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8-K - FORM 8-K - UNITED RENTALS NORTH AMERICA INCd521982d8k.htm

Exhibit 99.1

 

  United Rentals, Inc.
LOGO   Five Greenwich Office Park
  Greenwich, CT 06831
  Telephone: 203 622 3131
 

203 622 6080

 

unitedrentals.com

United Rentals Announces First Quarter 2013 Results

Reaffirms Full Year Outlook

GREENWICH, Conn. – April 16, 2013 – United Rentals, Inc. (NYSE: URI) today announced financial results for the first quarter 20131. Total revenue was $1,100 million and rental revenue was $916 million. On a GAAP basis, the company reported net income of $21 million, or $0.19 per diluted share. Adjusted EPS2 for the quarter was $0.58 per diluted share.

Adjusted EBITDA3 was $451 million and adjusted EBITDA margin was 41.0%.

First Quarter 2013 Highlights

On a pro-forma basis (that is, assuming the combination of United Rentals results and RSC results for the first quarter of 2012):

 

   

Rental revenue (which includes owned equipment rental revenue, re-rent revenue and ancillary items) increased 5.4%. Within rental revenue, owned equipment rental revenues increased 7.3%, reflecting year-over-year increases of 5.8% in the volume of equipment on rent and 5.4% in rental rates.

 

   

Adjusted EBITDA was $451 million and adjusted EBITDA margin was 41.0%, an increase of $59 million and 420 basis points, respectively, from the same period last year. The company has reaffirmed its outlook for full year adjusted EBITDA in a range of $2.25 billion to $2.35 billion.

 

   

Time utilization increased 30 basis points year-over-year to 64.2%. The company has reaffirmed its outlook for full year time utilization of approximately 68.0%.

 

   

The company generated $123 million of proceeds from used equipment sales at a gross margin of 43.9%, compared with $125 million of proceeds at a gross margin of 39.2% for the same period last year. 4

 

   

The company realized cost synergies of $53 million in the quarter from the RSC integration, and reaffirmed its fully developed goal of $230 million to $250 million of cost synergies on a run-rate basis.

 

   

Flow-through, which represents the year-over-year change in adjusted EBITDA divided by the year-over-year change in total revenue, was 163.9%.

 

1  On April 30, 2012, the Company completed the acquisition of RSC Holdings Inc. (“RSC”). The results of RSC’s operations have been combined with the Company’s results since that date.
2  Adjusted EPS is a non-GAAP measure that excludes the impact of the following special items: (i) RSC merger related costs; (ii) restructuring charge; (iii) asset impairment charge; (iv) pre-close RSC merger related interest expense; (v) impact on interest expense related to fair value adjustment of acquired RSC indebtedness; (vi) impact on depreciation related to acquired RSC fleet and property and equipment; (vii) impact of the fair value mark-up of acquired RSC fleet; (viii) RSC merger related intangible asset amortization; and (ix) loss on repurchase/redemption of debt securities and retirement of subordinated convertible debentures. See table below for amounts.
3  Adjusted EBITDA is a non-GAAP measure that excludes the impact of the following special items: (i) RSC merger related costs; (ii) restructuring charge; (iii) impact of the fair-value mark up of acquired RSC fleet; and (iv) stock compensation expense, net. See table below for amounts.
4 

The used equipment gross margin for the first quarter 2013 excludes the impact of the fair value mark-up of acquired RSC fleet that was sold.


CEO Comments

Michael Kneeland, chief executive officer of United Rentals, said, “Our first quarter performance has given us a strong start to a pivotal year. Revenue, rates and time utilization all met or exceeded our expectations, and our adjusted EBITDA margin of 41% was a first quarter record for us. We remain solidly on track for a year of disciplined growth, including a rental rate increase of 4.5% on total revenue of approximately $5 billion.”

