United Rentals to Acquire Yak Access for $1.1 Billion

United Rentals, Inc. (NYSE: URI) (“United Rentals” or “the company”) today announced that it has entered into a definitive agreement to acquire Yak Access, LLC, Yak Mat, LLC and New South Access & Environmental Solutions, LLC (collectively, “Yak”) from Platinum Equity (“Platinum”) for approximately $1.1 billion in cash. The transaction is expected to close in the first quarter of 2024, subject to limited contractual conditions.

Yak is a leader in the North American matting industry with a fleet of approximately 600,000 hardwood, softwood, and composite mats providing surface protection across both construction and maintenance, repair and operations (MRO) applications. Yak predominantly serves customers in the utility and midstream verticals. For the year ended December 31, 2023, Yak generated $171 million of adjusted EBITDA on $353 million of adjusted revenue across over 40 U.S. states.

United Rentals expects to use a combination of new debt financing and existing capacity under its ABL facility to fund the transaction and related expenses.

Strong Strategic Rationale

• Yak creates a new adjacency for United Rentals’ Specialty business with scale in a large and growing segment. This combination will further the company’s ability to deliver value as a one-stop-shop for customers.
• Yak provides immediate cross-sell opportunities to both existing and new customers across construction and MRO applications.
• Yak shares many cultural similarities with United Rentals, including a customer-first business philosophy, long-term customer relationships and a strong focus on safety.

Robust Financial Drivers

• United Rentals sees significant potential to grow the matting business over the next several years, supported by attractive secular opportunities across both the energy and power markets, funded by public and private investments.
• The company expects to realize approximately $166 million in net present value of tax benefits included in the $1.1 billion purchase price.
• The company expects to realize a $7 million benefit to adjusted EBITDA, equivalent to approximately 2% of Yak’s adjusted revenue for 2023, by the end of year two after closing from cost synergies via operational efficiencies and overhead savings.
• The purchase price represents a multiple of 6.4 times adjusted EBITDA for 2023, and an adjusted purchase multiple of 5.2 times, net of tax benefits and cost synergies.
• The company expects the acquisition to be immediately accretive to earnings per share (EPS) and free cash flow (FCF) with an attractive return profile.
• The company expects a pro forma leverage ratio of approximately 1.7 times at closing, taking into account the expected debt financing to fund the acquisition and Yak’s adjusted EBITDA. This is within the company’s target range of 1.5-2.5 times.
• The transaction structure also provides for the potential for additional cash consideration to be paid to the seller, with a maximum payout of $50 million based on revenue attainment in the first two years after closing.

CEO Comments

Matthew Flannery, president and chief executive officer of United Rentals, said, “Our acquisition of Yak further diversifies and differentiates United Rentals’ Specialty business offerings while also driving shareholder returns. This newly created “Matting Solutions” business will create another adjacency for our company with scale in a large and growing market segment. In addition to its attractive profile across growth, margins and returns, this combination builds upon our Power vertical strategy, where significant investment in generation, transmission and distribution is expected over the next several decades.”

Flannery continued, “Yak meets the strategic, financial and cultural criteria we aim for in acquisitions. We expect this new line of business to augment our Specialty offerings as we continue to execute on our strategy of further differentiating ourselves by providing one-stop shop capabilities for our customers. We look forward to welcoming our new team members to the United Rentals family.”

Frank Bardonaro, CEO of Yak, said, “Yak is excited to accelerate its business potential as part of United Rentals. This combination will benefit both our customers and existing employees as our established expertise in access solutions complements the broader value proposition United Rentals offers. I’m proud of the leading company we built and am happy we found a great partner for the next chapter.”

Jacob Kotzubei, co-president of Platinum Equity and Matthew Louie, Managing Director, Platinum Equity, said in a joint statement: “Over the past six years we worked with the Yak team to transform the business and are proud that it is now a stronger and more resilient company ready for the next chapter. United Rentals is an outstanding partner and a great long-term fit for Yak going forward.”

Note Regarding Yak Financial Information and Non-GAAP Measures

Adjusted revenue and adjusted net income presented herein for Yak represent only the historical results of the entities to be acquired by United Rentals. See below for a summary of the adjustments made to calculate adjusted revenue and adjusted net income.

