MGRC McGrath RentCorp

McGrath RentCorp (“McGrath” or the “Company”) (Nasdaq: MGRC), a leading business-to-business rental company in North America, today announced total revenues from continuing operations for the quarter ended September 30, 2024 of $266.8 million, an increase of 10% compared to the third quarter of 2023. The Company reported net income from continuing operations of $149.3 million, or $6.08 per diluted share, for the third quarter of 2024, compared to net income from continuing operations of $40.4 million, or $1.65 per diluted share, for the third quarter of 2023. Excluding the $180.0 million merger termination payment received from WillScot Mobile Mini and $39.4 million in transaction costs incurred during the quarter, net of provision for income taxes, the Company reported net income from continuing operations of $45.9 million, or $1.87 per diluted share.

THIRD QUARTER 2024 YEAR-OVER-YEAR COMPANY HIGHLIGHTS (FROM CONTINUING OPERATIONS):

• Rental revenues increased 1% to $124.2 million.
• Total revenues increased 10% to $266.8 million.
• Payment on merger termination from WillScot Mobile Mini provided for $180.0 million in proceeds received by the Company, partly offset by $39.4 million in transaction costs and an increase in provision for income taxes, resulted in a $103.5 million net income contribution during the quarter, or $4.21 per diluted share.
• Adjusted EBITDA1 increased 13% to $104.0 million.
• Dividend rate of $0.475 per share for the third quarter 2024. On an annualized basis, this dividend represents a 1.8% yield on the October 23, 2024 close price of $106.23 per share.

Joe Hanna, President and CEO of McGrath, made the following comments:

“We were very pleased with our third quarter results. The 10% increase in companywide revenues was driven by higher rental operations and sales revenues.

Our modular business was the highlight for the quarter, with 9% rental revenue growth. Rental revenues grew across our commercial and education customer bases. We maintained our focus on pricing optimization, rental fleet utilization, and value-added services for our customers. Growth initiatives for Mobile Modular Plus, Site Related Services and new modular equipment sales all continued to show progress.

Portable storage demand conditions were weak, resulting in 11% lower rental revenues for the quarter, compared to a year ago. The weaker demand was broad-based across regions and was primarily a result of lower commercial construction project activity.

TRS-RenTelco experienced continued demand challenges, resulting in 10% lower rental revenues for the quarter, compared to a year ago. During the quarter we maintained disciplined new equipment capital spending and made progress with reducing the fleet size to better align with demand conditions.

I appreciate the strong commitment from the McGrath employee team who maintained their focus on disciplined execution throughout the quarter. Looking ahead, I am excited about our multi-year opportunity to increase our customer base, geographic coverage and value-added service offerings in our Modular and Portable Storage businesses."

DIVISION HIGHLIGHTS:

All comparisons presented below are for the quarter ended September 30, 2024 to the quarter ended September 30, 2023 unless otherwise indicated.

MOBILE MODULAR

For the third quarter of 2024, the Company’s Mobile Modular division reported Adjusted EBITDA of $71.4 million, an increase of $13.3 million, or 23%, when compared to the same quarter in 2023.

• Rental revenues increased 9% to $81.5 million, depreciation expense increased 11% to $10.1 million, and other direct costs decreased 3% to $20.5 million, which resulted in an increase in gross profit on rental revenues of 14% to $50.8 million.
• Rental related services revenues increased 23% to $42.4 million, primarily attributable to higher delivery and pick-up activities and higher site related services, with associated gross profit increasing 32% to $15.0 million.
• Sales revenues increased 14% to $66.0 million, primarily from higher new equipment sales. Gross margin on sales was 34% in 2024, compared to 32% in 2023, resulting in a 20% increase in gross profit on sales revenues to $22.4 million. The increase in gross profit on sales was primarily attributed to the higher new sales revenues during the quarter.
• Selling and administrative expenses increased $2.2 million, or 7%, to $34.0 million.

PORTABLE STORAGE

For the third quarter of 2024, the Company’s Portable Storage division reported Adjusted EBITDA of $10.8 million, a decrease of $1.3 million, or 10%, when compared to the same quarter in 2023.

• Rental revenues decreased 11% to $17.0 million, depreciation expense increased 10% to $1.0 million, and other direct costs decreased 38% to $1.3 million, which resulted in a decrease in gross profit on rental revenues of 9% to $14.7 million.
• Rental related services revenues were $4.4 million and gross profit on rental related services revenues was $0.1 million, which was down from $0.3 million in the third quarter of 2023.
• Sales revenues increased $0.3 million to $1.4 million, primarily from higher used equipment sales. Gross margin on sales was 36%, compared to 32% in 2023, resulting in a $0.1 million increase in gross profit on sales revenues to $0.5 million.
• Selling and administrative expenses decreased $1.2 million, or 15%, to $6.8 million during the quarter.

