United Rentals, Inc. · NYSE:URI
United Rentals — FY2015 Earnings Presentation
25 slides from United Rentals's earnings presentation, Jan 28, 2016
Slide 1: Executing for Growth and Returns
Executing for Growth and Returns Quarterly Financial Review Update Fourth Quarter-Full Year 2015 and 2016 Outlook
Slide 2: Introductory Information
Introductory Information Unless otherwise specified, the information in this presentation, including forward looking statements related to our outlook, is as of our most recent earnings call held on January 28, 2016. We make no commitment to update any such information contained in this presentation
Slide 3: Q4 2015 Results
Q4 2015 Results Rates -1.8% 68.2%, a decrease of 240 bps Time Utilization $744M or 48.9%, reflecting Adjusted EBITDA decreases of $31M or 0.7 pp LTM ROIC 8.8%, which was flat year-over- year Adjusted EBITDA of 48.9% 3
Slide 4: 2015 Full Year Results
2015 Full Year Results Rates 0.5% 67.3%, a decrease of 150 bps Time Utilization $2.832B or 48.7%, reflecting Adjusted EBITDA increases of $114M or 0.9 pp Net Rental CapEx after gross purchases $996 million net, $1.534 billion gross Free Cash Flow $919M Adjusted EBITDA of 48.7% 4
Slide 5: 2016 Outlook
2016 Outlook Total Revenue $5.65B to $5.95B Adjusted EBITDA $2.7B to $2.9B Decrease in Rental Rates Approximately 1% to 2% (year-over-year) Time Utilization Approximately 68% Approximately $700M, after Net Rental Capital gross purchases of Expenditures approximately $1.2B Free Cash Flow
Slide 6: United Leads Industry in Time Utilization
United Leads Industry in Time Utilization 90% 85% 80% 74.0% 75% URI Total 71.9% 69.6% 70% 65% Non-URI Bench 60% 66.7% 55% 50% 45% 40% Feb Apr Sep Dec Jan Mar May Jun Oct Aug Jul Nov Sep Dec Feb Apr Oct Nov Jan Mar May Aug Sep Jun Jul 2013 2014 2015 Source: Rouse Note: URI (dashed line) is excluded f
Slide 7: Non Oil & Gas Locations Maintain Growth Trend
Non Oil & Gas Locations Maintain Growth Trend *Excluding Pump Locations; in Local Currency 7
Slide 8: U.S. Economy Forecast to Grow
U.S. Economy Forecast to Grow Real GDP and Industrial Production Real GDP and its Components 8 Percent Change 2016F 2017F Real GDP 2.7 2.9 4 Consumption 3.0 3.2 Percent Change Residential Investment 9.5 9.6 0 Business Fixed Investment 5.0 5.0 Federal Government 3.6 -0.8 -4 State & Local Government 1
Slide 9: Construction Outlook - US
Construction Outlook - US US Construction spending forecasted to grow 7.5% in 2016 Strong growth expected in Commercial, Healthcare, Education and Residential 2015 to 2016 Change Total Construction Spend Forecast Non Residential Expected to Grow 6.9% in 2016 Source: IHS Global Insight, December 2015
Slide 10: Construction Outlook - Canada
Construction Outlook - Canada Canadian construction spending forecasted to contract by -1.9% in 2016 2015 to 2016 Change Total Construction Spend Forecast ($USD) Non Residential Forecast to Decline 4.1% in 2016 Source: IHS Global Insight, December 2015 Note: Based on total project spending put in pl
Slide 11: Non-Residential Project Pipeline
Non-Residential Project Pipeline Dodge Momentum Index of First Report Non Residential Projects (Year 2000=100) 200 175 150 125 100 75 50 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Year Momentum Index Points to Increasing Project Pipeline Source: Dodge Data and Analytics Note: Dodge’s historical analy
Slide 12: Industrial Outlook – U.S.
