United Rentals (URI) Updates Guidance to Reflect the Combination with BlueLine

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October 31, 2018 9:16 AM EDT

United Rentals, Inc. (NYSE: URI) today announced that it has completed its previously announced acquisition of BlueLine from Platinum Equity for a total purchase price of approximately $2.1 billion in cash.1 The company used a combination of newly issued debt and bank borrowings to fund the transaction and related expenses.

The acquisition expands United Rentals’ equipment rental capacity in many of the largest metropolitan areas in North America, including both U.S. coasts, the Gulf South and Ontario. The company gains a well-diversified customer base with a balanced mix of commercial construction and industrial accounts, over 46,000 rental assets, 114 branch locations and approximately 1,700 employees.

Michael Kneeland, chief executive officer of United Rentals, said, “We’re excited to welcome BlueLine to the United Rentals family, and we’re confident that the strategic and financial merits of the acquisition will benefit our customers, shareholders and employees. Moreover, we look forward to leveraging our extensive integration capabilities to ensure that we generate the greatest value from combining our companies. Together, our enhanced scale and operating efficiencies reinforce our leadership position in the North American market and support our focus on driving long-term value creation.”

Louis Samson, partner at Platinum Equity, said, “The combination with United Rentals is the optimal conclusion to our BlueLine investment. We’re extremely pleased with this transaction and the opportunities created for the BlueLine team and customers. It’s fitting that their next phase of growth will be with the industry leader.”

2018 Guidance

The company has updated its full-year 2018 guidance solely to reflect the expected impact of the BlueLine acquisition. The new guidance adds $120 million of total revenue and $50 million of adjusted EBITDA to the guidance previously released on October 17, 2018:

Prior Outlook Current Outlook
Total revenue $7.77 billion to $7.87 billion $7.89 billion to $7.99 billion
Adjusted EBITDA1 $3.765 billion to $3.815 billion $3.815 billion to $3.865 billion
Net rental capital expenditures after gross purchases $1.35 billion to $1.45 billion, after gross purchases of $2.0 billion to $2.1 billion $1.35 billion to $1.45 billion, after gross purchases of $2.0 billion to $2.1 billion
Net cash provided by operating activities $2.725 billion to $2.875 billion $2.725 billion to $2.875 billion
Free cash flow (excluding the impact of merger and restructuring related costs)2 $1.25 billion to $1.35 billion $1.25 billion to $1.35 billion
1. Adjusted EBITDA is a non-GAAP measure. Information reconciling forward-looking adjusted EBITDA to the comparable GAAP financial measures is unavailable to the company without unreasonable effort, as discussed below.
2. Free cash flow is a non-GAAP measure, as discussed below. The table below provides a reconciliation between 2018 forecasted net cash provided by operating activities and free cash flow (in millions).
Amounts in millions:
Net cash provided by operating activities $2,725- $2,875
Purchases of rental equipment $(2,000)-$(2,100)
Proceeds from sales of rental equipment $600-$700
Purchases of non-rental equipment, net of proceeds from sales and insurance proceeds from damaged equipment $(75)-$(125)
Free cash flow (excluding the impact of merger and restructuring related payments) $1,250- $1,350

Morgan Stanley & Co. LLC and Centerview Partners acted as financial advisors to United Rentals, and Sullivan & Cromwell LLP acted as legal advisor. Barclays and Catalyst Strategic Advisors acted as financial advisors to Platinum Equity, and Latham & Watkins LLP acted as legal advisor.

Repurchase Program

As previously announced, United Rentals has paused its current $1.25 billion share repurchase program effective with the BlueLine closing, consistent with recent larger acquisitions. Once the initial phase of the integration is complete, the company will re-evaluate its decision to pause the repurchase program with the intention of completing the balance of the authorization.


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