Kneeland continued, “As our end markets recover, we have an opportunity to gain ground where it will be most profitable: with key accounts of all types and specialty rentals. We plan to expand our sales force by at least 10% this year to capitalize on over a billion dollars of net fleet purchases. At the same time, we’ll continue to drive cost efficiencies and further lower our debt leverage. We feel confident that our full year performance will meet our outlook and give us even greater earning power going into the next several years.”

Free Cash Flow and Fleet Size

For the first quarter 2013, free cash flow was $234 million, after total rental and non-rental capital expenditures of $303 million. By comparison, free cash usage (negative flow) for the first quarter 2012 on an as-reported basis5 was $89 million after total rental and non-rental capital expenditures of $426 million. The company has reaffirmed its outlook for full year 2013 free cash flow in the range of $400 million to $500 million, after net rental capital expenditures of approximately $1.05 billion and gross purchases of approximately $1.5 billion.

The size of the rental fleet was $7.24 billion of original equipment cost at March 31, 2013, compared with $7.23 billion at December 31, 2012. The age of the rental fleet was 47.0 months on an OEC-weighted basis at March 31, 2013, compared with 47.2 months at December 31, 2012.

Return on Invested Capital (ROIC)

Return on invested capital on an as-reported basis was 7.3% for the 12 months ended March 31, 2013, a decrease of 0.4 percentage points from the same period last year. The company’s ROIC metric uses after-tax operating income for the trailing 12 months divided by the averages of stockholders’ equity (deficit), 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 federal statutory tax rate of 35% is used to calculate after-tax operating income.6

Conference Call

United Rentals will hold a conference call tomorrow, Wednesday, April 17, 2013, at 11:00 a.m. Eastern Time. The conference call number is 866-835-8905. 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 703-925-2533, access code is 1610081.

Non-GAAP Measures

Free cash (usage) 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. Free cash flow (usage) represents net cash provided by operating activities, less purchases of rental and non-rental equipment plus proceeds from sales of rental and non-rental equipment. EBITDA represents the sum of net income, provision for income taxes, interest expense, net, interest expense-subordinated convertible debentures, depreciation of rental equipment

 

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As reported free cash flow for the first quarter 2012 excludes the results of RSC’s operations.

6 

When adjusting the denominator of the ROIC calculation to also exclude average goodwill, ROIC on an as-reported basis was 9.7% for the 12 months ended March 31, 2013, an increase of 1.5 percentage points from the same period last year.

 

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and non-rental depreciation and amortization. Adjusted EBITDA represents EBITDA plus the sum of RSC merger related costs, restructuring charge, stock compensation expense, net, and the impact of the fair value mark-up of acquired RSC fleet. Adjusted EPS represents EPS plus the sum of the RSC merger related costs, restructuring charge, asset impairment charge, pre-close RSC merger related interest expense, the impact on interest expense related to the fair value adjustment of acquired RSC indebtedness, the impact on depreciation related to acquired RSC fleet and property and equipment, the impact of the fair value mark-up of acquired RSC fleet, RSC merger related intangible asset amortization, and the loss on repurchase/redemption of debt securities and retirement of subordinated convertible debentures. The company believes that: (i) free cash (usage) 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 (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 free cash flow and Adjusted EBITDA to GAAP financial measures is unavailable to the company without unreasonable effort.

