, which is discussed in note 3 to our condensed consolidated financial statements, as well as our tools and onsite services offerings, will further position United Rentals as a single source provider of total jobsite solutions through our extensive product and service resources and technology offerings; and

Previous wording

•Issued $1.1 billion aggregate principal amount of 61/8 percent Senior Notes due 2034. The issued debt, together with drawings on our ABL facility, was used to fund the Yak acquisition that is discussed in note 3 to the condensed consolidated financial statements; and

Current wording

•Issued $1.1 billion aggregate principal amount of 61/8 percent Senior Notes due 2034. The issued debt, together with drawings on our ABL facility, was used to fund the Yak acquisition that is discussed in note 3 to the condensed consolidated financial statements;

Previous wording

•Amended our term loan facility, primarily to extend the maturity date to February 2031 and to increase the facility size to $1.0 billion.

Current wording

•Amended our term loan facility, primarily to extend the maturity date to February 2031 and to increase the facility size to $1.0 billion; and

Previous wording

(1) The accounts receivable securitization facility expires on June 24, 2024 and may be extended on a 364-day basis by mutual agreement with the purchasers under the facility.

Current wording

•Amended our accounts receivable securitization facility, primarily to extend the maturity date and to increase the facility size from $1.3 billion to $1.5 billion. The facility expires in June 2025 and may be extended on a 364-day basis by mutual agreement with the purchasers under the facility.

Previous wording

As of March 31, 2024, we had available liquidity of $3.561 billion, comprised of cash and cash equivalents, and availability under the ABL and accounts receivable securitization facilities.

Current wording

As of June 30, 2024, we had available liquidity of $3.267 billion, comprised of cash and cash equivalents, and availability under the ABL and accounts receivable securitization facilities.

Previous wording

In October 2022, our Board of Directors authorized a $1.25 billion share repurchase program, which was completed in the first quarter of 2024. In January 2024, our Board of Directors authorized a $1.5 billion share repurchase program, and repurchases under this program began in March 2024, following the completion of the $1.25 billion program. We have repurchased $125 under the $1.5 billion program through March 31, 2024, and intend to repurchase a total of $1.25 billion under the program in 2024 and then complete the program by the end of the first quarter of 2025. 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 and expected 2024 repurchases) do not include the excise tax, which totaled $3 year-to-date through March 31, 2024.

Current wording

In October 2022, our Board of Directors authorized a $1.25 billion share repurchase program, which was completed in the first quarter of 2024. In January 2024, our Board of Directors authorized a $1.5 billion share repurchase program, and repurchases under this program began in March 2024, following the completion of the $1.25 billion program. We have repurchased $500 under the $1.5 billion program through June 30, 2024, and intend to repurchase a total of $1.25 billion under the program in 2024 and then complete the program by the end of the first quarter of 2025. 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 and expected 2024 repurchases) do not include the excise tax, which totaled $7 year-to-date through June 30, 2024.

Previous wording

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 three months ended March 31, 2024 and 2023, we paid dividends totaling $110 ($1.63 per share) and $103 ($1.48 per share), respectively. On April 24, 2024, our Board of Directors declared a quarterly dividend of $1.63 per share, payable on May 22, 2024 to stockholders of record on May 8, 2024.

Current wording

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, 2024 and 2023, we paid dividends of $219 ($3.26 per share) and $205 ($2.96 per share), respectively. On July 24, 2024, our Board of Directors declared a quarterly dividend of $1.63 per share, payable on August 28, 2024 to stockholders of record on August 14, 2024.

Previous wording

(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). The decrease in 2024 primarily reflects the impact of reduced amortization associated with the December 2022 acquisition of Ahern Rentals.

Current wording

(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).

Previous wording

(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. The decrease in 2024 primarily reflects decreased sales of rental equipment acquired in the Ahern Rentals acquisition.

Current wording

(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. The decreases in 2024 primarily reflect decreased sales of rental equipment acquired in the Ahern Rentals acquisition.

Previous wording

(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 "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-Other costs/(income)-restructuring charges" below.

Current wording

(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 "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-Other costs/(income)-restructuring charges" below. The amounts above primarily reflect charges associated with a restructuring program initiated following the closing of the Ahern Rentals acquisition.

