0001067701-19-000031.txt : 20190717 0001067701-19-000031.hdr.sgml : 20190717 20190717164215 ACCESSION NUMBER: 0001067701-19-000031 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 20190717 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190717 DATE AS OF CHANGE: 20190717 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED RENTALS, INC. CENTRAL INDEX KEY: 0001067701 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 061522496 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14387 FILM NUMBER: 19959499 BUSINESS ADDRESS: STREET 1: 100 FIRST STAMFORD PLACE STREET 2: 7TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2036223131 MAIL ADDRESS: STREET 1: 100 FIRST STAMFORD PLACE STREET 2: 7TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06902 FORMER COMPANY: FORMER CONFORMED NAME: UNITED RENTALS INC /DE DATE OF NAME CHANGE: 19980806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED RENTALS NORTH AMERICA INC CENTRAL INDEX KEY: 0001047166 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 860933835 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13663 FILM NUMBER: 19959498 BUSINESS ADDRESS: STREET 1: 100 FIRST STAMFORD PLACE STREET 2: 7TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2036223131 MAIL ADDRESS: STREET 1: 100 FIRST STAMFORD PLACE STREET 2: 7TH FLOOR CITY: STAMFORD STATE: CT ZIP: 06902 FORMER COMPANY: FORMER CONFORMED NAME: UNITED RENTALS INC DATE OF NAME CHANGE: 19971020 8-K 1 uri-6302019x8xk.htm 8-K Document
false0001067701 0001067701 2019-07-17 2019-07-17


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________  
FORM 8-K
  __________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 17, 2019
  __________________
UNITED RENTALS, INC.
UNITED RENTALS (NORTH AMERICA), INC.
(Exact name of registrant as specified in its charter)
  __________________
 
 
 
 
 
Delaware
 
001-14387
 
06-1522496
Delaware
 
001-13663
 
86-0933835
(State or other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
 
 
 
100 First Stamford Place, Suite 700
 
 
Stamford
 
 
Connecticut
 
06902
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (203622-3131 
    (Former name or former address if changed since last report.)
__________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $.01 par value, of United Rentals, Inc.
 
URI
 
New York Stock Exchange






Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):
 
 
 
Emerging growth company 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
o
 
 






Item 2.02.    Results of Operations and Financial Condition.
On July 17, 2019, United Rentals, Inc. issued a press release reporting its results of operations for the quarter ended June 30, 2019. A copy of the press release is being furnished with this report as Exhibit 99.1.

Item 7.01.    Regulation FD Disclosure.
Certain information concerning our business, financial results and 2019 outlook that the Company expects to use at certain investor meetings and presentations can be accessed currently on the Company’s website, www.unitedrentals.com. Such information will be maintained on the Company’s website for at least the period of its use at such meetings and presentations or until superseded by more current information.
The presentation includes certain financial measures - free cash flow, earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA and adjusted earnings per share (“adjusted EPS”) - that are “non-GAAP financial measures” as defined under the rules of the Securities and Exchange Commission. Free cash flow represents net cash provided by operating activities less purchases of, and plus proceeds from, equipment, and plus excess tax benefits from share-based payment arrangements. The equipment purchases and proceeds represent cash flows from investing activities. EBITDA represents the sum of net income (loss), loss on discontinued operations, net of tax, provision (benefit) for income taxes, interest expense, net, interest expense-subordinated convertible debentures, net, depreciation of rental equipment and non-rental depreciation and amortization. Adjusted EBITDA represents EBITDA plus stock compensation expense, net, and the impact of the defined special items. EBITDA and adjusted EBITDA are presented on as-reported and pro forma bases. Adjusted EPS represents diluted EPS from continuing operations plus the impact of the defined special items.
The presentation includes reconciliations of these non-GAAP financial measures to their nearest generally accepted accounting principles financial measures. The Company believes that: (i) free cash flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements; (ii) EBITDA and adjusted EBITDA provide useful information about operating performance and period-over-period growth, and help investors gain an understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made and debt is serviced; and (iii) adjusted EPS provides useful information concerning future profitability. However, none of these measures should be considered as alternatives to net income, cash flows from operating activities or earnings per share under GAAP as indicators of operating performance or liquidity.

Item 9.01.    Financial Statements and Exhibits.

99.1 Press Release of United Rentals, Inc.





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 17, 2019
 
UNITED RENTALS, INC.
 
 
By:
 
/S/    Craig A. Pintoff     
 
 
Name: Craig A. Pintoff
 
 
Title:   Executive Vice President, Chief Administrative and Legal Officer
 
UNITED RENTALS (NORTH AMERICA), INC.
 
 
By:
 
/S/    Craig A. Pintoff     
 
 
Name: Craig A. Pintoff
 
 
Title:   Executive Vice President, Chief Administrative and Legal Officer






EXHIBIT INDEX
 
 
 
 
Exhibit
 No.
  
Description
 
 
99.1
  



EX-99.1 2 uri-6302019xex991.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
uriprlogo01a01a11.jpg
United Rentals, Inc.
100 First Stamford Place
Suite 700
Stamford, CT 06902
Telephone: 203 622 3131
Fax: 203 622 6080
unitedrentals.com
United Rentals Announces Second Quarter 2019 Results

STAMFORD, Conn. July 17, 2019 – United Rentals, Inc. (NYSE: URI) today announced financial results for the second quarter of 20191.
Total revenue increased 21.1% to $2.290 billion and rental revenue increased 20.2% to $1.960 billion. On a GAAP basis, the company reported second quarter net income of $270 million, or $3.44 per diluted share ("EPS"), compared with $270 million, or $3.20 per diluted share, for the same period in 2018. Second quarter 2019 included a pretax debt redemption loss of $32 million, or $0.30 per diluted share after taxes. Diluted EPS for the quarter increased 7.5% year-over-year. Adjusted EPS2 for the quarter increased 23.1% year-over-year to $4.74.
Adjusted EBITDA2 increased 18.3% year-over-year to $1.073 billion, while adjusted EBITDA margin decreased 110 basis points to 46.9%. On a pro forma basis, year-over-year, net income increased 7.1%, adjusted EBITDA increased 6.6% and adjusted EBITDA margin increased 40 basis points.
Matthew Flannery, chief executive officer of United Rentals, said, “We were pleased with our solid growth in revenue for both our general rental and specialty segments and our adjusted EBITDA for the second quarter. Importantly, the market outlook for the second half of 2019 remains positive based on feedback from our customers and the field. The multiple integrations we have underway will continue to gain traction in the back part of the year.”
Flannery continued, “Our updates to guidance reflect a slightly slower than expected pace for the BlueLine integration, as well as historically bad weather in several key regions this past quarter. As a result, we’ve trimmed the upper ends on total revenue and adjusted EBITDA by approximately 1%, and capex by $150 million, while raising our free cash flow expectation. We remain confident in the health of the cycle and are well positioned to serve our customers with the strongest service offering in our history.”

