United Rentals Announces Fourth Quarter and Full Year 2012 Results and Provides 2013 Outlook

  United Rentals Announces Fourth Quarter and Full Year 2012 Results and
  Provides 2013 Outlook

Business Wire

GREENWICH, Conn. -- January 23, 2013

United Rentals, Inc. (NYSE: URI) today announced financial results for the
fourth quarter and full year 2012^1.

For the fourth quarter of 2012, total revenue was $1.249 billion and rental
revenue was $1.036 billion. On a GAAP basis, the company reported fourth
quarter net income of $41 million, or earnings of $0.40 per diluted share.
Adjusted EPS^2 for the quarter was $1.27 per diluted share.

For the full year 2012, total revenue was $4.117 billion and rental revenue
was $3.455 billion. On a GAAP basis, full year net income was $75 million, or
earnings of $0.79 per diluted share. Adjusted EPS for the full year was $3.76
per diluted share.

For the fourth quarter of 2012, adjusted EBITDA^3 was $553 million and
adjusted EBITDA margin was 44.3%. For the full year 2012, adjusted EBITDA was
$1.772 billion, and adjusted EBITDA margin was 43.0%.

2012 Highlights^4

On a pro-forma basis (that is, assuming the combination of United Rentals
results and RSC results for all periods in 2011 and 2012):

  *Full year total revenue was $4.664 billion compared with $4.133 billion
    for 2011.
  *Fourth quarter 2012 rental revenue increased 8.7% year-over-year,
    reflecting an increase of 7.2% in the volume of equipment on rent and an
    increase of 6.0% in rental rates year-over-year.^5 Full year rental
    revenue increased 13.2% year-over-year, reflecting an increase of 11.4% in
    the volume of equipment on rent and an increase of 6.9% in rental rates.
  *Fourth quarter adjusted EBITDA was $553 million and adjusted EBITDA margin
    was 44.3%, an increase of $104 million and 580 basis points, respectively,
    from the same period last year. Full year adjusted EBITDA was $1.988
    billion and adjusted EBITDA margin was 42.6%, an increase of $494 million
    and 650 basis points, respectively, from 2011.
  *Flow-through, which represents the year-over-year change in adjusted
    EBITDA divided by the year-over-year change in total revenue, was 125.3%
    for the fourth quarter and 93.0% for the full year.
  *For the fourth quarter, time utilization decreased 90 basis points
    year-over-year to 68.7% and full year time utilization decreased 30 basis
    points to 67.5%.
  *For the fourth quarter, the company generated $141 million of proceeds
    from used equipment sales at a gross margin of 39.7%, compared with $134
    million of proceeds at a gross margin of 31.3% the prior year. For the
    full year, the company generated $463 million of proceeds from used
    equipment sales at a gross margin of 39.7%, compared with $363 million of
    proceeds at a gross margin of 33.3% for 2011.^6
  *The company realized cost synergies of $42 million in the fourth quarter
    and $104 million for the full year, and reaffirmed its fully developed
    goal of $230 million to $250 million on a run-rate basis.

2013 Outlook

The company provided the following outlook for full year 2013:

  *Total revenue in a range of $4.9 billion to $5.1 billion;
  *Adjusted EBITDA in a range of $2.25 billion to $2.35 billion;
  *An increase in rental rates of approximately 4.5% year-over-year;
  *Time utilization of approximately 68.0%;
  *Net rental capital expenditures of approximately $1.05 billion, after
    gross purchases of approximately $1.5 billion; and
  *Full year free cash flow in the range of $400 million to $500 million.

CEO Comments

Michael Kneeland, chief executive officer of United Rentals, said, "Our strong
performance in 2012 continued in the fourth quarter as we delivered solid
growth, robust margins and exceptional flow-through from our revenue streams.
The integration with RSC has been very successful, and while it's not
complete, we can now shift our focus to driving improvements across the entire
business. Despite the intensity of integration, we’ve paid consistent
attention to the fundamentals of our business and made good on our promise to
drive significant returns."

Kneeland continued, "There's a lot to be excited about from the standpoint of
value creation as we look at 2013. Industrial and other non-construction
sectors have balanced our mix and now account for about 50% of our business.
We also expect to benefit further from the secular shift to rental. And
non-residential construction is predicted to show reasonable improvement, with
larger upswings in 2014 and 2015. We see opportunities to continue to grow our
key accounts, reap the synergies of the merger and expand our fleet, while
further lowering our debt leverage."

