United Rentals to lower debt ratios

By Murray Pollok03 June 2019

United Rentals is changing its capital allocation strategy, lowering its target leverage ratio to between 2.0 and 3.0 from the 2.5 - 3.5 range used previously. United said the evolution of its business and its “durable cash flow” gave it the opportunity to support its growth initiatives while reducing leverage.

The company expects to end the year with a net leverage ratio of approximately 2.5, which compares to 2.9 on 31 March this year. The ratio is calculated as total debt (net of cash) divided by adjusted EBITDA.

United has in the past used its leverage range over the business cycle, with higher debt ratios during the trough of the market and the lower ratios at the peak. (Maximum capital expenditure typically takes place during the mid-cycle, with CapEx reducing as the market peaks and then declines.)

United rentals

Matthew Flannery, CEO of United Rentals, said, “Over the last decade our capital allocation strategy has served our company and our investors well. This change is consistent with other actions we’ve taken to deploy our capital with a balanced approach to grow our business, enhance our cash flows and improve financial flexibility.

“The evolution of our business, and the resulting durable cash flow, provides us the further opportunity to both fully support our growth initiatives and reduce our financial leverage.”

Jessica Graziano, the company’s CFO, said, “We remain focused on exercising strong capital stewardship to drive sustainable shareholder value. Today’s announcement reflects the culmination of an extensive six-month review of our capital allocation strategy.

“We expect this change in leverage to lower our beta and potentially unlock value for our shareholders without hindering our ability to continue to invest in growth.”

United reaffirmed its 2019 financial guidance and said it was committed to completing its current US$1.25 billion share repurchase program.

Delivered directly to your inbox, Access, Lift & Handlers Newsletter features the pick of the breaking news stories, product launches, show reports and more from KHL's world-class editorial team.
Featured Training From Easybook
NYC SST Online Training

The clock is ticking… Construction workers in New York City – have you fulfilled your required Site Safety Training (SST)? Get your SST card online now

Latest Events
ALH Conference program announced
The full ALH Conference program has been announced for the Sept. 14 rental and access event in Chicago
Registration open for ALH Conference
Registration is now open for the ALH Conference set for Sept. 14 in Chicago with presentations to be given by Larry Silber, Matthew Elvin, Rob Messina and more
Full ALH Conference speaker lineup announced
Larry Silber, Herc Rentals CEO, to give keynote at this year’s ALH Conference on September 14
Off-Highway Research

The gold standard in market research

Off-Highway Research offers a library of more than 200 regularly updated reports, providing forensic detail on key aspects of the construction equipment industry.

Our detailed insights and expert analyses are used by over 500 of the world’s largest and most successful suppliers, manufacturers and distributers, to inform their strategic plans and deliver profitable growth.

Click here to visit our website

Lindsey Anderson Editor, Access, Lift & Handlers Tel: +1 312 929 4409 E-mail: lindsey.anderson@khl.com
Tony Radke Sales Manager Tel: +1 480 478 6302 E-mail: tony.radke@khl.com