About United Rentals

United Rentals, Inc. is the largest equipment rental company in the world, with an integrated network of 830 rental locations in 49 states and 10 Canadian provinces. The company’s approximately 11,400 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers for rent approximately 3,300 classes of equipment with a total original cost of $7.24 billion. United Rentals is a member of the Standard & Poor’s MidCap 400 Index and the Russell 2000 Index® and is headquartered in Greenwich, 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 possibility that RSC or other companies that we have acquired or may acquire could have undiscovered liabilities or involve other unexpected costs, may strain our management capabilities or may be difficult to integrate; (2) our highly leveraged capital structure 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; (3) a change in the pace of the recovery in our end markets. Our business is cyclical and highly sensitive to North American construction and industrial activities. Although we have recently experienced an upturn in rental activity, there is no certainty this trend will continue. If the pace of the recovery slows or construction activity declines, our revenues and, because many of our costs are fixed, our profitability, may be adversely affected; (4) inability to benefit from government spending, including spending associated with infrastructure projects; (5) restrictive covenants in our debt instruments, which can limit our financial and operational flexibility; (6) noncompliance with financial or other covenants in our debt agreements, which could result in our lenders terminating our credit facilities and requiring us to repay outstanding borrowings; (7) inability to access the capital that our businesses or growth plans may require; (8) inability to manage credit risk adequately or to collect on contracts with a large number of customers; (9) incurrence of impairment charges; (10) the outcome or other potential consequences of regulatory matters and commercial litigation; (11) increases in our loss reserves to address business

 

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operations or other claims and any claims that exceed our established levels of reserves; (12) incurrence of additional expenses (including indemnification obligations) and other costs in connection with litigation, regulatory and investigatory matters; (13) increases in our maintenance and replacement costs and decreases in the residual value of our equipment; (14) inability to sell our new or used fleet in the amounts, or at the prices, we expect; (15) turnover in our management team and inability to attract and retain key personnel; (16) rates we charge and time utilization we achieve being less than anticipated; (17) costs we incur being more than anticipated, and the inability to realize expected savings in the amounts or time frames planned; (18) dependence on key suppliers to obtain equipment and other supplies for our business on acceptable terms; (19) competition from existing and new competitors; (20) disruptions in our information technology systems; (21) the costs of complying with environmental and safety regulations; (22) labor disputes, work stoppages or other labor difficulties, which may impact our productivity, and potential enactment of new legislation or other changes in law affecting our labor relations or operations generally; and (23) shortfalls in our insurance coverage. 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, 2012, 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:

Fred Bratman

(203) 618-7318

Cell: (917) 847-4507

fbratman@ur.com

 

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UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In millions, except per share amounts)

 

     Three Months Ended  
     March 31,  
     2013     2012  

Revenues:

    

Equipment rentals

   $ 916      $ 523   

Sales of rental equipment

     123        76   

Sales of new equipment

     21        18   

Contractor supplies sales

     20        18   

Service and other revenues

     20        21   
  

 

 

   

 

 

 

Total revenues

     1,100        656   
  

 

 

   

 

 

 

Cost of revenues:

    

Cost of equipment rentals, excluding depreciation

     393        246   

Depreciation of rental equipment

     202        115   

Cost of rental equipment sales

     83        47   

Cost of new equipment sales

     17        15   

Cost of contractor supplies sales

     13        12   

Cost of service and other revenues

     7        8   
  

 

 

   

 

 

 

Total cost of revenues

     715        443   
  

 

 

   

 

 

 

Gross profit

     385        213   

Selling, general and administrative expenses

     160        102   

RSC merger related costs

     6        10   

Restructuring charge

     6        —     

Non-rental depreciation and amortization

     64        14   
  

 

 

   

 

 

 

Operating income

     149        87   

Interest expense, net

     118        68   

Interest expense—subordinated convertible debentures

     2        1   

Other income, net

     (1     (1
  

 

 

   

 

 

 

Income before provision for income taxes

     30        19   

Provision for income taxes

     9        6   
  

 

 

   

 

 

 

Net income

   $ 21      $ 13   
  

 

 

   

 

 

 

Diluted earnings per share

   $ 0.19      $ 0.17   
  

 

 

   

 

 

 


UNITED RENTALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

 

     March 31, 2013        
     (unaudited)     December 31, 2012  

ASSETS

    

Cash and cash equivalents

   $ 147      $ 106   

Accounts receivable, net

     725        793   

Inventory

     103        68   

Prepaid expenses and other assets

     81        111   

Deferred taxes

     255        265   
  

 

