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Business Combinations | 6 Months Ended
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Jun. 30, 2022
Business Combination and Asset Acquisition [Abstract] |
Business Combinations | Business Combinations 2022 Business Combinations On April 19, 2022, the Company completed the acquisition of substantially all of the assets of Cloverdale Equipment Company ("Cloverdale"). Cloverdale was a full-service general equipment rental company comprising of approximately 120 employees and four locations serving industrial and construction customers with core operations in the metropolitan areas of Detroit and Grand Rapids, Michigan; Cleveland, Ohio; and Pittsburgh, Pennsylvania. The aggregate consideration was approximately $178.2 million. The acquisition and related fees and expenses were funded through available cash and drawings on the senior secured asset-based revolving credit facility. The following table summarizes the purchase price allocation of the assets acquired and liabilities assumed (in millions):
| Cloverdale
Accounts receivable | $ | 7.6 |
Other current assets | 1.7
Rental equipment | 125.2
Property and equipment | 4.2
Intangibles(a) | 10.9
Total identifiable assets acquired | 149.6
Current liabilities | 2.0
Net identifiable assets acquired | 147.6
Goodwill(b) | 30.6
Net assets acquired | $ | 178.2 |
(a) The following table reflects the fair values and useful lives of the acquired intangible assets identified (in millions):
| Cloverdale |  | Life (years)
Customer relationships | $ | 10.2 |  |  | 10
Non-compete agreements | 0.7 |  |  | 5
| $ | 10.9 |  |  |
(b) The level of goodwill that resulted from the acquisitions is primarily reflective of operational synergies that the Company expects to achieve that are not associated with identifiable assets, the value of Cloverdale's assembled workforce and new customer relationships expected to arise from the acquisition. All of the goodwill is expected to be deductible for income tax purposes. The assets and liabilities for Cloverdale were recorded as of April 19, 2022 and the results of operations have been included in the Company's consolidated results of operations since that date. Total revenue and income before taxes for Cloverdale included in the consolidated statement of operations since the acquisition date are $11.9 million and $1.8 million, respectively. In addition to the acquisition of Cloverdale, the Company completed the acquisitions of three companies, totaling 3 locations including Southern Equipment Rental, Harris Diversified, LLC, and Kilowatt Boy, Inc. during the first quarter of 2022 and five companies totaling 5 locations including All Trade Rentals, Inc., Absolute Rental & Supply, Inc., Single Source Rentals Ltd., Kropp Equipment, Inc., and Colvin's Inc. during the second quarter of 2022. 2021 Business Combinations On August 30, 2021, the Company completed the acquisition of substantially all of the assets of Contractors Building Supply Co. LLC ("CBS"). CBS was a full-service general equipment rental company comprising approximately 190 employees and twelve locations serving construction and industrial customers throughout Texas, as well as a location in New Mexico and Tennessee. The acquisition expanded the Company's presence in Texas to 38 physical locations, which collectively provide general and specialty equipment rental solutions and related services. The aggregate consideration was approximately $190.3 million. The acquisition and related fees and expenses were funded through available cash and drawings on the senior secured asset-based revolving credit facility. On November 15, 2021, the Company completed the acquisition of substantially all of the assets of Rapid Equipment Rental Limited ("Rapid"). Rapid was a full-service general equipment rental company comprising approximately 110 employees and seven locations serving construction and industrial customers throughout the Greater Toronto Area. The aggregate consideration was approximately $75.4 million and is subject to a potential working capital adjustment. The acquisition and related fees and expenses were funded through available cash and drawings on the senior secured asset-based revolving credit facility. There have been no material adjustments to the purchase price allocations of CBS or Rapid during the six months ended June 30, 2022. Throughout 2021, the Company also completed the acquisitions of nine additional companies, totaling 14 locations, which included San Mateo Rentals and Jim-N-I Rentals, Inc., Dwight Crane Ltd. along with its U.S. based affiliate, LRX LLC, Reliable Equipment, LLC, SkyKing Lift, Inc., Atlantic Aerial Inc., Central Valley Shoring, Inc., Priority Rental LLC and Temp-Power, Inc. Pro Forma Supplementary Data The unaudited pro forma supplementary data presented in the table below (in millions) gives effect to the acquisitions of Cloverdale, CBS, and Rapid as if they had been included in the Company's condensed consolidated results for the entire period reflected. The unaudited pro forma supplementary data is provided for informational purposes only and is not indicative of the Company's results of operations had the acquisitions been included for the periods present, nor is it indicative of the Company's future results.
