United Rentals Financial Performance and Market Exposure
EBITDA and Adjusted EBITDA GAAP Reconciliations
EBITDA represents the sum of net income, provision (benefit) 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. 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. However, EBITDA and adjusted EBITDA are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income or cash flow from operating
activities as indicators of operating performance or liquidity. The table below provides a reconciliation between net income and EBITDA and adjusted EBITDA.
The table below provides a reconciliation between net income and EBITDA and adjusted EBITDA.
$ Millions
Net income
Provision (benefit) 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 fleet (4)
Adjusted EBITDA (B)
Three Months Ended
Year Ended
December 31,
December 31,
2018
2017
2018
2017
$
310
$
897
$
1,096 $
1,346
115
(561)
380
(298)
142
126
481
464
375
320
1,363
1,124
95
70
308
259
$
1,037
$
852
$ 3,628
$
2,895
22
18
36
50
16
22
31
50
29
23
102
87
13
32
66
82
$
1,117
$
947
$
3,863
$
3,164
A)
Our EBITDA margin was 45.0% and 44.3% for the three months ended December 31, 2018 and 2017, respectively, and 45.1% and 43.6% for the years
ended December 31, 2018 and 2017, respectively.
B)
(1)
Our adjusted EBITDA margin was 48.4% and 49.3% for the three months ended December 31, 2018 and 2017, respectively, and 48.0% and 47.6% for the
years ended December 31, 2018 and 2017, respectively.
Reflects transaction costs associated with the NES, Neff, BakerCorp and Blue Line acquisitions discussed above. 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, Neff had annual revenues of approximately $413 million, BakerCorp had annual revenues of approximately $295 million and
BlueLine has annual revenues of approximately $786 million.
United Rentals®
(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 $315 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, NES, Neff and BlueLine acquisitions and subsequently sold.
United Rentals, Inc., 100 First Stamford Place, Stamford, CT 06902. © 2018 United Rentals, Inc. All rights reserved.
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