Free Cash Flow and Fleet Size

For the full year 2012, on an as-reported basis^7, free cash usage was $223
million after (i) total rental and non-rental capital expenditures of $1.369
billion and (ii) aggregate cash payments of $150 million related to merger and
restructuring activities.

The size of the rental fleet on an as reported basis was $7.23 billion of
original equipment cost at December 31, 2012, compared with $4.05 billion at
December 31, 2011. The age of the rental fleet was 47.2 months on an
OEC-weighted basis at December 31, 2012, compared with 50.3 months at December
31, 2011.

Return on Invested Capital (ROIC)

Return on invested capital, on an as-reported basis, was 7.4% for the 12
months ended December 31, 2012, an increase of 50 basis points from the same
period last year. The company’s ROIC metric uses after-tax operating income
for the trailing 12 months divided by the averages of stockholders’ equity,
debt and deferred taxes, net of average cash and excludes the impact of merger
and restructuring related costs. To mitigate the volatility related to
fluctuations in the company’s tax rate from period to period, the federal
statutory tax rate of 35% is used to calculate after-tax operating income.

Conference Call

United Rentals will hold a conference call tomorrow, Thursday, January 24,
2013, at 11 a.m. Eastern Time. The conference call will be available live by
audio webcast at unitedrentals.com, where it will be archived until the next
earnings call, and by calling 703-639-1123.

Non-GAAP Measures

Free cash (usage) flow, earnings before interest, taxes, depreciation and
amortization (EBITDA), adjusted EBITDA, and adjusted earnings per share
(adjusted EPS) are non-GAAP financial measures as defined under the rules of
the SEC. Free cash (usage) flow represents net cash provided by operating
activities, less purchases of rental and non-rental equipment plus proceeds
from sales of rental and non-rental equipment and excess tax benefits from
share-based payment arrangements, net. EBITDA represents the sum of net
income, income from discontinued operations, net of taxes, (benefit) provision
for income taxes, interest expense, net, interest expense-subordinated
convertible debentures, net, depreciation of rental equipment and non-rental
depreciation and amortization. Adjusted EBITDA represents EBITDA plus the sum
of RSC merger related costs, restructuring charge, stock compensation expense,
net, the impact of the fair value mark-up of acquired RSC fleet and inventory
and the gain on sale of our software subsidiary. Adjusted EPS represents EPS
plus the sum of the RSC merger related costs, restructuring charge, asset
impairment charge, pre-close RSC merger related interest expense, the impact
on interest expense related to the fair value adjustment of acquired RSC
indebtedness, the impact on depreciation related to acquired RSC fleet and
property and equipment, the impact of the fair value mark-up of acquired RSC
fleet and inventory, RSC merger related intangible asset amortization, the
gain on sale of our software subsidiary and the loss on extinguishment of debt
securities, including subordinated convertible debentures, and ABL amendment.
The company believes that: (i) free cash (usage) flow provides useful
additional information concerning cash flow available to meet future debt
service obligations and working capital requirements; (ii) EBITDA and adjusted
EBITDA provide useful information about operating performance and
period-over-period growth; and (iii) adjusted EPS provides useful information
concerning future profitability. However, none of these measures should be
considered as alternatives to net income, cash flows from operating activities
or earnings per share under GAAP as indicators of operating performance or
liquidity. Information reconciling forward-looking free cash flow and Adjusted
EBITDA to GAAP financial measures is unavailable to the company without
unreasonable effort.