| Three Months Ended June 30, 2022
| Herc | Cloverdale | Total
Historic/pro forma total revenues | $ | 640.4 |  | $ | 2.6 |  | 643.0 |
Historic/combined pretax income | $ | 97.5 |  | 1.6 |  | 99.1 |
Pro forma adjustments to consolidated pretax income: |  |  |
Impact of fair value adjustments/useful life changes on depreciation(a) |  | 0.4 |  | 0.4 |
Intangible asset amortization(b) |  | (0.4) |  | (0.4) |
Interest expense(c) |  | (0.2) |  | (0.2) |
Elimination of historic interest(d) |  | 0.1 |  | 0.1 |
Elimination of merger related costs(e) |  | 0.1 |  | 0.1 |
Pro forma pretax income |  |  | $ | 99.1 |
| Six Months Ended June 30, 2022
| Herc | Cloverdale | Total
Historic/pro forma total revenues | $ | 1,207.7 |  | $ | 18.4 |  | 1,226.1 |
Historic/combined pretax income | $ | 164.6 |  | 11.4 |  | 176.0 |
Pro forma adjustments to consolidated pretax income: |  |  |
Impact of fair value adjustments/useful life changes on depreciation(a) |  | 2.2 |  | 2.2 |
Intangible asset amortization(b) |  | (0.4) |  | (0.4) |
Interest expense(c) |  | (1.0) |  | (1.0) |
Elimination of historic interest(d) |  | 0.9 |  | 0.9 |
Elimination of merger related costs(e) |  | 0.6 |  | 0.6 |
Pro forma pretax income |  |  | $ | 178.3 |
| Three Months Ended June 30, 2021
| Herc | CBS | Rapid | Cloverdale | Total
Historic/pro forma total revenues | $ | 490.9 |  | $ | 16.1 |  | $ | 6.3 |  | $ | 14.7 |  | $ | 528.0 |
Historic/combined pretax income | $ | 61.8 |  | 2.4 |  | (3.1) |  | 3.9 |  | 65.0 |
Pro forma adjustments to consolidated pretax income: |  |  |  |  |
Impact of fair value adjustments/useful life changes on depreciation(a) |  | 1.1 |  | (1.0) |  | 2.1 |  | 2.2 |
Intangible asset amortization(b) |  | (1.2) |  | (0.4) |  | (0.3) |  | (1.9) |
Interest expense(c) |  | (0.6) |  | (0.3) |  | (0.6) |  | (1.5) |
Elimination of historic interest(d) |  | 0.4 |  | 0.3 |  | 0.2 |  | 0.9 |
Elimination of merger related costs(e) |  | 0.1 |  | 0.1 |  | — |  | 0.2 |
Pro forma pretax income |  |  |  |  | $ | 64.9 |
| Six Months Ended June 30, 2021
| Herc | CBS | Rapid | Cloverdale | Total
Historic/pro forma total revenues | $ | 944.7 |  | $ | 32.2 |  | $ | 12.0 |  | $ | 28.4 |  | $ | 1,017.3 |
Historic/combined pretax income | $ | 102.9 |  | 4.8 |  | (1.2) |  | 5.1 |  | 111.6 |
Pro forma adjustments to consolidated pretax income: |  |  |  |  |
Impact of fair value adjustments/useful life changes on depreciation(a) |  | 2.0 |  | (2.0) |  | 2.9 |  | 2.9 |
Intangible asset amortization(b) |  | (2.5) |  | (0.9) |  | (0.7) |  | (4.1) |
Interest expense(c) |  | (1.2) |  | (0.6) |  | (1.2) |  | (3.0) |
Elimination of historic interest(d) |  | 0.8 |  | 0.6 |  | 0.5 |  | 1.9 |
Elimination of merger related costs(e) |  | 0.2 |  | 0.2 |  | — |  | 0.4 |
Pro forma pretax income |  |  |  |  | $ | 109.7 |
(a) Depreciation of rental equipment was adjusted for the fair value at acquisition and changes in useful lives of equipment acquired. (b) Intangible asset amortization was adjusted to include amortization of the acquired intangible assets. (c) As discussed above, the Company funded the Cloverdale, CBS and Rapid acquisitions primarily using drawings on its senior secured asset-based revolving credit facility. Interest expense was adjusted to reflect interest on such borrowings. (d) Historic interest on debt that is not part of the combined entity was eliminated. (e) Merger related direct costs primarily comprised of financial and legal advisory fees associated with the Cloverdale, CBS and Rapid acquisitions were eliminated as they were assumed to have been recognized prior to the pro forma acquisition date.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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