Acquisitions (Tables)

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of assets acquired and liabilities assumed

The table below summarizes the fair values of the assets acquired and liabilities assumed. 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 rental equipment (inclusive of the completion of our usual and customary procedures to validate the existence of the acquired rental fleet) and intangible assets and 3) 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, primarily because of the proximity of the acquisition date to the balance sheet date of March 31, 2023. During the three months ended March 31, 2023, we recognized measurement period adjustments primarily to establish preliminary values for intangibles assets and lease assets and liabilities. These adjustments resulted in a substantial reduction to goodwill versus the previously reported amount (see note 6 to the condensed consolidated financial statements for further discussion of goodwill changes). Non-rental depreciation and amortization for the three months ended March 31, 2023 includes $8 of intangible asset amortization that would have been recognized in 2022 if the intangible asset values had been preliminarily established as of December 31, 2022.

Inventory	$	30
Rental equipment	1,290
Property and equipment	187
Intangibles (1)	450
Operating lease right-of-use assets	211
Other assets	9
Total identifiable assets acquired	2,177
Accounts payable, accrued expenses and other liabilities	(33)
Operating lease liabilities	(199)
Debt (finance leases)	(38)
Total liabilities assumed	(270)
Net identifiable assets acquired	1,907
Goodwill (2)	105
Net assets acquired	$	2,012

(1)The following table reflects the fair values and useful lives of the acquired intangible assets identified based on our preliminary purchase accounting assessments:

	Fair value		Life (years)
Customer relationships	$	260	9
Non-compete agreements	190		5
Total	$	450

(2)All of the goodwill was assigned to our general rentals segment. As noted above, we have not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed. As such, goodwill could change from the amount noted above. Once finalized, we expect that the goodwill that results from the acquisition will be primarily reflective of Ahern Rentals' going-concern value, the value of Ahern Rentals' 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 acquisition is a purchase of assets, the goodwill that is deductible for income tax purposes equals the total acquired goodwill. As noted above, goodwill could change from the amount above).

Finite-lived and indefinite-lived intangible assets acquired as part of business combination

The following table reflects the fair values and useful lives of the acquired intangible assets identified based on our preliminary purchase accounting assessments:

	Fair value		Life (years)
Customer relationships	$	260	9
Non-compete agreements	190		5
Total	$	450

Summary of business acquisition, pro forma information

The table below presents unaudited pro forma consolidated income statement information as if Ahern Rentals had been included in our consolidated results for the entire period reflected:

	Three Months Ended
	March 31,
	2022
United Rentals historic revenues	$	2,524
Ahern Rentals historic revenues	203
Pro forma revenues	2,727
United Rentals historic pretax income	483
Ahern Rentals historic pretax (loss) income	(9)
Combined pretax income	474
Pro forma adjustments to combined pretax income:
Impact of fair value mark-ups/useful life changes on depreciation (1)	(25)
Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2)	(10)
Intangible asset amortization (3)	(21)
Interest expense (4)	(25)
Elimination of historic interest (5)	13
Elimination of historic legal and financing costs (6)	2
Pro forma pretax income	$	408

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(1) Depreciation of rental equipment and non-rental depreciation were adjusted for the fair value mark-ups, and the changes in useful lives and salvage values, of the equipment acquired in the Ahern Rentals acquisition.

(2) Cost of rental equipment sales was adjusted for the fair value mark-ups, and the changes in useful lives and salvage values, of rental equipment acquired in the Ahern Rentals acquisition.

(3) Intangible asset amortization was adjusted to include amortization of the acquired intangible assets.

(4) As discussed above, the acquisition and related fees and expenses were funded through the issuance of senior notes and drawings on our ABL facility. Interest expense was adjusted to reflect interest on the debt used to finance the acquisition.

(5) Historic interest on debt that is not part of the combined entity was eliminated.

(6) Reflects legal and financing costs incurred by Ahern Rentals that do not relate to the combined entity (specifically, legal costs related to a particular lawsuit and costs related to an attempted financing).