About United Rentals

United Rentals, Inc. is the largest equipment rental company in the world,
with an integrated network of 836 rental locations in 49 states and 10
Canadian provinces. The company’s approximately 11,300 employees serve
construction and industrial customers, utilities, municipalities, homeowners
and others. The company offers for rent approximately 3,300 classes of
equipment with a total original cost of $7.23 billion. United Rentals is a
member of the Standard & Poor’s MidCap 400 Index and the Russell 2000 Index®
and is headquartered in Greenwich, Conn. Additional information about United
Rentals is available at unitedrentals.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of
Section21E of the Securities Exchange Act of 1934, as amended, and the
Private Securities Litigation Reform Act of 1995, known as the PSLRA. These
statements can generally be identified by the use of forward-looking
terminology such as “believe,” “expect,” “may,” “will,” “should,” “seek,”
“on-track,” “plan,” “project,” “forecast,” “intend” or “anticipate,” or the
negative thereof or comparable terminology, or by discussions of vision,
strategy or outlook. These statements are based on current plans, estimates
and projections, and, therefore, you should not place undue reliance on them.
No forward-looking statement can be guaranteed, and actual results may differ
materially from those projected. Factors that could cause actual results to
differ materially from those projected include, but are not limited to, the
following: (1) a slowdown in the recovery of North American construction and
industrial activities, which decreased during the economic downturn and
significantly affected our revenues and profitability, may reduce demand for
equipment and prices that we can charge; (2) a decrease in levels of
infrastructure spending, including lower than expected government funding for
such projects; (3) our highly leveraged capital structure, which 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; (4) restrictive covenants in our debt agreements, which could
limit our financial and operational flexibility; (5) noncompliance with
covenants in our debt agreements, which could result in termination of our
credit facilities and acceleration of outstanding borrowings; (6) inability to
access the capital that our business may require; (7)inability to manage
credit risk adequately or to collect on contracts with customers; (8)
incurrence of impairment charges; (9)the outcome or other potential
consequences of litigation and other claims and regulatory matters relating to
our business, including certain claims that our insurance may not cover; (10)
an increase in our loss reserves to address business operations or other
claims and any claims that exceed our established levels of reserves;
(11)incurrence of additional costs and expenses (including indemnification
obligations) in connection with litigation, regulatory or investigatory
matters; (12) increases in our maintenance and replacement costs as we age our
fleet, and decreases in the residual value of our equipment; (13) inability to
sell our new or used fleet in the amounts, or at the prices, we expect;
(14)challenges associated with past or future acquisitions, such as
undiscovered liabilities, costs, integration issues and/or the inability to
achieve the cost and revenue synergies expected; (15)management turnover and
inability to attract and retain key personnel; (16)our rates and time
utilization being less than anticipated; (17)our costs being more than
anticipated, the inability to realize expected savings in the amounts or time
frames planned and the inability to obtain key equipment and supplies; (18)
disruptions in our information technology systems; (19)competition from
existing and new competitors; (20)labor difficulties and labor-based
legislation affecting labor relations and operations generally; and (21) the
costs of complying with environmental and safety regulations. For a more
complete description of these and other possible risks and uncertainties,
please refer to our Annual Report on Form 10-K for the year ended December 31,
2012, as well as to our subsequent filings with the SEC. The forward-looking
statements contained herein speak only as of the date hereof, and we make no
commitment to update or publicly release any revisions to forward-looking
statements in order to reflect new information or subsequent events,
circumstances or changes in expectations.

                                                   
UNITED RENTALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In millions, except per share amounts)
                                                          
                           Three Months Ended             Year Ended
                           December 31,                   December 31,
                           2012         2011           2012         2011
Revenues:
Equipment rentals          $ 1,036         $ 589          $ 3,455         $ 2,151
Sales of rental            141             93             399             208
equipment
Sales of new               29              24             93              84
equipment
Contractor supplies        23              19             87              85
sales
Service and other          20             21            83             83      
revenues
Total revenues             1,249          746           4,117          2,611   
Cost of revenues:
Cost of equipment
rentals, excluding         401             252            1,392           992
depreciation
Depreciation of            208             111            699             423
rental equipment
Cost of rental             99              69             274             142
equipment sales
Cost of new                23              19             74              67
equipment sales
Cost of contractor         17              13             62              58
supplies sales
Cost of service and        6              7             29             31      
other revenues
Total cost of              754            471           2,530          1,713   
revenues
Gross profit               495             275            1,587           898
Selling, general and
administrative             176             109            588             407
expenses
RSC merger related         13              19             111             19
costs
Restructuring charge       6               14             99              19
Non-rental
depreciation and           64             18            198            57      
amortization
Operating income           236             115            591             396
Interest expense,          196             58             512             228
net
Interest
expense—subordinated       1               2              4               7
convertible
debentures, net
Other income, net          —              (1     )       (13     )       (3      )
Income from
continuing
operations before          39              56             88              164
(benefit) provision
for income taxes
(Benefit) provision        (2      )       28            13             63      
for income taxes
Income from
continuing                 $ 41            $ 28           $ 75            $ 101
operations
Income from
discontinued               $ —            $ 1           $ —            $ —     
operation, net of
taxes
Net income                 $ 41           $ 29          $ 75           $ 101   
Diluted earnings per
share:
Income from
continuing                 $ 0.40          $ 0.39         $ 0.79          $ 1.38
operations
Income from
discontinued               $ —            $ —           $ —            $ —     
operation
Net income                 $ 0.40         $ 0.39        $ 0.79         $ 1.38  
                                                                                  

