Executing for Growth and Returns
EBITDA and Adjusted EBITDA GAAP
Reconciliations
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 RSC and NES fleet. These items are excluded from adjusted EBITDA internally when evaluating our operating performance and for strategic
planning and forecasting purposes, and allow investors to make a more meaningful comparison between our core business operating results over different periods of time,
as well as with those of other similar companies. The EBITDA and adjusted EBITDA margins represent EBITDA or adjusted EBITDA divided by total revenue. Management
believes that EBITDA and adjusted EBITDA, when viewed with the Company's results under GAAP and the accompanying reconciliation, provide useful information about
operating performance and period-over-period growth, and provide additional information that is useful for evaluating the operating performance of our core business
without regard to potential distortions. Additionally, management believes that EBITDA and adjusted EBITDA 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.
The table below provides a reconciliation between net income and EBITDA and adjusted EBITDA.
$ Millions
Net income
Provision for income taxes
Interest expense, net
Depreciation of rental equipment
Non-rental depreciation and amortization
EBITDA (A)
Merger related costs (1)
Restructuring charge (2)
Stock compensation expense, net (3)
Impact of the fair value mark-up of acquired RSC and NES fleet (4)
Adjusted EBITDA (B)
Three Months Ended
June 30,
Six Months Ended
June 30,
2017
2016
2017
2016
$
141 $ 134 $
250 $
226
88
83
140
138
113
132
207
239
266
242
514
485
64
64
126
131
672
$
655
$ 1,237
$ 1,219
14
16
19
2
19
4
24
13
40
22
18
9
26
18
+A
$
A)
B)
(1)
Our EBITDA margin was 42.1% and 46.1% for the three months ended June 30, 2017 and 2016,
respectively, and 41.9% and 44.6% for the six months ended June 30, 2017 and 2016, respectively.
Our adjusted EBITDA margin was 46.8% and 47.8% for the three months ended June 30, 2017 and 2016,
respectively, and 45.3% and 46.2% for the six months ended June 30, 2017 and 2016, respectively.
Reflects transaction costs associated with the NES acquisition. 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.
United Rentals®
747 $ 679 $ 1,338 $ 1,263
(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 $253 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 and NES
acquisitions and subsequently sold.
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