x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
Delaware
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06-1522496
86-0933835
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(States of Incorporation)
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(I.R.S. Employer Identification Nos.)
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100 First Stamford Place, Suite 700
Stamford, Connecticut |
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06902
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(Address of Principal Executive Offices)
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(Zip Code)
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Large Accelerated Filer
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x
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Accelerated Filer
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o
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Non-Accelerated Filer
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o
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Smaller Reporting Company
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o
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Emerging Growth Company
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o
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Page
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PART I
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Item 1
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Item 2
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Item 3
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Item 4
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PART II
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Item 1
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Item 1A
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Item 2
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Item 6
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•
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the possibility that companies that we have acquired or may acquire, in our specialty business or otherwise, including NES Rentals Holdings II, Inc. (“NES ”) and Neff Corporation ("Neff"), could have undiscovered liabilities or involve other unexpected costs, may strain our management capabilities or may be difficult to integrate;
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•
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the cyclical nature of our business, which is highly sensitive to North American construction and industrial activities; if construction or industrial activity decline, our revenues and, because many of our costs are fixed, our profitability may be adversely affected;
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•
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our significant indebtedness (which totaled $
8.4 billion
at
September 30, 2017
) requires us to use a substantial portion of our cash flow for debt service and can constrain our flexibility in responding to unanticipated or adverse business conditions;
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•
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inability to refinance our indebtedness on terms that are favorable to us, or at all;
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•
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incurrence of additional debt, which could exacerbate the risks associated with our current level of indebtedness;
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•
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noncompliance with financial or other covenants in our debt agreements, which could result in our lenders terminating the agreements and requiring us to repay outstanding borrowings;
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•
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restrictive covenants and amount of borrowings permitted in our debt instruments, which can limit our financial and operational flexibility;
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•
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overcapacity of fleet in the equipment rental industry;
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•
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inability to benefit from government spending, including spending associated with infrastructure projects;
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•
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fluctuations in the price of our common stock and inability to complete stock repurchases in the time frame and/or on the terms anticipated;
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•
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rates we charge and time utilization we achieve being less than anticipated;
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•
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inability to manage credit risk adequately or to collect on contracts with a large number of customers;
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•
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inability to access the capital that our businesses or growth plans may require;
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•
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incurrence of impairment charges;
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•
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trends in oil and natural gas could adversely affect the demand for our services and products;
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•
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the fact that our holding company structure requires us to depend in part on distributions from subsidiaries and such distributions could be limited by contractual or legal restrictions;
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•
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increases in our loss reserves to address business operations or other claims and any claims that exceed our established levels of reserves;
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•
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incurrence of additional expenses (including indemnification obligations) and other costs in connection with litigation, regulatory and investigatory matters;
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•
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the outcome or other potential consequences of regulatory matters and commercial litigation;
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•
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shortfalls in our insurance coverage;
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•
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our charter provisions as well as provisions of certain debt agreements and our significant indebtedness may have the effect of making more difficult or otherwise discouraging, delaying or deterring a takeover or other change of control of us;
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•
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turnover in our management team and inability to attract and retain key personnel;
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•
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costs we incur being more than anticipated, and the inability to realize expected savings in the amounts or time frames planned;
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•
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dependence on key suppliers to obtain equipment and other supplies for our business on acceptable terms;
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•
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inability to sell our new or used fleet in the amounts, or at the prices, we expect;
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•
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competition from existing and new competitors;
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•
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risks related to security breaches, cybersecurity attacks and other significant disruptions in our information technology systems;
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•
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the costs of complying with environmental, safety and foreign law and regulations, as well as other risks associated with non-U.S. operations, including currency exchange risk;
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•
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labor disputes, work stoppages or other labor difficulties, which may impact our productivity, and potential enactment of new legislation or other changes in law affecting our labor relations or operations generally; and
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•
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increases in our maintenance and replacement costs and/or decreases in the residual value of our equipment.
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Item 1.
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Financial Statements
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September 30, 2017
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December 31, 2016
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(unaudited)
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ASSETS
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||||
Cash and cash equivalents
|
$
|
324
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|
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$
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312
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Accounts receivable, net of allowance for doubtful accounts of $57 at September 30, 2017 and $54 at December 31, 2016
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1,151
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|
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920
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Inventory
|
82
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|
|
68
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Prepaid expenses and other assets
|
82
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|
61
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Total current assets
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1,639
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|
1,361
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Rental equipment, net
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7,391
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6,189
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Property and equipment, net
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451
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430
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Goodwill
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3,493
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3,260
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Other intangible assets, net
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759
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742
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Other long-term assets
|
11
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6
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Total assets
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$
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13,744
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$
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11,988
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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|
||||
Short-term debt and current maturities of long-term debt
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$
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694
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$
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597
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Accounts payable
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612
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243
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Accrued expenses and other liabilities
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467
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344
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Total current liabilities
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1,773
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1,184
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Long-term debt
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7,677
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7,193
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Deferred taxes
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2,012
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1,896
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Other long-term liabilities
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71
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67
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Total liabilities
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11,533
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10,340
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Common stock—$0.01 par value, 500,000,000 shares authorized, 112,334,897 and 84,571,724 shares issued and outstanding, respectively, at September 30, 2017 and 111,985,215 and 84,222,042 shares issued and outstanding, respectively, at December 31, 2016
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1
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1
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Additional paid-in capital
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2,322
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2,288
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Retained earnings
|
2,108
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|
1,654
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Treasury stock at cost—27,763,173 shares at September 30, 2017 and December 31, 2016
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(2,077
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)
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(2,077
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)
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Accumulated other comprehensive loss
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(143
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)
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(218
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)
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Total stockholders’ equity
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2,211
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1,648
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Total liabilities and stockholders’ equity
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$
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13,744
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$
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11,988
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Three Months Ended
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Nine Months Ended
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||||||||||||
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September 30,
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September 30,
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||||||||||||
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2017
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2016
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2017
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2016
|
||||||||
Revenues:
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Equipment rentals
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$
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1,536
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$
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1,322
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$
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4,069
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$
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3,643
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Sales of rental equipment
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139
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112
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378
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361
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Sales of new equipment
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40
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30
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126
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96
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Contractor supplies sales
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21
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19
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60
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60
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Service and other revenues
|
30
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|
25
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|
|
86
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|
79
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|
||||
Total revenues
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1,766
|
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|
1,508
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|
4,719
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4,239
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Cost of revenues:
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||||||||
Cost of equipment rentals, excluding depreciation
|
557
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|
486
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1,556
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|
1,391
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|
||||
Depreciation of rental equipment
|
290
|
|
|
250
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|
|
804
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|
|
735
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|
||||
Cost of rental equipment sales
|
84
|
|
|
68
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|
|
225
|
|
|
215
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|
||||
Cost of new equipment sales
|
34
|
|
|
25
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|
|
108
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|
|
79
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|
||||
Cost of contractor supplies sales
|
14
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|
|
13
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|
|
42
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|
|
41
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|
||||
Cost of service and other revenues
|
14
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|
|
10
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|
|
42
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|
|
32
|
|
||||
Total cost of revenues
|
993
|
|
|
852
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|
|
2,777
|
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2,493
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||||
Gross profit
|
773
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|
656
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|
|
1,942
|
|
|
1,746
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|
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Selling, general and administrative expenses
|
237
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|
|
179
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|
648
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|
|
533
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|
||||
Merger related costs
|
16
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|
|
—
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|
32
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|
|
—
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||||
Restructuring charge
|
9
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|
|
4
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|
|
28
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|
|
8
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|
||||
Non-rental depreciation and amortization
|
63
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|
|
61
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|
|
189
|
|
|
192
|
|
||||
Operating income
|
448
|
|
|
412
|
|
|
1,045
|
|
|
1,013
|
|
||||
Interest expense, net
|
131
|
|
|
110
|
|
|
338
|
|
|
349
|
|
||||
Other income, net
|
(5
|
)
|
|
(1
|
)
|
|
(5
|
)
|
|
(3
|
)
|
||||
Income before provision for income taxes
|
322
|
|
|
303
|
|
|
712
|
|
|
667
|
|
||||
Provision for income taxes
|
123
|
|
|
116
|
|
|
263
|
|
|
254
|
|
||||
Net income
|
$
|
199
|
|
|
$
|
187
|
|
|
$
|
449
|
|
|
$
|
413
|
|
Basic earnings per share
|
$
|
2.36
|
|
|
$
|
2.18
|
|
|
$
|
5.31
|
|
|
$
|
4.68
|
|
Diluted earnings per share
|
$
|
2.33
|
|
|
$
|
2.16
|
|
|
$
|
5.26
|
|
|
$
|
4.66
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
199
|
|
|
$
|
187
|
|
|
$
|
449
|
|
|
$
|
413
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
41
|
|
|
(9
|
)
|
|
75
|
|
|
51
|
|
||||
Fixed price diesel swaps
|
1
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Other comprehensive income (loss)
|
42
|
|
|
(9
|
)
|
|
75
|
|
|
54
|
|
||||
Comprehensive income (1)
|
$
|
241
|
|
|
$
|
178
|
|
|
$
|
524
|
|
|
$
|
467
|
|
|
Common Stock
|
|
|
|
|
|
Treasury Stock
|
|
|
||||||||||||||||
|
Number of
Shares (1)
|
|
Amount
|
|
Additional Paid-in
Capital
|
|
Retained Earnings
|
|
Number of
Shares
|
|
Amount
|
|
Accumulated Other Comprehensive
(Loss) Income (2)
|
||||||||||||
Balance at December 31, 2016
|
84
|
|
|
$
|
1
|
|
|
$
|
2,288
|
|
|
$
|
1,654
|
|
|
28
|
|
|
$
|
(2,077
|
)
|
|
$
|
(218
|
)
|
Net income
|
|
|
|
|
|
|
449
|
|
|
|
|
|
|
|
|||||||||||
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
75
|
|
|||||||||||
Cumulative effect of a change in accounting for share-based payments (note 1)
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|||||||||||
Stock compensation expense, net
|
1
|
|
|
|
|
64
|
|
|
|
|
|
|
|
|
|
||||||||||
Exercise of common stock options
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|||||||||||
Shares repurchased and retired
|
|
|
|
|
(26
|
)
|
|
|
|
|
|
|
|
|
|||||||||||
Other
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at September 30, 2017
|
85
|
|
|
$
|
1
|
|
|
$
|
2,322
|
|
|
$
|
2,108
|
|
|
28
|
|
|
$
|
(2,077
|
)
|
|
$
|
(143
|
)
|
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash Flows From Operating Activities:
|
|
|
|
||||
Net income
|
$
|
449
|
|
|
$
|
413
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
993
|
|
|
927
|
|
||
Amortization of deferred financing costs and original issue discounts
|
6
|
|
|
7
|
|
||
Gain on sales of rental equipment
|
(153
|
)
|
|
(146
|
)
|
||
Gain on sales of non-rental equipment
|
(4
|
)
|
|
(3
|
)
|
||
Stock compensation expense, net
|
64
|
|
|
33
|
|
||
Merger related costs
|
32
|
|
|
—
|
|
||
Restructuring charge
|
28
|
|
|
8
|
|
||
Loss on repurchase/redemption of debt securities and amendment of ABL facility
|
43
|
|
|
36
|
|
||
Excess tax benefits from share-based payment arrangements
|
—
|
|
|
(53
|
)
|
||
Increase in deferred taxes
|
97
|
|
|
90
|
|
||
Changes in operating assets and liabilities, net of amounts acquired:
|
|
|
|
||||
(Increase) decrease in accounts receivable
|
(172
|
)
|
|
7
|
|
||
Increase in inventory
|
(9
|
)
|
|
(3
|
)
|
||
(Increase) decrease in prepaid expenses and other assets
|
(1
|
)
|
|
75
|
|
||
Increase in accounts payable
|
350
|
|
|
137
|
|
||
Increase in accrued expenses and other liabilities
|
43
|
|
|
102
|
|
||
Net cash provided by operating activities
|
1,766
|
|
|
1,630
|
|
||
Cash Flows From Investing Activities:
|
|
|
|
||||
Purchases of rental equipment
|
(1,485
|
)
|
|
(1,145
|
)
|
||
Purchases of non-rental equipment
|
(87
|
)
|
|
(65
|
)
|
||
Proceeds from sales of rental equipment
|
378
|
|
|
361
|
|
||
Proceeds from sales of non-rental equipment
|
10
|
|
|
12
|
|
||
Purchases of other companies, net of cash acquired
|
(1,063
|
)
|
|
(28
|
)
|
||
Purchases of investments
|
(5
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(2,252
|
)
|
|
(865
|
)
|
||
Cash Flows From Financing Activities:
|
|
|
|
||||
Proceeds from debt
|
8,702
|
|
|
5,812
|
|
||
Payments of debt
|
(8,156
|
)
|
|
(6,021
|
)
|
||
Proceeds from the exercise of common stock options
|
1
|
|
|
—
|
|
||
Common stock repurchased
|
(26
|
)
|
|
(488
|
)
|
||
Payments of financing costs
|
(44
|
)
|
|
(12
|
)
|
||
Excess tax benefits from share-based payment arrangements
|
—
|
|
|
53
|
|
||
Net cash provided by (used in) financing activities
|
477
|
|
|
(656
|
)
|
||
Effect of foreign exchange rates
|
21
|
|
|
9
|
|
||
Net increase in cash and cash equivalents
|
12
|
|
|
118
|
|
||
Cash and cash equivalents at beginning of period
|
312
|
|
|
179
|
|
||
Cash and cash equivalents at end of period
|
$
|
324
|
|
|
$
|
297
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for income taxes, net
|
$
|
114
|
|
|
$
|
14
|
|
Cash paid for interest
|
305
|
|
|
294
|
|
•
|
The guidance requires that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. We have historically classified such payments as financing activities, so no retrospective change was required to our 2016 statement of cash flows.