                                                      
UNITED RENTALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
                                                             
                                     December 31, 2012       December 31, 2011
ASSETS
Cash and cash equivalents            $    106                $    36
Accounts receivable, net             793                     464
Inventory                            68                      44
Prepaid expenses and other           111                     75
assets
Deferred taxes                       265                    104           
Total current assets                 1,343                   723
Rental equipment, net                4,966                   2,617
Property and equipment, net          428                     366
Goodwill and other intangible        4,170                   372
assets, net
Other long-term assets               119                    65            
Total assets                         $    11,026            $    4,143    
LIABILITIES AND STOCKHOLDERS’
EQUITY
Short-term debt and current          $    630                $    395
maturities of long-term debt
Accounts payable                     286                     206
Accrued expenses and other           435                    263           
liabilities
Total current liabilities            1,351                   864
Long-term debt                       6,679                   2,592
Subordinated convertible             55                      55
debentures
Deferred taxes                       1,302                   470
Other long-term liabilities          65                     59            
Total liabilities                    9,452                  4,040         
Temporary equity                     31                      39
Common stock                         1                       1
Additional paid-in capital           1,997                   487
Accumulated deficit                  (424          )         (499          )
Treasury stock                       (115          )         —
Accumulated other                    84                     75            
comprehensive income
Total stockholders’ equity           1,543                  64            
Total liabilities and                $    11,026            $    4,143    
stockholders’ equity
                                                                           

                                                
UNITED RENTALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Millions)
                                                       
                           Three Months Ended          Year Ended
                           December 31,                December 31,
                           2012        2011         2012        2011
Cash Flows From
Operating
Activities:
Net income                 $  41          $ 29         $  75          $  101
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and           272            129          897            480
amortization
Amortization of
deferred financing         6              5            23             22
costs and original
issue discounts
Gain on sales of           (42    )       (24  )       (125   )       (66    )
rental equipment
Gain on sales of           —              —            (2     )       (2     )
non-rental equipment
Gain on sale of            2              —            (8     )       —
software subsidiary
Stock compensation         9              3            32             12
expense, net
RSC merger related         13             19           111            19
costs
Restructuring charge       6              14           99             19
Loss on
extinguishment of          72             3            72             3
debt securities and
ABL amendment
Loss on retirement
of subordinated            —              1            —              2
convertible
debentures
(Decrease) increase        (21    )       23           (16    )       39
in deferred taxes
Changes in operating
assets and
liabilities:
Decrease (increase)
in accounts                8              (2   )       (86    )       (62    )
receivable
Decrease (increase)        20             14           (2     )       (3     )
in inventory
Increase in prepaid
expenses and other         (1     )       (4   )       (18    )       (15    )
assets
(Decrease) increase        (121   )       (33  )       (223   )       68
in accounts payable
Decrease in accrued
expenses and other         (38    )       (18  )       (108   )       (5     )
liabilities
Net cash provided by       226            159          721            612
operating activities
Cash Flows From
Investing
Activities:
Purchases of rental        (163   )       (143 )       (1,272 )       (774   )
equipment
Purchases of               (21    )       (12  )       (97    )       (36    )
non-rental equipment
Proceeds from sales        141            93           399            208
of rental equipment
Proceeds from sales
of non-rental              5              2            31             13
equipment
Purchases of other
companies, net of          —              (78  )       (1,175 )       (276   )
cash acquired
Proceeds from sale
of software                —             —           10            —      
subsidiary
Net cash used in           (38    )       (138 )       (2,104 )       (865   )
investing activities
Cash Flows From
Financing
Activities:
Proceeds from debt         1,127          430          6,013          1,892
Payments of debt,
including
subordinated               (1,268 )       (430 )       (4,370 )       (1,813 )
convertible
debentures
Payments of                (8     )       (16  )       (75    )       (16    )
financing costs
Proceeds from the
exercise of common         4              4            21             35
stock options
Common stock               (3     )       —            (131   )       (7     )
repurchased
Cash paid in
connection with the
4 percent                  —              —            —              (11    )
Convertible Senior
Notes and related
hedge, net
Excess tax benefits
from share-based           (1     )       —           (5     )       —      
payment
arrangements, net
Net cash (used in)
provided by                (149   )       (12  )       1,453          80
financing activities
Effect of foreign          (1     )       1           —             6      
exchange rates
Net increase
(decrease) in cash         38             10           70             (167   )
and cash equivalents
Cash and cash
equivalents at             68            26          36            203    
beginning of period
Cash and cash
equivalents at end         $  106        $ 36        $  106        $  36  
of period
Supplemental
disclosure of cash
flow information:
Cash paid for
interest, including
subordinated               $  152         $ 62         $  371         $  203
convertible
debentures
Cash paid for income       9              4            40             24
taxes, net
                                                                             

