United Rentals Inc. (NYSE:URI)

The analysis of the financial data reveals several noteworthy trends in intangible assets over the five-year period from 2018 to 2022.

Goodwill

Goodwill steadily increased from $5,058 million in 2018 to $6,026 million in 2022. This reflects a cumulative rise of approximately 19%, indicating ongoing acquisitions or business growth contributing to the balance of goodwill over time.

Non-compete agreements

Values for non-compete agreements were relatively stable at $24 million in 2018 and 2019, before declining to $12 million in 2020. Subsequently, there was a marked increase to $65 million in 2021 and $69 million in 2022, suggesting new agreements or revaluation of existing ones enhancing their reported value.

Customer relationships

This intangible asset showed a consistent increase from $2,148 million in 2018 to a peak of $2,389 million in 2021, followed by a slight decline to $2,349 million in 2022. The general upward trend implies strengthening customer base or acquisition of customer portfolios, although the modest dip in the last year may indicate partial amortization or re-assessment.

Trade names and associated trademarks

The carrying amount for trade names and trademarks started at a low base of $5 million in 2018 and rose steadily to $15 million by 2021, before a slight decrease to $14 million in 2022. This growth suggests increased investment or recognition of brand-related intangible assets, with minor reduction possibly due to amortization.

Other intangible assets, gross carrying amount

The gross carrying amount of other intangible assets remained relatively stable, hovering around $2,275 million to $2,469 million from 2018 through 2022, with a slight dip in 2020 and 2022. This stability indicates consistent valuation without significant additions or disposals.

Accumulated amortization

Accumulated amortization of intangible assets increased steadily from -$1,093 million in 2018 to -$1,980 million in 2022. This rising amortization charge reflects the periodic expensing of intangible assets, which is expected given the decreasing net carrying amount.

Other intangible assets, net carrying amount

The net carrying amount of other intangible assets experienced a continuous decline from $1,084 million in 2018 to $452 million in 2022. The sharp decrease indicates that amortization expenses outpaced additions to intangible assets, reducing the net book value significantly over the period.

Goodwill and other intangible assets (combined)

The combined total of goodwill and other intangible assets fluctuated slightly, decreasing from $6,142 million in 2018 to $5,816 million in 2020, before rising again to $6,478 million in 2022. This pattern suggests a transient dip, possibly driven by impairment or disposals in 2020, followed by growth due to acquisitions or asset revaluations thereafter.

Overall, the data indicates a trend of increasing goodwill and customer-related intangibles, supported by steady amortization that reduces net intangible asset values. While some intangible categories such as non-compete agreements and trade names saw volatility, the general direction points to active management of intangible asset portfolios through acquisitions and expirations/amortizations over time.

Total Assets

The reported total assets exhibited a generally increasing trend over the five-year period, growing from 18,133 million USD at the end of 2018 to 24,183 million USD by the end of 2022. Despite a slight decline in 2020, the assets rebounded significantly in subsequent years, indicating an expansion in the company's resource base.

The adjusted total assets, which exclude goodwill, followed a similar pattern but at consistently lower levels. These assets increased from 13,075 million USD in 2018 to 18,157 million USD in 2022, reflecting organic growth while accounting for the exclusion of intangible assets.

Stockholders’ Equity

The reported stockholders’ equity consistently increased, reaching 7,062 million USD in 2022 from 3,403 million USD in 2018. This steady growth suggests a strengthening equity base and possibly improved profitability or retained earnings accumulation over time.

Conversely, the adjusted stockholders’ equity showed negative values in the first three years, albeit improving each year from -1,655 million USD in 2018 to -623 million USD in 2020. In 2021 and 2022, this measure turned positive, rising to 463 million USD and then 1,036 million USD respectively, indicating a significant reduction in intangible asset adjustments and improved equity position when goodwill is excluded.

Overall Insights

The divergence between reported and adjusted figures highlights the impact of goodwill on the company’s balance sheet. While reported figures show consistent growth in assets and equity, the adjusted data reveal a more cautious view of net asset value, particularly in earlier years when adjusted equity was negative.

The negative adjusted equity in prior years suggests that the goodwill and other intangible assets had a substantial effect on reported equity, and the transition to positive adjusted equity from 2021 onward indicates an improvement in the underlying financial strength without reliance on intangible assets.

Overall, the company showed asset base growth and strengthening equity position under both reported and adjusted measures, with increasing adjusted equity signaling enhanced financial stability independent of goodwill valuation.

The analysis of the financial data reveals several noteworthy trends in the company's operational efficiency and profitability metrics over the reviewed periods.

Total Asset Turnover

The reported total asset turnover ratio remained relatively stable from 2018 to 2022, fluctuating narrowly between 0.44 and 0.49, ultimately settling at 0.48 in the latest period. In contrast, the adjusted total asset turnover, which presumably accounts for goodwill adjustments, exhibited a higher level throughout the same timeframe, starting at 0.62 in 2018 and gently declining to 0.64 by 2022. This pattern indicates that after adjustments, the company’s asset utilization efficiency has been consistently better but showing a slight downward trend in recent years.