TRS-RENTELCO

For the third quarter of 2024, the Company’s TRS-RenTelco division reported Adjusted EBITDA of $18.9 million, a decrease of 10%, when compared to the same quarter in 2023.

• Rental revenues decreased 10% to $25.7 million, depreciation expense decreased 10%, and other direct costs increased 5%, resulting in an 18% decrease in gross profit on rental revenues to $9.4 million. The rental revenue decrease was primarily due to continued weakness in end markets, resulting in lower average rental equipment on rent compared to the prior year.
• Sales revenues decreased 13% to $7.6 million, primarily due to lower used equipment sales. Gross margin on sales was 52%, compared to 35% in 2023, resulting in a 27% increase in gross profit on sales revenues to $3.9 million.
• Selling and administrative expenses decreased 5%, to $6.6 million.

FINANCIAL OUTLOOK:

Based upon the Company's year-to-date results and current outlook for the remainder of the year, for the full-year 2024 the Company expects:

 

 

(Continuing Operations)

•

 

Total revenue:

$910 to $920 million

•

 

Adjusted EBITDA1, 2:

$345 to $351 million

•

 

Gross rental equipment capital expenditures:

$180 to $190 million

1.

Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs, other income, net and non-operating transactions. A reconciliation of actual net income to Adjusted EBITDA and Adjusted EBITDA to net cash provided by operating activities can be found at the end of this release. Adjusted EBITDA from continuing operations for the quarter ended September 30, 2023, excludes the income from discontinued operations from the divestiture of Adler Tanks. The gain on merger termination from WillScot Mobile Mini was considered a non-operating transaction and is excluded from Adjusted EBITDA.

 

2.

Information reconciling forward-looking Adjusted EBITDA to the comparable GAAP financial measures is unavailable to the Company without unreasonable effort because certain items required for such reconciliations are outside of the Company’s control and/or cannot be reasonably predicted, such as the provision for income taxes. Therefore, no reconciliation to the most comparable GAAP measures is provided. The Company provides Adjusted EBITDA guidance because it believes that Adjusted EBITDA, when viewed with the Company’s results under GAAP, provides useful information for the reasons noted in the reconciliation of actual Adjusted EBITDA to the most directly comparable GAAP measures at the end of this release.

ABOUT MCGRATH:

McGrath RentCorp (Nasdaq: MGRC) is a leading business-to-business rental company in North America with a strong record of profitable business growth. Founded in 1979, McGrath’s operations are centered on modular solutions through its Mobile Modular and Mobile Modular Portable Storage businesses. In addition, its TRS-RenTelco business offers electronic test equipment rental solutions. The Company’s rental product offerings and services are part of the circular supply economy, helping customers work more efficiently, and sustainably manage their environmental footprint. With over 40 years of experience, McGrath’s success is driven by a focus on exceptional customer experiences. This focus has underpinned the Company’s long-term financial success and supported over 30 consecutive years of annual dividend increases to shareholders, a rare distinction among publicly listed companies.

McGrath is headquartered in Livermore, California. Additional information about McGrath and its businesses is available at mgrc.com and investors.mgrc.com.

You should read this press release in conjunction with the financial statements and notes thereto included in the Company’s latest Forms 10-K, 10-Q and other SEC filings. You can visit the Company’s web site at www.mgrc.com to access information on McGrath RentCorp, including the latest Forms 10-K, 10-Q and other SEC filings.

CONFERENCE CALL NOTE:

As previously announced in its press release of September 26, 2024, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on October 24, 2024 to discuss the third quarter 2024 results. To participate in the teleconference, dial 1-800-245-3047 (in the U.S.), or 1-203-518-9765 (outside the U.S.), or to listen only, access the simultaneous webcast at the investor relations section of the Company’s website at https://investors.mgrc.com/. A replay will be available for 7 days following the call by dialing 1-800-753-9146 (in the U.S.), or 1-402-220-2705 (outside the U.S.). In addition, a live audio webcast and replay of the call may be found in the investor relations section of the Company’s website at https://investors.mgrc.com/events-and-presentations.