Highlights
Rental Revenue: Rental revenue3 was a second quarter record at $1.960 billion, reflecting increases of 20.2% and 4.8% year-over-year on an as-reported and pro forma basis, respectively. The as-reported increase is primarily due to the impact of the BakerCorp and BlueLine acquisitions. The pro forma increase is primarily due to growth in the company’s construction end-markets.
_______________

1.
The company completed the acquisitions of BakerCorp International Holdings, Inc. (“BakerCorp”) and Vander Holding Corporation and its subsidiaries (“BlueLine”) in July 2018 and October 2018, respectively. BakerCorp and BlueLine are included in the company's results subsequent to the acquisition dates. Pro forma results reflect the combination of United Rentals, BakerCorp and BlueLine for all periods presented. The acquired BakerCorp locations are reflected in the Trench, Power and Fluid Solutions specialty segment.
2.
Adjusted EPS (earnings per share) and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) are non-GAAP measures as defined in the tables below. See the tables below for amounts and reconciliations to the most comparable GAAP measures. Adjusted EBITDA margin represents adjusted EBITDA divided by total revenue.
3.
Rental revenue includes owned equipment rental revenue, re-rent revenue and ancillary revenue.






Fleet Productivity4: Second quarter fleet productivity decreased 3.1% year-over-year, primarily due to the impact of the BakerCorp and BlueLine acquisitions. On a pro forma basis, fleet productivity increased 0.7%, reflecting improvements in rental rates and fleet mix, partially offset by lower time utilization, primarily due to acquisition integration activities and adverse weather.
Used Equipment: The company generated $197 million of proceeds from used equipment sales in the second quarter at a GAAP gross margin of 41.1% and an adjusted gross margin of 49.2%5; this compares with $157 million at a GAAP gross margin of 41.4% and an adjusted gross margin of 51.6% for the same period last year.
Profitability: Net income for the second quarter of $270 million was flat with last year. Net interest expense increased $68 million year-over-year primarily due to debt issued to fund the BakerCorp and BlueLine acquisitions, and a loss of $32 million associated with the full redemption of our 5 3/4 % Senior Notes. Operating income increased 12.6% year-over-year to $529 million. Adjusted EBITDA increased 18.3% year-over-year to $1.073 billion, while adjusted EBITDA margin decreased 110 basis points to 46.9%. The decline in adjusted EBITDA margin primarily reflects the acquisitions of BakerCorp and BlueLine. On a pro forma basis, year-over-year, net income increased 7.1%, adjusted EBITDA increased 6.6% and adjusted EBITDA margin increased 40 basis points.
General rentals: Second quarter rental revenue for the company’s general rentals segment increased by 14.6% and 2.1% year-over-year on an actual and pro forma basis, respectively. Rental gross margin decreased by 200 basis points to 38.8%, primarily due to the impact of the BlueLine acquisition. Depreciation of rental equipment increased 20.6%, with the BlueLine acquisition being a significant driver of the increase.
Specialty: Second quarter rental revenue for the company’s specialty segment, Trench, Power and Fluid Solutions, increased by 44.8% year-over-year, including an organic increase of 12.6%. Rental gross margin decreased by 250 basis points to 46.0%, primarily due to the impact of acquisitions.
Cash flow: For the first six months of 2019, net cash from operating activities decreased 3.6% to $1.590 billion and free cash flow6, including aggregated merger and restructuring payments, increased 11.0% to $780 million. Free cash flow for the first six months of 2019 included rental gross capital expenditures of $1.129 billion, a 7.9% decrease from a year ago.
Capital Allocation: In June 2019, the company announced that it had lowered its targeted leverage range to 2.0x-3.0x, from 2.5x-3.5x, and expects to end the year with a net leverage ratio of approximately 2.5x. The company's net leverage ratio was 2.8x at June 30, 2019. During the first six months of 2019, the company reduced net debt by $84 million relative to year-end 2018 levels, primarily due to the net impact of issuing $750 million of debt due in 2030 and redeeming $850 million of debt that would have been due in 2024. During the same period, the company also repurchased $420 million of common stock under its current $1.25 billion repurchase program, reducing its diluted share count by 2.1%. As of June 30, 2019, the company has repurchased $840 million of common stock under this program, which it expects to complete by year-end.




_______________
4.
Fleet productivity reflects the combined impact of changes in rental rates, time utilization and mix on owned equipment rental revenue. See “Fleet Productivity Operating Metric” below for more information.
5.
Used equipment sales adjusted gross margin excludes the impact of the fair value mark-up of acquired RSC, NES, Neff and BlueLine fleet that was sold.
6.
Free cash flow is a non-GAAP measure. See the table below for amounts and a reconciliation to the most comparable GAAP measure.





