Acquisitions (Tables)

9 Months Ended

Sep. 30, 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 purchase price allocations for these assets and liabilities are based on preliminary valuations and are subject to change as we obtain additional information during the acquisition measurement period. The accounting for the acquisition that has not yet been completed principally relates to finalizing the valuations of the acquired rental equipment and intangible assets. During the nine months ended September 30, 2023, we recognized measurement period adjustments primarily to establish preliminary values for intangible 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 nine months ended September 30, 2023 includes $7 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	$	24
Rental equipment	1,244
Property and equipment	186
Intangible assets (1)	428
Operating lease right-of-use assets	211
Other assets	10
Total identifiable assets acquired	2,103
Accounts payable, accrued expenses and other liabilities	(25)
Operating lease liabilities	(199)
Debt (finance leases)	(38)
Total liabilities assumed	(262)
Net identifiable assets acquired	1,841
Goodwill (2)	147
Net assets acquired	$	1,988

(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	$	330	9
Non-compete agreements	98		5
Total	$	428

(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	$	330	9
Non-compete agreements	98		5
Total	$	428

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 periods reflected:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2022		2022
United Rentals historic revenues	$	3,051	$	8,346
Ahern Rentals historic revenues	226		654
Pro forma revenues	3,277		9,000
United Rentals historic pretax income	816		1,907
Ahern Rentals historic pretax income (loss)	1		(5)
Combined pretax income	817		1,902
Pro forma adjustments to combined pretax income:
Impact of fair value mark-ups/useful life changes on depreciation (1)	(26)		(76)
Impact of the fair value mark-up of acquired fleet on cost of rental equipment sales (2)	(4)		(26)
Intangible asset amortization (3)	(20)		(59)
Interest expense (4)	(27)		(77)
Elimination of historic interest (5)	15		42
Elimination of historic legal and financing costs (6)	4		8
Pro forma pretax income	$	759	$	1,714

________________

(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).