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) |
(Former name or former address if changed since last report.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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 | o |
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 |
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 No. | Description | |
99.1 |
• | Rental revenue4 increased 19.3% year-over-year. Within rental revenue, owned equipment rental revenue increased 19.3%, reflecting increases of 15.9% in the volume of equipment on rent and 2.8% in rental rates. |
• | Pro forma1 rental revenue increased 11.4% year-over-year, reflecting growth of 7.1% in the volume of equipment on rent and a 2.8% increase in rental rates. |
• | Time utilization decreased 20 basis points year-over-year to 69.2%, primarily reflecting the impact of the Neff acquisition. On a pro forma basis, time utilization was flat year-over-year. |
• | The company’s Trench, Power and Pump specialty segment's rental revenue increased by 33.5% year-over-year, including a 21.9% increase on a same store basis. The segment’s rental gross margin decreased by 110 basis points to 48.5%. |
1. | The company completed the acquisitions of NES Rentals Holdings II, Inc. (“NES”) and Neff Corporation ("Neff") in April 2017 and October 2017, respectively. NES and Neff are included in the company's results subsequent to the acquisition dates. Pro forma results reflect the combination of United Rentals, NES and Neff for all periods presented. |
2. | The estimated contribution of the Tax Act was calculated by applying the percentage point tax rate reduction to U.S. pretax income and the pretax adjustments reflected in adjusted EPS. |
3. | Adjusted EPS (earnings per share) and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) are non-GAAP measures that exclude the impact of the items noted 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. |
4. | Rental revenue includes owned equipment rental revenue, re-rent revenue and ancillary revenue. |
• | The company generated $157 million of proceeds from used equipment sales at a GAAP gross margin of 41.4% and an adjusted gross margin of 51.6%, compared with $133 million at a GAAP gross margin of 39.1% and an adjusted gross margin of 52.6% for the same period last year. The year-over-year increase in used equipment sales primarily reflects increased volume, driven by a significantly larger fleet size, in a strong used equipment market.5 |
• | Rental revenue increased 22.0% year-over-year. Within rental revenue, owned equipment rental revenue increased 22.1%, reflecting increases of 20.6% in the volume of equipment on rent and 2.4% in rental rates. |
• | Pro forma rental revenue increased 10.7% year-over-year, reflecting growth of 7.0% in the volume of equipment on rent and a 2.8% increase in rental rates. |
• | Time utilization decreased 60 basis points year-over-year to 67.2%, primarily reflecting the impact of the NES and Neff acquisitions. On a pro forma basis, time utilization decreased 10 basis points year-over-year. |
• | The company’s Trench, Power and Pump specialty segment's rental revenue increased by 34.9% year-over-year, including a 23.7% increase on a same store basis. The segment’s rental gross margin increased by 20 basis points to 47.4%. |
• | The company generated $338 million of proceeds from used equipment sales at a GAAP gross margin of 41.1% and an adjusted gross margin of 53.0%, compared with $239 million at a GAAP gross margin of 41.0% and an adjusted gross margin of 51.9% for the same period last year. The year-over-year increase in used equipment sales primarily reflects increased volume, driven by a significantly larger fleet size, in a strong used equipment market.5 |
5. | Used equipment sales adjusted gross margin excludes the impact of the fair value mark-up of acquired RSC, NES and Neff fleet that was sold. In 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”. Used equipment sales in the second quarter of 2017 would have been reduced by $12 under Topic 606 because such sales would have been recognized prior to the second quarter. Under Topic 606, we would have recognized an additional $12 of sales of rental equipment during the first six months of 2017. While the adoption of Topic 606 impacted the timing of revenue recognition, it has no impact on annual revenue. |