Updated 2019 Outlook
The company has updated its full-year outlook as follows:
 
Prior Outlook
 
Current Outlook
Total revenue
$9.15 billion to $9.55 billion
 
$9.15 billion to $9.45 billion
Adjusted EBITDA7
$4.35 billion to $4.55 billion
 
$4.35 billion to $4.5 billion
Net rental capital expenditures after gross purchases
$1.4 billion to $1.55 billion, after gross purchases of $2.15 billion to $2.3 billion
 
$1.3 billion to $1.4 billion, after gross purchases of $2.05 billion to $2.15 billion
Net cash provided by operating activities
$2.85 billion to $3.2 billion
 
$2.85 billion to $3.1 billion
Free cash flow (excluding the impact of merger and restructuring related payments)
$1.3 billion to $1.5 billion
 
$1.4 billion to $1.55 billion
Return on Invested Capital (ROIC)    
ROIC was 10.8% for the 12 months ended June 30, 2019, exceeding both the 10.0% ROIC for the 12 months ended June 30, 2018 and the company’s current weighted average cost of capital of less than 8.0%. The company’s ROIC metric uses after-tax operating income for the trailing 12 months divided by average stockholders’ equity, debt and deferred taxes, net of average cash. To mitigate the volatility related to fluctuations in the company’s tax rate from period to period, the U.S. federal corporate statutory tax rates of 21% for 2019 and 2018 and 35% for 2017 were used to calculate after-tax operating income (because of the trailing 12-month measurement period, the 2017 tax rate impacts ROIC for the 12 months ended June 30, 2018).
ROIC materially increased due to the reduced tax rates following the enactment of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"). The Tax Act decreased the U.S. federal tax rate from 35% to 21%. If the 21% U.S. federal corporate statutory tax rate following the enactment of the Tax Act was applied to ROIC for all historic periods, the company estimates that ROIC would have been 10.6% and 10.9% for the 12 months ended June 30, 2019 and 2018, respectively. The decline in tax-adjusted ROIC for the 2019 period primarily reflects the impact of recent acquisitions.
Fleet Productivity Operating Metric
In January 2019, the company introduced fleet productivity as a comprehensive metric that provides greater insight into the decisions made by its managers in support of growth and returns. Specifically, the company seeks to optimize the interplay of rental rates, time utilization and mix in driving rental revenue. Fleet productivity aggregates, in one metric, the impact of changes in rates, utilization and mix on owned equipment rental revenue.
The company believes that this metric is useful in assessing the effectiveness of its decisions on rates, time utilization and mix, particularly as they support the creation of shareholder value. Additional information about fleet productivity can be found in the Second Quarter 2019 Investor Presentation on unitedrentals.com. The company is providing quarterly information on rental rates and time utilization in its Second Quarter 2019 Investor Presentation, and does not plan to include such information in subsequent Investor Presentations.


_______________

7.
Information reconciling forward-looking adjusted EBITDA to the comparable GAAP financial measures is unavailable to the company without unreasonable effort, as discussed below.






The table below shows the components of the year-over-year change in rental revenue using the fleet productivity methodology, presented on an actual and pro forma basis:
 
Year-over-year change in average OEC
 
Assumed year-over-year inflation impact (1)
 
Fleet productivity (2)
 
Contribution from ancillary and re-rent revenue (3)
 
Total change in rental revenue
 
Second Quarter 2019
 
 
 
 
 
 
 
 
 
 
Actual
23.2%
 
(1.5)%
 
(3.1)%
 
1.6%
 
20.2%
 
Pro forma
5.5%
 
(1.5)%
 
0.7%
 
0.1%
 
4.8%
 
Six Months Ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
Actual
23.4%
 
(1.5)%
 
(2.2)%
 
1.8%
 
21.5%
 
Pro forma
5.6%
 
(1.5)%
 
1.4%
 
0.4%
 
5.9%
 
Please refer to our Second Quarter 2019 Investor Presentation for additional perspective on the components of fleet productivity.
(1)
Reflects the estimated impact of inflation on the revenue productivity of fleet based on OEC, which is recorded at cost.
(2)
Reflects the combined impact of changes in rental rates, time utilization and mix on owned equipment rental revenue. Changes in customers, fleet, geographies and segments all contribute to changes in mix.
(3)
Reflects the combined impact of changes in other types of equipment rental revenue: ancillary and re-rent (excludes owned equipment rental revenue).
Conference Call            
United Rentals will hold a conference call tomorrow, Thursday, July 18, 2019, at 11:00 a.m. Eastern Time. The conference call number is 855-458-4217 (international: 574-990-3618). The conference call will also be available live by audio webcast at unitedrentals.com, where it will be archived until the next earnings call. The replay number for the call is 404-537-3406, passcode is 5473879.
Non-GAAP Measures                         
Free cash flow, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA, and adjusted earnings per share (adjusted EPS) are non-GAAP financial measures as defined under the rules of the SEC. EBITDA and adjusted EBITDA are presented on as-reported and pro forma bases. Free cash flow represents net cash provided by operating activities less purchases of, and plus proceeds from, equipment. The equipment purchases and proceeds represent cash flows from investing activities. EBITDA represents the sum of net income, provision for income taxes, interest expense, net, depreciation of rental equipment and non-rental depreciation and amortization. Adjusted EBITDA represents EBITDA plus the sum of the merger related costs, restructuring charge, stock compensation expense, net, and the impact of the fair value mark-up of acquired fleet. Adjusted EPS represents EPS plus the sum of the merger related costs, restructuring charge, the impact on depreciation related to acquired fleet and property and equipment, the impact of the fair value mark-up of acquired fleet, merger related intangible asset amortization, asset impairment charge and loss on repurchase/redemption of debt securities and amendment of ABL facility. The company believes that: (i) free cash flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements; (ii) EBITDA and adjusted EBITDA provide useful information about operating performance and period-over-period growth, and help investors gain an understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made and debt is serviced; and (iii) adjusted EPS provides useful information concerning future profitability. However, none of these measures should be considered as alternatives to net income, cash flows from operating activities or earnings per share under GAAP as indicators of operating performance or liquidity.





Information reconciling forward-looking adjusted EBITDA to GAAP financial measures is unavailable to the company without unreasonable effort. The company is not able to provide reconciliations of adjusted EBITDA to GAAP financial measures because certain items required for such reconciliations are outside of the company’s control and/or cannot be reasonably predicted, such as the provision for income taxes. Preparation of such reconciliations would require a forward-looking balance sheet, statement of income and statement of cash flow, prepared in accordance with GAAP, and such forward-looking financial statements are unavailable to the company without unreasonable effort. The company provides a range for its adjusted EBITDA forecast that it believes will be achieved, however it cannot accurately predict all the components of the adjusted EBITDA calculation. The company provides an adjusted EBITDA forecast because it believes that adjusted EBITDA, when viewed with the company’s results under GAAP, provides useful information for the reasons noted above. However, adjusted EBITDA is not a measure of financial performance or liquidity under GAAP and, accordingly, should not be considered as an alternative to net income or cash flow from operating activities as an indicator of operating performance or liquidity.