Financial Leverage

The reported financial leverage ratio demonstrated a clear downward trend from 5.33 in 2018 to 3.42 in 2022, indicating a reduction in the reliance on debt or liabilities relative to equity over time. However, adjusted financial leverage data are only available for 2021 and 2022, showing extraordinarily high values of 31.89 and 17.53 respectively. These adjusted figures suggest significant changes when considering goodwill adjustments, possibly reflecting an accounting treatment that drastically alters the equity base or liabilities, subsequently reducing leverage by 2022 but still suggesting very high leverage compared to reported figures.

Return on Equity (ROE)

Reported ROE decreased from 32.21% in 2018 to a low of 19.58% in 2020, followed by a recovery to 29.81% in 2022. The adjusted ROE, available only for the last two years, is substantially higher, with a peak of 299.35% in 2021 and a decrease to 203.19% in 2022. This stark contrast implies that the goodwill adjustments significantly amplify the perceived return on equity, likely due to a markedly reduced equity base in the adjusted calculation, but still maintain an extremely high level of profitability relative to equity.

Return on Assets (ROA)

Reported ROA demonstrated moderate fluctuations, starting at 6.04% in 2018, dipping to 4.98% in 2020, and then improving steadily to 8.7% in 2022. Adjusted ROA remained consistently higher than the reported measure in all years where both are available, ranging from 8.38% in 2018 to reaching 11.59% in 2022. This tendency of higher adjusted ROAs suggests better asset efficiency and profitability once goodwill-related adjustments are factored into the asset base.

In summary, the company appears to sustain stable operational efficiency with slightly improved profitability metrics over time, especially when goodwill is considered. While reported figures point to moderate financial leverage reduction and stable returns, adjusted data reveal more pronounced leverage and exceptional returns on equity and assets, highlighting the significant impact of goodwill on financial ratios.

The analysis of the financial data over the reported periods reveals several noteworthy trends in the assets and asset utilization metrics.

Total Assets

The reported total assets exhibit a general upward trend, increasing from US$18,133 million as of December 31, 2018, to US$24,183 million by December 31, 2022. This reflects an approximate 33% growth over the five-year period. Despite a slight dip observed in 2020 to US$17,868 million, total assets rebounded and continued their growth trajectory through 2022.

The adjusted total assets, which exclude goodwill, follow a similar but less pronounced pattern, increasing from US$13,075 million in 2018 to US$18,157 million in 2022. The adjusted asset base experienced a decrease in 2020, declining to US$12,700 million, before recovering steadily in subsequent years. Overall, the adjusted total assets grew by roughly 39% over the period, implying a substantive increase in the company’s asset base excluding goodwill.

Total Asset Turnover

The reported total asset turnover ratio shows relative stability across the years, starting at 0.44 in 2018 and increasing to 0.49 in 2019, followed by a marginal decline and leveling at 0.48 from 2020 through 2022. This suggests that the efficiency in utilizing reported total assets to generate revenue has remained consistent, with only minor fluctuations.

The adjusted total asset turnover ratio, which considers the asset base excluding goodwill, is notably higher than the reported figures, beginning at 0.62 in 2018 and peaking at 0.68 in 2019. A gradual decline is observed thereafter, reaching 0.64 by 2022. This downward trend may indicate a slight reduction in the efficiency of asset utilization when goodwill is excluded, though the ratio consistently remains above the reported turnover.

In summary, the company has expanded its asset base both in reported terms and on a goodwill-adjusted basis, while maintaining a generally stable asset turnover ratio. The adjusted asset turnover ratio demonstrates a higher efficiency level relative to the reported figures but has experienced a slight decline recently. These patterns highlight an ongoing growth strategy accompanied by consistent asset utilization performance, albeit with some mild indications of decreased efficiency in the most recent years when excluding goodwill effects.

The data reveals multiple trends regarding the financial position of the entity over the period from 2018 to 2022, considering both reported and goodwill-adjusted figures.

Assets

Reported total assets rose steadily from US$18,133 million in 2018 to US$24,183 million in 2022, representing a significant increase over five years. Adjusted total assets, which exclude goodwill, displayed a similar upward trajectory, moving from US$13,075 million in 2018 to US$18,157 million in 2022. Both reported and adjusted assets exhibit growth, although the adjusted base remains consistently lower, reflecting the deduction of goodwill.