FORWARD-LOOKING STATEMENTS:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, regarding McGrath RentCorp’s expectations, strategies, prospects or targets are forward-looking statements. These forward-looking statements also can be identified by the use of forward-looking terminology such as “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plan,” “predict,” “project,” or “will,” or the negative of these terms or other comparable terminology. In particular, (i) Mr. Hanna’s statements about the Company’s multi-year opportunity to increase its customer base, geographic coverage and value-added service offerings in its Modular and Portable Storage businesses, and (ii) statements regarding the full year 2024 in the “Financial Outlook” section, are forward-looking.

These forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties that could cause our actual results to differ materially from those projected including: health of the education and commercial markets in our modular building division; unforeseen liabilities and integration challenges associated with the Vesta, Brekke Storage, Dixie Storage and Inland Storage acquisitions; any adverse impact of the termination of the merger with WillScot Mobile Mini; competition within the modular business; the activity levels in the semiconductor and general purpose and communications test equipment markets at TRS-RenTelco; the activity levels in commercial construction projects and impact on Portable Storage segment; continued execution of our strategic performance improvement initiatives; our ability to successfully increase prices to offset cost increases; and our ability to effectively manage our rental assets, as well as the other factors disclosed under “Risk Factors” in the Company’s Form 10-K and other SEC filings.

Forward-looking statements are made only as of the date hereof. Except as otherwise required by law, we assume no obligation to update any of the forward-looking statements contained in this press release.

MCGRATH RENTCORP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

 

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands, except per share amounts)

2024

2023

2024

2023

Revenues

 

 

 

 

 

 

 

 

Rental

$

124,203

 

$

122,686

 

$

365,708

 

$

350,773

 

Rental related services

 

47,701

 

 

40,492

 

 

111,640

 

 

101,481

 

Rental operations

 

171,904

 

 

163,178

 

 

477,349

 

 

452,254

 

Sales

 

92,508

 

 

77,115

 

 

181,992

 

 

148,576

 

Other

 

2,346

 

 

3,213

 

 

7,855

 

 

9,424

 

Total revenues

 

266,758

 

 

243,506

 

 

667,196

 

 

610,254

 

Costs and Expenses

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

Depreciation of rental equipment

 

21,981

 

 

22,069

 

 

66,512

 

 

66,499

 

Rental related services

 

32,439

 

 

28,532

 

 

78,215

 

 

71,625

 

Other

 

27,252

 

 

28,493

 

 

84,182

 

 

90,188

 

Total direct costs of rental operations

 

81,672

 

 

79,094

 

 

228,909

 

 

228,312

 

Costs of sales

 

61,107

 

 

52,878

 

 

117,625

 

 

98,431

 

Total costs of revenues

 

142,779

 

 

131,972

 

 

346,534

 

 

326,743

 

Gross profit

 

123,979

 

 

111,534

 

 

320,661

 

 

283,511

 

Expenses:

 

 

 

 

 

 

 

 

Selling and administrative expenses

 

49,297

 

 

48,508

 

 

148,764

 

 

153,032

 

Other income, net

 

—

 

 

(3,559

)

 

(9,281

)

 

(3,559

)

Income from operations

 

74,682

 

 

66,585

 

 

181,178

 

 

134,038

 

Interest expense

 

12,641

 

 

11,025

 

 

38,383

 

 

28,434

 

Foreign currency exchange (gain) loss

 

(216

)

 

42

 

 

(53

)

 

(166

)

Gain on merger termination from WillScot Mobile Mini

 

(180,000

)

 

—

 

 

(180,000

)

 

—

 

WillScot Mobile Mini transaction costs

 

39,436

 

 

—

 

 

61,157

 

 

—

 

Income from continuing operations before provision for income taxes

 

202,821

 

 

55,518

 

 

261,691

 

 

105,770

 

Provision for income taxes from continuing operations

 

53,504

 

 

15,152

 

 

68,913

 

 

25,934

 

Income from continuing operations

 

149,317

 

 

40,366

 

 

192,778

 

 

79,836

 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

Income from discontinued operations before provision for income taxes

 

—

 

 

—

 

 

—

 

 

1,709

 

Provision for income taxes from discontinued operations

 

—

 

 

—

 

 

—

 

 

453

 

Gain on sale of discontinued operations, net of tax

 

—

 

 

—

 

 

—

 

 

61,513

 

Income from discontinued operations

 

—

 

 

—

 

 

—

 

 

62,769

 

 

 

 

 

 

 

 

 

 

Net income

$

149,317

 

$

40,366

 

$

192,778

 

$

142,605

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations:

 