                                                     
UNITED RENTALS, INC.
SEGMENT PERFORMANCE
($ in millions)
                                                                                                 
                 Three Months Ended                         Year Ended
                 December 31,                              December 31,                         
                 2012         2011       Change       2012         2011         Change
General
Rentals
Reportable
segment
equipment        $ 961           $ 534         80.0 %       $ 3,188         $ 1,953         63.2 %
rentals
revenue
Reportable
segment
equipment        392             201           95.0 %       1,239           643             92.7 %
rentals
gross
profit
Reportable
segment
equipment        40.8    %       37.6  %       3.2pp        38.9    %       32.9    %       6.0pp
rentals
gross
margin
Trench
Safety,
Power &
HVAC
Reportable
segment
equipment        $ 75            $ 55          36.4 %       $ 267           $ 198           34.8 %
rentals
revenue
Reportable
segment
equipment        35              25            40.0 %       125             93              34.4 %
rentals
gross
profit
Reportable
segment
equipment        46.7    %       45.5  %       1.2pp        46.8    %       47.0    %       (0.2pp )
rentals
gross
margin
Total
United
Rentals
Total
equipment        $ 1,036         $ 589         75.9 %       $ 3,455         $ 2,151         60.6 %
rentals
revenue
Total
equipment
rentals          427             226           88.9 %       1,364           736             85.3 %
gross
profit
Total
equipment
rentals          41.2    %       38.4  %       2.8pp        39.5    %       34.2    %       5.3pp
gross
margin
                                                                                            

                                                    
UNITED RENTALS, INC.
DILUTED EARNINGS PER SHARE CALCULATION
(In millions, except per share data)
                                                           
                             Three Months Ended            Year Ended
                             December 31,                  December 31,
                             2012        2011           2012        2011
Numerator:
Income from continuing       $ 41           $ 28           $ 75           $ 101
operations
Convertible debt
interest—1 ^ 7/8             —             —             —             —
percent notes
Income from continuing
operations available         $ 41           $ 28           $ 75           $ 101
to common stockholders
Income from                  —             1             —             —
discontinued operation
Net income available         $ 41           $ 29           $ 75           $ 101
to common stockholders
Denominator:
Denominator for basic
earnings per                 92.7           62.7           83.0           62.2
share—weighted-average
common shares
Effect of dilutive
securities:
Employee stock options       0.8            0.7            0.7            1.0
and warrants
Convertible
subordinated notes—1 ^       0.2            1.0            —              1.0
7/8 percent
Convertible
subordinated notes—4         10.9           8.4            10.6           8.5
percent
Restricted stock units       0.6           0.6           0.5          0.6
Denominator for
diluted earnings per
share—adjusted               105.2          73.4           94.8           73.3
weighted-average
common shares
Diluted earnings per
share:
Income from continuing       $ 0.40         $ 0.39         $ 0.79         $ 1.38
operations
Income from                  —            —            —            —
discontinued operation
Net income                   $ 0.40         $ 0.39         $ 0.79         $ 1.38
                                                                            

                             UNITED RENTALS, INC.
               ADJUSTED EARNINGS PER SHARE GAAP RECONCILIATION

We define “Earnings per share from continuing operations – adjusted” as the
sum of earnings per share from continuing operations – GAAP, as reported plus
the impact of the following special items: RSC merger related costs, RSC
merger related intangible asset amortization, impact on depreciation related
to acquired RSC fleet and property and equipment, impact of the fair value
mark-up of acquired RSC fleet and inventory, pre-close RSC merger related
interest expense, impact on interest expense related to fair value adjustment
of acquired RSC indebtedness, restructuring charge, asset impairment charge,
loss on extinguishment of debt securities, including subordinated convertible
debentures, and ABL amendment, and gain on sale of software subsidiary.
Management believes adjusted earnings per share from continuing operations
provides useful information concerning future profitability. However, adjusted
earnings per share from continuing operations is not a measure of financial
performance under GAAP. Accordingly, adjusted earnings per share from
continuing operations should not be considered an alternative to GAAP earnings
per share from continuing operations. The table below provides a
reconciliation between earnings per share from continuing operations – GAAP,
as reported, and earnings per share from continuing operations – adjusted.