About United Rentals
United Rentals, Inc. is the largest equipment rental company in the world. The company has an integrated network of 1,164 rental locations in North America and 11 in Europe. In North America, the company operates in 49 states and every Canadian province. The company’s approximately 18,900 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers approximately 4,000 classes of equipment for rent with a total original cost of $14.57 billion. United Rentals is a member of the Standard & Poor’s 500 Index, the Barron’s 400 Index and the Russell 3000 Index® and is headquartered in Stamford, Conn. Additional information about United Rentals is available at unitedrentals.com.






Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. These statements can generally be identified by the use of forward-looking terminology such as believe, expect, may, will, should, seek, on-track, plan, project, forecast, intend or anticipate, or the negative thereof or comparable terminology, or by discussions of vision, strategy or outlook. These statements are based on current plans, estimates and projections, and, therefore, you should not place undue reliance on them. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Factors that could cause actual results to differ materially from those projected include, but are not limited to, the following: (1) the challenges associated with past or future acquisitions, including BakerCorp and BlueLine, such as undiscovered liabilities, costs, integration issues and/or the inability to achieve the cost and revenue synergies expected; (2) a slowdown in North American construction and industrial activities, which could reduce our revenues and profitability; (3) our significant indebtedness, which requires us to use a substantial portion of our cash flow for debt service and can constrain our flexibility in responding to unanticipated or adverse business conditions; (4) the inability to refinance our indebtedness at terms that are favorable to us, or at all; (5) the incurrence of additional debt, which could exacerbate the risks associated with our current level of indebtedness; (6) noncompliance with covenants in our debt agreements, which could result in termination of our credit facilities and acceleration of outstanding borrowings; (7) restrictive covenants and amount of borrowings permitted under our debt agreements, which could limit our financial and operational flexibility; (8) an overcapacity of fleet in the equipment rental industry; (9) inability to benefit from government spending, including spending associated with infrastructure projects; (10) fluctuations in the price of our common stock and inability to complete stock repurchases in the time frame and/or on the terms anticipated; (11) our rates and time utilization being less than anticipated; (12) our inability to manage credit risk adequately or to collect on contracts with customers; (13) our inability to access the capital that our business or growth plans may require; (14) the incurrence of impairment charges; (15) trends in oil and natural gas could adversely affect demand for our services and products; (16) our dependence on distributions from subsidiaries as a result of our holding company structure and the fact that such distributions could be limited by contractual or legal restrictions; (17) an increase in our loss reserves to address business operations or other claims and any claims that exceed our established levels of reserves; (18) the incurrence of additional costs and expenses (including indemnification obligations) in connection with litigation, regulatory or investigatory matters; (19) the outcome or other potential consequences of litigation and other claims and regulatory matters relating to our business, including certain claims that our insurance may not cover; (20) the effect that certain provisions in our charter and certain debt agreements and our significant indebtedness may have of making more difficult or otherwise discouraging, delaying or deterring a takeover or other change of control of us; (21) management turnover and inability to attract and retain key personnel; (22) our costs being more than anticipated and/or the inability to realize expected savings in the amounts or time frames planned; (23) our dependence on key suppliers to obtain equipment and other supplies for our business on acceptable terms; (24) our inability to sell our new or used fleet in the amounts, or at the prices, we expect; (25) competition from existing and new competitors; (26) security breaches, cybersecurity attacks, failure to protect personal information, compliance with data protection laws and other significant disruptions in our information technology systems; (27) the costs of complying with environmental, safety and foreign laws and regulations, as well as other risks associated with non-U.S. operations, including currency exchange risk (including as a result of Brexit), and tariffs; (28) labor difficulties and labor-based legislation affecting our labor relations and operations generally; (29) increases in our maintenance and replacement costs and/or decreases in the residual value of our equipment; and (30) the effect of changes in tax law. For a more complete description of these and other possible risks and uncertainties, please refer to our Annual Report on Form 10-K for the year ended December 31, 2018, as well as to our subsequent filings with the SEC. The forward-looking statements contained herein speak only as of the date hereof, and we make no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations.

# # #
Contact:
Ted Grace
(203) 618-7122
Cell: (203) 399-8951
tgrace@ur.com





UNITED RENTALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In millions, except per share amounts)
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
Revenues:
 
 
 
 
 
 
 
Equipment rentals
$
1,960

 
$
1,631

 
$
3,755

 
$
3,090

Sales of rental equipment
197

 
157

 
389

 
338

Sales of new equipment
60

 
44

 
122

 
86

Contractor supplies sales
27

 
24

 
51

 
42

Service and other revenues
46

 
35

 
90

 
69

Total revenues
2,290

 
1,891

 
4,407

 
3,625

Cost of revenues:
 
 
 
 
 
 
 
Cost of equipment rentals, excluding depreciation
769

 
620

 
1,511

 
1,212

Depreciation of rental equipment
399

 
323

 
794

 
645

Cost of rental equipment sales
116

 
92

 
241

 
199

Cost of new equipment sales
51

 
38

 
105

 
75

Cost of contractor supplies sales
19

 
16

 
36

 
28

Cost of service and other revenues
25

 
20

 
48

 
38

Total cost of revenues
1,379

 
1,109

 
2,735

 
2,197

Gross profit
911

 
782

 
1,672

 
1,428

Selling, general and administrative expenses
271

 
239

 
551

 
471

Merger related costs

 
2

 
1

 
3

Restructuring charge
6

 
4

 
14

 
6

Non-rental depreciation and amortization
105

 
67

 
209

 
138

Operating income
529

 
470

 
897

 
810

Interest expense, net
180

 
112

 
331

 
221

Other income, net
(2
)
 
(1
)
 
(5
)
 