|
•
|
Certain aspects of the guidance require a cumulative change to retained earnings upon adoption. Upon adopting this guidance, we elected to record forfeitures of share-based payments as they occur. Making such an election requires a cumulative change to retained earnings upon adoption. However, we historically adjusted estimated forfeitures to reflect actual forfeitures annually, as a result of which no change to retained earnings was required. In 2016, we utilized all of the prior federal excess tax benefits from share-based payments that vested through 2016, and, accordingly, no change to retained earnings was required associated with federal excess tax benefits from share-based payments. A $
5
change to retained earnings was required associated with state excess tax benefits from share-based payments that were not previously recognized because the related tax deduction had not reduced taxes payable.
|
Accounts receivable, net of allowance for doubtful accounts (1)
|
$
|
49
|
|
Inventory
|
4
|
|
|
Rental equipment
|
571
|
|
|
Property and equipment
|
48
|
|
|
Intangibles (2)
|
139
|
|
|
Other assets
|
7
|
|
|
Total identifiable assets acquired
|
818
|
|
|
Short-term debt and current maturities of long-term debt (3)
|
(3
|
)
|
|
Current liabilities
|
(28
|
)
|
|
Deferred taxes
|
(14
|
)
|
|
Long-term debt (3)
|
(11
|
)
|
|
Other long-term liabilities
|
(5
|
)
|
|
Total liabilities assumed
|
(61
|
)
|
|
Net identifiable assets acquired
|
757
|
|
|
Goodwill (4)
|
203
|
|
|
Net assets acquired
|
$
|
960
|
|
|
Fair value
|
Life (years)
|
||
Customer relationships
|
$
|
138
|
|
10
|
Non-compete agreements
|
1
|
|
1
|
|
Total
|
$
|
139
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
||||||||||||
|
September 30,
|
|
September 30,
|
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
|
2016
|
|
|||||||
United Rentals historic revenues
|
$
|
1,766
|
|
|
$
|
1,508
|
|
|
$
|
4,719
|
|
|
$
|
4,239
|
|
|
NES historic revenues
|
—
|
|
|
95
|
|
|
81
|
|
|
266
|
|
|
||||
Pro forma revenues
|
1,766
|
|
|
1,603
|
|
|
4,800
|
|
|
4,505
|
|
|
||||
United Rentals historic pretax income
|
322
|
|
|
303
|
|
|
712
|
|
|
667
|
|
|
||||
NES historic pretax income (loss)
|
—
|
|
|
6
|
|
|
(12
|
)
|
|
11
|
|
|
||||
Combined pretax income
|
322
|
|
|
309
|
|
|
700
|
|
|
678
|
|
|
||||
Pro forma adjustments to combined pretax income:
|
|
|
|
|
|
|
|
|
||||||||
Impact of fair value mark-ups/useful life changes on depreciation (1)
|
—
|
|
|
(9
|
)
|
|
(9
|
)
|
|
(28
|
)
|
|
||||
Impact of the fair value mark-up of acquired NES fleet on cost of rental equipment sales (2)
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
||||
Gain on sale of equity interest (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
||||
Interest expense (4)
|
—
|
|
|
(9
|
)
|
|
(9
|
)
|
|
(28
|
)
|
|
||||
Elimination of historic NES interest (5)
|
—
|
|
|
9
|
|
|
12
|
|
|
28
|
|
|
||||
Elimination of merger related costs (6)
|
1
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
||||
Restructuring charges (7)
|
9
|
|
|
(9
|
)
|
|
27
|
|
|
(27
|
)
|
|
||||
Pro forma pretax income
|
$
|
332
|
|
|
$
|
290
|
|
|
$
|
737
|
|
|
$
|
615
|
|
|
|
General
rentals
|
|
Trench, power and pump
|
|
Total
|
||||||
Three Months Ended September 30, 2017
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
1,237
|
|
|
$
|
299
|
|
|
$
|
1,536
|
|
Sales of rental equipment
|
130
|
|
|
9
|
|
|
139
|
|
|||
Sales of new equipment
|
34
|
|
|
6
|
|
|
40
|
|
|||
Contractor supplies sales
|
17
|
|
|
4
|
|
|
21
|
|
|||
Service and other revenues
|
26
|
|
|
4
|
|
|
30
|
|
|||
Total revenue
|
1,444
|
|
|
322
|
|
|
1,766
|
|
|||
Depreciation and amortization expense
|
306
|
|
|
47
|
|
|
353
|
|
|||
Equipment rentals gross profit
|
525
|
|
|
164
|
|
|
689
|
|
|||
Three Months Ended September 30, 2016
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
1,097
|
|
|
$
|
225
|
|
|
$
|
1,322
|
|
Sales of rental equipment
|
103
|
|
|
9
|
|
|
112
|
|
|||
Sales of new equipment
|
27
|
|
|
3
|
|
|
30
|
|
|||
Contractor supplies sales
|
16
|
|
|
3
|
|
|
19
|
|
|||
Service and other revenues
|
23
|
|
|
2
|
|
|
25
|
|
|||
Total revenue
|
1,266
|
|
|
242
|
|
|
1,508
|
|
|||
Depreciation and amortization expense
|
266
|
|
|
45
|
|
|
311
|
|
|||
Equipment rentals gross profit
|
469
|
|
|
117
|
|
|
586
|
|
|||
Nine Months Ended September 30, 2017
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
3,357
|
|
|
$
|
712
|
|
|
$
|
4,069
|
|
Sales of rental equipment
|
348
|
|
|
30
|
|
|
378
|
|
|||
Sales of new equipment
|
112
|
|
|
14
|
|
|
126
|
|
|||
Contractor supplies sales
|
49
|
|
|
11
|
|
|
60
|
|
|||
Service and other revenues
|
76
|
|
|
10
|
|
|
86
|
|
|||
Total revenue
|
3,942
|
|
|
777
|
|
|
4,719
|
|
|||
Depreciation and amortization expense
|
855
|
|
|
138
|
|
|
993
|
|
|||
Equipment rentals gross profit
|
1,350
|
|
|
359
|
|
|
1,709
|
|
|||
Capital expenditures
|
1,404
|
|
|
168
|
|
|
1,572
|
|
|||
Nine Months Ended September 30, 2016
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
3,067
|
|
|
$
|
576
|
|
|
$
|
3,643
|
|
Sales of rental equipment
|
334
|
|
|
27
|
|
|
361
|
|
|||
Sales of new equipment
|
84
|
|
|
12
|
|
|
96
|
|
|||
Contractor supplies sales
|
49
|
|
|
11
|
|
|
60
|
|
|||
Service and other revenues
|
71
|
|
|
8
|
|
|
79
|
|
|||
Total revenue
|
3,605
|
|
|
634
|
|
|
4,239
|
|
|||
Depreciation and amortization expense
|
791
|
|
|
136
|
|
|
927
|
|
|||
Equipment rentals gross profit
|
1,243
|
|
|
274
|
|
|
1,517
|
|
|||
Capital expenditures
|
1,086
|
|
|
124
|
|
|
1,210
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Total reportable segment assets
|
|
|
|
||||
General rentals
|
$
|
12,118
|
|
|
$
|
10,496
|
|
Trench, power and pump
|
1,626
|
|
|
1,492
|
|
||
Total assets
|
$
|
13,744
|
|
|
$
|
11,988
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Total equipment rentals gross profit
|
$
|
689
|
|
|
$
|
586
|
|
|
$
|
1,709
|
|
|
$
|
1,517
|
|
Gross profit from other lines of business
|
84
|
|
|
70
|
|
|
233
|
|
|
229
|
|
||||
Selling, general and administrative expenses
|
(237
|
)
|
|
(179
|
)
|
|
(648
|
)
|
|
(533
|
)
|
||||
Merger related costs
|
(16
|
)
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
||||
Restructuring charge
|
(9
|
)
|
|
(4
|
)
|
|
(28
|
)
|
|
(8
|
)
|
||||
Non-rental depreciation and amortization
|
(63
|
)
|
|
(61
|
)
|
|
(189
|
)
|
|
(192
|
)
|
||||
Interest expense, net
|
(131
|
)
|
|
(110
|
)
|
|
(338
|
)
|
|
(349
|
)
|
||||
Other income, net
|
5
|
|
|
1
|
|
|
5
|
|
|
3
|
|
||||
Income before provision for income taxes
|
$
|
322
|
|
|
$
|
303
|
|
|
$
|
712
|
|
|
$
|
667
|
|
|
|
Reserve Balance at
|
|
Charged to
Costs and Expenses (1) |
|
Payments
and Other |
|
Reserve Balance at
|
||||||||
|
|
December 31, 2016
|
|
|
|
September 30, 2017
|
||||||||||
Closed Restructuring Programs
|
|
|
|
|
|
|
|
|
||||||||
Branch closure charges
|
|
$
|
16
|
|
|
$
|
1
|
|
|
$
|
(3
|
)
|
|
$
|
14
|
|
Severance and other
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Total
|
|
$
|
17
|
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
14
|
|
NES/Neff/Project XL Restructuring Program
|
|
|
|
|
|
|
|
|
||||||||
Branch closure charges
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
(1
|
)
|
|
$
|
6
|
|
Severance and other
|
|
—
|
|
|
20
|
|
|
(16
|
)
|
|
4
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
(17
|
)
|
|
$
|
10
|
|
Total
|
|
|
|
|
|
|
|
|
||||||||
Branch closure charges
|
|
$
|
16
|
|
|
$
|
8
|
|
|
$
|
(4
|
)
|
|
$
|
20
|
|
Severance and other
|
|
1
|
|
|
20
|
|
|
(17
|
)
|
|
4
|
|
||||
Total
|
|
$
|
17
|
|
|
$
|
28
|
|
|
$
|
(21
|
)
|
|
$
|
24
|
|
(1)
|
Reflected in our condensed consolidated statements of income as “Restructuring charge.” These charges are not allocated to our reportable segments.