 

 

 

 

 

 

 

Basic

$

6.08

 

$

1.65

 

$

7.86

 

$

3.26

 

Diluted

$

6.08

 

$

1.65

 

$

7.85

 

$

3.26

 

Earnings per share from discontinued operations:

 

 

 

 

 

 

 

 

Basic

$

—

 

$

—

 

$

—

 

$

2.57

 

Diluted

$

—

 

$

—

 

$

—

 

$

2.56

 

Earnings per share:

 

 

 

 

 

 

 

 

Basic

$

6.08

 

$

1.65

 

$

7.86

 

$

5.83

 

Diluted

$

6.08

 

$

1.65

 

$

7.85

 

$

5.81

 

Shares used in per share calculation:

 

 

 

 

 

 

 

 

Basic

 

24,551

 

 

24,487

 

 

24,538

 

 

24,461

 

Diluted

 

24,567

 

 

24,525

 

 

24,564

 

 

24,527

 

Cash dividends declared per share

$

0.475

 

$

0.465

 

$

1.425

 

$

1.395

 

 

 

 

 

 

 

 

 

 

 

MCGRATH RENTCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

September 30,

December 31,

(in thousands)

2024

2023

Assets

 

 

 

 

Cash

$

4,056

 

$

877

 

Accounts receivable, net of allowance for credit losses of $2,866 at September 30, 2024 and $2,801 at December 31, 2023

 

224,529

 

 

227,368

 

Rental equipment, at cost:

 

 

 

 

Relocatable modular buildings

 

1,398,422

 

 

1,291,093

 

Portable storage containers

 

241,620

 

 

236,123

 

Electronic test equipment

 

356,979

 

 

377,587

 

 

 

1,997,021

 

 

1,904,803

 

Less: accumulated depreciation

 

(605,339

)

 

(575,480

)

Rental equipment, net

 

1,391,682

 

 

1,329,323

 

Property, plant and equipment, net

 

195,593

 

 

169,114

 

Inventories

 

22,285

 

 

15,425

 

Prepaid expenses and other assets

 

67,376

 

 

87,364

 

Intangible assets, net

 

56,891

 

 

64,588

 

Goodwill

 

323,224

 

 

323,224

 

Total assets

$

2,285,636

 

$

2,217,283

 

Liabilities and Shareholders' Equity

 

 

 

 

Liabilities:

 

 

 

 

Notes payable

$

608,562

 

$

762,975

 

Accounts payable

 

76,240

 

 

58,760

 

Accrued liabilities

 

109,367

 

 

108,763

 

Deferred income

 

123,925

 

 

111,428

 

Deferred income taxes, net

 

273,482

 

 

241,555

 

Total liabilities

 

1,191,576

 

 

1,283,481

 

Shareholders’ equity:

 

 

 

 

Common stock, no par value - Authorized 40,000 shares

 

 

 

 

Issued and outstanding - 24,551 shares as of September 30, 2024 and 24,496 shares as of December 31, 2023

 

113,989

 

 

111,122

 

Retained earnings

 

980,244

 

 

822,796

 

Accumulated other comprehensive loss

 

(173

)

 

(116

)

Total shareholders’ equity

 

1,094,060

 

 

933,802

 

Total liabilities and shareholders’ equity

$

2,285,636

 

$

2,217,283

 

 

 

 

 

 

 

MCGRATH RENTCORP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

Nine Months Ended September 30,

(in thousands)

2024

2023

Cash Flows from Operating Activities:

 

 

 

 

Net income

$

192,778

 

$

142,605

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

80,824

 

 

81,842

 

Deferred income taxes

 

31,927

 

 

(30,018

)

Provision for credit losses

 

1,437

 

 

1,794

 

Share-based compensation

 

6,949

 

 

5,273

 

Gain on sale of property, plant and equipment

 

(9,281

)

 

(3,559

)

Gain on sale of discontinued operations

 

—

 

 

(61,513

)

Gain on sale of used rental equipment

 

(25,185

)

 

(22,964

)

Foreign currency exchange gain

 

(53

)

 

(166

)

Amortization of debt issuance costs

 

6

 

 

6

 

Change in:

 

 

 

 

Accounts receivable

 

1,402

 

 

(27,733

)

Inventories

 

(6,860

)

 

(1,988

)

Prepaid expenses and other assets

 

19,988

 

 

(5,402

)

Accounts payable

 

30,562

 

 

22,513

 

Accrued liabilities

 

605

 

 

10,305

 

Deferred income

 