Stockholders’ Equity

Reported stockholders’ equity showed a strong upward trend, increasing from US$3,403 million in 2018 to US$7,062 million in 2022, more than doubling over the period. However, the adjusted stockholders’ equity presents a contrasting picture: it was negative from 2018 through 2020, improving from -US$1,655 million in 2018 to -US$623 million in 2020, then turning positive in 2021 at US$463 million and further increasing to US$1,036 million in 2022. This improvement suggests that adjustments made for goodwill markedly affect equity valuation, especially in the earlier years.

Financial Leverage

Reported financial leverage showed a steady decline from 5.33 in 2018 to 3.42 in 2022, indicating a reduction in the proportion of debt relative to equity on a reported basis. In contrast, the adjusted financial leverage is only available for the two most recent years, displaying very high levels: 31.89 in 2021 and decreasing to 17.53 in 2022. While still elevated, this reduction hints at an improving equity base relative to liabilities when excluding goodwill.

Overall, the data indicates that while the company’s asset base and reported equity have grown substantially, the adjustments for goodwill reveal that underlying equity capital was initially negative and only recently improved to a positive position. The moderation in financial leverage on both reported and adjusted bases suggests a trend towards strengthening capital structure, though the adjusted leverage remains significantly higher, reflecting the impact of goodwill on balance sheet metrics.

The financial data reveals significant trends in both reported and adjusted stockholders' equity and return on equity (ROE) over the five-year period ending December 31, 2022.

Reported Stockholders' Equity

The reported stockholders' equity showed a consistent and strong upward trend throughout the period. Beginning at $3,403 million in 2018, it increased steadily each year to reach $7,062 million by the end of 2022. This represents more than a doubling in equity over five years, indicating sustained growth in the company's net worth.

Adjusted Stockholders' Equity

The adjusted stockholders' equity—presumably excluding goodwill or other intangible assets—displayed a contrasting trend. It started with negative values, at -$1,655 million in 2018, and although it remained negative in 2019 and 2020, the magnitude of the negative balance decreased significantly each year. By 2021, it turned positive at $463 million and further increased to $1,036 million in 2022. This progression from a substantial negative to a positive adjusted equity suggests improvements in tangible net assets or a reduction in intangible asset adjustments.

Reported Return on Equity (ROE)

The reported ROE demonstrated variability across the years. It began at a high of 32.21% in 2018, followed by a slight decrease to 30.65% in 2019. There was a more pronounced dip in 2020 to 19.58%, potentially influenced by adverse market or operational factors. Recovery was noted subsequently, with ROE rising to 23.13% in 2021 and further improving to 29.81% in 2022. Although the 2020 downturn is evident, the overall pattern indicates resilience and a rebound in profitability relative to shareholders' equity.

Adjusted Return on Equity (ROE)

Adjusted ROE data is only available for 2021 and 2022, displaying extraordinarily high values of 299.35% and 203.19%, respectively. These figures are substantially greater than the reported ROE for the same years, reflecting the impact of the adjusted equity base, which was much smaller and notably positive compared to negative or near-zero values in earlier years. The extremely elevated adjusted ROE suggests that when excluding goodwill or other intangible assets, the company achieved very high returns on its tangible equity during these two years.

Total Assets

The reported total assets exhibited a generally increasing trend over the five-year period. Starting at US$18,133 million in 2018, the value rose marginally to US$18,970 million in 2019, before experiencing a decline to US$17,868 million in 2020. This was followed by a significant recovery and growth in 2021 and 2022, reaching US$20,292 million and US$24,183 million respectively. Conversely, the adjusted total assets, which exclude goodwill, followed a similar pattern but at consistently lower levels. The adjusted assets increased from US$13,075 million in 2018 to US$13,816 million in 2019, dipped to US$12,700 million in 2020, and then rose substantially to US$14,764 million in 2021 and US$18,157 million in 2022.

Return on Assets (ROA)

Both reported and adjusted ROA demonstrated positive growth across the analyzed timeframe. The reported ROA started at 6.04% in 2018, increasing slightly to 6.19% in 2019 before dropping to 4.98% in 2020. It then rebounded to 6.83% in 2021, followed by a notable increase to 8.7% in 2022. The adjusted ROA, which accounts for asset values excluding goodwill, showed a similar trajectory but at higher levels, indicating better profitability relative to the adjusted asset base. It moved from 8.38% in 2018 to 8.5% in 2019, declined to 7.01% in 2020, then significantly improved in subsequent years to 9.39% in 2021 and reached 11.59% in 2022.

Overall Insights

The data reveals that while total assets fluctuated, there was a clear recovery post-2020 and considerable growth by 2022. The disparity between reported and adjusted assets indicates a substantial presence of goodwill, which consistently increases the reported asset base. Profitability, as measured by ROA, declined in 2020, implying operational challenges possibly related to that period. However, the strong recovery in both reported and adjusted ROA in subsequent years suggests improved asset utilization and operational efficiency. The consistently higher adjusted ROA compared to reported ROA indicates that excluding goodwill from asset base presents a more favorable profitability picture relative to tangible assets.