United Rentals, Inc. (NYSE:URI) today announced that it has
completed its previously announced acquisition of BakerCorp
International Holdings, Inc. (“BakerCorp”) for a total purchase
price of approximately $715 million. The transaction was funded
through a combination of cash and available capacity on the
company’s senior secured asset-based revolving credit facility.
BakerCorp is a leading multinational provider of tank, pump,
filtration and trench shoring rental solutions for a broad range of
industrial and construction applications. With the acquisition,
United Rentals substantially augments its bundled solutions for
fluid storage, transfer and treatment; expands its strategic
account base; and gains a significant opportunity to increase
revenue and enhance customer service by cross-selling to its
broader customer base. The BakerCorp acquisition added
approximately 25,000 units of fleet, 46 branches in North America
and 11 in Europe, and approximately 950 employees to United
Rentals’ footprint. For the trailing 12 months ended May 31, 2018,
BakerCorp generated $79 million of adjusted EBITDA at a 26.9%
margin on $295 million of total revenue.
Michael Kneeland, chief executive officer of United Rentals,
said, “The Baker acquisition is a highly strategic move on our part
to grow our Specialty segment. Our expanded expertise in fluid
solutions will benefit our customers and build long-term value for
our investors. Today we welcomed almost a thousand top-notch
colleagues as the first step in the integration.”
The company has updated its 2018 guidance solely to reflect the
acquisition of BakerCorp. The new guidance includes $140 million of
total revenue, $40 million of adjusted EBITDA and $50 million of
gross capital spending, reflecting the anticipated impact of the
acquisition on the company’s full-year results:
Prior Outlook Current
Outlook Total revenue $7.5 billion to $7.7 billion $7.64
billion to $7.84 billion
Adjusted EBITDA1
$3.675 billion to $3.775 billion $3.715 billion to $3.815 billion
Net rental capital expenditures after gross purchases $1.25 billion
to $1.35 billion, after gross purchases of $1.9 billion to $2.0
billion $1.3 billion to $1.4 billion, after gross purchases of
$1.95 billion to $2.05 billion Net cash provided by operating
activities $2.675 billion to $2.825 billion $2.725 billion to
$2.875 billion
Free cash flow2 (excluding the impact of
merger and restructuring related costs)
$1.3 billion to $1.4 billion $1.3 billion to $1.4 billion
_________________
1 Information reconciling forward-looking
adjusted EBITDA to the comparable GAAP financial measures is
unavailable to the company without unreasonable effort, as
discussed below.
2 Free cash flow is a non-GAAP measure. See the Appendix hereto for
amounts and a reconciliation to the most comparable GAAP measure.
Centerview Partners acted as financial advisor to United
Rentals, and Sullivan & Cromwell acted as legal advisor. Morgan
Stanley acted as financial advisor to BakerCorp, and Fried Frank
acted as legal advisor.
Non-GAAP Measures
Free cash flow and adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA) are non-GAAP financial
measures as defined under the rules of the Securities and Exchange
Commission. Free cash flow represents net cash provided by
operating activities less purchases of, and plus proceeds from,
equipment. The equipment purchases and proceeds represent cash
flows from investing activities. EBITDA represents the sum of net
income, provision for income taxes, interest expense, net,
depreciation of rental equipment and non-rental depreciation and
amortization. Adjusted EBITDA represents EBITDA plus the sum of the
merger related costs, restructuring charge, stock compensation
expense, net, and the impact of the fair value mark-up of acquired
fleet. The company believes that: (i) free cash flow provides
useful additional information concerning cash flow available to
meet future debt service obligations and working capital
requirements; and (ii) adjusted EBITDA provides useful information
about operating performance and period-over-period growth, and help
investors gain an understanding of the factors and trends affecting
our ongoing cash earnings, from which capital investments are made
and debt is serviced. However, neither of these measures should be
considered as alternatives to net income or cash flows from
operating activities under GAAP as indicators of operating
performance or liquidity.
Information reconciling forward-looking adjusted EBITDA to GAAP
financial measures is unavailable to the company without
unreasonable effort. The company is not able to provide
reconciliations of adjusted EBITDA to GAAP financial measures
because certain items required for such reconciliations are outside
of the company’s control and/or cannot be reasonably predicted,
such as the provision for income taxes. Preparation of such
reconciliations would require a forward-looking balance sheet,
statement of income and statement of cash flow, prepared in
accordance with GAAP, and such forward-looking financial statements
are unavailable to the company without unreasonable effort. The
company provides a range for its adjusted EBITDA forecast that it
believes will be achieved, however it cannot accurately predict all
the components of the adjusted EBITDA calculation. The company
provides an adjusted EBITDA forecast because it believes that
adjusted EBITDA, when viewed with the company’s results under GAAP,
provides useful information for the reasons noted above. However,
adjusted EBITDA is not a measure of financial performance or
liquidity under GAAP and, accordingly, should not be considered as
an alternative to net income or cash flow from operating activities
as an indicator of operating performance or liquidity.