(2
)
Income before provision for income taxes
351

 
359

 
571

 
591

Provision for income taxes
81

 
89

 
126

 
138

Net income
$
270

 
$
270

 
$
445

 
$
453

Diluted earnings per share
$
3.44

 
$
3.20

 
$
5.62

 
$
5.34








UNITED RENTALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions)
 
 
June 30, 2019
 
December 31, 2018
ASSETS
 
 
 
Cash and cash equivalents
$
75

 
$
43

Accounts receivable, net
1,525

 
1,545

Inventory
135

 
109

Prepaid expenses and other assets
105

 
64

Total current assets
1,840

 
1,761

Rental equipment, net
9,839

 
9,600

Property and equipment, net
578

 
614

Goodwill
5,134

 
5,058

Other intangible assets, net
1,019

 
1,084

Operating lease right-of-use assets (1)
619

 

Other long-term assets
18

 
16

Total assets
$
19,047

 
$
18,133

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Short-term debt and current maturities of long-term debt
$
995

 
$
903

Accounts payable
752

 
536

Accrued expenses and other liabilities (1)
788

 
677

Total current liabilities
2,535

 
2,116

Long-term debt
10,700

 
10,844

Deferred taxes
1,743

 
1,687

Operating lease liabilities (1)
497

 

Other long-term liabilities
94

 
83

Total liabilities
15,569

 
14,730

Common stock
1

 
1

Additional paid-in capital
2,415

 
2,408

Retained earnings
4,546

 
4,101

Treasury stock
(3,290
)
 
(2,870
)
Accumulated other comprehensive loss
(194
)
 
(237
)
Total stockholders’ equity
3,478

 
3,403

Total liabilities and stockholders’ equity
$
19,047

 
$
18,133


(1)
In 2019, we adopted an updated lease accounting standard that resulted in the recognition of operating lease right-of-use assets and lease liabilities. Accrued expenses and other liabilities as of June 30, 2019 includes $170 million of current operating lease liabilities. We adopted this standard using a transition method that does not require application to periods prior to adoption.






UNITED RENTALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In millions)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
Cash Flows From Operating Activities:
 
 
 
 
 
 
 
Net income
$
270

 
$
270

 
$
445

 
$
453

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
504

 
390

 
1,003

 
783

Amortization of deferred financing costs and original issue discounts
4

 
3

 
8

 
6

Gain on sales of rental equipment
(81
)
 
(65
)
 
(148
)
 
(139
)
Gain on sales of non-rental equipment
(1
)
 
(2
)
 
(3
)
 
(3
)
Gain on insurance proceeds from damaged equipment
(5
)
 
(12
)
 
(12
)
 
(14
)
Stock compensation expense, net
16

 
24

 
31

 
43

Merger related costs

 
2

 
1

 
3

Restructuring charge
6

 
4

 
14

 
6

Loss on repurchase/redemption of debt securities and amendment of ABL facility
32

 

 
32

 

Increase in deferred taxes
28

 
56

 
49

 
93

Changes in operating assets and liabilities:
 
 
 
 
 
 
 
(Increase) decrease in accounts receivable
(34
)
 
(51
)
 
39

 
29

Increase in inventory
(16
)
 
(10
)
 
(25
)
 
(19
)
(Increase) decrease in prepaid expenses and other assets
(35
)
 
(17
)
 
(23
)
 
25

Increase in accounts payable
193

 
348

 
211

 
451

Increase (decrease) in accrued expenses and other liabilities
42

 
67

 
(32
)
 
(68
)
Net cash provided by operating activities
923

 
1,007

 
1,590

 
1,649

Cash Flows From Investing Activities:
 
 
 
 
 
 
 
Purchases of rental equipment
(872
)
 
(946
)
 
(1,129
)
 
(1,226
)
Purchases of non-rental equipment
(55
)
 
(47
)
 
(97
)
 
(80
)
Proceeds from sales of rental equipment
197

 
157

 
389

 
338

Proceeds from sales of non-rental equipment
7

 
4

 
15

 
8

Insurance proceeds from damaged equipment
5

 
12

 
12

 
14

Purchases of other companies, net of cash acquired
(22
)
 
(6
)
 
(195
)
 
(58
)
Purchases of investments
(1
)
 
(1
)
 
(1
)
 
(1
)
Net cash used in investing activities
(741
)
 
(827
)
 
(1,006
)
 
(1,005
)
Cash Flows From Financing Activities:
 
 
 
 
 
 
 
Proceeds from debt
3,163

 
2,074

 
4,590

 
4,330

Payments of debt
(3,107
)
 
(2,243
)
 
(4,679
)
 
(4,806
)
Payments of financing costs
(10
)
 
(1
)
 
(19
)
 
(1
)
Proceeds from the exercise of common stock options
6

 
1

 
10

 
2

Common stock repurchased (1)
(211
)
 
(169
)
 
(454
)
 
(395
)
Net cash used in financing activities
(159
)
 
(338
)
 
(552
)
 
(870
)
Effect of foreign exchange rates

 
(3
)
 

 
(9
)
Net increase (decrease) in cash and cash equivalents
23

 
(161
)
 
32

 
(235
)
Cash and cash equivalents at beginning of period
52

 
278

 
43

 
352

Cash and cash equivalents at end of period
$
75

 
$
117

 
$
75

 
$
117

Supplemental disclosure of cash flow information:
 
 
 
 
 
 
 
Cash paid for income taxes, net
$
69

 
$
29

 
$
73

 
$
39

Cash paid for interest
122

 
60

 
301

 
213

(1)
We have an open $1.25 billion share repurchase program that commenced in July 2018. We intend to complete the program in 2019. The common stock repurchases include i) shares repurchased pursuant to our share repurchase programs and ii) shares withheld to satisfy tax withholding obligations upon the vesting of restricted stock unit awards.