Prior Outlook | Current Outlook | ||
Total revenue | $7.3 billion to $7.6 billion | $7.5 billion to $7.7 billion | |
Adjusted EBITDA6 | $3.6 billion to $3.75 billion | $3.675 billion to $3.775 billion | |
Net rental capital expenditures after gross purchases | $1.2 billion to $1.35 billion, after gross purchases of $1.8 billion to $1.95 billion | $1.25 billion to $1.35 billion, after gross purchases of $1.9 billion to $2.0 billion | |
Net cash provided by operating activities | $2.625 billion to $2.825 billion | $2.675 billion to $2.825 billion | |
Free cash flow7 (excluding the impact of merger and restructuring related payments) | $1.3 billion to $1.4 billion | $1.3 billion to $1.4 billion |
6. | Information reconciling forward-looking adjusted EBITDA to the comparable GAAP financial measures is unavailable to the company without unreasonable effort, as discussed below. |
7. | Free cash flow is a non-GAAP measure. See the table below for amounts and a reconciliation to the most comparable GAAP measure. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues: | |||||||||||||||
Equipment rentals | $ | 1,631 | $ | 1,367 | $ | 3,090 | $ | 2,533 | |||||||
Sales of rental equipment | 157 | 133 | 338 | 239 | |||||||||||
Sales of new equipment | 44 | 47 | 86 | 86 | |||||||||||
Contractor supplies sales | 24 | 21 | 42 | 39 | |||||||||||
Service and other revenues | 35 | 29 | 69 | 56 | |||||||||||
Total revenues | 1,891 | 1,597 | 3,625 | 2,953 | |||||||||||
Cost of revenues: | |||||||||||||||
Cost of equipment rentals, excluding depreciation | 620 | 525 | 1,212 | 999 | |||||||||||
Depreciation of rental equipment | 323 | 266 | 645 | 514 | |||||||||||
Cost of rental equipment sales | 92 | 81 | 199 | 141 | |||||||||||
Cost of new equipment sales | 38 | 40 | 75 | 74 | |||||||||||
Cost of contractor supplies sales | 16 | 15 | 28 | 28 | |||||||||||
Cost of service and other revenues | 20 | 15 | 38 | 28 | |||||||||||
Total cost of revenues | 1,109 | 942 | 2,197 | 1,784 | |||||||||||
Gross profit | 782 | 655 | 1,428 | 1,169 | |||||||||||
Selling, general and administrative expenses | 239 | 218 | 471 | 411 | |||||||||||
Merger related costs | 2 | 14 | 3 | 16 | |||||||||||
Restructuring charge | 4 | 19 | 6 | 19 | |||||||||||
Non-rental depreciation and amortization | 67 | 64 | 138 | 126 | |||||||||||
Operating income | 470 | 340 | 810 | 597 | |||||||||||
Interest expense, net | 112 | 113 | 221 | 207 | |||||||||||
Other income, net | (1 | ) | (2 | ) | (2 | ) | — | ||||||||
Income before provision for income taxes | 359 | 229 | 591 | 390 | |||||||||||
Provision for income taxes (1) | 89 | 88 | 138 | 140 | |||||||||||
Net income (1) | $ | 270 | $ | 141 | $ | 453 | $ | 250 | |||||||
Diluted earnings per share (1) | $ | 3.20 | $ | 1.65 | $ | 5.34 | $ | 2.92 |
(1) | The three and six months ended June 30, 2018 reflect a reduction in the U.S. federal corporate statutory tax rate from 35% to 21% following the enactment of the Tax Cuts and Jobs Act in December 2017, which contributed an estimated $0.58 and $0.95 to diluted earnings per share for the three and six months ended June 30, 2018, respectively. |
June 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 117 | $ | 352 | |||
Accounts receivable, net | 1,203 | 1,233 | |||||
Inventory | 94 | 75 | |||||
Prepaid expenses and other assets | 92 | 112 | |||||
Total current assets | 1,506 | 1,772 | |||||
Rental equipment, net | 8,213 | 7,824 | |||||
Property and equipment, net | 480 | 467 | |||||
Goodwill | 4,096 | 4,082 | |||||
Other intangible assets, net | 798 | 875 | |||||
Other long-term assets | 15 | 10 | |||||
Total assets | $ | 15,108 | $ | 15,030 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Short-term debt and current maturities of long-term debt | $ | 900 | $ | 723 | |||
Accounts payable | 859 | 409 | |||||
Accrued expenses and other liabilities | 470 | 536 | |||||
Total current liabilities | 2,229 | 1,668 | |||||
Long-term debt | 8,086 | 8,717 | |||||
Deferred taxes | 1,509 | 1,419 | |||||
Other long-term liabilities | 120 | 120 | |||||
Total liabilities | 11,944 | 11,924 | |||||
Common stock | 1 | 1 | |||||
Additional paid-in capital | 2,351 | 2,356 | |||||
Retained earnings | 3,458 | 3,005 | |||||
Treasury stock | (2,450 | ) | (2,105 | ) | |||
