URI Valens Credit Analysis – CDS 201bps, Base Case iCDS 172bps, Negative Case iCDS 240bps, 2025 5.500% Bond YTW of 5.021%, iYTW of 2.041%, Ba2 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need

• Cash bond markets are grossly overstating credit risk with a cash bond YTW of 5.021% relative to an Intrinsic YTW of 2.041%. Meanwhile, Moody’s is overstating credit risk with its Ba2 rating three notches lower than Valens’ IG4 (Baa2) rating
• Earnings Call Forensics™ analysis of the firm’s Q1 2020 earnings call (4/30) highlights that management is confident their proceeds as a percentage of original equipment cost was healthy at 53%, and that they have had a procure-to-pay, seamless, and touchless system for a couple of years
• Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. URI’s management compensation framework should drive management to focus on all three value drivers: asset utilization, margin expansion, and top-line growth, leading to Uniform ROA expansion and increased cash flows available for servicing obligations. Moreover, although most management members are not material holders of the company’s equity relative to their average annual compensation, CEO Flannery’s high equity multiples indicate that he may influence other NEOs to align with shareholders for long-term value creation