UNITED RENTALS, INC.
SEGMENT PERFORMANCE
($ in millions)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
General Rentals
 
 
 
 
 
 
 
 
 
 
 
Reportable segment equipment rentals revenue
$1,527
 
$1,332
 
14.6%
 
$2,950
 
$2,533
 
16.5%
Reportable segment equipment rentals gross profit
593
 
543
 
9.2%
 
1,094
 
969
 
12.9%
Reportable segment equipment rentals gross margin
38.8%
 
40.8%
 
(200) bps
 
37.1%
 
38.3%
 
(120) bps
Trench, Power and Fluid Solutions
 
 
 
 
 
 
 
 
 
 
 
Reportable segment equipment rentals revenue
$433
 
$299
 
44.8%
 
$805
 
$557
 
44.5%
Reportable segment equipment rentals gross profit
199
 
145
 
37.2%
 
356
 
264
 
34.8%
Reportable segment equipment rentals gross margin
46.0%
 
48.5%
 
(250) bps
 
44.2%
 
47.4%
 
(320) bps
Total United Rentals
 
 
 
 
 
 
 
 
 
 
 
Total equipment rentals revenue
$1,960
 
$1,631
 
20.2%
 
$3,755
 
$3,090
 
21.5%
Total equipment rentals gross profit
792
 
688
 
15.1%
 
1,450
 
1,233
 
17.6%
Total equipment rentals gross margin
40.4%
 
42.2%
 
(180) bps
 
38.6%
 
39.9%
 
(130) bps


UNITED RENTALS, INC.
DILUTED EARNINGS PER SHARE CALCULATION
(In millions, except per share data)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
Numerator:
 
 
 
 
 
 
 
Net income available to common stockholders
$
270

 
$
270

 
$
445

 
$
453

Denominator:
 
 
 
 
 
 
 
Denominator for basic earnings per share—weighted-average common shares
78.3

 
83.5

 
78.8

 
83.9

Effect of dilutive securities:
 
 
 
 
 
 
 
Employee stock options
0.1

 
0.4

 
0.2

 
0.4

Restricted stock units
0.1

 
0.3

 
0.2

 
0.4

Denominator for diluted earnings per share—adjusted weighted-average common shares
78.5

 
84.2

 
79.2

 
84.7

Diluted earnings per share
$
3.44

 
$
3.20

 
$
5.62

 
$
5.34







UNITED RENTALS, INC.
ADJUSTED EARNINGS PER SHARE GAAP RECONCILIATION

We define “earnings per share – adjusted” as the sum of earnings per share – GAAP, as-reported plus the impact of the following special items: merger related costs, merger related intangible asset amortization, impact on depreciation related to acquired fleet and property and equipment, impact of the fair value mark-up of acquired fleet, restructuring charge, asset impairment charge and loss on repurchase/redemption of debt securities and amendment of ABL facility. Management believes that earnings per share - adjusted provides useful information concerning future profitability. However, earnings per share - adjusted is not a measure of financial performance under GAAP. Accordingly, earnings per share - adjusted should not be considered an alternative to GAAP earnings per share. The table below provides a reconciliation between earnings per share – GAAP, as-reported, and earnings per share – adjusted.
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
Earnings per share - GAAP, as-reported
$
3.44

 
$
3.20

 
$
5.62

 
$
5.34

After-tax impact of:
 
 
 
 
 
 
 
Merger related costs (2)

 
0.02

 
0.01

 
0.03

Merger related intangible asset amortization (3)
0.64

 
0.37

 
1.28

 
0.76

Impact on depreciation related to acquired fleet and property and equipment (4)
0.12

 
0.08

 
0.26

 
0.17

Impact of the fair value mark-up of acquired fleet (5)
0.15

 
0.15

 
0.41

 
0.36

Restructuring charge (6)
0.06

 
0.03

 
0.13

 
0.05

Asset impairment charge (7)
0.03

 

 
0.03

 

Loss on repurchase/redemption of debt securities and amendment of ABL facility
0.30

 

 
0.30

 

Earnings per share - adjusted
$
4.74

 
$
3.85

 
$
8.04

 
$
6.71

Tax rate applied to above adjustments (1)
25.3
%
 
25.3
%
 
25.4
%
 
25.3
%

(1)
The tax rates applied to the adjustments reflect the statutory rates in the applicable entities.
(2)
Reflects transaction costs associated with the NES, Neff, BakerCorp and BlueLine acquisitions. We have made a number of acquisitions in the past and may continue to make acquisitions in the future. Merger related costs only include costs associated with major acquisitions that significantly impact our operations. The historic acquisitions that have included merger related costs are RSC, which had annual revenues of approximately $1.5 billion prior to the acquisition, and National Pump, which had annual revenues of over $200 million prior to the acquisition. NES had annual revenues of approximately $369 million, Neff had annual revenues of approximately $413 million, BakerCorp had annual revenues of approximately $295 million and BlueLine had annual revenues of approximately $786 million.
(3)
Reflects the amortization of the intangible assets acquired in the RSC, National Pump, NES, Neff, BakerCorp and BlueLine acquisitions.
(4)
Reflects the impact of extending the useful lives of equipment acquired in the RSC, NES, Neff, BakerCorp and BlueLine acquisitions, net of the impact of additional depreciation associated with the fair value mark-up of such equipment.
(5)
Reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC, NES, Neff and BlueLine acquisitions and subsequently sold.
(6)
Primarily reflects severance and branch closure charges associated with our closed restructuring programs and our current restructuring programs. We only include such costs that are part of a restructuring program as restructuring charges. Since the first such restructuring program was initiated in 2008, we have completed four restructuring programs. We have cumulatively incurred total restructuring charges of $329 million under our restructuring programs.
(7)
Reflects write-offs of leasehold improvements and other fixed assets.








UNITED RENTALS, INC.
EBITDA AND ADJUSTED EBITDA GAAP RECONCILIATIONS
(In millions)

EBITDA represents the sum of net income, provision for income taxes, interest expense, net, depreciation of rental equipment, and non-rental depreciation and amortization. Adjusted EBITDA represents EBITDA plus the sum of the merger related costs, restructuring charge, stock compensation expense, net, and the impact of the fair value mark-up of acquired fleet. These items are excluded from adjusted EBITDA internally when evaluating our operating performance and for strategic planning and forecasting purposes, and allow investors to make a more meaningful comparison between our core business operating results over different periods of time, as well as with those of other similar companies. The EBITDA and adjusted EBITDA margins represent EBITDA or adjusted EBITDA divided by total revenue. Management believes that EBITDA and adjusted EBITDA, when viewed with the Company’s results under GAAP and the accompanying reconciliation, provide useful information about operating performance and period-over-period growth, and provide additional information that is useful for evaluating the operating performance of our core business without regard to potential distortions. Additionally, management believes that EBITDA and adjusted EBITDA help investors gain an understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made and debt is serviced.