 

   

 

 

 

Total current assets

     1,311        1,343   

Rental equipment, net

     4,963        4,966   

Property and equipment, net

     420        428   

Goodwill, net

     2,963        2,970   

Other intangible assets, net

     1,151        1,200   

Other long-term assets

     113        119   
  

 

 

   

 

 

 

Total assets

   $ 10,921      $ 11,026   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Short-term debt and current maturities of long-term debt

   $ 567      $ 630   

Accounts payable

     406        286   

Accrued expenses and other liabilities

     396        435   
  

 

 

   

 

 

 

Total current liabilities

     1,369        1,351   

Long-term debt

     6,580        6,679   

Subordinated convertible debentures

     17        55   

Deferred taxes

     1,293        1,302   

Other long-term liabilities

     67        65   
  

 

 

   

 

 

 

Total liabilities

     9,326        9,452   
  

 

 

   

 

 

 

Temporary equity

     29        31   

Common stock

     1        1   

Additional paid-in capital

     2,037        1,997   

Accumulated deficit

     (403     (424

Treasury stock

     (133     (115

Accumulated other comprehensive income

     64        84   
  

 

 

   

 

 

 

Total stockholders’ equity

     1,566        1,543   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 10,921      $ 11,026   
  

 

 

   

 

 

 


UNITED RENTALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)

 

     Three Months Ended  
     March 31,  
     2013     2012  

Cash Flows From Operating Activities:

    

Net income

   $ 21      $ 13   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     266        129   

Amortization of deferred financing costs and original issue discounts

     6        5   

Gain on sales of rental equipment

     (40     (29

Gain on sales of non-rental equipment

     (1     (1

Stock compensation expense, net

     9        4   

RSC merger related costs

     6        10   

Restructuring charge

     6        —     

Loss on retirement of subordinated convertible debentures

     1        —     

Increase in restricted cash- RSC merger related debt interest

     —          (25

Increase in deferred taxes

     3        1   

Changes in operating assets and liabilities:

    

Decrease in accounts receivable

     65        50   

Increase in inventory

     (34     (41

Decrease in prepaid expenses and other assets

     30        11   

Increase in accounts payable

     121        172   

Decrease in accrued expenses and other liabilities

     (50     (45
  

 

 

   

 

 

 

Net cash provided by operating activities

     409        254   

Cash Flows From Investing Activities:

    

Purchases of rental equipment

     (289     (390

Purchases of non-rental equipment

     (14     (36

Proceeds from sales of rental equipment

     123        76   

Proceeds from sales of non-rental equipment

     5        7   

Purchases of other companies, net of cash acquired

     —          (57
  

 

 

   

 

 

 

Net cash used in investing activities

     (175     (400

Cash Flows From Financing Activities:

    

Proceeds from debt

     631        3,351   

Payments of debt, including subordinated convertible debentures

     (795     (385

Increase in restricted cash- proceeds from RSC merger related debt

     —          (2,825

Payments of financing costs

     —          (3

Proceeds from the exercise of common stock options

     3        5   

Common stock repurchased

     (30     (8
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (191     135   

Effect of foreign exchange rates

     (2     1   
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     41        (10

Cash and cash equivalents at beginning of period

     106        36   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 147      $ 26   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information:

    

Cash paid for income taxes, net

   $ 15      $ 12   

Cash paid for interest, including subordinated convertible debentures

     90        40   


UNITED RENTALS, INC.