BakerCorp’s adjusted EBITDA is a non-GAAP financial measure as
defined under the rules of the Securities and Exchange Commission.
United Rentals believes that this non-GAAP financial measure
provides useful information about the proposed transaction;
however, it should not be considered as an alternative to GAAP net
income. A reconciliation between BakerCorp’s net income (loss) and
adjusted EBITDA, as well as other financial data, is provided in
the investor presentation available on the company’s website.
About United Rentals
United Rentals, Inc. is the largest equipment rental company in
the world, with an integrated network of 1,054 rental locations in
North America and 11 in Europe. The company’s approximately 16,400
employees serve construction and industrial customers, utilities,
municipalities, homeowners and others. The company offers
approximately 4,200 classes of equipment for rent with a total
original cost of $12.4 billion. United Rentals is a member of the
Standard & Poor’s 500 Index, the Barron’s 400 Index and the
Russell 3000 Index® and is headquartered in Stamford, Conn.
Additional information about United Rentals is available at
unitedrentals.com.
Cautionary Statement Regarding 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. Forward-looking statements involve
significant risks and uncertainties that may cause results to
differ materially from those set forth in the statements. These
statements are based on current plans, estimates and projections,
and, therefore, you should not place undue reliance on them. No
forward-looking statement, including any such statement concerning
the completion and anticipated benefits of the proposed
transaction, can be guaranteed, and actual results may differ
materially from those projected. United Rentals undertakes no
obligation to publicly update any forward-looking statement,
whether as a result of new information, future events or otherwise.
Forward-looking statements are not historical facts, but rather are
based on current expectations, estimates, assumptions and
projections about the business and future financial results of the
equipment rental industries, and other legal, regulatory and
economic developments. We use words such as “anticipates,”
“believes,” “plans,” “expects,” “projects,” “future,” “intends,”
“may,” “will,” “should,” “could,” “estimates,” “predicts,”
“potential,” “continue,” “guidance” and similar expressions to
identify these forward-looking statements that are intended to be
covered by the safe harbor provisions of the PSLRA. Actual results
could differ materially from the results contemplated by these
forward-looking statements due to a number of factors, including,
but not limited to, those described in the SEC reports filed by
United Rentals, as well as the possibility that (1) problems may
arise in successfully integrating the businesses of United Rentals
and BakerCorp, including, without limitation, problems associated
with the potential loss of any key employees of BakerCorp; (2) the
transaction may involve unexpected costs, including, without
limitation, the exposure to any unrecorded liabilities or
unidentified issues that we failed to discover during the due
diligence investigation of BakerCorp or that are not subject to
indemnification or reimbursement, as well as potential unfavorable
accounting treatment and unexpected increases in taxes; (3) our
business may suffer as a result of uncertainty surrounding the
transaction, any adverse effects on our ability to maintain
relationships with customers, employees and suppliers, or the
inherent risk associated with entering a geographic area or
business; and (4) the industry may be subject to future risks that
are described in the “Risk Factors” section of the Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q and other documents
filed from time to time with the SEC by United Rentals. United
Rentals gives no assurance that it will achieve its expectations
and does not assume any responsibility for the accuracy and
completeness of the forward-looking statements.
The foregoing list of factors is not exhaustive. You should
carefully consider the foregoing factors and the other risks and
uncertainties that affect the businesses of United Rentals
described in the “Risk Factors” section of its Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and other documents filed
from time to time with the SEC. All forward-looking statements
included in this document are based upon information available to
United Rentals on the date hereof; and United Rentals assumes no
obligations to update or revise any such forward-looking
statements.
Appendix
UNITED RENTALS, INC.FREE CASH FLOW
GAAP RECONCILIATION(In millions)
We define “free cash flow” as net cash provided by operating
activities less purchases of, and plus proceeds from, equipment.
The equipment purchases and proceeds are included in cash flows
from investing activities. 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 is not a measure of
financial performance or liquidity under GAAP. Accordingly, free
cash flow 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 2018
forecasted net cash provided by operating activities and free cash
flow.
Net cash provided by operating activities
$2,725- $2,875 Purchases of rental equipment
$(1,950)-$(2,050) 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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180731005542/en/
For United Rentals, Inc.Ted Grace, 203-618-7122Cell:
203-399-8951tgrace@ur.com
United Rentals (NYSE:URI)
Historical Stock Chart
From Jun 2024 to Jul 2024
United Rentals (NYSE:URI)
Historical Stock Chart
From Jul 2023 to Jul 2024