The table below provides a reconciliation between net income and EBITDA and adjusted EBITDA.
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
270

 
$
270

 
$
445

 
$
453

Provision for income taxes
81

 
89

 
126

 
138

Interest expense, net
180

 
112

 
331

 
221

Depreciation of rental equipment
399

 
323

 
794

 
645

Non-rental depreciation and amortization
105

 
67

 
209

 
138

EBITDA (A)
$
1,035

 
$
861

 
$
1,905

 
$
1,595

Merger related costs (1)

 
2

 
1

 
3

Restructuring charge (2)
6

 
4

 
14

 
6

Stock compensation expense, net (3)
16

 
24

 
31

 
43

Impact of the fair value mark-up of acquired fleet (4)
16

 
16

 
43

 
40

Adjusted EBITDA (B)
$
1,073

 
$
907

 
$
1,994

 
$
1,687


A) Our EBITDA margin was 45.2% and 45.5% for the three months ended June 30, 2019 and 2018, respectively, and 43.2% and 44.0% for the six months ended June 30, 2019 and 2018, respectively.
B) Our adjusted EBITDA margin was
46.9% and 48.0% for the three months ended June 30, 2019 and 2018, respectively, and 45.2% and 46.5% for the six months ended June 30, 2019 and 2018, respectively.
(1)
Reflects transaction costs associated with the NES, Neff, BakerCorp and BlueLine acquisitions. We have made a number of acquisitions in the past and may continue to make acquisitions in the future. Merger related costs only include costs associated with major acquisitions that significantly impact our operations. The historic acquisitions that have included merger related costs are RSC, which had annual revenues of approximately $1.5 billion prior to the acquisition, and National Pump, which had annual revenues of over $200 million prior to the acquisition. NES had annual revenues of approximately $369 million, Neff had annual revenues of approximately $413 million, BakerCorp had annual revenues of approximately $295 million and BlueLine had annual revenues of approximately $786 million.
(2)
Primarily reflects severance and branch closure charges associated with our closed restructuring programs and our current restructuring program. We only include such costs that are part of a restructuring program as restructuring charges. Since the first such restructuring program was initiated in 2008, we have completed four restructuring programs. We have cumulatively incurred total restructuring charges of $329 million under our restructuring programs.
(3)
Represents non-cash, share-based payments associated with the granting of equity instruments.
(4)
Reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC, NES, Neff and BlueLine acquisitions and subsequently sold.






UNITED RENTALS, INC.
EBITDA AND ADJUSTED EBITDA GAAP RECONCILIATIONS (continued)
(In millions)

The table below provides a reconciliation between net cash provided by operating activities and EBITDA and adjusted EBITDA.
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
Net cash provided by operating activities
$
923

 
$
1,007

 
$
1,590

 
$
1,649

Adjustments for items included in net cash provided by operating activities but excluded from the calculation of EBITDA:
 
 
 
 
 
 
 
Amortization of deferred financing costs and original issue discounts
(4
)
 
(3
)
 
(8
)
 
(6
)
Gain on sales of rental equipment
81

 
65

 
148

 
139

Gain on sales of non-rental equipment
1

 
2

 
3

 
3

Gain on insurance proceeds from damaged equipment
5

 
12

 
12

 
14

Merger related costs (1)

 
(2
)
 
(1
)
 
(3
)
Restructuring charge (2)
(6
)
 
(4
)
 
(14
)
 
(6
)
Stock compensation expense, net (3)
(16
)
 
(24
)
 
(31
)
 
(43
)
Loss on repurchase/redemption of debt securities and amendment of ABL facility
(32
)
 

 
(32
)
 

Changes in assets and liabilities
(108
)
 
(281
)
 
(136
)
 
(404
)
Cash paid for interest
122

 
60

 
301

 
213

Cash paid for income taxes, net
69

 
29

 
73

 
39

EBITDA
$
1,035

 
$
861

 
$
1,905

 
$
1,595

Add back:
 
 
 
 
 
 
 
Merger related costs (1)

 
2

 
1

 
3

Restructuring charge (2)
6

 
4

 
14

 
6

Stock compensation expense, net (3)
16

 
24

 
31

 
43

Impact of the fair value mark-up of acquired fleet (4)
16

 
16

 
43

 
40

Adjusted EBITDA
$
1,073

 
$
907

 
$
1,994

 
$
1,687


(1)
Reflects transaction costs associated with the NES, Neff, BakerCorp and BlueLine acquisitions. We have made a number of acquisitions in the past and may continue to make acquisitions in the future. Merger related costs only include costs associated with major acquisitions that significantly impact our operations. The historic acquisitions that have included merger related costs are RSC, which had annual revenues of approximately $1.5 billion prior to the acquisition, and National Pump, which had annual revenues of over $200 million prior to the acquisition. NES had annual revenues of approximately $369 million, Neff had annual revenues of approximately $413 million, BakerCorp had annual revenues of approximately $295 million and BlueLine had annual revenues of approximately $786 million.
(2)
Primarily reflects severance and branch closure charges associated with our closed restructuring programs and our current restructuring program. We only include such costs that are part of a restructuring program as restructuring charges. Since the first such restructuring program was initiated in 2008, we have completed four restructuring programs. We have cumulatively incurred total restructuring charges of $329 million under our restructuring programs.
(3)
Represents non-cash, share-based payments associated with the granting of equity instruments.
(4)
Reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC, NES, Neff and BlueLine acquisitions and subsequently sold.