SEGMENT PERFORMANCE

($ in millions)

 

     Three Months Ended  
     March 31,  
     2013     2012     Change  

General Rentals

      

Reportable segment equipment rentals revenue

   $ 854      $ 475        79.8

Reportable segment equipment rentals gross profit

     295        144        104.9

Reportable segment equipment rentals gross margin

     34.5     30.3     4.2pp   

Trench Safety, Power & HVAC

      

Reportable segment equipment rentals revenue

   $ 62      $ 48        29.2

Reportable segment equipment rentals gross profit

     26        18        44.4

Reportable segment equipment rentals gross margin

     41.9     37.5     4.4pp   

Total United Rentals

      

Total equipment rentals revenue

   $ 916      $ 523        75.1

Total equipment rentals gross profit

     321        162        98.1

Total equipment rentals gross margin

     35.0     31.0     4.0pp   

UNITED RENTALS, INC.

DILUTED EARNINGS PER SHARE CALCULATION

(In millions, except per share data)

 

     Three Months Ended  
     March 31,  
     2013      2012  

Numerator:

     

Net income

   $ 21       $ 13   

Convertible debt interest—1 7/8 percent notes

     —           —     
  

 

 

    

 

 

 

Net income available to common stockholders

   $ 21       $ 13   

Denominator:

     

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

     93.3         63.1   

Effect of dilutive securities:

     

Employee stock options and warrants

     0.6         0.7   

Convertible subordinated notes—1 7/8 percent

             1.0   

Convertible subordinated notes—4 percent

     11.9         10.8   

Restricted stock units

     0.6         0.7   
  

 

 

    

 

 

 

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

     106.4         76.3   

Diluted earnings per share

   $ 0.19       $ 0.17   


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: RSC merger related costs, RSC merger related intangible asset amortization, impact on rental depreciation related to acquired RSC fleet and property and equipment, impact of the fair value mark-up of acquired RSC fleet, pre-close RSC merger related interest expense, impact on interest expense related to fair value adjustment of acquired RSC indebtedness, restructuring charge, asset impairment charge, and loss on repurchase/redemption of debt securities and retirement of subordinated convertible debentures. Management believes adjusted earnings per share provides useful information concerning future profitability. However, adjusted earnings per share is not a measure of financial performance under GAAP. Accordingly, adjusted earnings per share 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  
     March 31,  
     2013     2012  

Earnings per share - GAAP, as reported

   $ 0.19      $ 0.17   

After-tax impact of:

    

RSC merger related costs (1)

     0.03        0.09   

RSC merger related intangible asset amortization (2)

     0.24        —     

Impact on depreciation related to acquired RSC fleet and property and equipment (3)

     (0.01     —     

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

     0.08        —     

Pre-close RSC merger related interest expense (5)

     —          0.10   

Impact on interest expense related to fair value adjustment of acquired RSC indebtedness (6)

     (0.01     —     

Restructuring charge (7)

     0.04        —     

Asset impairment charge (8)

     0.01        —     

Loss on repurchase/redemption of debt securities and retirement of subordinated convertible debentures

     0.01        —     
  

 

 

   

 

 

 

Earnings per share – adjusted

   $ 0.58      $ 0.36   
  

 

 

   

 

 

 

 

(1) Reflects transaction costs associated with the RSC acquisition.
(2) Reflects the amortization of the intangible assets acquired in the RSC acquisition.
(3) Reflects the impact of extending the useful lives of equipment acquired in the RSC acquisition, net of the impact of additional depreciation associated with the fair value mark-up of such equipment.
(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 acquisition and subsequently sold.
(5) In March 2012, we issued $2,825 million of debt in connection with the RSC acquisition. The pre-close RSC merger related interest expense reflects the interest expense recorded on this debt prior to the acquisition date.
(6) Reflects a reduction of interest expense associated with the fair value mark-up of debt acquired in the RSC acquisition.
(7) Primarily reflects severance costs and branch closure charges associated with the RSC acquisition.
(8) Primarily reflects write-offs of leasehold improvements and other fixed assets in connection with the RSC acquisition.


UNITED RENTALS, INC.