Previous wording

(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 "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-Other costs/(income)-restructuring charges" below.

Current wording

(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 "Management’s Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-Other costs/(income)-restructuring charges" below. The amounts above primarily reflect charges associated with a restructuring program initiated following the closing of the Ahern Rentals acquisition.

Previous wording

(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. The decrease in 2024 primarily reflects decreased sales of rental equipment acquired in the Ahern Rentals acquisition.

Current wording

(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. The decreases in 2024 primarily reflect decreased sales of rental equipment acquired in the Ahern Rentals acquisition.

Previous wording

For the three months ended March 31, 2024, net income increased $91, or 20.2 percent, and net income margin increased 190 basis points to 15.6 percent. For the three months ended March 31, 2024, adjusted EBITDA increased $84, or 5.6 percent, and adjusted EBITDA margin decreased 30 basis points to 45.5 percent.

Current wording

For the three months ended June 30, 2024, net income increased $45, or 7.6 percent, and net income margin increased 30 basis points to 16.9 percent. For the three months ended June 30, 2024, adjusted EBITDA increased $74, or 4.4 percent, and adjusted EBITDA margin decreased 80 basis points to 46.9 percent.

Previous wording

The year-over-year decrease in adjusted EBITDA margin primarily reflects a 620 basis point decrease in gross margin from sales of rental equipment (excluding the adjustment reflected in the table above for the impact of the fair value mark-up of acquired fleet), partially offset by reduced SG&A expense as a percentage of revenue. The decreased gross margin from sales of rental equipment (excluding the adjustment for the impact of the fair value mark-up of acquired fleet) primarily reflects the continued normalization of used equipment pricing. The favorable margin impact of SG&A expense primarily reflects decreases in certain discretionary expenses, including travel and entertainment.

Current wording

The year-over-year decrease in adjusted EBITDA margin primarily reflects a 550 basis point decrease in gross margin from sales of rental equipment (excluding the adjustment reflected in the table above for the impact of the fair value mark-up of acquired fleet) and a slight decrease in gross margin from equipment rentals (excluding depreciation and stock compensation expense). The decreased gross margin from sales of rental equipment (excluding the adjustment for the impact of the fair value mark-up of acquired fleet) primarily reflects the continued normalization of the used equipment market, including pricing.

Previous wording

For the three months ended March 31, 2024, total revenues of $3.485 billion increased 6.1 percent compared with 2023. 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 March 31, 2024). Equipment rentals increased $189, or 6.9 percent, primarily due to a 4.0 percent increase in fleet productivity, which reflects broad-based strength of demand across our end-markets, and a 3.6 percent increase in average OEC. Sales of rental equipment did not change significantly year-over-year.

Current wording

For the three months ended June 30, 2024, total revenues of $3.773 billion increased 6.2 percent compared with 2023. 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, 2024). Equipment rentals increased $234, or 7.8 percent, primarily due to a 4.6 percent increase in fleet productivity, which includes the impact of the Yak acquisition discussed above, and a 2.7 percent increase in average OEC. Sales of rental equipment did not change significantly year-over-year.

Previous wording

Equipment rentals represented 84 percent of total revenues for the three months ended March 31, 2024. For the three months ended March 31, 2024, equipment rentals of $2.929 billion increased $189, or 6.9 percent, as compared to the same period in 2023, primarily due to a 4.0 percent increase in fleet productivity, which reflects broad-based strength of demand across our end-markets, and a 3.6 percent increase in average OEC.

Current wording

Equipment rentals represented 85 percent of total revenues for the three months ended June 30, 2024. For the three months ended June 30, 2024, equipment rentals of $3.215 billion increased $234, or 7.8 percent, as compared to the same period in 2023, primarily due to a 4.6 percent increase in fleet productivity, which includes the impact of the Yak acquisition discussed above, and a 2.7 percent increase in average OEC.

Previous wording

For the three months ended March 31, 2024, equipment rentals represented 81 percent of total revenues for the general rentals segment. For the three months ended March 31, 2024, general rentals equipment rentals increased $52, or 2.6 percent, as compared to the same period in 2023, primarily reflecting broad-based strength of demand across our end-markets.