Yak’s EBITDA and adjusted EBITDA are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission. The company believes that these non-GAAP financial measures provide useful information about the proposed transaction; however, they should not be considered alternatives to GAAP net income as indicators of operating performance. The table below (in millions) provides a reconciliation between adjusted net income and EBITDA and adjusted EBITDA. EBITDA represents the sum of adjusted net income, depreciation and amortization, and interest expense, net (income tax expense rounded to less than $1 million and is excluded from the reconciliation). Adjusted EBITDA represents EBITDA plus the adjustments detailed below.

Advisor

Sullivan & Cromwell LLP acted as United Rentals’ legal advisor in the transaction.

About United Rentals

United Rentals, Inc. is the largest equipment rental company in the world. The company has an integrated network of 1,504 rental locations in North America, 38 in Europe, 23 in Australia and 19 in New Zealand. In North America, the company operates in 49 states and every Canadian province. The company’s approximately 26,300 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers approximately 4,800 classes of equipment for rent with a total original cost of $20.66 billion. United Rentals is a member of the Standard & Poor’s 500 Index, the Barron’s 400 Index and the Russell 3000 Index® and is headquartered in Stamford, Conn. Additional information about United Rentals is available at unitedrentals.com.

About Yak

Yak is one of the largest matting providers of ground protection and temporary roadway solutions in the United States. The company has an integrated network of more than 135 distribution points and operates in over 40 states. The company primarily serves powerline and pipeline customers, industrials, renewables, and other infrastructure related industries. The company offers a full suite of solutions, including ~600,000 hardwood, softwood, and composite mats, temporary and permanent access roads, site evaluation, design and installation of access plans, and mat removal and logistics services. Yak is headquartered in Hattiesburg, Mississippi.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. Forward-looking statements involve significant risks and uncertainties that may cause actual results to differ materially from those set forth in the statements. These statements are based on current plans, estimates and projections, and, therefore, you should not place undue reliance on them. No forward-looking statement, including any such statement concerning the completion and anticipated benefits of the proposed transaction, can be guaranteed, and actual results may differ materially from those projected. United Rentals undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about the business and future financial results of the equipment rental industry, and other legal, regulatory and economic developments. We use words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance” and similar expressions to identify these forward-looking statements that are intended to be covered by the safe harbor provisions of the PSLRA. Actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including, but not limited to, those described in the SEC reports filed by United Rentals, as well as (1) the length of time necessary to consummate the proposed transaction may be longer than anticipated; (2) problems that may arise in successfully integrating the businesses of United Rentals and Yak, including, without limitation, problems associated with the potential loss of any key employees of Yak; (3) the proposed transaction may involve unexpected costs, including, without limitation, the exposure to any unrecorded liabilities or unidentified issues that we failed to discover during the due diligence investigation of Yak or that are not covered by insurance, as well as potential unfavorable accounting treatment and unexpected increases in taxes; (4) our business may suffer as a result of uncertainty surrounding the proposed transaction, any adverse effects on our ability to maintain relationships with customers, employees and suppliers, or the inherent risk associated with entering a geographic area or line of business in which we have no or limited experience; (5) we may not achieve the benefits we expect from the transaction, including with respect to revenue, earnings and free cash flow, the matting business and the industries we are targeting may not experience the growth or levels of investment we expect, we may not be able to realize expected tax benefits, and we may not be able to achieve anticipated synergies; and (6) the industry may be subject to future risks that are described in the “Risk Factors” sections of the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed from time to time with the SEC by United Rentals. United Rentals gives no assurance that it will achieve its expectations and does not assume any responsibility for the accuracy and completeness of the forward-looking statements.

The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the businesses of United Rentals described in the “Risk Factors” sections of the Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed from time to time with the SEC. All forward-looking statements included in this document are based upon information available to United Rentals on the date hereof; and United Rentals assumes no obligations to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. This communication is not intended to be a recommendation to buy, sell or hold securities and does not constitute an offer for the sale of, or the solicitation of an offer to buy securities in any jurisdiction, including the United States. Any such offer will only be made by means of a prospectus or offering memorandum, and in compliance with applicable securities laws.

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