                                                  
                           Three Months Ended            Year Ended
                           December 31,                  December 31,
                           2012        2011           2012        2011
Earnings per share
from continuing            $ 0.40         $ 0.39         $ 0.79         $ 1.38
operations, GAAP, as
reported
After-tax impact of:
RSC merger related         0.08           0.25           0.72           0.25
costs (1)
RSC merger related
intangible asset           0.25           —              0.74           —
amortization (2)
Impact on
depreciation related
to acquired RSC            —              —              (0.03  )       —
fleet and property
and equipment (3)
Impact of the fair
value mark-up of           0.09           —              0.24           —
acquired RSC fleet
and inventory (4)
Pre-close RSC merger
related interest           —              —              0.19           —
expense (5)
Impact on interest
expense related to
fair value                 (0.01  )       —              (0.03  )       —
adjustment of
acquired RSC
indebtedness (6)
Restructuring charge       0.03           0.12           0.64           0.16
(7)
Asset impairment           0.01           0.03           0.10           0.04
charge (8)
Loss on
extinguishment of
debt securities,
including                  0.41           0.03           0.45           0.04
subordinated
convertible
debentures, and ABL
amendment (9)
Gain on sale of
software subsidiary        0.01          —             (0.05  )       —
(10)
Earnings per share
from continuing            $ 1.27        $ 0.82        $ 3.76        $ 1.87
operations- adjusted
                                                                          

(1)   Reflects transaction costs associated with the RSC acquisition.
(2)    Reflects the amortization of the intangible assets acquired in the RSC
       acquisition.
       Reflects the impact of extending the useful lives of equipment acquired
(3)    in the RSC acquisition, net of the impact of additional depreciation
       associated with the fair value mark-up of such equipment.
       Reflects additional costs recorded in cost of rental equipment sales,
       cost of equipment rentals, excluding depreciation, and cost of
(4)    contractor supplies sales associated with the fair value mark-up of
       rental equipment and inventory acquired in the RSC acquisition. The
       costs relate to equipment and inventory acquired in the RSC acquisition
       and subsequently sold.
       In March 2012, we issued $2,825 million of debt in connection with the
(5)    RSC acquisition. The pre-close RSC merger related interest expense
       reflects the interest expense recorded on this debt prior to the
       acquisition date.
(6)    Reflects a reduction of interest expense associated with the fair value
       mark-up of debt acquired in the RSC acquisition.
(7)    Reflects severance costs and branch closure charges associated with the
       RSC acquisition and our closed restructuring program.
       Primarily reflects write-offs of leasehold improvements and other fixed
(8)    assets in connection with the RSC acquisition and our closed
       restructuring program.
       Reflects losses on the extinguishment of certain debt securities,
(9)    including subordinated convertible debentures, and write-offs of debt
       issuance costs associated with the October 2011 amendment of our ABL
       facility.
(10)   Reflects a gain recognized upon the sale of a former subsidiary that
       developed and marketed software.
       

                             UNITED RENTALS, INC.
                EBITDA AND ADJUSTED EBITDA GAAP RECONCILIATION
                                (In millions)

EBITDA represents the sum of net income, income from discontinued operation,
net of taxes, (benefit) provision for income taxes, interest expense, net,
interest expense-subordinated convertible debentures, net, depreciation of
rental equipment, and non-rental depreciation and amortization. Adjusted
EBITDA represents EBITDA plus the sum of the RSC merger related costs,
restructuring charge, stock compensation expense, net, the impact of the fair
value mark-up of acquired RSC fleet and inventory and the gain on sale of
software subsidiary. These items are excluded from adjusted EBITDA internally
when evaluating our operating performance and allow investors to make a more
meaningful comparison between our core business operating results over
different periods of time, as well as with those of other similar companies.
Management believes that EBITDA and adjusted EBITDA, when viewed with the
Company’s results under GAAP and the accompanying reconciliation, provide
useful information about operating performance and period-over-period growth,
and provide additional information that is useful for evaluating the operating
performance of our core business without regard to potential distortions.
Additionally, management believes that EBITDA and adjusted EBITDA permit
investors to gain an understanding of the factors and trends affecting our
ongoing cash earnings, from which capital investments are made and debt is
serviced. However, EBITDA and adjusted EBITDA are not measures of financial
performance or liquidity under GAAP and, accordingly, should not be considered
as alternatives to net income or cash flow from operating activities as
indicators of operating performance or liquidity. The table below provides a
reconciliation between net income and EBITDA and adjusted EBITDA.