Current wording

For the three months ended June 30, 2024, equipment rentals represented 83 percent of total revenues for the general rentals segment. For the three months ended June 30, 2024, general rentals equipment rentals increased $20, or 0.9 percent, as compared to the same period in 2023.

Previous wording

For the three months ended March 31, 2024, equipment rentals represented 91 percent of total revenues for the specialty segment. For the three months ended March 31, 2024, specialty equipment rentals increased $137, or 19.0 percent, as compared to the same period in 2023, primarily due to strong demand across our end-markets and increased average OEC.

Current wording

For the three months ended June 30, 2024, equipment rentals represented 90 percent of total revenues for the specialty segment. For the three months ended June 30, 2024, specialty equipment rentals increased $214, or 27.0 percent, as compared to the same period in 2023, primarily due to strong demand across our end-markets, the impact of the Yak acquisition and increased average OEC. Specialty equipment rentals increased 18.1 percent year-over-year excluding the revenue from the acquired Yak locations.

Previous wording

Sales of rental equipment. For the three months ended March 31, 2024, sales of rental equipment represented approximately 11 percent of our total revenues. For the three months ended March 31, 2024, sales of rental equipment did not change significantly year-over-year.

Current wording

Sales of rental equipment. For the six months ended June 30, 2024, sales of rental equipment represented approximately 10 percent of our total revenues. For the three and six months ended June 30, 2024, sales of rental equipment did not change significantly year-over-year.

Previous wording

Sales of new equipment. For the three months ended March 31, 2024, sales of new equipment represented approximately 1 percent of our total revenues. For the three months ended March 31, 2024, sales of new equipment did not change significantly year-over-year.

Current wording

Sales of new equipment. For the six months ended June 30, 2024, sales of new equipment represented approximately 2 percent of our total revenues. For the three and six months ended June 30, 2024, sales of new equipment did not change significantly year-over-year.

Previous wording

Contractor supplies sales represent our revenues associated with selling a variety of supplies, including construction consumables, tools, small equipment and safety supplies. For the three months ended March 31, 2024, contractor supplies sales represented approximately 1 percent of our total revenues. For the three months ended March 31, 2024, contractor supplies sales did not change significantly year-over-year.

Current wording

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, 2024, contractor supplies sales represented approximately 1 percent of our total revenues. For the three and six months ended June 30, 2024, contractor supplies sales did not change significantly year-over-year.

Previous wording

Service and other revenues primarily represent our revenues earned from providing repair and maintenance services on our customers’ fleet (including parts sales). For the three months ended March 31, 2024, service and other revenues represented approximately 3 percent of our total revenues. For the three months ended March 31, 2024, service and other revenues did not change significantly year-over-year.

Current wording

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, 2024, service and other revenues represented approximately 2 percent of our total revenues. For the three and six months ended June 30, 2024, service and other revenues did not change significantly year-over-year.

Previous wording

General rentals. For the three months ended March 31, 2024, equipment rentals gross profit increased by $18, and equipment rentals gross margin was flat, year-over-year.

Current wording

General rentals. For the three months ended June 30, 2024, equipment rentals gross profit increased by $14, and equipment rentals gross margin increased by 30 basis points, year-over-year.

Previous wording

Specialty. For the three months ended March 31, 2024, equipment rentals gross profit increased by $82, and equipment rentals gross margin increased by 200 basis points, year-over-year. Gross margin increased primarily due to better cost performance and fixed cost absorption on higher revenue.

Current wording

For the six months ended June 30, 2024, equipment rentals gross profit increased by $180, and equipment rentals gross margin increased by 60 basis points, year-over-year. Gross margin increased primarily due to better cost performance and fixed cost absorption on higher revenue, partially offset by the impact of increased depreciation expense associated with the Yak acquisition.

Previous wording

For the three months ended March 31, 2024, total gross margin increased 80 basis points from the same period in 2023. Equipment rentals gross margin increased 110 basis points from 2023, primarily due to decreased depreciation expense as a percentage of revenue. Gross margin from sales of rental equipment did not change significantly from the same period in 2023. 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 March 31, 2024).