|
|
General rentals
|
|
Trench,
power and pump |
|
Total
|
||||||
Balance at January 1, 2017 (1)
|
$
|
2,797
|
|
|
$
|
463
|
|
|
$
|
3,260
|
|
Goodwill related to acquisitions (2)
|
212
|
|
|
2
|
|
|
214
|
|
|||
Foreign currency translation
|
14
|
|
|
5
|
|
|
19
|
|
|||
Balance at September 30, 2017 (1)
|
3,023
|
|
|
470
|
|
|
3,493
|
|
(1)
|
The total carrying amount of goodwill for all periods in the table above is reflected net of $
1.557 billion
of accumulated impairment charges, which were primarily recorded in our general rentals segment.
|
(2)
|
For additional detail on the April 2017 acquisition of NES, which accounted for most of the goodwill related to acquisitions, see note
2
to our condensed consolidated financial statements.
|
|
September 30, 2017
|
||||||||||||||||||
|
Weighted-Average Remaining
Amortization Period
|
|
Gross
Carrying Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
||||||||||||
Non-compete agreements
|
27 months
|
|
|
$
|
67
|
|
|
|
|
$
|
60
|
|
|
|
|
$
|
7
|
|
|
Customer relationships
|
9 years
|
|
|
$
|
1,590
|
|
|
|
|
$
|
838
|
|
|
|
|
$
|
752
|
|
|
|
December 31, 2016
|
||||||||||||||||||
|
Weighted-Average Remaining
Amortization Period
|
|
Gross
Carrying Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
||||||||||||
Non-compete agreements
|
28 months
|
|
|
$
|
70
|
|
|
|
|
$
|
57
|
|
|
|
|
$
|
13
|
|
|
Customer relationships
|
10 years
|
|
|
$
|
1,465
|
|
|
|
|
$
|
737
|
|
|
|
|
$
|
728
|
|
|
Trade names and associated trademarks
|
4 months
|
|
|
$
|
80
|
|
|
|
|
$
|
79
|
|
|
|
|
$
|
1
|
|
|
|
September 30, 2017
|
|||||
|
Weighted-Average Remaining
Amortization Period |
|
|
Net Carrying
Amount |
||
Customer relationships
|
10 years
|
|
|
$
|
125
|
|
2017
|
|
$
|
41
|
|
|
2018
|
150
|
|
|
||
2019
|
132
|
|
|
||
2020
|
114
|
|
|
||
2021
|
95
|
|
|
||
Thereafter
|
227
|
|
|
||
Total
|
|
$
|
759
|
|
|
|
|
|
Three Months Ended September 30, 2017
|
|
Three Months Ended September 30, 2016
|
||||||||||
|
Location of income
(expense)
recognized on
derivative/hedged item
|
|
Amount of income
(expense)
recognized
on derivative
|
|
Amount of income
(expense)
recognized
on hedged item
|
|
Amount of income
(expense)
recognized
on derivative
|
|
Amount of income
(expense)
recognized
on hedged item
|
||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||
Fixed price diesel swaps
|
Other income
(expense), net (1)
|
|
$ *
|
|
|
|
|
$ *
|
|
|
|
||||
|
Cost of equipment
rentals, excluding
depreciation (2),
(3)
|
|
*
|
|
|
$
|
(4
|
)
|
|
(1
|
)
|
|
$
|
(6
|
)
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency forward contracts (4)
|
Other income
(expense), net
|
|
8
|
|
|
(8
|
)
|
|
(4
|
)
|
|
4
|
|
||
|
|
|
Nine Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2016
|
||||||||||
|
Location of income
(expense)
recognized on
derivative/hedged item
|
|
Amount of income
(expense)
recognized
on derivative
|
|
Amount of income
(expense)
recognized
on hedged item
|
|
Amount of income
(expense)
recognized
on derivative
|
|
Amount of income
(expense)
recognized
on hedged item
|
||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||
Fixed price diesel swaps
|
Other income
(expense), net (1)
|
|
$ *
|
|
|
|
|
$ *
|
|
|
|
||||
|
Cost of equipment
rentals, excluding
depreciation (2),
(3)
|
|
*
|
|
|
$
|
(14
|
)
|
|
(5
|
)
|
|
$
|
(17
|
)
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency forward contracts (4)
|
Other income
(expense), net
|
|
15
|
|
|
(15
|
)
|
|
(1
|
)
|
|
1
|
|
*
|
Amounts are insignificant (less than
$1
).
|
(1)
|
Represents the ineffective portion of the fixed price diesel swaps.
|
(2)
|
Amounts recognized on derivative represent the effective portion of the fixed price diesel swaps.
|
(3)
|
Amounts recognized on hedged item reflect the use of
1.7 million
and
2.7 million
gallons and of diesel covered by the fixed price swaps during the three months ended
September 30, 2017
and
2016
, respectively, and the use of
5.5 million
and
7.7 million
gallons and of diesel covered by the fixed price swaps during the
nine
months ended
September 30, 2017
|
(4)
|
Insignificant amounts were reflected in our condensed consolidated statement of cash flows associated with the forward contracts to purchase Canadian dollars, as the cash impact of the gains/losses recognized on the derivatives were offset by the gains/losses recognized on the hedged items.
|
a)
|
quoted prices for similar assets or liabilities in active markets;
|
b)
|
quoted prices for identical or similar assets or liabilities in inactive markets;
|
c)
|
inputs other than quoted prices that are observable for the asset or liability;
|
d)
|
inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Senior notes
|
$
|
7,228
|
|
|
$
|
7,616
|
|
|
$
|
5,506
|
|
|
$
|
5,715
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
Accounts Receivable Securitization Facility expiring 2018 (1)
|
$
|
666
|
|
|
$
|
568
|
|
$3.0 billion ABL Facility expiring 2021 (2)
|
408
|
|
|
1,645
|
|
||
7
5
/
8
percent Senior Notes due 2022 (3)
|
223
|
|
|
469
|
|
||
6
1
/
8
percent Senior Notes due 2023 (4)
|
—
|
|
|
936
|
|
||
4
5
/
8
percent Senior Secured Notes due 2023
|
992
|
|
|
991
|
|
||
5
3
/
4
percent Senior Notes due 2024
|
840
|
|
|
839
|
|
||
5
1
/
2
percent Senior Notes due 2025
|
793
|
|
|
792
|
|
||
4
5
/
8
percent Senior Notes due 2025 (5)
|
739
|
|
|
—
|
|
||
5
7
/
8
percent Senior Notes due 2026 (6)
|
998
|
|
|
740
|
|
||
5
1
/
2
percent Senior Notes due 2027 (7)
|
990
|
|
|
739
|
|
||
4
7
/
8
percent Senior Notes due 2028 (8)
|
912
|
|
|
—
|
|
||
4
7
/
8
percent Senior Notes due 2028 (9)
|
741
|
|
|
—
|
|
||
Capital leases
|
69
|
|
|
71
|
|
||
Total debt (10)
|
8,371
|
|
|
7,790
|
|
||
Less short-term portion (11)
|
(694
|
)
|
|
(597
|
)
|
||
Total long-term debt
|
$
|
7,677
|
|
|
$
|
7,193
|
|
(1)
|
In August 2017, the accounts receivable securitization facility was amended, primarily to increase the facility size and to extend the maturity date which may be further extended on a
364
-day basis by mutual agreement with the purchasers under the facility. The size of the facility, which expires on August 28, 2018, was increased to $
675
. At
September 30, 2017
,
$9
was available under our accounts receivable securitization facility. The interest rate applicable to the accounts receivable securitization facility was
2.0
percent at
September 30, 2017
. During the
nine
months ended
September 30, 2017
, the monthly average amount outstanding under the accounts receivable securitization facility was
$584
, and the weighted-average interest rate thereon was
1.8 percent
. The maximum month-end amount outstanding under the accounts receivable securitization facility during the
nine
months ended
September 30, 2017
was
$667
. Borrowings under the accounts receivable securitization facility are permitted only to the extent that the face amount of the receivables in the collateral pool, net of applicable reserves and other deductions, exceeds the outstanding loans. As of
September 30, 2017
, there were $
769
of receivables, net of applicable reserves and other deductions, in the collateral pool.
|
(2)
|
In September 2017, the size of the ABL facility was increased to $
3.0 billion
. At
September 30, 2017
,
$2.5 billion
was available under our ABL facility, net of
$39
of letters of credit. The interest rate applicable to the ABL facility was
2.8 percent
at
September 30, 2017
. During the
nine
months ended
September 30, 2017
, the monthly average amount outstanding under the ABL facility was
$1.2
billion, and the weighted-average interest rate thereon was
2.6 percent
. The maximum month-end amount outstanding under the ABL facility during the
nine
months ended
September 30, 2017
was
$1.8 billion
. As discussed below, pending the payment of the purchase price for the Neff acquisition discussed in note
2
to the condensed consolidated financial statements, a portion of the net proceeds from debt issued in the third quarter of 2017 was used to reduce borrowings under the ABL facility. Upon the closing of the Neff acquisition on October 2, 2017, we used borrowings under the ABL facility to partially fund the Neff acquisition.
|
(3)
|
In June 2017, we redeemed $
250
principal amount of our 7
5
/
8
percent Senior Notes. Upon redemption, we recognized a loss of $
12
in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes. In September 2017, we gave notice of our intention to redeem the remaining 7
5
/
8
percent Senior Notes in October 2017 using borrowings under the ABL facility.
