RSC — Merger or Acquisition (December 2011)
20 slides from RSC's merger presentation, Dec 16, 2011
Slide 1: United Rentals to Acquire RSC Holdings
United Rentals to Acquire RSC Holdings Investor Presentation DECEMBER 2011
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Introductory Information Cautionary Statement Regarding Forward-Looking Statements This document contains "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and in the Private Securities Litigation Reform Act of 1995, known as the PSLRA
Slide 3: On Today's Call
On Today's Call PRESIDENT AND CHIEF EXECUTIVE OFFICER, UNITED RENTALS Michael Kneeland was appointed President and Chief Executive Officer of United Rentals, and a Director of the Company, in 2008. He had previously served as Interim Chief Executive Officer since 2007. Mr. Kneeland has more than 25
Slide 4: Agenda
Agenda Key Transaction Terms Combination Overview Strategic & Financial Rationale Financial Profile Q4 Market Update Q&A
Slide 5: Introduction
Introduction Solid recent performance Robust October and November performance for both companies 2012 outlook is positive Optimal transaction timing Strong market growth expected over next 5 years, surpassing 2007 peak in 2014* Rental penetration increasing Strategic and financially compelling deal
Slide 6: Key Transaction Terms
Key Transaction Terms STRUCTURE United Rentals is acquiring RSC for $18 per share or a total enterprise value of $4.2 billion including the assumption of $2.3 billion of net debt OFFER COMPONENTS Merger consideration will consist of 60% cash and 40% stock Each outstanding share of RSC common stock w
Slide 7: Combination Overview
Combined OEC of $7.0 billion LTM revenue of $3.9 billion(1) Best in class management team Largest branch network in industry Strong regional positions Leader in industrial rentals Balanced customer mix IT optimizes fleet management Combination Overview STRONG PRO-FORMA BALANCE SHEET A LEADING NORTH
Slide 8: Meets Strategic Criteria
Meets Strategic Criteria Fits with United Rentals' long-term strategy to build stronger relationships with the most attractive customer groups Corporate cultures are closely aligned ROIC of the transaction expected to be greater than 10% by second full year
Slide 9: Rationale
Strategic & Financial Rationale Significant accretion expected to Cash EPS in the first full year Industry poised for growth / ability to manage through all cycles Balanced customer mix - Industrial / Construction Positioned to serve key large customers / national accounts Integration / branch optim
Slide 10: Rationale: Industry poised for growth / ability to manage through all cycles
Strategic & Financial Rationale: Industry poised for growth / ability to manage through all cycles Combined Company well-positioned to take advantage of growth trends, while reducing cyclical volatility Balanced revenue mix Wider range of equipment offerings Flexibility in managing customer equipmen
Slide 11: Rationale: Balanced customer mix
Strategic & Financial Rationale: Balanced customer mix RESULT = DIVERSIFIED END-MARKET Increased penetration of industrial accounts Improved ability to manage through all cycles Growth outpacing general rental sector Surpass previously announced industrial target of 30% RSC STANDALONE(1) COMBINED CO
Slide 12: Rationale: Better ability to serve key large customers / national accounts
Strategic & Financial Rationale: Better ability to serve key large customers / national accounts Focus on attractive large customers Longer, more stable rental periods Lower transaction costs Higher revenue per transaction Timely payments Less equipment damage Most efficient use of North American fo
Slide 13: Rationale: Cultures and strategies are aligned
Strategic & Financial Rationale: Cultures and strategies are aligned CULTURE United Rentals and RSC share a similar business culture with a commitment to exceptional customer service Both companies possess a deep bench of leaders across the organization ACCOUNT FOCUS Shared focus on key accounts BUS
Slide 14: Rationale: Significant integration and branch optimization experience
Strategic & Financial Rationale: Significant integration and branch optimization experience OPERATING PRINCIPLES: View through customer's eyes Seamless transition Best of both worlds People, processes & systems Follow the money Cost and revenue synergy opportunities Transparent communication Interna
Slide 15: Rationale: Substantial cost savings / revenue synergy opportunities
Strategic & Financial Rationale: Substantial cost savings / revenue synergy opportunities Potential $200 million+ annual run-rate cost savings 2/3 expected to be achievable within the first 12 months Represents 5% of pro-forma combined LTM revenue, before synergies Additional top-line and cash flow
Slide 16: Capital Structure Supports Combination
Capital Structure Supports Combination ACCRETION Accretive to Cash EPS in the first full year after closingDouble-digit accretive to Cash EPS by Year 2 BALANCE SHEET Strong pro-forma balance sheet Liquidity of approximately $700 million at the time of closing LEVERAGE 4.5x Total Debt/EBITDA (includi
Slide 17: Q4 2011 Update - United Rentals
Q4 2011 Update - United Rentals United Rentals consolidated 20 branches in Q4 2011 OCTOBER 2011 NOVEMBER 2011 QTD AVERAGE TIME UTILIZATION 74.5% 71.5% 73.0% RENTAL REVENUE GROWTH 17.6% 17.5% 17.5% RATE GROWTH YoY Sequential 6.6%-0.2% 6.9%1.0% 6.5%0.8%
Slide 18: Q4 2011 Update - RSC
Q4 2011 Update - RSC OCTOBER 2011 NOVEMBER 2011 QTD AVERAGE TIME UTILIZATION 75.2% 70.9% 73.1% RENTAL REVENUE GROWTH 22.8% 31.5% 26.9% RATE GROWTH YoY Sequential 4.9%1.2% 6.7%2.0% 5.8%3.2% Strong trends expected to continue in 2012
Slide 19: Summary
Summary ENTERING TRANSACTION FROM A POSITION OF STRENGTH Rental industry poised for growth Ability to manage through cyclical trends Record of integration and branch optimization experience CREATING FINANCIAL VALUE Expected to be accretive to cash earnings in the full first year Substantial cost sav
Slide 20: Q&A
Q&A Michael Kneeland , United Rentals Erik Olsson, RSC Bill Plummer, United Rentals Participants in Solicitation United Rentals, RSC Holdings and their respective directors and executive officers and certain members of management and employees may be deemed to be participants in the solicitation of