Current wording

For the three months ended June 30, 2024, total gross margin increased 10 basis points from the same period in 2023. Equipment rentals gross margin increased 70 basis points from 2023, primarily due to decreased depreciation expense as a percentage of revenue. Gross margin from sales of rental equipment decreased 390 basis points from 2023, which primarily reflected the continued 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, 2024).

Previous wording

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. SG&A expense as a percentage of revenue for the three months ended March 31, 2024 decreased from the same period in 2023 primarily due to decreases in certain discretionary expenses, including travel and entertainment.

Current wording

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. SG&A expense as a percentage of revenue for the three and six months ended June 30, 2024 did not change significantly year-over-year.

Previous wording

Therestructuring 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 $381. We currently have no open restructuring programs, and the total liability associated with our restructuring programs was $20 as of March 31, 2024.

Current wording

Therestructuring 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. The year-over-year decreases in restructuring charges for the three and six months ended June 30, 2024 primarily reflect 2023 charges associated with the restructuring program initiated following the December 2022 acquisition of Ahern Rentals. Since the first such program was initiated in 2008, we have completed seven restructuring programs and have incurred total restructuring charges of $382. We currently have no open restructuring programs, and the total liability associated with our restructuring programs was $19 as of June 30, 2024.

Previous wording

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. The year-over-year decrease in non-rental depreciation and amortization for the three months ended March 31, 2024 primarily reflected a reduction in amortization expense associated with the Ahern Rentals acquisition.

Current wording

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.

Previous wording

Interest expense, net for the three months ended March 31, 2024 increased 6.7 percent year-over-year, primarily reflecting increased average debt, including the debt issued to partially fund the Yak acquisition discussed above, and higher variable debt interest rates. The weighted average interest rates on our variable debt instruments were 6.6 percent and 5.9 percent for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Interest expense, net for the three and six months ended June 30, 2024 increased by 7.5 percent and 7.1 percent year-over-year, respectively, primarily reflecting increased average debt, including the debt issued to partially fund the Yak acquisition discussed above, and higher variable debt interest rates. The weighted average interest rates on our variable debt instruments were 6.6 percent and 6.3 percent for the three months ended June 30, 2024 and 2023, respectively, and 6.6 percent and 6.1 percent for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

Theeffective tax rates for 2024 and 2023 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 decrease in the effective tax rate for the three months ended March 31, 2024 primarily reflected decreased average state tax rates.

Current wording

Theeffective tax rates for 2024 and 2023 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.

Previous wording

Balance sheet. Goodwill increased by $923, or 15.5 percent, from December 31, 2023 to March 31, 2024, primarily due to the impact of the Yak acquisition, as discussed in note 3 to the condensed consolidated financial statements. 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 7 to the condensed consolidated financial statements for further information on debt changes.

Current wording

Balance sheet. Prepaid expenses and other assets increased by $138, or 102.2 percent, from December 31, 2023 to June 30, 2024, primarily due to an increase in income taxes receivable which reflected required tax payments exceeding the estimated tax accruals. Goodwill increased by $809, or 13.6 percent, from December 31, 2023 to June 30, 2024, primarily due to the impact of the Yak acquisition, as discussed in note 3 to the condensed consolidated financial statements. Accounts payable increased by $444, or 49.1 percent, from December 31, 2023 to June 30, 2024, 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 7 to the condensed consolidated financial statements for further information on debt changes.

Previous wording

In October 2022, our Board of Directors authorized a $1.25 billion share repurchase program, which was completed in the first quarter of 2024. In January 2024, our Board of Directors authorized a $1.5 billion share repurchase program, and repurchases under this program began in March 2024, following the completion of the $1.25 billion program. We have repurchased $125 under the $1.5 billion program through March 31, 2024, and intend to repurchase a total of $1.25 billion under the program in 2024 and then complete the program by the end of the first quarter of 2025. 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 and expected 2024 repurchases) do not include the excise tax, which totaled $3 year-to-date through March 31, 2024. Since 2012, we have repurchased a total of $6.343 billion (inclusive of immaterial excise taxes, which were first imposed in 2023) of Holdings' common stock under our share repurchase programs (comprised of eight programs that have ended and the current program).

