Our 2019 Annual Report
Total Page:16
File Type:pdf, Size:1020Kb
2019 ANNUAL REPORT Purple Line Project United Rentals is the primary rental equipment provider for the Purple Line Light Rail Transit System project, which includes 21 stations along a 16-mile alignment extending from Bethesda to New Carrollton, Maryland These results reflect a tailwind from our Specialty Letter to our Rentals segment, which had another strong year. Rental revenue from Trench, Power and Fluid Stockholders Solutions grew by a combined 26.8% year-over- year. About a third of that growth was organic, underpinned by cross-selling and the 34 cold- United Rentals continued to perform well in starts we opened in 2019. We have another 25 2019, in what was a year of steady progress openings planned for 2020, bringing our Specialty for our company. We delivered profitable network to nearly 400 locations this year. growth, both organically and through the impact of our acquisitions. Importantly, the over $5 billion we’ve invested in acquisitions and cold-starts over the past The operating environment, while uneven, three years has enhanced our ability to deliver generally played out in our favor. Our core more value to our customers. Size is one of our construction markets continued to grow at a defining characteristics: we had a record 1,175 moderating pace, and contractor backlogs stayed locations and more than 19,000 employees at at healthy levels. By contrast, manufacturing year-end 2019. But, that’s not the goal in itself activity was more mixed, particularly parts of the — the end game is always to become a more oil and gas sector. valuable partner for our customers, and scale is a mechanism to get us there. Against this backdrop, we completed the integrations of our 2018 acquisitions — most Equally important is the pride we take in notably BakerCorp in our Specialty Rentals corporate responsibility. Our company’s intense segment and BlueLine in General Rentals. The safety culture, commitment to innovation and success of these integrations is reflected in the environmental stewardship are highly valued by nearly 15% increase in rental revenue we reported our customers. They see how we continually for 2019. At the same time, it’s important to note invest in quality and capacity, and they envision us that we increased pro forma rental revenue by as part of their future. When we offer customers 4% year-over-year, excluding the impact of the greater expertise, a safer experience, better acquisitions. digital connectivity and more ways to become productive, we open gateways to shareholder For the full year 2019, compared with 2018, value. United Rentals delivered a 15% increase in GAAP earnings per diluted share to $15.11. Adjusted EPS1 improved by 20% to $19.52. Net income increased to $1.2 billion, adjusted EBITDA1 increased to $4.4 billion, and free cash flow1, excluding merger and restructuring-related payments, increased to $1.6 billion after capex. Return on invested capital was 10.4%, meaningfully higher than our weighted average cost of capital. Our scale also has a positive impact on corporate While our guidance provides an important sustainability. Our larger organization is more framework in the short-term, the priority of our diverse than in the past — that’s important to our leadership team is to manage the business for the culture. The causes supported by our employees optimal balance of growth, margin, returns and free range from the United Compassion Fund and cash flow over time. We remain open to all possible emergency response in our communities, to avenues for value creation, including investing in employment of military veterans, women’s rights strategic initiatives that have the potential to be and diversity in construction. When we build more accretive to our stakeholders in the long-term. capacity for growth, we also expand our capacity to do good. Going forward, the entire team is focused on unlocking the value of this big engine we’ve built. Discipline and resilience We’ve shown that we can operate as a disciplined, Looking at 2020, we expect to gain more ground resilient company capable of generating returns in a cycle that’s not without its challenges, but across cycles. That’s what our investors expect, one that should continue to provide a growth and that’s what we’ll deliver. environment this year. No company can control the operating environment, but United Rentals has the March 24, 2020 ability to continuously improve the business from the inside out. It’s in our nature to strive for more. Matthew J. Flannery Michael J. Kneeland President and Chief Chairman of the Board Our guidance for full year 2020 is for total revenue Executive Officer in the range of $9.4 billion to $9.8 billion, and adjusted EBITDA of $4.35 billion to $4.55 billion. We expect net rental capex to be between $1.05 billion and $1.35 billion, after gross purchases of $1.9 billion to $2.2 billion. We’re guiding to net cash provided by operating activities in the range of $2.85 billion to $3.35 billion. Free cash flow, excluding merger and restructuring- related payments, is expected to