|
(4)
|
In August 2017, we redeemed all of our 6
1
/
8
percent Senior Notes. Upon redemption, we recognized a loss of $
31
in interest expense, net. The loss represented the difference between the net carrying amount and the total purchase price of the redeemed notes.
|
(5)
|
In September 2017, URNA issued
$750
principal amount of 4
5
/
8
percent Senior Notes (the “4
5
/
8
percent Notes”) which are due October 15, 2025. The net proceeds from the issuance were approximately
$741
(after deducting offering expenses). The 4
5
/
8
percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of
|
(6)
|
In February 2017, in connection with the NES acquisition discussed in note
2
to the condensed consolidated financial statements, URNA issued
$250
principal amount of 5
7
/
8
percent Senior Notes (the "5
7
/
8
percent Notes") as an add-on to our existing 5
7
/
8
percent Notes. The net proceeds from the issuance were
$258
(including the original issue premium and after deducting offering expenses). After the February 2017 issuance, the aggregate principal amount of outstanding 5
7
/
8
percent Notes was $
1.0 billion
. The newly issued notes have identical terms, and are fungible, with the 5
7
/
8
percent Notes outstanding at December 31, 2016. The carrying value of the 5
7
/
8
percent Notes includes the
$11
unamortized portion of the original issue premium recognized in conjunction with the February 2017 issuance, which is being amortized through the maturity date in 2026. The effective interest rate on the 5
7
/
8
percent Notes is
5.7
percent.
|
(7)
|
In February 2017, in connection with the NES acquisition discussed in note
2
to the condensed consolidated financial statements, URNA issued
$250
principal amount of 5
1
/
2
percent Senior Notes due 2027 (the "2027 5
1
/
2
percent Senior Notes") as an add-on to our existing 2027 5
1
/
2
percent Senior Notes. The net proceeds from the issuance were
$250
(including the original issue premium and after deducting offering expenses). After the February 2017 issuance, the aggregate principal amount of outstanding 2027 5
1
/
2
percent Senior Notes was $
1.0 billion
. The newly issued notes have identical terms, and are fungible, with the 2027 5
1
/
2
percent Senior Notes outstanding at December 31, 2016. The carrying value of the 2027 5
1
/
2
percent Senior Notes includes the
$3
unamortized portion of the original issue premium recognized in conjunction with the February 2017 issuance, which is being amortized through the maturity date in 2027. The effective interest rate on the 2027 5
1
/
2
percent Senior Notes is
5.5
percent.
|
(8)
|
In August 2017, URNA issued
$925
principal amount of 4
7
/
8
percent Senior Notes (the “Initial 4
7
/
8
percent Notes”) which are due January 15, 2028. The net proceeds from the issuance were approximately
$913
(after deducting offering expenses). The Initial 4
7
/
8
percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The Initial 4
7
/
8
percent Notes may be redeemed on or after January 15, 2023, at specified redemption prices that range from
102.438
percent in 2023, to
100
percent in 2026 and thereafter, in each case, plus accrued and unpaid interest, if any. The indenture governing the Initial 4
7
/
8
percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; (iii) sales, transfers and other dispositions of assets; (iv) dividends and other distributions, stock repurchases and redemptions and other restricted payments; and (v) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the Initial 4
7
/
8
percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding Initial 4
7
/
8
percent Notes tendered at a purchase price in cash equal to
101
percent of the principal amount thereof, plus accrued and unpaid interest, if any,
|
(9)
|
In September 2017, URNA issued
$750
principal amount of 4
7
/
8
percent Senior Notes (the “Subsequent 4
7
/
8
percent Notes”) which are due January 15, 2028. The net proceeds from the issuance were approximately
$743
(including the original issue premium and after deducting offering expenses). The Subsequent 4
7
/
8
percent Notes are unsecured and are guaranteed by Holdings and certain domestic subsidiaries of URNA. The Subsequent 4
7
/
8
percent Notes may be redeemed on or after January 15, 2023, at specified redemption prices that range from
102.438
percent in 2023, to
100
percent in 2026 and thereafter, in each case, plus accrued and unpaid interest, if any. The indenture governing the Subsequent 4
7
/
8
percent Notes contains certain restrictive covenants, including, among others, limitations on (i) liens; (ii) mergers and consolidations; (iii) sales, transfers and other dispositions of assets; (iv) dividends and other distributions, stock repurchases and redemptions and other restricted payments; and (v) designations of unrestricted subsidiaries, as well as a requirement to timely file periodic reports with the SEC. Each of the restrictive covenants is subject to important exceptions and qualifications that would allow URNA and its subsidiaries to engage in these activities under certain conditions. In addition, the covenant relating to dividends and other distributions, stock repurchases and redemptions and other restricted payments and the requirements relating to additional subsidiary guarantors will not apply to URNA and its restricted subsidiaries during any period when the Subsequent 4
7
/
8
percent Notes are rated investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., or, in certain circumstances, another rating agency selected by URNA, provided at such time no default under the indenture has occurred and is continuing. The indenture also requires that, in the event of a change of control (as defined in the indenture), URNA must make an offer to purchase all of the then-outstanding Subsequent 4
7
/
8
percent Notes tendered at a purchase price in cash equal to
101 percent
of the principal amount thereof, plus accrued and unpaid interest, if any, thereon. The carrying value of the Subsequent 4
7
/
8
percent Notes includes $
2
of the unamortized original issue premium, which is being amortized through the maturity date in 2028. The effective interest rate on the Subsequent 4
7
/
8
percent Notes is
4.84
percent. The net proceeds from the Subsequent 4
7
/
8
percent Notes were primarily used to partially fund the Neff acquisition discussed in note
2
to the condensed consolidated financial statements. Pending the payment of the purchase price for the Neff acquisition, a portion of the net proceeds from the issuance was used to reduce borrowings under the ABL facility. The acquisition closed on October 2, 2017. Upon closing of the Neff acquisition, we used available cash and borrowings under the ABL facility to finance the Neff acquisition.
|
(10)
|
As discussed above, we completed the Neff acquisition on October 2, 2017. The aggregate consideration paid to complete the acquisition was approximately $
1.3 billion
. Total debt as of
September 30, 2017
reflects approximately $
1.4 billion
of debt issued in connection with the acquisition (this amount reflects $
2.425 billion
principal amount of debt issued in the third quarter of 2017, net of (i) cash paid to redeem $
925
principal amount of 6
1
/
8
percent Senior Notes and (ii) fees and expenses associated with the issued debt), as discussed above. Upon closing, we paid the consideration due to holders of Neff common stock and options using available cash and drawings on the ABL facility. After payment of such consideration, total outstanding debt was approximately $
9.7 billion
.
|
(11)
|
As of
September 30, 2017
, our short-term debt primarily reflects $
666
of borrowings under our accounts receivable securitization facility.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income available to common stockholders
|
$
|
199
|
|
|
$
|
187
|
|
|
449
|
|
|
413
|
|
||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Denominator for basic earnings per share—weighted-average common shares
|
84,663
|
|
|
85,945
|
|
|
84,585
|
|
|
88,175
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Employee stock options
|
398
|
|
|
278
|
|
|
401
|
|
|
281
|
|
||||
Restricted stock units
|
531
|
|
|
222
|
|
|
488
|
|
|
168
|
|
||||
Denominator for diluted earnings per share—adjusted weighted-average common shares
|
85,592
|
|
|
86,445
|
|
|
85,474
|
|
|
88,624
|
|
||||
Basic earnings per share
|
$
|
2.36
|
|
|
$
|
2.18
|
|
|
$
|
5.31
|
|
|
$
|
4.68
|
|
Diluted earnings per share
|
$
|
2.33
|
|
|
$
|
2.16
|
|
|
$
|
5.26
|
|
|
$
|
4.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
Foreign
|
|
SPV
|
|
||||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equipment rentals
|
$
|
—
|
|
|
$
|
1,407
|
|
|
$
|
—
|
|
|
$
|
129
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,536
|
|
Sales of rental equipment
|
—
|
|
|
118
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
139
|
|
|||||||
Sales of new equipment
|
—
|
|
|
36
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|||||||
Contractor supplies sales
|
—
|
|
|
18
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|||||||
Service and other revenues
|
—
|
|
|
27
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|||||||
Total revenues
|
—
|
|
|
1,606
|
|
|
—
|
|
|
160
|
|
|
—
|
|
|
—
|
|
|
1,766
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
502
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
557
|
|
|||||||
Depreciation of rental equipment
|
—
|
|
|
266
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
290
|
|
|||||||
Cost of rental equipment sales
|
—
|
|
|
73
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
84
|
|
|||||||
Cost of new equipment sales
|
—
|
|
|
31
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|||||||
Cost of contractor supplies sales
|
—
|
|
|
12
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|||||||
Cost of service and other revenues
|
—
|
|
|
12
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|||||||
Total cost of revenues
|
—
|
|
|
896
|
|
|
—
|
|
|
97
|
|
|
—
|
|
|
—
|
|
|
993
|
|
|||||||
Gross profit
|
—
|
|
|
710
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
—
|
|
|
773
|
|
|||||||
Selling, general and administrative expenses
|
42
|
|
|
167
|
|
|
—
|
|
|
19
|
|
|
9
|
|
|
—
|
|
|
237
|
|
|||||||
Merger related costs
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|||||||
Restructuring charge
|
—
|
|
|
8
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|||||||
Non-rental depreciation and amortization
|
3
|
|
|
54
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|||||||
Operating (loss) income
|
(45
|
)
|
|
465
|
|
|
—
|
|
|
37
|
|
|
(9
|
)
|
|
—
|
|
|
448
|
|
|||||||
Interest (income) expense, net
|
(5
|
)
|
|
133
|
|
|
1
|
|
|
1
|
|
|
3
|
|
|
(2
|
)
|
|
131
|
|
|||||||
Other (income) expense, net
|
(144
|
)
|
|
154
|
|
|
—
|
|
|
10
|
|