Accumulated other comprehensive loss | (196 | ) | (151 | ) | |||
Total stockholders’ equity | 3,164 | 3,106 | |||||
Total liabilities and stockholders’ equity | $ | 15,108 | $ | 15,030 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cash Flows From Operating Activities: | |||||||||||||||
Net income | $ | 270 | $ | 141 | $ | 453 | $ | 250 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 390 | 330 | 783 | 640 | |||||||||||
Amortization of deferred financing costs and original issue discounts | 3 | 2 | 6 | 4 | |||||||||||
Gain on sales of rental equipment | (65 | ) | (52 | ) | (139 | ) | (98 | ) | |||||||
Gain on sales of non-rental equipment | (2 | ) | (2 | ) | (3 | ) | (3 | ) | |||||||
Gain on insurance proceeds from damaged equipment | (12 | ) | (7 | ) | (14 | ) | (8 | ) | |||||||
Stock compensation expense, net | 24 | 24 | 43 | 40 | |||||||||||
Merger related costs | 2 | 14 | 3 | 16 | |||||||||||
Restructuring charge | 4 | 19 | 6 | 19 | |||||||||||
Loss on repurchase/redemption of debt securities and amendment of ABL facility | — | 12 | — | 12 | |||||||||||
Increase in deferred taxes | 56 | 30 | 93 | 40 | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
(Increase) decrease in accounts receivable | (51 | ) | (81 | ) | 29 | (16 | ) | ||||||||
(Increase) decrease in inventory | (10 | ) | 1 | (19 | ) | (5 | ) | ||||||||
(Increase) decrease in prepaid expenses and other assets | (17 | ) | (16 | ) | 25 | (7 | ) | ||||||||
Increase in accounts payable | 348 | 290 | 451 | 429 | |||||||||||
Increase (decrease) in accrued expenses and other liabilities | 67 | 2 | (68 | ) | 16 | ||||||||||
Net cash provided by operating activities | 1,007 | 707 | 1,649 | 1,329 | |||||||||||
Cash Flows From Investing Activities: | |||||||||||||||
Purchases of rental equipment | (946 | ) | (694 | ) | (1,226 | ) | (913 | ) | |||||||
Purchases of non-rental equipment | (47 | ) | (33 | ) | (80 | ) | (55 | ) | |||||||
Proceeds from sales of rental equipment | 157 | 133 | 338 | 239 | |||||||||||
Proceeds from sales of non-rental equipment | 4 | 4 | 8 | 6 | |||||||||||
Insurance proceeds from damaged equipment | 12 | 7 | 14 | 8 | |||||||||||
Purchases of other companies, net of cash acquired | (6 | ) | (965 | ) | (58 | ) | (965 | ) | |||||||
Purchases of investments | (1 | ) | (3 | ) | (1 | ) | (4 | ) | |||||||
Net cash used in investing activities | (827 | ) | (1,551 | ) | (1,005 | ) | (1,684 | ) | |||||||
Cash Flows From Financing Activities: | |||||||||||||||
Proceeds from debt | 2,074 | 2,441 | 4,330 | 3,943 | |||||||||||
Payments of debt | (2,243 | ) | (1,604 | ) | (4,806 | ) | (3,543 | ) | |||||||
Payments of financing costs | (1 | ) | — | (1 | ) | (7 | ) | ||||||||
Proceeds from the exercise of common stock options | 1 | — | 2 | 1 | |||||||||||
Common stock repurchased (1) | (169 | ) | (1 | ) | (395 | ) | (24 | ) | |||||||
Net cash (used in) provided by financing activities | (338 | ) | 836 | (870 | ) | 370 | |||||||||
Effect of foreign exchange rates | (3 | ) | 9 | (9 | ) | 11 | |||||||||
Net (decrease) increase in cash and cash equivalents | (161 | ) | 1 | (235 | ) | 26 | |||||||||
Cash and cash equivalents at beginning of period | 278 | 337 | 352 | 312 | |||||||||||
Cash and cash equivalents at end of period | $ | 117 | $ | 338 | $ | 117 | $ | 338 | |||||||
Supplemental disclosure of cash flow information: | |||||||||||||||
Cash paid for income taxes, net | $ | 29 | $ | 58 | $ | 39 | $ | 59 | |||||||
Cash paid for interest | 60 | 87 | 213 | 177 |
(1) | As discussed above, we have an open $1.25 billion share repurchase program that we intend to complete by the end of 2019. This program commenced in July 2018 following the completion of our $1 billion share repurchase program. The common stock repurchases include i) shares repurchased pursuant to the $1 billion share repurchase program and ii) shares withheld to satisfy tax withholding obligations upon the vesting of restricted stock unit awards. |
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||
General Rentals | |||||||||||
Reportable segment equipment rentals revenue | $1,332 | $1,143 | 16.5% | $2,533 | $2,120 | 19.5% | |||||
Reportable segment equipment rentals gross profit | 543 | 465 | 16.8% | 969 | 825 | 17.5% | |||||
Reportable segment equipment rentals gross margin | 40.8% | 40.7% | 10 bps | 38.3% | 38.9% | (60) bps | |||||
