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United Rentals

URI is the equipment rental leader in market share with a US share of 13% vs. #2 Ashtead 8%, #3 Herc Rentals 3%, #4 Home Depot 2%, and #5 Ahern 1%. The remaining 73% is fragmented and subject to ongoing consolidation. Equipment rental is growing faster than equipment demand with leasing share rising in the "lease vs. buy" decision (CAGR of 5.5% over 20 years, 6.5% since 2009). Industrial and non-construction markets are 50% of URI revenues, nonresidential construction 46%, and 4% "other." M&A and organic growth both drive revenue. The deals improve competitive position across major markets, expand the suite of products to offer full service solutions, and bolster cross-selling in the combined customer base. URI deals in 2017-2018 include BlueLine ($2.1 bn, cash, announced 9/18), BakerCorp ($715 mm cash, to close in 3Q18), Neff Rentals ($1.3 bn cash,10/17), and NES Rentals ($960 mn cash, 4/17). These deals continue a legacy of M&A during this cycle that included RSC Holdings ($4.2 bn in April 2012, cash and stock) and National Pump ($780 mn April 2014, cash). (28 Sep 2018)

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United Rentals: BlueLine Closed/Updates Guidance

Worth Watching: 31 Oct 2018, 1:27 PM ET - United Rentals filed an 8K indicating that it has closed the BlueLine Rentals acquisition and provided updated guidance for FY18.  It has been a busy month for URI, which kicked off with a $1 bn 7-year term loan deal that priced at L+175 and mat ..

United Rentals: In the Market

HY Note: 24 Oct 2018, 10:48 AM ET - URI is in the market as it rolls along its M&A funding plan with the use of proceeds for the BlueLine deal along with the recent term loan. We see URI as a very solid, free cash flow generating machine with a lot of financial flexibility. 

United Rentals: Small Canadian Acquisition

Worth Watching: 22 Oct 2018, 10:58 AM ET - United Rentals announced that it entered an agreement to acquire the assets of WesternOne Rentals & Sales LP for ~$91.8 mn or CAD $120 mn.   WesternOne has 12 locations and ~330 employees in Alberta, British Columbia and Manitoba that primarily ..

United Rentals: Great Numbers, Cyclical Jitters

Earnings Note: 19 Oct 2018, 5:31 AM ET - Solid performance for URI still brought enough questions on the direction of rental pricing to give equity markets an excuse to get nervous on valuation after a good post-election run.  Credit fundamentals remain steady and solid.

United Rentals: Term Loan B Launched

HY Note: 28 Sep 2018, 2:26 PM ET - URI is getting busy on the BlueLine funding with a $1 bn Term Loan B expected to mature in October 2025.

United Rentals: Same as it Ever Was

HY Note: 10 Sep 2018, 1:23 PM ET - With the $2.1 bn cash deal for BlueLine Rental, URI continues an M&A-driven growth strategy that has been well tested and encouraged by a history of managing operational integration risks and sustaining high margins and free cash flow.

United Rentals: Not Seeing Tariff Repercussions

Earnings Note: 20 Jul 2018, 5:59 AM ET - URI delivered solid 2Q18 results and raised guidance marginally for revenues, Adj. EBITDA and capex spending for FY18.  End market demand trends remain strong and the company remains optimistic that the cycle has legs to it.  

United Rentals: Acquiring BakerCorp

HY Note: 03 Jul 2018, 4:40 AM ET - URI announced it will acquire BakerCorp for $715 mn in cash to be funded with ABL borrowings and available cash.  URI does not anticipate issuing unsecured notes for this transaction and expects to end FY18 with net leverage of ~2.5x. 

US Industrials: Macro Data Points

Sector Analysis: 12 Jun 2018, 1:59 AM ET - In this report, we tied the positive tone from Industrial management teams to select economic data points.

Parker: 3Q18 | Shifting to Market perform

Earnings Note: 26 Apr 2018, 9:13 PM ET - PH’s earnings were strong, but with the equity now under pressure and debt reduction plans nearing completion we anticipate a capital allocation change soon. We take our Outperform on the credit to a Market perform.

United Rentals: Bumpy Equity, Strong Credit

Earnings Note: 20 Apr 2018, 5:12 AM ET - With leverage heading lower, URI resumes stock buybacks and reloaded approved capacity with a $1.25 bn buyback authorization. Post-earnings, S&P upgraded URI to BB and 2nd lien debt to BBB- as URI moves up the quality spectrum. 

US Cap Goods: Event Risk = Sector Underperformance

IG Note: 21 Mar 2018, 5:23 AM ET - The Capital Goods Index has been the worst performing sector on an excess return basis year-to-date. Sector returns severely lagged the Index in January with GE and UTX being notable underperformers to date.

US Strategy: Tariffs as Repricing Event?

Strategy Analysis: 01 Mar 2018, 9:40 PM ET - The market has been building in very low odds of a trade war event, a NAFTA withdrawal, or a significant escalation of tit-for-tat trade retaliations on a broader scale.  The odds-makers just got a fresh load of input.

Section 232: The NAFTA Conundrum

Sector Analysis: 26 Feb 2018, 3:42 AM ET - Using Section 232 on Steel/Aluminum could damage supplier chains and cost structures and drive broader inflation.  A tariff gambit in such key industries could undermine the NAFTA negotiations and have immediate effects on risk pricing. 

CNHI 4Q17: Supportive Positive Trends

Earnings Note: 31 Jan 2018, 9:11 AM ET - CNHI reported results highlighting positive trends in end-market demand which contributed to better operating performance. Credit metrics continue to strengthen at the Capital Goods bellwether and we maintain our O/P on CNHI bonds.

United Rentals: Leverage Heading Lower

Earnings Note: 26 Jan 2018, 3:48 AM ET - A banner year of M&A and record revenues and EBITDA translates into sharply lower leverage forecasts for 2018 year end.  What to do with balance sheet capacity?  Stock buybacks?  M&A?  Higher capex with the right market conditions?  

US Industrial 2018 Outlook: Conglomerate Conundrum

Sector Analysis: 21 Jan 2018, 9:58 PM ET - Against the backdrop of a generally favorable global demand environment, event risk is the key 2018 credit concern for the conglomerate peer group. We focus on this topic and revisit our credit recommendations for more than two dozen firms.

CNH Industrial: Issuing New 10Y US$ Bonds

Worth Watching: 09 Nov 2017, 1:23 PM ET - CNH Industrial is issuing new 10-year US dollar bonds out of the CNH Industrial N.V. (parent) entity. CNH Industrial has one other US$ bond outstanding at the parent level, the 4.5% 8/2023 bond (Ba2/BBB -/BBB-), which trades at a spread of G+12 ..

Caterpillar: 3Q17 | Knocks the Cover off the Ball

Earnings Note: 24 Oct 2017, 8:11 PM ET - Caterpillar’s earning trajectory has been on a favorable trend line in 2017 and the trend continued into the third quarter with a set of strong results. The quarter did not change our view of the credit and we remain at a Market perform.

United Rentals: Capex Canary Revisited

Earnings Note: 20 Oct 2017, 5:12 AM ET - Rental rates finally posted positive YoY monthly increases in Aug/Sept as distinctly favorable volume variances and higher utilization lead the revenue story. Non-residential construction and industrial spending forecasts still positive.

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