M&A Strategy and Financial Overview
Historical Free Cash Flow GAAP Reconciliation ($M)
We define "free cash flow" as net cash provided by operating activities less purchases of, and plus proceeds from, equipment and intangible assets, and plus excess tax benefits from share-based payment arrangements. The equipment
and intangible asset 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 net cash provided by operating activities and free cash flow.
YTD
2008 2009
2010 2011
2012
2013 2014
2015
2016
2017 2018
2019
2020
2021
2022
2023
Net cash provided by operating activities
Purchases of rental equipment
$ 764 $ 438 $ 452 $ 612 $
(624) (260) (346)
(774)
Purchases of non-rental equipment and
intangible assets
(80)
(51)
(28)
(36
(97) (104) (120)
721 $ 1,551 $ 1,801 $ 1,987 $ 1,941 $ 2,209 $ 2,853 $ 3,024
(1,272) (1,580) (1,701) (1,534) (1,246) (1,769) (2,106) (2,132)
(102) (93) (120) (185) (218)
$ 2,658 $ 3,689 $4,433 $ 3,290
(961) (2,998) (3,436)
(3,078)
(197)
(200) (254)
(267)
Proceeds from sales of rental equipment
264
229
144
208
399
490
544
538
496
550
664
831
858
968
965
1,136
Proceeds from sales of non-rental equipment
Insurance proceeds from damaged
11
13
7
13
31
26
33
17
14
16
23
37
42
30
24
46
equipment (1)
8
12
21
22
24
40
25
32
30
Excess tax benefits from share-based payment
arrangements (2)
(2)
(2)
(5)
5
58
Free cash flow
$ 335 $ 367 $ 227 $
23 $
(223) $
383 $
557 $
919 $ 1,182 $
907 $
1,271 $ 1,566
$ 2,440 $
1,514 $ 1,764 $ 1,157
Merger and restructuring related payments
included in free cash flow (3)
150
38
17
5
13
76
63
26
14
13
4
6
Free cash flow excluding merger and
restructuring related payments (3)
$
(73) $
421 $
574 $
924 $ 1,195 $
983 $ 1,334 $ 1,592 $ 2,454 $
1,527 $1,768 $ 1,163
(1) In 2018, we adopted accounting guidance that addressed the cash flow presentation for proceeds from the settlement of insurance claims. Adoption of this guidance decreased net cash provided by operating
activities, relative to previously reported amounts, but did not change free cash flow, for 2017, 2016 and 2015 in the table above. The information required to determine the amount of insurance proceeds for periods prior
to 2015 is unavailable without unreasonable effort. The adoption of this accounting guidance did not impact free cash flow, as the reduction to net cash provided by operating activities was offset by the increase in
insurance proceeds from
damaged equipment.
(2) The excess tax benefits from share-based payment arrangements result from stock-based compensation windfall deductions in excess of the amounts reported for financial reporting purposes. We adopted
accounting guidance in 2017 that changed the cash flow presentation of excess tax benefits from share-based payment arrangements. In the table above, the excess tax benefits from share-based payment
arrangements for periods after 2016 are presented as a component of net cash provided by operating activities, while, for 2016 and prior, they are presented as a separate line item. Because we historically included the
excess tax benefits from share based payment arrangements in the free cash flow calculation, the adoption of this guidance did not change the calculation of free cash flow.
(3) Merger and restructuring related payments were first reported for 2012. The information required to determine the amount of merger and restructuring related payments for periods prior to 2012 is unavailable without
unreasonable effort.
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