be between $1.6 billion and $1.8 billion in 2020. Given this outlook, and our strong free cash flow generation in 2019, we announced our intention to return $1.5 billion to our investors. This includes a new $500 million share repurchase program, with the remainder available to pay down debt. 1Adjusted EPS, adjusted EBITDA and free cash flow are non-GAAP measures. Please see the reconciliation of these measures to the comparable GAAP measures contained in the “Management Discussion and Analysis of Financial Condition and Results of Operations” section in the accompanying Annual Report on Form 10-K for the year ended December 31, 2019, and in our fiscal 2019 earnings press release furnished on Form 8-K with the Securities and Exchange Commission on January 29, 2020. Directors and Officers Board of Directors Executive Officers Irene Moshouris Brent R. Kuchynka Todd M. Hayes Senior Vice President Vice President Vice President Michael J. Kneeland Matthew J. Flannery Treasurer Corporate Fleet Trench Safety Region Chairman President and Chief Management Executive Officer Kevin C. Parr John J. Humphrey Bobby J. Griffin (3) Senior Vice President Anthony S. Leopold Vice President Lead Independent Director Jessica T. Graziano Operations Vice President Mid-Atlantic Region Executive Vice President Market Development José B. Alvarez (3, 4) and Chief Financial Officer David C. Scott Thomas P. Jones Senior Lecturer Senior Vice President Ty “TJ” Mahoney Vice President Harvard Business School Dale A. Asplund Specialty Operations Vice President Onsite Services Executive Vice President Supply Chain Marc A. Bruno (2, 3) and Chief Operating Officer Norton Turner Jr. William A. Kiker Chief Operating Officer Senior Vice President Gordon McDonald Vice President U.S. Food & Facilities Paul I. McDonnell Services and Advanced Vice President Pump Solutions Aramark Corporation Executive Vice President Solutions Managed Services and Chief Commercial John “Eddie” King Matthew J. Flannery (4) Officer Corporate Vice Presidents Joseph W. Pledger Vice President President and Vice President Gulf South Region Chief Executive Officer Craig A. Pintoff Tomer Barkan Finance Operations United Rentals, Inc. Executive Vice President Vice President Donald “Chad” Matter Chief Administrative and Planning and Analysis Daniel C. Sparks Vice President Kim Harris Jones (1, 2) Legal Officer Vice President Industrial Region Director Christopher P. Carmolingo Sales Operations and Jeffrey J. Fenton Vice President Support Jeffrey S. McGinnis Terri L. Kelly (2, 4) Senior Vice President Service Operations Vice President Director Business Development Michael L. Zea South Region Gregg L. Christensen Vice President Gracia Martore (2, 3) Andrew B. Limoges Vice President Strategy Kevin M. O’Brien Director Vice President, Controller National Accounts Vice President and Principal Accounting Regional Vice Presidents Mid-Central Region Jason D. Papastavrou, Ph.D. (1, 4) Officer John J. Fahey Founder and Vice President Jason C. Barba Nicholas M. Roberts Chief Executive Officer Senior Vice Presidents Internal Audit Vice President Vice President ARIS Capital Management Carolinas Region Southeast Region Michael G. Cloer William “Ted” Grace Filippo Passerini (1, 4) Senior Vice President Vice President Robert C. Bower Craig A. Schmidt Director Operations Investor Relations Vice President Vice President Pacific West Region Northeast Region Donald C. Roof (1, 2, 3) Michael D. Durand Homer “Ned” Graham Director Senior Vice President Vice President Chris A. Burlog Jurgen M. Verschoor Operations Operations Excellence Vice President Vice President and Shiv Singh (1,4) Midwest Region Managing Director Europe Chief Marketing Officer Joli L. Gross Daniel T. Higgins Eargo, Inc. Senior Vice President Vice President John “Scott” Fisher Larry K. Worthington Jr. General Counsel Chief Information Officer Vice President Vice President and Corporate Secretary Western Canada Region Power HVAC Region David A. Hobbs Christopher K. Hummel Vice President Joshuah P. Flores Senior Vice President Safety and Employee Vice President Chief Marketing Officer Experience Tools and Industrial Solutions Kenneth B. Mettel Mitchell J. Holder Senior Vice President Vice President Performance Analytics Total Rewards Committees of the Board (1) Audit Committee, Jason D. Papastavrou, Chair (2) Compensation Committee, Donald C. Roof, Chair (3) Nominating and Corporate Governance Committee, José B. Alvarez, Chair (4) Strategy Committee, Filippo Passerini, Chair Michael J. Kneeland Bobby J. Griffin José B. Alvarez Marc A. Bruno Matthew J. Flannery Kim Harris Jones Terri L. Kelly Gracia Martore Jason D. Papastavrou Filippo Passerini Donald C. Roof Shiv Singh TOTAL RETURN TO STOCKHOLDERS The tables and graph assume that $100 was invested on December 31, 2014 in shares of our common stock, shares of stock comprising the S&P 500 Index, shares comprising the Peer Group Index, and the reinvestment of any dividends. The returns of each company within each of the S&P 500 Index, and the Peer Group Index have been weighted annually for their respective stock market capitalization.