|
(25
|
)
|
|
—
|
|
|
(5
|
)
|
|||||||
Income (loss) before provision for income taxes
|
104
|
|
|
178
|
|
|
(1
|
)
|
|
26
|
|
|
13
|
|
|
2
|
|
|
322
|
|
|||||||
Provision for income taxes
|
39
|
|
|
73
|
|
|
—
|
|
|
7
|
|
|
4
|
|
|
—
|
|
|
123
|
|
|||||||
Income (loss) before equity in net earnings (loss) of subsidiaries
|
65
|
|
|
105
|
|
|
(1
|
)
|
|
19
|
|
|
9
|
|
|
2
|
|
|
199
|
|
|||||||
Equity in net earnings (loss) of subsidiaries
|
134
|
|
|
29
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
(182
|
)
|
|
—
|
|
|||||||
Net income (loss)
|
199
|
|
|
134
|
|
|
18
|
|
|
19
|
|
|
9
|
|
|
(180
|
)
|
|
199
|
|
|||||||
Other comprehensive income (loss)
|
42
|
|
|
42
|
|
|
41
|
|
|
33
|
|
|
—
|
|
|
(116
|
)
|
|
42
|
|
|||||||
Comprehensive income (loss)
|
$
|
241
|
|
|
$
|
176
|
|
|
$
|
59
|
|
|
$
|
52
|
|
|
$
|
9
|
|
|
$
|
(296
|
)
|
|
$
|
241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
|
Foreign
|
|
SPV
|
|
|||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equipment rentals
|
$
|
—
|
|
|
$
|
1,208
|
|
|
$
|
—
|
|
|
$
|
114
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,322
|
|
Sales of rental equipment
|
—
|
|
|
99
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|||||||
Sales of new equipment
|
—
|
|
|
28
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|||||||
Contractor supplies sales
|
—
|
|
|
17
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|||||||
Service and other revenues
|
—
|
|
|
22
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|||||||
Total revenues
|
—
|
|
|
1,374
|
|
|
—
|
|
|
134
|
|
|
—
|
|
|
—
|
|
|
1,508
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
435
|
|
|
—
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|
486
|
|
|||||||
Depreciation of rental equipment
|
—
|
|
|
227
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
250
|
|
|||||||
Cost of rental equipment sales
|
—
|
|
|
61
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
68
|
|
|||||||
Cost of new equipment sales
|
—
|
|
|
23
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|||||||
Cost of contractor supplies sales
|
—
|
|
|
11
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|||||||
Cost of service and other revenues
|
—
|
|
|
11
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
10
|
|
|||||||
Total cost of revenues
|
—
|
|
|
768
|
|
|
—
|
|
|
84
|
|
|
—
|
|
|
—
|
|
|
852
|
|
|||||||
Gross profit
|
—
|
|
|
606
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
656
|
|
|||||||
Selling, general and administrative expenses
|
2
|
|
|
151
|
|
|
—
|
|
|
18
|
|
|
8
|
|
|
—
|
|
|
179
|
|
|||||||
Restructuring charge
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||||
Non-rental depreciation and amortization
|
3
|
|
|
52
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|||||||
Operating (loss) income
|
(5
|
)
|
|
399
|
|
|
—
|
|
|
26
|
|
|
(8
|
)
|
|
—
|
|
|
412
|
|
|||||||
Interest (income) expense, net
|
(1
|
)
|
|
109
|
|
|
1
|
|
|
1
|
|
|
2
|
|
|
(2
|
)
|
|
110
|
|
|||||||
Other (income) expense, net
|
(123
|
)
|
|
136
|
|
|
—
|
|
|
9
|
|
|
(23
|
)
|
|
—
|
|
|
(1
|
)
|
|||||||
Income (loss) before provision for income taxes
|
119
|
|
|
154
|
|
|
(1
|
)
|
|
16
|
|
|
13
|
|
|
2
|
|
|
303
|
|
|||||||
Provision for income taxes
|
42
|
|
|
64
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
—
|
|
|
116
|
|
|||||||
Income (loss) before equity in net earnings (loss) of subsidiaries
|
77
|
|
|
90
|
|
|
(1
|
)
|
|
11
|
|
|
8
|
|
|
2
|
|
|
187
|
|
|||||||
Equity in net earnings (loss) of subsidiaries
|
110
|
|
|
20
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
(141
|
)
|
|
—
|
|
|||||||
Net income (loss)
|
187
|
|
|
110
|
|
|
10
|
|
|
11
|
|
|
8
|
|
|
(139
|
)
|
|
187
|
|
|||||||
Other comprehensive (loss) income
|
(9
|
)
|
|
(9
|
)
|
|
(9
|
)
|
|
(7
|
)
|
|
—
|
|
|
25
|
|
|
(9
|
)
|
|||||||
Comprehensive income (loss)
|
$
|
178
|
|
|
$
|
101
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
8
|
|
|
$
|
(114
|
)
|
|
$
|
178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
Foreign
|
|
SPV
|
|
||||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equipment rentals
|
$
|
—
|
|
|
$
|
3,739
|
|
|
$
|
—
|
|
|
$
|
330
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,069
|
|
Sales of rental equipment
|
—
|
|
|
334
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|
—
|
|
|
378
|
|
|||||||
Sales of new equipment
|
—
|
|
|
113
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
126
|
|
|||||||
Contractor supplies sales
|
—
|
|
|
53
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
60
|
|
|||||||
Service and other revenues
|
—
|
|
|
75
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
86
|
|
|||||||
Total revenues
|
—
|
|
|
4,314
|
|
|
—
|
|
|
405
|
|
|
—
|
|
|
—
|
|
|
4,719
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
1,397
|
|
|
—
|
|
|
159
|
|
|
—
|
|
|
—
|
|
|
1,556
|
|
|||||||
Depreciation of rental equipment
|
—
|
|
|
738
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
—
|
|
|
804
|
|
|||||||
Cost of rental equipment sales
|
—
|
|
|
202
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
225
|
|
|||||||
Cost of new equipment sales
|
—
|
|
|
97
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
108
|
|
|||||||
Cost of contractor supplies sales
|
—
|
|
|
37
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|||||||
Cost of service and other revenues
|
—
|
|
|
37
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|||||||
Total cost of revenues
|
—
|
|
|
2,508
|
|
|
—
|
|
|
269
|
|
|
—
|
|
|
—
|
|
|
2,777
|
|
|||||||
Gross profit
|
—
|
|
|
1,806
|
|
|
—
|
|
|
136
|
|
|
—
|
|
|
—
|
|
|
1,942
|
|
|||||||
Selling, general and administrative expenses
|
84
|
|
|
483
|
|
|
—
|
|
|
57
|
|
|
24
|
|
|
—
|
|
|
648
|
|
|||||||
Merger related costs
|
—
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|||||||
Restructuring charge
|
—
|
|
|
27
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|||||||
Non-rental depreciation and amortization
|
11
|
|
|
162
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
189
|
|
|||||||
Operating (loss) income
|
(95
|
)
|
|
1,102
|
|
|
—
|
|
|
62
|
|
|
(24
|
)
|
|
—
|
|
|
1,045
|
|
|||||||
Interest (income) expense, net
|
(10
|
)
|
|
341
|
|
|
2
|
|
|
1
|
|
|
8
|
|
|
(4
|
)
|
|
338
|
|
|||||||
Other (income) expense, net
|
(387
|
)
|
|
419
|
|
|
—
|
|
|
33
|
|
|
(70
|
)
|
|
—
|
|
|
(5
|
)
|
|||||||
Income (loss) before provision for income taxes
|
302
|
|
|
342
|
|
|
(2
|
)
|
|
28
|
|
|
38
|
|
|
4
|
|
|
712
|
|
|||||||
Provision for income taxes
|
102
|
|
|
140
|
|
|
—
|
|
|
7
|
|
|
14
|
|
|
—
|
|
|
263
|
|
|||||||
Income (loss) before equity in net earnings (loss) of subsidiaries
|
200
|
|
|
202
|
|
|
(2
|
)
|
|
21
|
|
|
24
|
|
|
4
|
|
|
449
|
|
|||||||
Equity in net earnings (loss) of subsidiaries
|
249
|
|
|
47
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
(317
|
)
|
|
—
|
|
|||||||
Net income (loss)
|
449
|
|
|
249
|
|
|
19
|
|
|
21
|
|
|
24
|
|
|
(313
|
)
|
|
449
|
|
|||||||
Other comprehensive income (loss)
|
75
|
|
|
75
|
|
|
75
|
|
|
61
|
|
|
—
|
|
|
(211
|
)
|
|
75
|
|
|||||||
Comprehensive income (loss)
|
$
|
524
|
|
|
$
|
324
|
|
|
$
|
94
|
|
|
$
|
82
|
|
|
$
|
24
|
|
|
$
|
(524
|
)
|
|
$
|
524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
|
Foreign
|
|
SPV
|
|
|||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equipment rentals
|
$
|
—
|
|
|
$
|
3,335
|
|
|
$
|
—
|
|
|
$
|
308
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,643
|
|
Sales of rental equipment
|
—
|
|
|
320
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
—
|
|
|
361
|
|
|||||||
Sales of new equipment
|
—
|
|
|
86
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
96
|
|
|||||||
Contractor supplies sales
|
—
|
|
|
52
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
60
|
|
|||||||
Service and other revenues
|
—
|
|
|
69
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|||||||
Total revenues
|
—
|
|
|
3,862
|
|
|
—
|
|
|
377
|
|
|
—
|
|
|
—
|
|
|
4,239
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of equipment rentals, excluding depreciation
|
—
|
|
|
1,246
|
|
|
—
|
|
|
145
|
|
|
—
|
|
|
—
|
|
|
1,391
|
|
|||||||
Depreciation of rental equipment
|
—
|
|
|
667
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
—
|
|
|
735
|
|
|||||||
Cost of rental equipment sales
|
—
|
|
|
193
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
215
|
|
|||||||
Cost of new equipment sales
|
—
|
|
|
71
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|||||||
Cost of contractor supplies sales
|
—
|
|
|
35
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|||||||
Cost of service and other revenues
|
—
|
|
|
30
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|||||||
Total cost of revenues
|
—
|
|
|
2,242
|
|
|
—
|
|
|
251
|
|
|
—
|
|
|
—
|
|
|
2,493
|
|
|||||||
Gross profit
|
—
|
|
|
1,620
|
|
|
—
|
|
|
126
|
|
|
—
|
|
|
—
|
|
|
1,746
|
|
|||||||
Selling, general and administrative expenses
|
10
|
|
|
450
|
|
|
—
|
|
|
55
|
|
|
18
|
|
|
—
|
|
|
533
|
|
|||||||
Restructuring charge
|
—
|
|
|
7
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||||
Non-rental depreciation and amortization
|
11
|
|
|
163
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
192
|
|
|||||||
Operating (loss) income
|
(21
|
)
|
|
1,000
|
|
|
—
|
|
|
52
|
|
|
(18
|
)
|
|
—
|
|
|
1,013
|
|
|||||||
Interest (income) expense, net
|
(4
|
)
|
|
348
|
|
|
2
|
|
|
2
|
|
|
5
|
|
|
(4
|
)
|
|
349
|
|
|||||||
Other (income) expense, net
|
(345
|
)
|
|
382
|
|
|
—
|
|
|
29
|
|
|
(69
|
)
|
|
—
|
|
|
(3
|
)
|
|||||||
Income (loss) before provision for income taxes
|
328
|
|
|
270
|
|
|
(2
|
)
|
|
21
|
|
|
46
|
|
|
4
|
|
|
667
|
|
|||||||
Provision for income taxes
|
121
|
|
|
109
|
|
|
—
|
|
|
6
|
|
|
18
|
|
|
—
|
|
|
254
|
|
|||||||
Income (loss) before equity in net earnings (loss) of subsidiaries
|
207
|
|
|
161
|
|
|
(2
|
)
|
|
15
|
|
|
28
|
|
|
4
|
|
|
413
|
|
|||||||
Equity in net earnings (loss) of subsidiaries
|
206
|
|
|
45
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
(266
|
)
|
|
—
|
|
|||||||
Net income (loss)
|
413
|
|
|
206
|
|
|
13
|
|
|
15
|
|
|
28
|
|
|
(262
|
)
|
|
413
|
|
|||||||
Other comprehensive income (loss)
|
54
|
|
|
54
|
|
|
51
|
|
|
41
|
|
|
—
|
|
|
(146
|
)
|
|
54
|
|
|||||||
Comprehensive income (loss)
|
$
|
467
|
|
|
$
|
260
|
|
|
$
|
64
|
|
|
$
|
56
|
|
|
$
|
28
|
|
|
$
|
(408
|
)
|
|
$
|
467
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
Foreign
|
|
SPV
|
|
||||||||||||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
15
|
|
|
$
|
1,849
|
|
|
$
|
(2
|
)
|
|
$
|
83
|
|
|
$
|
(179
|
)
|
|
$
|
—
|
|
|
$
|
1,766
|
|
Net cash used in investing activities
|
(15
|
)
|
|
(2,145
|
)
|
|
—
|
|
|
(92
|
)
|
|
—
|
|
|
—
|
|
|
(2,252
|
)
|
|||||||
Net cash provided by (used in) financing activities
|
—
|
|
|
298
|
|
|
2
|
|
|
(2
|
)
|
|
179
|
|
|
—
|
|
|