Trench, Power and Pump | |||||||||||
Reportable segment equipment rentals revenue | $299 | $224 | 33.5% | $557 | $413 | 34.9% | |||||
Reportable segment equipment rentals gross profit | 145 | 111 | 30.6% | 264 | 195 | 35.4% | |||||
Reportable segment equipment rentals gross margin | 48.5% | 49.6% | (110) bps | 47.4% | 47.2% | 20 bps | |||||
Total United Rentals | |||||||||||
Total equipment rentals revenue | $1,631 | $1,367 | 19.3% | $3,090 | $2,533 | 22.0% | |||||
Total equipment rentals gross profit | 688 | 576 | 19.4% | 1,233 | 1,020 | 20.9% | |||||
Total equipment rentals gross margin | 42.2% | 42.1% | 10 bps | 39.9% | 40.3% | (40) bps |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Numerator: | |||||||||||||||
Net income available to common stockholders (1) | $ | 270 | $ | 141 | $ | 453 | $ | 250 | |||||||
Denominator: | |||||||||||||||
Denominator for basic earnings per share—weighted-average common shares | 83.5 | 84.6 | 83.9 | 84.5 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Employee stock options | 0.4 | 0.4 | 0.4 | 0.4 | |||||||||||
Restricted stock units | 0.3 | 0.4 | 0.4 | 0.5 | |||||||||||
Denominator for diluted earnings per share—adjusted weighted-average common shares | 84.2 | 85.4 | 84.7 | 85.4 | |||||||||||
Diluted earnings per share (1) | $ | 3.20 | $ | 1.65 | $ | 5.34 | $ | 2.92 |
(1) | The three and six months ended June 30, 2018 reflect a reduction in the U.S. federal corporate statutory tax rate from 35% to 21% following the enactment of the Tax Cuts and Jobs Act in December 2017, which contributed an estimated $0.58 and $0.95 to diluted earnings per share for the three and six months ended June 30, 2018, respectively. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Earnings per share - GAAP, as reported (1) | $ | 3.20 | $ | 1.65 | $ | 5.34 | $ | 2.92 | |||||||
After-tax impact of: | |||||||||||||||
Merger related costs (2) | 0.02 | 0.09 | 0.03 | 0.11 | |||||||||||
Merger related intangible asset amortization (3) | 0.37 | 0.30 | 0.76 | 0.57 | |||||||||||
Impact on depreciation related to acquired fleet and property and equipment (4) | 0.08 | (0.03 | ) | 0.17 | (0.02 | ) | |||||||||
Impact of the fair value mark-up of acquired fleet (5) | 0.15 | 0.13 | 0.36 | 0.19 | |||||||||||
Restructuring charge (6) | 0.03 | 0.14 | 0.05 | 0.14 | |||||||||||
Loss on repurchase/redemption of debt securities and amendment of ABL facility | — | 0.09 | — | 0.09 | |||||||||||
Earnings per share - adjusted (1) | $ | 3.85 | $ | 2.37 | $ | 6.71 | $ | 4.00 | |||||||
Tax rate applied to above adjustments (1) | 25.3 | % | 38.5 | % | 25.3 | % | 38.5 | % |
(1) | The three and six months ended June 30, 2018 reflect a reduction in the U.S. federal corporate statutory tax rate from 35% to 21% following the enactment of the Tax Cuts and Jobs Act in December 2017, which contributed an estimated $0.58 and $0.95, respectively, to earnings per share-GAAP, and $0.70 and $1.20, respectively, to earnings per share-adjusted, for the three and six months ended June 30, 2018. The tax rates applied to the adjustments reflect the statutory rates in the applicable entities. |
(2) | Reflects transaction costs associated with the NES, Neff and BakerCorp acquisitions discussed above. As discussed above, the BakerCorp acquisition is expected to close early in the third quarter of 2018. 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 and BakerCorp had annual revenues of approximately $295 million. |
(3) | Reflects the amortization of the intangible assets acquired in the RSC, National Pump, NES and Neff acquisitions. |
(4) | Reflects the impact of extending the useful lives of equipment acquired in the RSC, NES and Neff 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 and Neff acquisitions and subsequently sold. |
(6) | 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 three restructuring programs. We have cumulatively incurred total restructuring charges of $290 million under our restructuring programs. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 270 | $ | 141 | $ | 453 | $ | 250 | |||||||
Provision for income taxes | 89 | 88 | 138 | 140 | |||||||||||
Interest expense, net | 112 | 113 | 221 | 207 | |||||||||||
Depreciation of rental equipment | 323 | 266 | 645 | 514 | |||||||||||
Non-rental depreciation and amortization | 67 | 64 | 138 | 126 | |||||||||||
