Acquisitions

3 Months Ended

Mar. 31, 2024

Business Combination and Asset Acquisition [Abstract]

On March 15, 2024, we completed the acquisition of Yak Access, LLC, Yak Mat, LLC and New South Access & Environmental Solutions, LLC (collectively, “Yak”). Yak was a leader in the North American matting industry with a fleet of approximately 600,000 hardwood, softwood, and composite mats that provide surface protection across both construction and maintenance, repair and operations (“MRO”) applications, and served customers primarily in the industrial sector across over 40 states. The acquisition is expected to:

• Provide entry into the matting market via an industry leader with established scale across fleet, operations, and talent;

• Augment exposure to the energy and power verticals, where significant investment is expected over the next several decades; and

• Enhance our one-stop-shop value proposition with immediate cross-selling opportunities to existing and new construction and MRO customers.

The acquisition date fair value of the purchase price to acquire Yak was $1.165 billion, comprised of cash and $50 of estimated contingent consideration (such amount is also the maximum possible amount due) that could become payable to the seller based on revenue attainment in the first two years after closing. The acquisition and related fees and expenses were funded through the issuance of $1.100 billion principal amount of 6 1/8 Senior Notes (see note 7 to the condensed consolidated financial statements for further information) and drawings on our senior secured asset-based revolving credit facility (“ABL facility”).

The following table summarizes the net book values of the assets acquired and liabilities assumed as of the acquisition date. The initial accounting for the acquisition is incomplete, principally related to finalizing 1) the measurement of the acquired net working capital, 2) the valuation of the acquired equipment (inclusive of the completion of our usual and customary procedures to validate the existence of the acquired rental fleet) and intangible assets, 3) the impact of lease accounting, 4) the valuation of the contingent consideration noted above and 5) the associated income tax considerations. All amounts below could change, potentially materially, as there is significant additional information that we must obtain to finalize the valuations of the assets acquired and liabilities assumed, and to establish the value of the potential intangible assets, primarily because of the proximity of the acquisition date to the balance sheet date of March 31, 2024.



Accounts receivable (1)	$	99


Rental equipment	152
Property and equipment	19

Operating lease right-of-use assets	6
Other assets	18
Total identifiable assets acquired	294

Accounts payable, accrued expenses and other liabilities	(104)

Operating lease liabilities	(6)

Total liabilities assumed	(110)
Net identifiable assets acquired	184
Goodwill (2)	981
Net assets acquired	$	1,165

(1)The estimated fair value of accounts receivables acquired was $99, and the gross contractual amount was $102. We estimated that $3 would be uncollectible.

(2)All of the goodwill was assigned to our specialty segment. As noted above, we have not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed, primarily because of the proximity of the acquisition date to the balance sheet date of March 31, 2024. As such, we expect that goodwill will change materially from the amount noted above. Once finalized, we expect that the goodwill that results from the acquisition will be primarily reflective of Yak's going-concern value, the value of Yak's assembled workforce and new customer relationships expected to arise from the acquisition. All of the goodwill is expected to be deductible for income tax purposes (because the acquired Yak entities were sold as disregarded entities, the acquisition was treated as an asset purchase for income tax purposes, which resulted in the goodwill that is deductible for income tax purposes equaling the total acquired goodwill).

The debt issuance costs associated with the issuance of debt to partially fund the acquisition are reflected, net of amortization subsequent to the acquisition date, in long-term debt in our consolidated balance sheets. It is not practicable to reasonably estimate the amounts of revenue and earnings of Yak since the acquisition date, primarily due to the movement of fleet between URI locations and the acquired Yak locations, as well as our corporate structure and the allocation of corporate costs.

Pro forma financial information

The pro forma information below gives effect to the Yak acquisition as if it had been completed on January 1, 2023. The table below presents unaudited pro forma revenue information as if the Yak acquisition had been included in our consolidated results for the entire period reflected. The pro forma information is not necessarily indicative of our revenue results had the acquisition been completed on the above date, nor is it necessarily indicative of our future results. The pro forma revenue information reflects the historic revenue of Yak as explained in the table below, and does not include any additional revenue opportunities following the acquisition. Pro forma revenue information is presented below for 2023, but not for 2024, as we do not yet have all the required information to determine the amount of 2024 revenue prior to the acquisition date, primarily because of the proximity of the acquisition date to March 31, 2024. Pro forma income information is also not presented, as we expect that there will be material adjustments to the values of the assets acquired, including establishing the value of the potential intangible assets, and liabilities assumed, and, as such, we cannot presently provide meaningful pro forma income information. The opening balance sheet values assigned to the Yak assets acquired and liabilities assumed are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period. We expect that such valuation changes could be material, primarily because of the proximity of the acquisition date to March 31, 2024. Increases or decreases in the estimated fair values of the net assets acquired may impact our statements of income in future periods. In future periods, we expect to provide pro forma revenue and income information for both 2024 and 2023.


	Three Months Ended
	March 31,
		2023
United Rentals historic revenue		$	3,285
Yak historic revenue (1)		91
Pro forma revenue		3,376

(1)Yak revenue reflects only the historical results of the entities being acquired, and includes an estimate of revenue from mat rentals to a commonly controlled entity that were eliminated in consolidation by Yak.

During 2024 and 2023, we completed other acquisitions that were not significant individually or in the aggregate. See the condensed consolidated statements of cash flows for the total cash outflow for purchases of other companies (including Yak), net of cash acquired.