Current wording

In October 2022, our Board of Directors authorized a $1.25 billion share repurchase program, which was completed in the first quarter of 2024. In January 2024, our Board of Directors authorized a $1.5 billion share repurchase program, and repurchases under this program began in March 2024, following the completion of the $1.25 billion program. We have repurchased $500 under the $1.5 billion program through June 30, 2024, and intend to repurchase a total of $1.25 billion under the program in 2024 and then complete the program by the end of the first quarter of 2025. 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 and expected 2024 repurchases) do not include the excise tax, which totaled $7 year-to-date through June 30, 2024. Since 2012, we have repurchased a total of $6.722 billion (inclusive of immaterial excise taxes, which were first imposed in 2023) of Holdings' common stock under our share repurchase programs (comprised of eight programs that have ended and the current program).

Previous wording

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 three months ended March 31, 2024 and 2023, we paid dividends totaling $110 ($1.63 per share) and $103 ($1.48 per share), respectively. On April 24, 2024, our Board of Directors declared a quarterly dividend of $1.63 per share, payable on May 22, 2024 to stockholders of record on May 8, 2024.

Current wording

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, 2024 and 2023, we paid dividends totaling $219 ($3.26 per share) and $205 ($2.96 per share), respectively. On July 24, 2024, our Board of Directors declared a quarterly dividend of $1.63 per share, payable on August 28, 2024 to stockholders of record on August 14, 2024.

Previous wording

Our principal existing sources of cash are cash generated from operations and from the sale of rental equipment, and borrowings available under our ABL facility and accounts receivable securitization facility. As of March 31, 2024, we had cash and cash equivalents of $429. 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 three months ended March 31, 2024:

Current wording

Our principal existing sources of cash are cash generated from operations and from the sale of rental equipment, and borrowings available under our ABL facility and accounts receivable securitization facility. As of June 30, 2024, we had cash and cash equivalents of $467. 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, 2024:

Previous wording

Loan Covenants and Compliance. As of March 31, 2024, we were in compliance with the covenants and other provisions of the ABL, accounts receivable securitization, term loan and repurchase 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.

Current wording

Loan Covenants and Compliance. As of June 30, 2024, 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.

Previous wording

Sources and Uses of Cash. During the three months ended March 31, 2024, we (i) generated cash from operating activities of $1.029 billion, (ii) generated cash from the sale of rental and non-rental equipment of $396 and (iii) received cash from debt proceeds, net of payments, of $866. We used cash during this period principally to (i) make payments for purchases of rental and non-rental equipment and intangible assets of $569, (ii) purchase other companies for $1.118 billion, (iii) purchase shares of our common stock for $415 and (iv) pay dividends of $110. During the three months ended March 31, 2023, we (i) generated cash from operating activities of $939, (ii) generated cash from the sale of rental and non-rental equipment of $400 and (iii) received cash from debt proceeds, net of payments, of $220. We used cash during this period principally to (i) make payments for purchases of rental and non-rental equipment and intangible assets of $870, (ii) purchase other companies for $299, (iii) purchase shares of our common stock for $303 and (iv) pay dividends of $103.

Current wording

Sources and Uses of Cash. 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. During the six months ended June 30, 2023, we (i) generated cash from operating activities of $2.228 billion, (ii) generated cash from the sale of rental and non-rental equipment of $798 and (iii) received cash from debt proceeds, net of payments, of $481. We used cash during this period principally to (i) make payments for purchases of rental and non-rental equipment and intangible assets of $2.227 billion, (ii) purchase other companies for $418, (iii) purchase shares of our common stock for $554 and (iv) pay dividends of $205.

Previous wording

Free cash flow for the three months ended March 31, 2024 was $869, an increase of $391 as compared to $478 for the three months ended March 31, 2023. The increase in free cash flow primarily reflected lower payments for net rental capital expenditures (payments for purchases of rental equipment less the proceeds from sales of rental equipment), which decreased $281, or 69 percent, year-over-year, and increased net cash provided by operating activities.

Current wording

Free cash flow for the six months ended June 30, 2024 was $1.065 billion, an increase of $247 as compared to $818 for the six months ended June 30, 2023. The increase in free cash flow primarily reflected lower payments for purchases of rental equipment, which decreased $182, or 9 percent, year-over-year, and increased net cash provided by operating activities.