                                                  
                             Three Months Ended          Year Ended
                             December 31,                December 31,
                             2012       2011          2012         2011
Net income                   $ 41          $ 29          $ 75            $ 101
Income from
discontinued                 —             (1    )       —               —
operation, net of
taxes
(Benefit) provision          (2    )       28            13              63
for income taxes
Interest expense, net        196           58            512             228
Interest expense –
subordinated                 1             2             4               7
convertible
debentures, net
Depreciation of rental       208           111           699             423
equipment
Non-rental
depreciation and             64           18           198            57
amortization
EBITDA (A)                   $ 508         $ 245         $ 1,501         $ 879
RSC merger related           13            19            111             19
costs (1)
Restructuring charge         6             14            99              19
(2)
Stock compensation           9             3             32              12
expense, net (3)
Impact of the fair
value mark-up of             15            —             37              —
acquired RSC fleet and
inventory (4)
Gain on sale of
software subsidiary          2            —            (8      )       —
(5)
Adjusted EBITDA (B)          $ 553        $ 281        $ 1,772        $ 929
                                                                           

      Our EBITDA margin was 40.7% and 32.8% for the three months ended
A)   December 31, 2012 and 2011, respectively, and 36.5% and 33.7% for the
      year ended December 31, 2012 and 2011, respectively.
      Our adjusted EBITDA margin was 44.3% and 37.7% for the three months
B)    ended December 31, 2012 and 2011, respectively, and 43.0% and 35.6% for
      the year ended December 31, 2012 and 2011, respectively.
      
(1)   Reflects transaction costs associated with the RSC acquisition.
(2)   Reflects severance costs and branch closure charges associated with the
      RSC acquisition and our closed restructuring program.
(3)   Represents non-cash, share-based payments associated with the granting
      of equity instruments.
      Reflects additional costs recorded in cost of rental equipment sales,
      cost of equipment rentals, excluding depreciation, and cost of
(4)   contractor supplies sales associated with the fair value mark-up of
      rental equipment and inventory acquired in the RSC acquisition. The
      costs relate to equipment and inventory acquired in the RSC acquisition
      and subsequently sold.
(5)   Reflects a gain recognized upon the sale of a former subsidiary that
      developed and marketed software.
      

                                                
UNITED RENTALS, INC.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO EBITDA AND
ADJUSTED EBITDA
(In millions)
                                                       
                           Three Months Ended          Year Ended
                           December 31,                December 31,
                           2012       2011          2012         2011
Net cash provided by       $ 226         $ 159         $ 721           $ 612
operating activities
Adjustments for
items included in
net cash provided by
operating activities
but excluded from
the calculation of
EBITDA:
Income from
discontinued               —             (1    )       —               —
operation, net of
taxes
Amortization of
deferred financing         (6    )       (5    )       (23     )       (22   )
costs and original
issue discounts
Gain on sales of           42            24            125             66
rental equipment
Gain on sales of           —             —             2               2
non-rental equipment
Gain on sale of
software subsidiary        (2    )       —             8               —
(5)
RSC merger related         (13   )       (19   )       (111    )       (19   )
costs (1)
Restructuring charge       (6    )       (14   )       (99     )       (19   )
(2)
Stock compensation         (9    )       (3    )       (32     )       (12   )
expense, net (3)
Loss on
extinguishment of          (72   )       (3    )       (72     )       (3    )
debt securities and
ABL amendment (6)
Loss on retirement
of subordinated            —             (1    )       —               (2    )
convertible
debentures
Changes in assets          187           42            571             49
and liabilities
Cash paid for
interest, including
subordinated               152           62            371             203
convertible
debentures
Cash paid for income       9            4            40             24    
taxes, net
EBITDA                     $ 508         $ 245         $ 1,501         $ 879
Add back:
RSC merger related         13            19            111             19
costs (1)
Restructuring charge       6             14            99              19
(2)
Stock compensation         9             3             32              12
expense, net (3)
Impact of the fair
value mark-up of           15            —             37              —
acquired RSC fleet
and inventory (4)
Gain on sale of
software subsidiary        2            —            (8      )       —     
(5)
Adjusted EBITDA            $ 553        $ 281        $ 1,772        $ 929 
                                                                             