Industrial Outlook – U.S. U.S. Industrial spending forecasted to grow 5% in 2016 2015 to 2016 Change Industrial Spend Forecast Chemical, Refining, LNG Export and Pipelines will be Key Drivers Source: Industrial Information Resources, January 2016 Note: Based on total project spending 12
Slide 13: Industrial Outlook - Canada
Industrial Outlook - Canada Canadian industrial spending forecasted to grow 4% in 2016 2015 to 2016 Change Industrial Spend Forecast ($USD) Strength Expected in Power, Refining and LNG Export Projects Source: Industrial Information Resources, January 2016 Note: Based on total project spending. Inclu
Slide 14: Industrial Project Pipeline
Industrial Project Pipeline Pipeline of active projects with targeted start date in next 12 months $540 Value of Capital Projects Value of Maintenance Billions $520 Projects $12 Billions $500 $10 $480 $8 $460 $6 $440 $420 $4 $400 $2 $380 $0 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q4 2014 Q1
Slide 15: Customer Confidence Index
Customer Confidence Index UR Customer Confidence Index* % of Respondents Indicating an Improving Outlook 70% 65% 60% 55% 50% 45% Oct '12 Oct '13 Oct '14 Oct '15 Apr '13 May '13 Apr '14 May '14 Apr '15 May '15 Jan '13 Jun '13 Jul '13 Jan '14 Jun '14 Jul '14 Jan '15 Jun '15 Jul '15 Feb '13 Mar '13 Feb
Slide 16: 3,300 Equipment Classes with Original Cost of $8.7B
3,300 Equipment Classes with Original Cost of $8.7B Booms and Earth Moving Forklifts Trench and Lifts Other Total/ Average % of Q4 2015 35.3% 12.6% 18.2% 33.8% Rental Revenue Time 73.9% 61.6% 80.1% 54.7% 68.2% Utilization* Dollar 41.9% 43.3% 40.9% 56.0% 45.8% Utilization Average Fleet Age** 52.6 38.
Slide 17: Managing Fleet with a Life Cycle Approach
Managing Fleet with a Life Cycle Approach Selling Oldest Fleet Rental Capex and Used Sales ($M)* Age of Used Sales in Months 89 1,580 1,701 1,390 1,534 88 1,321 86 85 83 83 ($363) ($490) ($463) ($544) ($538) 2011 2012 2013 2014 Q4 2014 Q4 2015 2011 2012 2013 2014 2015 Age Composition Time Utilizatio
Slide 18: Lean Processes Drive Real Value
Lean Processes Drive Real Value LEAN Activity Productivity Gains Value Levers Kaizen Decreased Outside Improved processes Hauling Costs Cost per Delivery in yards, shops, Increased dispatch and sourcing Dispatches Credit Memos & per Driver Overrides B-PRO Improved Branch Adopted order-entr
Slide 19: On Way to Generate about $2.3B in Free Cash Flow
On Way to Generate about $2.3B in Free Cash Flow* $ Millions $924 $900+ $900+ ̴ $600+ $574 $421 2013 2014 2015 2016 2017 Actual Forecast Capex Flexibility Cash to Support Share Buyback and Debt Paydown *Excludes merger and restructuring cash payments. Merger and restructuring cash payments were $38M
Slide 20: Assumptions Driving FCF Outlook
Assumptions Driving FCF Outlook Rental CapEx Spend: Gross Net 2016 ~$1.2B ~$700M 2017 $1.2B – $1.6B $700M – $1.1B ~1% - 2% rental rate decline in 2016 and modest rate growth in 2017 Cash Taxes – About $180M cash taxes in 2016 – About $370M cash taxes in 2017 Cash Interest – Range of $430M-$4
Slide 21: Leverage Ratio Continues Decline
Leverage Ratio Continues Decline (1) 2 4.6 3 3.6 3.0 2.9 2.8 2.7 “Dry Powder” 2011 2012 2013 2014 2015 2016 2017 Actual Forecast 2.5x – 3.5x Target Leverage Range of the Cycle Lower End of Target Range in 2016 (1) Leverage Ratio calculated as total debt and QUIPs, net of cash, excluding original iss
Slide 22: Adjusted Earnings Per Share GAAP Reconciliation
Adjusted Earnings Per Share GAAP Reconciliation We define ―earnings per share – adjusted‖ as the sum of earnings per share – GAAP, as reported plus the impact of the following special items: merger related costs, merger related intangible asset amortization, impact on rental depreciation related to
Slide 23: EBITDA and Adjusted EBITDA GAAP Reconciliation
EBITDA and Adjusted EBITDA GAAP Reconciliation EBITDA represents the sum of net income, provision for income taxes, interest expense, net, depreciation of rental equipment, and non-rental depreciation and amortization. Adjusted EBITDA represents EBITDA plus the sum of the merger related costs, restr
Slide 24: Reconciliation of Net Cash Provided by Operating Activities to EBITDA
Reconciliation of Net Cash Provided by Operating Activities to EBITDA and Adjusted EBITDA Three Months Ended Year Ended $ Millions December 31, December 31, 2015 2014 2015 2014 Net cash provided by operating activities $ 438 $ 335 $ 1,995 $ 1,801 Adjustments for items included in net cash provided b
Slide 25: Free Cash Flow GAAP Reconciliation
Free Cash Flow GAAP Reconciliation We define free cash flow as (i) net cash provided by operating activities less (ii) purchases of rental and non-rental equipment plus (iii) proceeds from sales of rental and non-rental equipment, and excess tax benefits from share-based payment arrangements. Manage