EBITDA (A) | $ | 861 | $ | 672 | $ | 1,595 | $ | 1,237 | |||||||
Merger related costs (1) | 2 | 14 | 3 | 16 | |||||||||||
Restructuring charge (2) | 4 | 19 | 6 | 19 | |||||||||||
Stock compensation expense, net (3) | 24 | 24 | 43 | 40 | |||||||||||
Impact of the fair value mark-up of acquired fleet (4) | 16 | 18 | 40 | 26 | |||||||||||
Adjusted EBITDA (B) | $ | 907 | $ | 747 | $ | 1,687 | $ | 1,338 |
(1) | Reflects transaction costs associated with the NES, Neff and BakerCorp acquisitions discussed above. As discussed above, the BakerCorp acquisition is expected to close early in the third quarter of 2018. 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 and BakerCorp had annual revenues of approximately $295 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 three restructuring programs. We have cumulatively incurred total restructuring charges of $290 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 and Neff acquisitions and subsequently sold. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net cash provided by operating activities | $ | 1,007 | $ | 707 | $ | 1,649 | $ | 1,329 | |||||||
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 | (3 | ) | (2 | ) | (6 | ) | (4 | ) | |||||||
Gain on sales of rental equipment | 65 | 52 | 139 | 98 | |||||||||||
Gain on sales of non-rental equipment | 2 | 2 | 3 | 3 | |||||||||||
Gain on insurance proceeds from damaged equipment | 12 | 7 | 14 | 8 | |||||||||||
Merger related costs (1) | (2 | ) | (14 | ) | (3 | ) | (16 | ) | |||||||
Restructuring charge (2) | (4 | ) | (19 | ) | (6 | ) | (19 | ) | |||||||
Stock compensation expense, net (3) | (24 | ) | (24 | ) | (43 | ) | (40 | ) | |||||||
Loss on repurchase/redemption of debt securities and amendment of ABL facility | — | (12 | ) | — | (12 | ) | |||||||||
Changes in assets and liabilities | (281 | ) | (170 | ) | (404 | ) | (346 | ) | |||||||
Cash paid for interest | 60 | 87 | 213 | 177 | |||||||||||
Cash paid for income taxes, net | 29 | 58 | 39 | 59 | |||||||||||
EBITDA | $ | 861 | $ | 672 | $ | 1,595 | $ | 1,237 | |||||||
Add back: | |||||||||||||||
Merger related costs (1) | 2 | 14 | 3 | 16 | |||||||||||
Restructuring charge (2) | 4 | 19 | 6 | 19 | |||||||||||
Stock compensation expense, net (3) | 24 | 24 | 43 | 40 | |||||||||||
Impact of the fair value mark-up of acquired fleet (4) | 16 | 18 | 40 | 26 | |||||||||||
Adjusted EBITDA | $ | 907 | $ | 747 | $ | 1,687 | $ | 1,338 |
(1) | Reflects transaction costs associated with the NES, Neff and BakerCorp acquisitions discussed above. As discussed above, the BakerCorp acquisition is expected to close early in the third quarter of 2018. 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 and BakerCorp had annual revenues of approximately $295 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 three restructuring programs. We have cumulatively incurred total restructuring charges of $290 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 and Neff acquisitions and subsequently sold. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net cash provided by operating activities | $ | 1,007 | $ | 707 | $ | 1,649 | $ | 1,329 | |||||||
Purchases of rental equipment | (946 | ) | (694 | ) | (1,226 | ) | (913 | ) | |||||||
Purchases of non-rental equipment | (47 | ) | (33 | ) | (80 | ) | (55 | ) | |||||||
Proceeds from sales of rental equipment | 157 | 133 | 338 | 239 | |||||||||||
Proceeds from sales of non-rental equipment | 4 | 4 | 8 | 6 | |||||||||||
Insurance proceeds from damaged equipment | 12 | 7 | 14 | 8 | |||||||||||
Free cash flow (1) | $ | 187 | $ | 124 | $ | 703 | $ | 614 |
(1) | Free cash flow included aggregate merger and restructuring related payments of $6 million and $29 million for the three months ended June 30, 2018 and 2017, respectively, and $16 million and $31 million for the six months ended June 30, 2018 and 2017, respectively. |
Net cash provided by operating activities | $2,675- $2,825 | |
Purchases of rental equipment | $(1,900)-$(2,000) | |
Proceeds from sales of rental equipment | $600-$700 | |
Purchases of non-rental equipment, net of proceeds from sales and insurance proceeds from damaged equipment | $(75)-$(125) | |
Free cash flow (excluding the impact of merger and restructuring related payments) | $1,300- $1,400 |
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