M&A Strategy and Financial Overview
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
restructuring charges, stock compensation expense, net, and the impact of the fair value mark-up of acquired fleet. See below for further detail on each adjusting item. 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 net income and adjusted EBITDA margins represent net income 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
Restructuring charge (1)
Stock compensation expense, net (2)
Impact of the fair value mark-up of acquired fleet (3)
Adjusted EBITDA
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
$
703
$ 606
2023
$1,745
2022
$1,466
240
210
564
441
163
106
474
313
588
470
1,755
1,362
107
90
329
278
$ 1,801
$1,482
$ 4,867
$ 3,860
5
(1)
24
23
35
72
95
21
5
85
16
$ 1,850
$ 1,521
$5,048
$ 3,971
18.7 %
49.1 %
19.9 %
49.9 %
16.5 %
47.6 %
17.6 %
Net income margin
Adjusted EBITDA margin
47.6 %
1) Primarily reflects severance and branch closure charges associated with our restructuring programs. We only include such costs that are part of a restructuring
program as restructuring charges. The designated restructuring programs generally involve the closure of a large number of branches over a short period of time,
often in periods following a major acquisition, and result in significant costs that we would not normally incur absent a major acquisition or other triggering event that
results in the initiation of a restructuring program. Since the first such restructuring program was initiated in 2008, we have completed six restructuring programs. In
the first quarter of 2023, we initiated a restructuring program following the closing of the Ahern Rentals acquisition, which is our only open restructuring program as
of September 30, 2023. The increase in 2023 reflects charges associated with the restructuring program initiated following the closing of the Ahern Rentals
acquisition. We have cumulatively incurred total restructuring charges of $376 million under our restructuring programs.
Represents non-cash, share-based payments associated with the granting of equity instruments.
2)
3)
Reflects additional costs recorded in cost of rental equipment sales associated with the fair value mark-up of rental equipment acquired in certain major acquisitions
and subsequently sold. The increase in 2023 primarily reflects the impact of the Ahern Rentals acquisition.
United Rentals®
Work United®
| 45View entire presentation