Irene Moshouris SVP, Treasurer. Investor Day December 4, 2014

Transcription

1 Irene Moshouris SVP, Treasurer Investor Day December 4, 2014

2 Irene Moshouris Vice President, Treasurer Joined the company in 2006 Responsibilities include Treasury, Tax and Real Estate Avon Products, Inc. Deputy Treasurer Sterling Winthrop, Inc. and Arthur Andersen & Co. various tax and treasury positions 2

3 Our Principles: Maximizing Financial Flexibility Valuable asset base supports reasonable amount of debt High operating margins generate significant cash flow/dollar of revenue Asset base can be monetized to support cash flow requirements Debt maturities timed to avoid excessive refinancing needs in single year Maintain diversified funding sources: Secured, unsecured, hybrids Access to alternative investor base No reliance on one investor base No single maturity of a funding source should be too large Preserves a margin of safety vs. covenants Supports Organic Growth, M&A and Return to Stockholders 3

4 Ample Liquidity and No Significant Near-Term Maturities $ Millions $2,300 Over $1B in ABL capacity and cash creating ample liquidity to grow the business $584 $550 A/R Securitization $550 A/R Securitization Used Used $ % $ % Convert. Convert. $908 $908 ABL ABL Unused Unused $1,392* $1,392 * ABL Used ABL Used Subordinated Note callable in September 2015 $ % 5.75% Secured Secured $1,500 $ % $ % Unsecured Unsecured $750 $ % 8.375% Sub Sub Note callable in February 2016 $ % 8.25% Unsecured $1,325 $ % Unsecured 7.625% 6.125% 6.125% Unsecured Unsecured Unsecured $ % 5.75% Unsecured Unsecured Monitor Markets to Opportunistically Refinance Debt Note: As of September 30, Principal amounts only, no OID or premium included. *Includes $56M in Letters of Credit. 4

5 Expect to Generate about $2.5B in Free Cash Flow* $ Millions $1,000+ $421 $500 $600+ $ Actual Forecast End Market Strength Contributing to Powerful FCF *Excludes merger and restructuring expenses. Merger and restructuring expenses were $38M in 2013 and $16M for the nine months ended September 30, Information reconciling free cash flow to net cash provided by operating activities for 2013 and for the nine months ended September 30, 2014 is provided at the end of this presentation. 5

6 Assumptions Driving FCF Outlook Gross rental CapEx spend of about $1.7B; net rental CapEx spend of $1.2B for the next 3 years 3%-4% rental rate growth in 2015 and 3% thereafter Cash Taxes Remaining Federal NOLs utilized in 2015 About $225M cash taxes in 2015 About $200M incrementally both in 2016 and 2017 Cash Interest Range of $450M-$475M in 2015, 2016 and 2017 Disciplined Fleet Growth With Continued Rate Progression 6

7 Capital Allocation Strategy New $750M Share Repurchase Program Managing Leverage Organic Invest in Growth M&A Return Cash to Stockholders Target leverage range over the cycle of 2.5x 3.5x Forecasted net leverage* of 2.9x at December 31, 2014 Credit ratings of BBby S&P and Ba3 by Moody s Continued organic investments to support growth and boost productivity Opened 18 specialty branches in 2013 with plans of approximately 17 additional openings in 2014 Balanced strategy creates flexibility to pursue strategic assets as opportunities arise Expanded role in specialty with completion of National Pump acquisition in April 2014 Will complete $500M program by year-end 2014 Initiate new $750M share repurchase program over 18 month period, with $500M of purchases in 2015 Investing in Growth While Managing Leverage and Returning Cash to Stockholders *Leverage ratio calculated as total debt, net of cash, excluding original issuance discounts and premiums divided by adjusted EBITDA. 7

8 Leverage Ratio Continues Decline Dry Powder Actual Forecast 2.5x 3.5x Target Leverage Range of the Cycle Lower End of Target Range in 2015 (1) Leverage Ratio calculated as total debt and QUIPs, net of cash, excluding original issuance discounts and premiums divided by adjusted EBITDA. Assumes no M&A. (2) Pro Forma assumes RSC acquisition occurred on January 1, 2011 and excludes cost synergies. (3) Pro Forma 2012 leverage assumes RSC acquisition occurred on January 1,

9 Building a Bridge to Higher Returns* 14% 2.1% 0.3% (2.4%) 12% 10% 2.3% 0.3% 11.0% 10% Internal Hurdle Rate 8% 8.4% WACC Range 6% 4% 2% 0% 2013 Rate Fleet 2 Growth and Utilization 3 *Illustrative After tax and including goodwill Lean Fleet and Cost Inflation6 Business Mix/Other Approx 2017 (1) Assumes average rate of 3.25% over next 3 years; (2) Assumes 7% annual growth in average fleet size; (3) Assumes 20 basis points improvement per year; (4) Assumes $100M run rate EBITDA impact from Lean; (5) Assumes 2% annual inflation in average fleet purchase prices; (6) Assumes 3% annual inflation in all operating costs. 9

10 Long Term Targets Total Revenue Adjusted EBITDA ~ $6.9B - $7.3B ~ $3.6B - $3.9B ROIC ~ 11% FCF $1.0B+ Significant Growth Potential Remains 10

11 Q & A 11

12 Appendix 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. 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 is not a measure of financial performance or liquidity under GAAP. Accordingly, free cash flow 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. (in millions) Year Ended December 31, 2013 Nine Months Ended September 30, 2014 Net cash provided by operating activities $1,551 $1,466 Purchases of rental equipment (1,580) (1,484) Purchases of non-rental equipment (104) (84) Proceeds from sales of rental equipment Proceeds from sales of non-rental equipment Free cash flow $383 $312 12