477
|
|
|||||||
Effect of foreign exchange rates
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|||||||
Net increase in cash and cash equivalents
|
—
|
|
|
2
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|||||||
Cash and cash equivalents at beginning of period
|
—
|
|
|
21
|
|
|
—
|
|
|
291
|
|
|
—
|
|
|
—
|
|
|
312
|
|
|||||||
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
301
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
324
|
|
|
Parent
|
|
URNA
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||||||||
|
|
|
|
Foreign
|
|
SPV
|
|
|
|||||||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
4
|
|
|
$
|
1,513
|
|
|
$
|
(2
|
)
|
|
$
|
108
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
1,630
|
|
Net cash (used in) provided by investing activities
|
(4
|
)
|
|
(862
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(865
|
)
|
|||||||
Net cash (used in) provided by financing activities
|
—
|
|
|
(649
|
)
|
|
2
|
|
|
(2
|
)
|
|
(7
|
)
|
|
—
|
|
|
(656
|
)
|
|||||||
Effect of foreign exchange rates
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|||||||
Net increase in cash and cash equivalents
|
—
|
|
|
2
|
|
|
—
|
|
|
116
|
|
|
—
|
|
|
—
|
|
|
118
|
|
|||||||
Cash and cash equivalents at beginning of period
|
—
|
|
|
18
|
|
|
—
|
|
|
161
|
|
|
—
|
|
|
—
|
|
|
179
|
|
|||||||
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
277
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
297
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in millions, except per share data, unless otherwise indicated)
|
•
|
A consistently superior standard of service to customers
, often provided through a single point of contact;
|
•
|
The further optimization of our customer mix and fleet mix,
with a dual objective: to enhance our performance in serving our current customer base, and to focus on the accounts and customer types that are best suited to our strategy for profitable growth. We believe these efforts will lead to even better service of our target accounts, primarily large construction and industrial customers, as well as select local contractors. Our fleet team's analyses are aligned with these objectives to identify trends in equipment categories and define action plans that can generate improved returns;
|
•
|
The implementation of “Lean” management techniques, including kaizen processes focused on continuous improvement
. We have trained over 3,100 employees, over 70 percent of our district managers and approximately 55 percent of our branch managers on the Lean kaizen process. We continue to implement this program across our branch network, with the objectives of: reducing the cycle time associated with renting our equipment to customers; improving invoice accuracy and service quality; reducing the elapsed time for equipment pickup and delivery; and improving the effectiveness and efficiency of our repair and maintenance operations. We achieved the anticipated run rate savings from the Lean initiatives in 2016 and expect to continue to generate savings from these initiatives;
|
•
|
The implementation of Project XL,
which is a set of eight specific work streams focused on driving profitable growth through revenue opportunities and generating incremental profitability through cost savings across our business;
|
•
|
The continued expansion of our trench, power and pump footprint, as well as our tools offering, and the cross-selling of these services throughout our network
. We believe that the expansion of our trench, power and pump business, as well as our tools offering, will further position United Rentals as a single source provider of total jobsite solutions through our extensive product and service resources and technology offerings; and
|
•
|
The pursuit of strategic acquisitions to continue to expand our core equipment rental business
, as exhibited by our recently completed acquisitions of NES and Neff. Strategic acquisitions allow us to invest our capital to expand our business, further driving our ability to accomplish our strategic goals.
|
•
|
Redeemed all of our 8
1
/
4
percent Senior Notes, 7
3
/
8
percent Senior Notes and 6
1
/
8
percent Senior Notes;
|
•
|
Redeemed $1.1 billion principal amount of our 7
5
/
8
percent Senior Notes due 2022 (we expect to redeem the remaining $225 principal amount in the fourth quarter of 2017);
|
•
|
Issued $750 principal amount of 4
5
/
8
percent Senior Notes due 2025;
|
•
|
Issued $1.0 billion principal amount of 5
7
/
8
percent Senior Notes due 2026;
|
•
|
Issued $1.0 billion principal amount of 5
1
/
2
percent Senior Notes due 2027;
|
•
|
Issued $1.675 billion principal amount of 4
7
/
8
percent Senior Notes due 2028, comprised of separate issuances of $925 in August 2017 and $750 in September 2017, as discussed in note
8
to the condensed consolidated financial statements;
|
•
|
Amended and extended our ABL facility, including an increase in the facility size to $3.0 billion; and
|
•
|
Amended and extended our accounts receivable securitization facility, including an increase in the facility size to $675.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
199
|
|
|
$
|
187
|
|
|
$
|
449
|
|
|
$
|
413
|
|
Diluted earnings per share
|
$
|
2.33
|
|
|
$
|
2.16
|
|
|
$
|
5.26
|
|
|
$
|
4.66
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||||||||||||||
Tax rate applied to items below
|
38.5
|
%
|
|
|
|
38.6
|
%
|
|
|
|
38.5
|
%
|
|
|
|
38.4
|
%
|
|
|
||||||||||||
|
Contribution
to net income (after-tax) |
|
Impact on
diluted earnings per share
|
|
Contribution
to net income (after-tax)
|
|
Impact on
diluted earnings per share |
|
Contribution
to net income (after-tax)
|
|
Impact on
diluted earnings per share
|
|
Contribution
to net income (after-tax)
|
|
Impact on
diluted earnings per share
|
||||||||||||||||
Merger related costs (1)
|
$
|
(10
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Merger related intangible asset amortization (2)
|
(24
|
)
|
|
(0.27
|
)
|
|
(24
|
)
|
|
(0.28
|
)
|
|
(72
|
)
|
|
(0.83
|
)
|
|
(75
|
)
|
|
(0.85
|
)
|
||||||||
Impact on depreciation related to acquired RSC and NES fleet and property and equipment (3)
|
(6
|
)
|
|
(0.07
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(0.05
|
)
|
|
—
|
|
|
—
|
|
||||||||
Impact of the fair value mark-up of acquired RSC and NES fleet (4)
|
(15
|
)
|
|
(0.17
|
)
|
|
(5
|
)
|
|
(0.05
|
)
|
|
(31
|
)
|
|
(0.36
|
)
|
|
(16
|
)
|
|
(0.18
|
)
|
||||||||
Impact on interest expense related to fair value adjustment of acquired RSC indebtedness (5)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
0.01
|
|
||||||||
Restructuring charge (6)
|
(6
|
)
|
|
(0.07
|
)
|
|
(2
|
)
|
|
(0.02
|
)
|
|
(18
|
)
|
|
(0.21
|
)
|
|
(5
|
)
|
|
(0.05
|
)
|
||||||||
Asset impairment charge (7)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(0.02
|
)
|
||||||||
Loss on repurchase/redemption of debt securities and amendment of ABL facility
|
(18
|
)
|
|
(0.22
|
)
|
|
(6
|
)
|
|
(0.07
|
)
|
|
(26
|
)
|
|
(0.31
|
)
|
|
(22
|
)
|
|
(0.25
|
)
|
(1)
|
This reflects transaction costs associated with the NES and Neff acquisitions discussed in note
2
to our condensed consolidated financial statements. Merger related costs only include costs associated with major acquisitions that significantly impact our operations. For additional information, see "Results of Operations-Other costs/(income)-merger related costs" below.
|
(2)
|
This reflects the amortization of the intangible assets acquired in the RSC, National Pump and NES acquisitions.
|
(3)
|
This reflects the impact of extending the useful lives of equipment acquired in the RSC and NES acquisitions, net of the impact of additional depreciation associated with the fair value mark-up of such equipment.
|
(4)
|
This 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.
|
(5)
|
This reflects a reduction of interest expense associated with the fair value mark-up of debt acquired in the RSC acquisition.
|
(6)
|
This primarily reflects severance and branch closure charges associated with our restructuring programs. For additional information, see note
4
to our condensed consolidated financial statements.
|
(7)
|
This reflects write-offs of fixed assets in connection with our restructuring programs.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
199
|
|
|
$
|
187
|
|
|
$
|
449
|
|
|
$
|
413
|
|
Provision for income taxes
|
123
|
|
|
116
|
|
|
263
|
|
|
254
|
|
||||
Interest expense, net
|
131
|
|
|
110
|
|
|
338
|
|
|
349
|
|
||||
Depreciation of rental equipment
|
290
|
|
|
250
|
|
|
804
|
|
|
735
|
|
||||
Non-rental depreciation and amortization
|
63
|
|
|
61
|
|
|
189
|
|
|
192
|
|
||||
EBITDA
|
$
|
806
|
|
|
$
|
724
|
|
|
$
|
2,043
|
|
|
$
|
1,943
|
|
Merger related costs (1)
|
16
|
|
|
—
|
|
|
32
|
|
|
—
|
|
||||
Restructuring charge (2)
|
9
|
|
|
4
|
|
|
28
|
|
|
8
|
|
||||
Stock compensation expense, net (3)
|
24
|
|
|
11
|
|
|
64
|
|
|
33
|
|
||||
Impact of the fair value mark-up of acquired RSC and NES fleet (4)
|
24
|
|
|
8
|
|
|
50
|
|
|
26
|
|
||||
Adjusted EBITDA
|
$
|
879
|
|
|
$
|
747
|
|
|
$
|
2,217
|
|
|
$
|
2,010
|
|
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2017
|
|
2016
|
||||
Net cash provided by operating activities
|
$
|
1,766
|
|
|
$
|
1,630
|
|
Adjustments for items included in net cash provided by operating activities but excluded from the calculation of EBITDA:
|
|
|
|
||||
Amortization of deferred financing costs and original issue discounts
|
(6
|
)
|
|
(7
|
)
|
||
Gain on sales of rental equipment
|
153
|
|
|
146
|
|
||
Gain on sales of non-rental equipment
|
4
|
|
|
3
|
|
||
Merger related costs (1)
|
(32
|
)
|
|
—
|
|
||
Restructuring charge (2)
|
(28
|
)
|
|
(8
|
)
|
||
Stock compensation expense, net (3)
|
(64
|
)
|
|
(33
|
)
|
||
Loss on repurchase/redemption of debt securities and amendment of ABL facility
|
(43
|
)
|
|
(36
|
)
|
||
Excess tax benefits from share-based payment arrangements
|
—
|
|
|
53
|
|
||
Changes in assets and liabilities
|
(126
|
)
|
|
(113
|
)
|
||
Cash paid for interest
|
305
|
|
|
294
|
|
||
Cash paid for income taxes, net
|
114
|
|
|
14
|
|
||
EBITDA
|
$
|
2,043
|
|
|
$
|
1,943
|
|
Add back:
|
|
|
|
||||
Merger related costs (1)
|
32
|
|
|
—
|
|
||
Restructuring charge (2)
|
28
|
|
|
8
|
|
||
Stock compensation expense, net (3)
|
64
|
|
|
33
|
|
||
Impact of the fair value mark-up of acquired RSC and NES fleet (4)
|
50
|
|
|
26
|
|
||
Adjusted EBITDA
|
$
|
2,217
|
|
|
$
|
2,010
|
|
(1)
|
This reflects transaction costs associated with the NES and Neff acquisitions discussed in note
2
to our condensed consolidated financial statements. Merger related costs only include costs associated with major acquisitions that significantly impact our operations. For additional information, see "Results of Operations-Other costs/(income)-merger related costs" below.