EBITDA AND ADJUSTED EBITDA GAAP RECONCILIATION

(In millions)

EBITDA represents the sum of net income, provision for income taxes, interest expense, net, interest expense-subordinated convertible debentures, depreciation of rental equipment, and non-rental depreciation and amortization. Adjusted EBITDA represents EBITDA plus the sum of the RSC merger related costs, restructuring charge, stock compensation expense, net, and the impact of the fair value mark-up of acquired RSC fleet. These items are excluded from adjusted EBITDA internally when evaluating our operating performance 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. 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 permit investors to gain an understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made and debt is serviced. However, EBITDA and adjusted EBITDA are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income or cash flow from operating activities as indicators of operating performance or liquidity. The table below provides a reconciliation between net income and EBITDA and adjusted EBITDA.

 

     Three Months Ended  
     March 31,  
     2013      2012  

Net income

   $ 21       $ 13   

Provision for income taxes

     9         6   

Interest expense, net

     118         68   

Interest expense – subordinated convertible debentures

     2         1   

Depreciation of rental equipment

     202         115   

Non-rental depreciation and amortization

     64         14   
  

 

 

    

 

 

 

EBITDA (A)

   $ 416       $ 217   

RSC merger related costs (1)

     6         10   

Restructuring charge (2)

     6         —     

Stock compensation expense, net (3)

     9         4   

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

     14         —     
  

 

 

    

 

 

 

Adjusted EBITDA (B)

   $ 451       $ 231   
  

 

 

    

 

 

 

 

A) Our EBITDA margin was 37.8% and 33.1% for the three months ended March 31, 2013 and 2012, respectively.
B) Our adjusted EBITDA margin was 41.0% and 35.2% for the three months ended March 31, 2013 and 2012, respectively.

 

(1) Reflects transaction costs associated with the RSC acquisition.
(2) Primarily reflects severance costs and branch closure charges associated with the RSC acquisition.
(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 acquisition and subsequently sold.


UNITED RENTALS, INC.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO EBITDA AND ADJUSTED EBITDA

(In millions)

 

     Three Months Ended  
     March 31,  
     2013     2012  

Net cash provided by operating activities

   $ 409      $ 254   

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

     (6     (5

Gain on sales of rental equipment

     40        29   

Gain on sales of non-rental equipment

     1        1   

RSC merger related costs (1)

     (6     (10

Restructuring charge (2)

     (6     —     

Stock compensation expense, net (3)

     (9     (4

Loss on retirement of subordinated convertible debentures

     (1     —     

Increase in restricted cash- RSC merger related debt interest

     —          25   

Changes in assets and liabilities

     (111     (125

Cash paid for interest, including subordinated convertible debentures

     90        40   

Cash paid for income taxes, net

     15        12   
  

 

 

   

 

 

 

EBITDA

   $ 416      $ 217   

Add back:

    

RSC merger related costs (1)

     6        10   

Restructuring charge (2)

     6        —     

Stock compensation expense, net (3)

     9        4   

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

     14        —     
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 451      $ 231   
  

 

 

   

 

 

 

 

(1) Reflects transaction costs associated with the acquisition of RSC.
(2) Primarily reflects severance costs and branch closure charges associated with the RSC acquisition.
(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 acquisition and subsequently sold.


UNITED RENTALS, INC.

FREE CASH FLOW GAAP RECONCILIATION

(In millions)

We define free cash flow (usage) as (i) net cash provided by operating activities less (ii) purchases of rental and non-rental equipment plus (iii) proceeds from sales of rental and non-rental equipment. 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 (usage) is not a measure of financial performance or liquidity under GAAP. Accordingly, free cash flow (usage) 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 (usage).

 

     Three Months Ended  
     March 31,  
     2013     2012  

Net cash provided by operating activities

   $ 409      $ 254   

Purchases of rental equipment

     (289     (390

Purchases of non-rental equipment

     (14     (36

Proceeds from sales of rental equipment

     123        76   

Proceeds from sales of non-rental equipment

     5        7   
  

 

 

   

 

 

 

Free cash flow (usage)

   $ 234      $ (89