(1)  Reflects transaction costs associated with the acquisition of RSC.
(2)   Reflects severance costs and branch closure charges associated with the
      RSC acquisition and our closed restructuring program.
(3)   Represents non-cash, share-based payments associated with the granting
      of equity instruments.
      Reflects additional costs recorded in cost of rental equipment sales,
      cost of equipment rentals, excluding depreciation, and cost of
(4)   contractor supplies sales associated with the fair value mark-up of
      rental equipment and inventory acquired in the RSC acquisition. The
      costs relate to equipment and inventory acquired in the RSC acquisition
      and subsequently sold.
(5)   Reflects a gain recognized upon the sale of a former subsidiary that
      developed and marketed software.
      Reflects losses on the extinguishment of certain debt securities and
(6)   write-offs of debt issuance costs associated with the October 2011
      amendment of our ABL facility.
      

                             UNITED RENTALS, INC.
                      FREE CASH FLOW GAAP RECONCILIATION
                                (In millions)

We define free cash flow (usage) 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, net. Management believes that free cash
flow provides useful additional information concerning cash flow available to
meet future debt service obligations and working capital requirements.
However, free cash flow (usage) is not a measure of financial performance or
liquidity under GAAP. Accordingly, free cash flow (usage) should not be
considered an alternative to net income or cash flow from operating activities
as an indicator of operating performance or liquidity. The table below
provides a reconciliation between net cash provided by operating activities
and free cash flow (usage).

                                                     
                                   Three Months Ended       Year Ended
                                   December 31,             December 31,
                                   2012      2011          2012      2011
Net cash provided by               $  226     $ 159         $ 721      $ 612
operating activities
Purchases of rental                (163   )   (143  )       (1,272 )   (774  )
equipment
Purchases of non-rental            (21    )   (12   )       (97    )   (36   )
equipment
Proceeds from sales of             141        93            399        208
rental equipment
Proceeds from sales of             5          2             31         13
non-rental equipment
Excess tax benefits from
share-based payment                $  (1  )   $ —          $ (5   )   $ —   
arrangements, net
Free cash flow (usage)             $  187    $ 99         $ (223 )   $ 23  
                                                                             

^1 On April 30, 2012, the company completed the acquisition of RSC Holdings,
Inc. (“RSC”). The results of RSC’s operations have been combined with the
Company’s results since that date.

^2 Adjusted EPS is a non-GAAP measure that excludes the impact of the
following special items: (i) RSC merger related costs; (ii) restructuring
charge; (iii) asset impairment charge; (iv) pre-close RSC merger related
interest expense; (v) impact on interest expense related to fair value
adjustment of acquired RSC indebtedness; (vi) impact on depreciation related
to acquired RSC fleet and property and equipment; (vii) impact of the fair
value mark-up of acquired RSC fleet and inventory; (viii) RSC merger related
intangible asset amortization; (ix) the gain on sale of our software
subsidiary; and (x) the loss on extinguishment of debt securities, including
subordinated convertible debentures, and ABL amendment. See table below for
amounts.

^3 Adjusted EBITDA is a non-GAAP measure that excludes the impact of the
following special items: (i) RSC merger related costs; (ii) restructuring
charge; (iii) stock compensation expense, net; (iv) the impact of the fair
value mark-up of acquired RSC fleet and inventory; and (v) the gain on sale of
our software subsidiary. See tables below for amounts.

^4 Rental rate, time utilization and OEC calculations are based on the
American Rental Association metrics criteria; comparisons to 2011 are based on
a recast of these metrics on the same basis.

^5 The favorable impact of volume increases and rental rate increases were
partially offset by the impact of rental mix in both the fourth quarter and
the full year. Consistent with the company’s strategic focus on larger
accounts, there has been a mix shift towards monthly rentals in 2012.

^6 Used equipment margins for the 2012 fourth quarter and full year exclude
the impact of the fair value mark-up of acquired RSC fleet that was sold.

^7 As-reported basis includes the results of RSC’s operations only from April
30, 2012 forward.

Contact:

United Rentals, Inc.
Fred Bratman, 203-618-7318
Cell: 917-847-4507
fbratman@ur.com
 
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