|
(2)
|
This primarily reflects severance and branch closure charges associated with our restructuring programs. For additional information, see note
4
to our condensed consolidated financial statements.
|
(3)
|
Represents non-cash, share-based payments associated with the granting of equity instruments.
|
(4)
|
This 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.
|
|
General
rentals
|
|
Trench, power and pump
|
|
Total
|
||||||
Three Months Ended September 30, 2017
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
1,237
|
|
|
$
|
299
|
|
|
$
|
1,536
|
|
Sales of rental equipment
|
130
|
|
|
9
|
|
|
139
|
|
|||
Sales of new equipment
|
34
|
|
|
6
|
|
|
40
|
|
|||
Contractor supplies sales
|
17
|
|
|
4
|
|
|
21
|
|
|||
Service and other revenues
|
26
|
|
|
4
|
|
|
30
|
|
|||
Total revenue
|
$
|
1,444
|
|
|
$
|
322
|
|
|
$
|
1,766
|
|
Three Months Ended September 30, 2016
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
1,097
|
|
|
$
|
225
|
|
|
$
|
1,322
|
|
Sales of rental equipment
|
103
|
|
|
9
|
|
|
112
|
|
|||
Sales of new equipment
|
27
|
|
|
3
|
|
|
30
|
|
|||
Contractor supplies sales
|
16
|
|
|
3
|
|
|
19
|
|
|||
Service and other revenues
|
23
|
|
|
2
|
|
|
25
|
|
|||
Total revenue
|
$
|
1,266
|
|
|
$
|
242
|
|
|
$
|
1,508
|
|
Nine Months Ended September 30, 2017
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
3,357
|
|
|
$
|
712
|
|
|
$
|
4,069
|
|
Sales of rental equipment
|
348
|
|
|
30
|
|
|
378
|
|
|||
Sales of new equipment
|
112
|
|
|
14
|
|
|
126
|
|
|||
Contractor supplies sales
|
49
|
|
|
11
|
|
|
60
|
|
|||
Service and other revenues
|
76
|
|
|
10
|
|
|
86
|
|
|||
Total revenue
|
$
|
3,942
|
|
|
$
|
777
|
|
|
$
|
4,719
|
|
Nine Months Ended September 30, 2016
|
|
|
|
|
|
||||||
Equipment rentals
|
$
|
3,067
|
|
|
$
|
576
|
|
|
$
|
3,643
|
|
Sales of rental equipment
|
334
|
|
|
27
|
|
|
361
|
|
|||
Sales of new equipment
|
84
|
|
|
12
|
|
|
96
|
|
|||
Contractor supplies sales
|
49
|
|
|
11
|
|
|
60
|
|
|||
Service and other revenues
|
71
|
|
|
8
|
|
|
79
|
|
|||
Total revenue
|
$
|
3,605
|
|
|
$
|
634
|
|
|
$
|
4,239
|
|
|
General
rentals
|
|
Trench, power and pump
|
|
Total
|
||||||
Three Months Ended September 30, 2017
|
|
|
|
|
|
||||||
Equipment Rentals Gross Profit
|
$
|
525
|
|
|
$
|
164
|
|
|
$
|
689
|
|
Equipment Rentals Gross Margin
|
42.4
|
%
|
|
54.8
|
%
|
|
44.9
|
%
|
|||
Three Months Ended September 30, 2016
|
|
|
|
|
|
||||||
Equipment Rentals Gross Profit
|
$
|
469
|
|
|
$
|
117
|
|
|
$
|
586
|
|
Equipment Rentals Gross Margin
|
42.8
|
%
|
|
52.0
|
%
|
|
44.3
|
%
|
|||
Nine Months Ended September 30, 2017
|
|
|
|
|
|
||||||
Equipment Rentals Gross Profit
|
$
|
1,350
|
|
|
$
|
359
|
|
|
$
|
1,709
|
|
Equipment Rentals Gross Margin
|
40.2
|
%
|
|
50.4
|
%
|
|
42.0
|
%
|
|||
Nine Months Ended September 30, 2016
|
|
|
|
|
|
||||||
Equipment Rentals Gross Profit
|
$
|
1,243
|
|
|
$
|
274
|
|
|
$
|
1,517
|
|
Equipment Rentals Gross Margin
|
40.5
|
%
|
|
47.6
|
%
|
|
41.6
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||
Total gross margin
|
43.8
|
%
|
|
43.5
|
%
|
|
30 bps
|
|
41.2%
|
|
41.2%
|
|
—
|
Equipment rentals
|
44.9
|
%
|
|
44.3
|
%
|
|
60 bps
|
|
42.0%
|
|
41.6%
|
|
40 bps
|
Sales of rental equipment
|
39.6
|
%
|
|
39.3
|
%
|
|
30 bps
|
|
40.5%
|
|
40.4%
|
|
10 bps
|
Sales of new equipment
|
15.0
|
%
|
|
16.7
|
%
|
|
(170) bps
|
|
14.3%
|
|
17.7%
|
|
(340) bps
|
Contractor supplies sales
|
33.3
|
%
|
|
31.6
|
%
|
|
170 bps
|
|
30.0%
|
|
31.7%
|
|
(170) bps
|
Service and other revenues
|
53.3
|
%
|
|
60.0
|
%
|
|
(670) bps
|
|
51.2%
|
|
59.5%
|
|
(830) bps
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
Change
|
|
2017
|
|
2016
|
Change
|
Selling, general and administrative ("SG&A") expense
|
$237
|
|
$179
|
32.4%
|
|
$648
|
|
$533
|
21.6%
|
SG&A expense as a percentage of revenue
|
13.4%
|
|
11.9%
|
150 bps
|
|
13.7%
|
|
12.6%
|
110 bps
|
Merger related costs
|
16
|
|
—
|
—%
|
|
32
|
|
—
|
—%
|
Restructuring charge
|
9
|
|
4
|
125.0%
|
|
28
|
|
8
|
250.0%
|
Non-rental depreciation and amortization
|
63
|
|
61
|
3.3%
|
|
189
|
|
192
|
(1.6)%
|
Interest expense, net
|
131
|
|
110
|
19.1%
|
|
338
|
|
349
|
(3.2)%
|
Other income, net
|
(5)
|
|
(1)
|
400.0%
|
|
(5)
|
|
(3)
|
66.7%
|
Provision for income taxes
|
123
|
|
116
|
6.0%
|
|
263
|
|
254
|
3.5%
|
Effective tax rate
|
38.2%
|
|
38.3%
|
(10) bps
|
|
36.9%
|
|
38.1%
|
(120) bps
|
ABL facility:
|
|
||
Borrowing capacity, net of letters of credit
|
$
|
2,545
|
|
Outstanding debt, net of debt issuance costs (1)
|
408
|
|
|
Interest rate at September 30, 2017
|
2.8
|
%
|
|
Average month-end debt outstanding (1)
|
1,243
|
|
|
Weighted-average interest rate on average debt outstanding
|
2.6
|
%
|
|
Maximum month-end debt outstanding (1)
|
1,802
|
|
|
Accounts receivable securitization facility:
|
|
||
Borrowing capacity
|
9
|
|
|
Outstanding debt, net of debt issuance costs
|
666
|
|
|
Interest rate at September 30, 2017
|
2.0
|
%
|
|
Average month-end debt outstanding
|
584
|
|
|
Weighted-average interest rate on average debt outstanding
|
1.8
|
%
|
|
Maximum month-end debt outstanding
|
667
|
|
|
Corporate Rating
|
|
Outlook
|
Moody’s
|
Ba2
|
|
Stable
|
Standard & Poor’s
|
BB-
|
|
Positive
|
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2017
|
|
2016
|
||||
Net cash provided by operating activities
|
$
|
1,766
|
|
|
$
|
1,630
|
|
Purchases of rental equipment
|
(1,485
|
)
|
|
(1,145
|
)
|
||
Purchases of non-rental equipment
|
(87
|
)
|
|
(65
|
)
|
||
Proceeds from sales of rental equipment
|
378
|
|
|
361
|
|
||
Proceeds from sales of non-rental equipment
|
10
|
|
|
12
|
|
||
Excess tax benefits from share-based payment arrangements (1)
|
—
|
|
|
53
|
|
||
Free cash flow
|
$
|
582
|
|
|
$
|
846
|
|
(1)
|
As discussed in note
1
to our condensed consolidated financial statements, we adopted accounting guidance in the first quarter of 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 2017 are presented as a component of net cash provided by operating activities, while, for 2016, 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.
|
|
2017
|
2018
|
2019
|
2020
|
2021
|
Thereafter
|
Total
|
||||||||||||||
Debt and capital leases (1)
|
$
|
7
|
|
$
|
698
|
|
$
|
18
|
|
$
|
5
|
|
$
|
644
|
|
$
|
7,080
|
|
$
|
8,452
|
|
Interest due on debt (2)
|
101
|
|
398
|
|
388
|
|
388
|
|
378
|
|
1,566
|
|
3,219
|
|
|||||||
Operating leases (1):
|
|
|
|
|
|
|
|
||||||||||||||
Real estate
|
27
|
|
101
|
|
82
|
|
63
|
|
46
|
|
55
|
|
374
|
|
|||||||
Non-rental equipment
|
11
|
|
41
|
|
34
|
|
28
|
|
18
|
|
11
|
|
143
|
|
|||||||
Service agreements (3)
|
4
|
|
13
|
|
3
|
|
1
|
|
—
|
|
—
|
|
21
|
|
|||||||
Purchase obligations (4)
|
301
|
|
20
|
|
—
|
|
—
|
|
—
|
|
—
|
|
321
|
|
|||||||
Total (5)
|
$
|
451
|
|
$
|
1,271
|
|
$
|
525
|
|
$
|
485
|
|
$
|
1,086
|
|
$
|
8,712
|
|
$
|
12,530
|
|
(1)
|
The payments due with respect to a period represent (i) in the case of debt and capital leases, the scheduled principal payments due in such period, and (ii) in the case of operating leases, the minimum lease payments due in such period under non-cancelable operating leases. We have given notice of our intention to redeem the remaining $225 principal amount of our 7
5
/
8
percent Senior Notes in October 2017 using borrowings available under our ABL facility. The 7
5
/
8
percent Senior Notes are reflected in the table above using the 2021 maturity date of the ABL facility.
|
(2)
|
Estimated interest payments have been calculated based on the principal amount of debt and the applicable interest rates as of
September 30, 2017
. As discussed above, in October 2017, we expect to redeem the remaining $225 principal amount of our 7
5
/
8
percent Senior Notes using borrowings available under our ABL facility. Interest on the 7
5
/
8
percent Senior Notes is reflected in the table above using the interest rate on the ABL facility and the 2021 maturity date of the ABL facility.
|
(3)
|
These primarily represent service agreements with third parties to provide wireless and network services.
|
(4)
|
As of
September 30, 2017
, we had outstanding purchase orders, which were negotiated in the ordinary course of business, with our equipment and inventory suppliers. These purchase commitments can generally be cancelled by us with 30 days notice and without cancellation penalties. The equipment and inventory receipts from the suppliers for these purchases and related payments to the suppliers are expected to be completed throughout 2017 and 2018.
|
(5)
|
This information excludes $
4
of unrecognized tax benefits. It is not possible to estimate the time period during which these unrecognized tax benefits may be paid to tax authorities.