UNITED RENTALS, INC.
EBITDA AND ADJUSTED EBITDA GAAP RECONCILIATIONS (continued)
(In millions)

The pro forma information below for the second quarter of 2018 reflects the combination of United Rentals, BakerCorp and BlueLine. Prior to our acquisitions of BakerCorp and BlueLine, BakerCorp and BlueLine management used different EBITDA and adjusted EBITDA definitions than those used by United Rentals. The information below reflects BakerCorp and BlueLine historical information presented in accordance with United Rentals’ definitions of EBITDA and adjusted EBITDA. The management of BakerCorp and BlueLine historically did not view EBITDA and adjusted EBITDA as liquidity measures, and accordingly the information required to reconcile these measures to the statement of cash flows is unavailable to the company. The table below provides a calculation of as-reported and pro forma net income and EBITDA and adjusted EBITDA for the second quarter of 2019 and 2018.
 
Three Months Ended
 
Three Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2018
 
2018
 
2018
 
As-reported
 
As-reported
 
BakerCorp
 
BlueLine
 
Pro forma
Net income (loss)
$
270

 
$
270

 
$
(10
)
 
$
(8
)
 
$
252

Provision for income taxes
81

 
89

 
2

 

 
91

Interest expense, net
180

 
112

 
11

 
32

 
155

Depreciation of rental equipment
399

 
323

 
9

 
50

 
382

Non-rental depreciation and amortization
105

 
67

 
6

 
2

 
75

EBITDA (A)
$
1,035

 
$
861

 
$
18

 
$
76

 
$
955

Merger related costs (1)

 
2

 

 
2

 
4

Restructuring charge (2)
6

 
4

 

 

 
4

Stock compensation expense, net (3)
16

 
24

 

 

 
24

Impact of the fair value mark-up of acquired fleet (4)
16

 
16

 

 

 
16

Other (5)

 

 
3

 
1

 
4

Adjusted EBITDA (B)
$
1,073

 
$
907

 
$
21

 
$
79

 
$
1,007


A) Our as-reported EBITDA margin was 45.2% and 45.5% for the three months ended June 30, 2019 and 2018, respectively, and pro forma EBITDA margin was 44.1% for the three months ended June 30, 2018.
B) Our as-reported adjusted EBITDA margin was
46.9% and 48.0% for the three months ended June 30, 2019 and 2018, respectively, and pro forma adjusted EBITDA margin was 46.5% for the three months ended June 30, 2018.
(1)
Reflects transaction costs associated with the NES, Neff, BakerCorp and BlueLine acquisitions. We have made a number of acquisitions in the past and may continue to make acquisitions in the future. Merger related costs only include costs associated with major acquisitions that significantly impact our operations. The historic acquisitions that have included merger related costs are RSC, which had annual revenues of approximately $1.5 billion prior to the acquisition, and National Pump, which had annual revenues of over $200 million prior to the acquisition. NES had annual revenues of approximately $369 million, Neff had annual revenues of approximately $413 million, BakerCorp had annual revenues of approximately $295 million and BlueLine had annual revenues of approximately $786 million. The BlueLine merger costs reflect merger related costs recognized by BlueLine prior to the acquisition.
(2)
Primarily reflects severance and branch closure charges associated with our closed restructuring programs and our current restructuring program. We only include such costs that are part of a restructuring program as restructuring charges. Since the first such restructuring program was initiated in 2008, we have completed four restructuring programs. We have cumulatively incurred total restructuring charges of $329 million under our restructuring programs.
(3)
Represents non-cash, share-based payments associated with the granting of equity instruments.
(4)
Reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in the RSC, NES, Neff and BlueLine acquisitions and subsequently sold.
(5)
Includes various adjustments reflected in historic adjusted EBITDA for BakerCorp and BlueLine.






UNITED RENTALS, INC.
FREE CASH FLOW GAAP RECONCILIATION
(In millions)

We define “free cash flow” as net cash provided by operating activities less purchases of, and plus proceeds from, equipment. The equipment purchases and proceeds are included in cash flows from investing activities. Management believes that free cash flow provides useful additional information concerning cash flow available to meet future debt service obligations and working capital requirements. However, free cash flow is not a measure of financial performance or liquidity under GAAP. Accordingly, free cash flow should not be considered an alternative to net income or cash flow from operating activities as an indicator of operating performance or liquidity. The table below provides a reconciliation between net cash provided by operating activities and free cash flow.
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
Net cash provided by operating activities
$
923

 
$
1,007

 
$
1,590

 
$
1,649

Purchases of rental equipment
(872
)
 
(946
)
 
(1,129
)
 
(1,226
)
Purchases of non-rental equipment
(55
)
 
(47
)
 
(97
)
 
(80
)
Proceeds from sales of rental equipment
197

 
157

 
389

 
338

Proceeds from sales of non-rental equipment
7

 
4

 
15

 
8

Insurance proceeds from damaged equipment
5

 
12

 
12

 
14

Free cash flow (1)
$
205

 
$
187

 
$
780

 
$
703


(1)
Free cash flow included aggregate merger and restructuring related payments of $8 million and $6 million for the three months ended June 30, 2019 and 2018, respectively, and $16 million for both the six months ended June 30, 2019 and the six months ended June 30, 2018.

The table below provides a reconciliation between 2019 forecasted net cash provided by operating activities and free cash flow.
Net cash provided by operating activities
$2,850- $3,100
 
Purchases of rental equipment
$(2,050)-$(2,150)
 
Proceeds from sales of rental equipment
$700-$800
 
Purchases of non-rental equipment, net of proceeds from sales and insurance proceeds from damaged equipment
$(100)-$(200)
 
Free cash flow (excluding the impact of merger and restructuring related payments)
$1,400- $1,550
 





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Document and Entity Information Statement
Jul. 17, 2019
Cover page.  
Document Type 8-K
Document Period End Date Jul. 17, 2019
Entity Registrant Name UNITED RENTALS, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-14387
Entity Tax Identification Number 06-1522496
Entity Address, Address Line One 100 First Stamford Place, Suite 700
Entity Address, City or Town Stamford
Entity Address, State or Province CT
Entity Address, Postal Zip Code 06902
City Area Code 203
Local Phone Number 622-3131
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $.01 par value, of United Rentals, Inc.
Trading Symbol URI
Security Exchange Name NYSE
Entity Emerging Growth Company false
Entity Central Index Key 0001067701
Amendment Flag false
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