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
Total Number of
Shares Purchased
|
|
Average Price
Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
|
|
Maximum Dollar Amount of Shares That May Yet Be Purchased Under the Program (2)
|
||||||
July 1, 2017 to July 31, 2017
|
619
|
|
(1)
|
$
|
91.80
|
|
|
—
|
|
|
—
|
|
|
August 1, 2017 to August 31, 2017
|
17,452
|
|
(1)
|
$
|
116.54
|
|
|
—
|
|
|
—
|
|
|
September 1, 2017 to September 30, 2017
|
923
|
|
(1)
|
$
|
73.09
|
|
|
—
|
|
|
—
|
|
|
Total
|
18,994
|
|
|
$
|
113.62
|
|
|
—
|
|
|
$
|
372,997,032
|
|
(1)
|
Reflects shares withheld by Holdings to satisfy tax withholding obligations upon the vesting of restricted stock unit awards. These shares were not acquired pursuant to any repurchase plan or program.
|
(2)
|
On July 21, 2015, our Board authorized a $1 billion share repurchase program which commenced in November 2015. In October 2016, we paused repurchases under the program as we evaluated potential acquisition opportunities. As discussed in note
2
to the condensed consolidated financial statements, we completed the acquisitions of NES in April 2017 and Neff in October 2017. In October 2017, our Board authorized the resumption of the share repurchase program, and we intend to complete the program in 2018.
|
Item 6.
|
Exhibits
|
2(a)
|
Agreement and Plan of Merger, dated as of August 16, 2017, by and among United Rentals (North America), Inc., UR Merger Sub III Corporation and Neff Corporation (incorporated herein by reference to Exhibit 2.1 of the
United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on August 17, 2017
)
|
|
|
3(a)
|
Fourth Restated Certificate of Incorporation of United Rentals, Inc., dated June 1, 2017 (incorporated by reference to Exhibit 3.2 of the
United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on June 2, 2017
)
|
|
|
3(b)
|
Amended and Restated By-Laws of United Rentals, Inc., amended as of May 4, 2017 (incorporated by reference to Exhibit 3.4 of the
United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on May 4, 2017
)
|
|
|
3(c)
|
Restated Certificate of Incorporation of United Rentals (North America), Inc., dated April 30, 2012 (incorporated by reference to Exhibit 3(c) of the
United Rentals, Inc. and United Rentals (North America), Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2013
)
|
|
|
3(d)
|
By-laws of United Rentals (North America), Inc. dated May 8, 2013 (incorporated by reference to Exhibit 3(d) of the
United Rentals, Inc. and United Rentals (North America), Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2013
)
|
|
|
4(a)
|
Indenture for the 4
7
/
8
percent Notes due 2028, dated as of August 11, 2017, among United Rentals (North America), Inc., United Rentals, Inc., each of United Rentals (North America), Inc.’s subsidiaries named therein and Wells Fargo Bank, National Association, as Trustee (including the Form of 2028 Note) (incorporated by reference to Exhibit 4.1 of the
United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on August 11, 2017
)
|
|
|
4(b)
|
Indenture for the 4
5
/
8
percent Notes due 2025, dated as of September 22, 2017, among United Rentals (North America), Inc., United Rentals, Inc., each of United Rentals (North America), Inc.’s subsidiaries named therein and Wells Fargo Bank, National Association, as Trustee (including the Form of 2025 Note) (incorporated by reference to Exhibit 4.1 of the
United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on September 22, 2017
)
|
|
|
4(c)
|
Indenture for the 4
7
/
8
percent Notes due 2028, dated as of September 22, 2017, among United Rentals (North America), Inc., United Rentals, Inc., each of United Rentals (North America), Inc.’s subsidiaries named therein and Wells Fargo Bank, National Association, as Trustee (including the Form of 2028 Note) (incorporated by reference to Exhibit 4.2 of the
United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on September 22, 2017
)
|
|
|
10(a)
|
Assignment and Acceptance Agreement and Amendment No. 6 to Third Amended and Restated Receivables Purchase Agreement and Amendment No. 4 to Third Amended and Restated Purchase and Contribution Agreement, dated as of August 29, 2017, by and among United Rentals (North America), Inc., United Rentals Receivables LLC II, United Rentals, Inc., Liberty Street Funding LLC, Gotham Funding Corporation, Fairway Finance Company, LLC, The Bank of Nova Scotia, PNC Bank, National Association, SunTrust Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, Bank of Montreal and The Toronto-Dominion Bank (incorporated by reference to Exhibit 10.1 of the
United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on August 29, 2017
)
|
|
|
10(b)
|
Lender Joinder Agreement, dated as of September 29, 2017, among United Rentals, Inc., United Rentals (North America), Inc., United Rentals of Canada, Inc., United Rentals Financing Limited Partnership and certain other subsidiaries of United Rentals, Inc. and Bank of America, N.A., as agent and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the
United Rentals, Inc. and United Rentals (North America), Inc. Current Report on Form 8-K filed on September 29, 2017
)
|
|
|
12*
|
|
|
|
31(a)*
|
|
|
|
31(b)*
|
|
|
|
32(a)**
|
|
|
|
32(b)**
|
|
|
|
101
|
The following materials from the Quarterly Report on Form 10-Q for United Rentals, Inc. and United Rentals (North America), Inc., for the quarter ended September 30, 2017 filed on October 18, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statement of Stockholders' Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Unaudited Condensed Consolidated Financial Statements.
|
*
|
Filed herewith.
|
**
|
Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K under the Exchange Act.
|
|
|
UNITED RENTALS, INC.
|
||
|
|
|
|
|
Dated:
|
October 18, 2017
|
By:
|
|
/
S
/ J
ESSICA
T. G
RAZIANO
|
|
|
|
|
Jessica T. Graziano
Senior Vice President, Controller and Principal Accounting Officer
|
|
|
|
||
|
|
UNITED RENTALS (NORTH AMERICA), INC.
|
||
|
|
|
|
|
Dated:
|
October 18, 2017
|
By:
|
|
/
S
/ J
ESSICA
T. G
RAZIANO
|
|
|
|
|
Jessica T. Graziano
Senior Vice President, Controller and Principal Accounting Officer |
|
|
|
|
|
|
Year Ended December 31,
|
|
Nine Months Ended September 30,
|
||||||||||||||||
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
2017
|
||||||||||||
Earnings:
|
|
|
|
|
|
|
|
||||||||||||
Income before provision for income taxes
|
$
|
88
|
|
$
|
605
|
|
$
|
850
|
|
$
|
963
|
|
$
|
909
|
|
|
$
|
712
|
|
Add:
|
|
|
|
|
|
|
|
||||||||||||
Fixed charges, net of capitalized interest
|
504
|
|
521
|
|
520
|
|
492
|
|
461
|
|
|
336
|
|
||||||
Total earnings available for fixed charges
|
592
|
|
1,126
|
|
1,370
|
|
1,455
|
|
1,370
|
|
|
1,048
|
|
||||||
Fixed charges (1):
|
|
|
|
|
|
|
|
||||||||||||
Interest expense, net
|
512
|
|
475
|
|
555
|
|
567
|
|
511
|
|
|
338
|
|
||||||
Add back interest income, which is netted in interest expense
|
2
|
|
1
|
|
2
|
|
2
|
|
2
|
|
|
2
|
|
||||||
Add back losses on bond repurchases/retirement of subordinated convertible debentures, included in interest expense
|
(72
|
)
|
(3
|
)
|
(80
|
)
|
(123
|
)
|
(101
|
)
|
|
(43
|
)
|
||||||
Interest expense—subordinated convertible debentures
|
4
|
|
3
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Capitalized interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Interest component of rent expense
|
58
|
|
45
|
|
43
|
|
46
|
|
49
|
|
|
39
|
|
||||||
Fixed charges
|
$
|
504
|
|
$
|
521
|
|
$
|
520
|
|
$
|
492
|
|
$
|
461
|
|
|
$
|
336
|
|
Ratio of earnings to fixed charges
|
1.2x
|
|
2.2x
|
|
2.6x
|
|
3.0x
|
|
3.0x
|
|
|
3.1x
|
|
(1)
|
Fixed charges consist of interest expense, which includes amortization of deferred finance charges, interest expense-subordinated debentures, capitalized interest and imputed interest on our lease obligations. The interest component of rent was determined based on an estimate of a reasonable interest factor at the inception of the leases.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of United Rentals, Inc. and United Rentals (North America), Inc. for the quarterly period ended
September 30, 2017
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;
|
4.
|
The registrants' other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and.
|
d)
|
disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrants' most recent fiscal quarter (the registrants' fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and
|
5.
|
The registrants' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants' auditors and the audit committee of the registrants' board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants' ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting.
|
/
S
/ M
ICHAEL
J. K
NEELAND
|
Michael J. Kneeland
|
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of United Rentals, Inc. and United Rentals (North America), Inc. for the quarterly period ended
September 30, 2017
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;
|
4.
|
The registrants' other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including their consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and.
|
d)
|
disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrants' most recent fiscal quarter (the registrants' fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and
|
5.
|
The registrants' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants' auditors and the audit committee of the registrants' board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants' ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting.
|
/
S
/ W
ILLIAM
B. P
LUMMER
|
William B. Plummer
|
Chief Financial Officer
|
1.
|
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m); and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.
|
/
S
/ M
ICHAEL
J. K
NEELAND
|
Michael J. Kneeland
|
Chief Executive Officer
|
1.
|
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m); and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.
|
/
S
/ W
ILLIAM
B. P
LUMMER
|
William B. Plummer
|
Chief Financial Officer
|