12,497

 

 

7,908

 

Net cash provided by operating activities

 

337,596

 

 

118,903

 

Cash Flows from Investing Activities:

 

 

 

 

Proceeds from sale of discontinued operations

 

—

 

 

268,012

 

Purchases of rental equipment

 

(167,269

)

 

(171,322

)

Purchases of property, plant and equipment

 

(36,070

)

 

(16,448

)

Cash paid for acquisition of businesses

 

—

 

 

(458,315

)

Cash paid for acquisition of business assets

 

—

 

 

(3,474

)

Proceeds from sales of used rental equipment

 

50,270

 

 

49,405

 

Proceeds from sales of property, plant and equipment

 

12,251

 

 

595

 

Net cash used in investing activities

 

(140,818

)

 

(331,547

)

Cash Flows from Financing Activities:

 

 

 

 

Net (payments) borrowings under bank lines of credit

 

(154,420

)

 

178,892

 

Borrowings under term note agreement

 

—

 

 

75,000

 

Taxes paid related to net share settlement of stock awards

 

(4,082

)

 

(6,100

)

Payment of dividends

 

(35,097

)

 

(34,168

)

Net cash (used in) provided by financing activities

 

(193,599

)

 

213,624

 

Effect of foreign currency exchange rate changes on cash

 

—

 

 

9

 

Net increase in cash

 

3,179

 

 

989

 

Cash balance, beginning of period

 

877

 

 

957

 

Cash balance, end of period

$

4,056

 

$

1,946

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

Gain on merger termination, net of transaction costs, presented under net cash provided by operating activities

$

118,843

 

$

—

 

Interest paid, during the period

$

40,338

 

$

27,818

 

Net income taxes (refunded) paid, during the period

$

(3,826

)

$

9,547

 

Dividends accrued during the period, not yet paid

$

12,241

 

$

12,014

 

Rental equipment acquisitions, not yet paid

$

3,333

 

$

5,765

 

 

 

 

 

 

 

MCGRATH RENTCORP

BUSINESS SEGMENT DATA (unaudited)

Three months ended September 30, 2024

 

 

 

 

(dollar amounts in thousands)

Mobile Modular

 

Portable Storage

 

TRS-RenTelco

 

Enviroplex

 

Consolidated

Revenues

 

 

 

 

 

 

 

 

Rental

$

81,508

 

$

17,040

 

$

25,655

 

$

—

 

$

124,203

 

Rental related services

 

42,396

 

 

4,405

 

 

900

 

 

—

 

 

47,701

 

Rental operations

 

123,904

 

 

21,445

 

 

26,555

 

 

—

 

 

171,904

 

Sales

 

65,994

 

 

1,411

 

 

7,604

 

 

17,499

 

 

92,508

 

Other

 

1,509

 

 

195

 

 

642

 

 

—

 

 

2,346

 

Total revenues

 

191,407

 

 

23,051

 

 

34,801

 

 

17,499

 

 

266,758

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

Depreciation

 

10,124

 

 

1,006

 

 

10,851

 

 

—

 

 

21,981

 

Rental related services

 

27,366

 

 

4,280

 

 

793

 

 

—

 

 

32,439

 

Other

 

20,549

 

 

1,327

 

 

5,376

 

 

—

 

 

27,252

 

Total direct costs of rental operations

 

58,039

 

 

6,613

 

 

17,020

 

 

—

 

 

81,672

 

Costs of sales

 

43,595

 

 

906

 

 

3,688

 

 

12,918

 

 

61,107

 

Total costs of revenues

 

101,634

 

 

7,519

 

 

20,708

 

 

12,918

 

 

142,779

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

Rental

 

50,835

 

 

14,707

 

 

9,428

 

 

—

 

 

74,970

 

Rental related services

 

15,030

 

 

125

 

 

107

 

 

—

 

 

15,262

 

Rental operations

 

65,865

 

 

14,832

 

 

9,535

 

 

—

 

 

90,232

 

Sales

 

22,399

 

 

505

 

 

3,916

 

 

4,581

 

 

31,401

 

Other

 

1,509

 

 

195

 

 

642

 

 

—

 

 

2,346

 

Total gross profit

 

89,773

 

 

15,532

 

 

14,093

 

 

4,581

 

 

123,979

 

Selling and administrative expenses 6

 

34,028

 

 

6,790

 

 

6,627

 

 

1,851

 

 

49,296

 

Other income

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Income from operations

$

55,745

 

$

8,742

 

$

7,466

 

$

2,730

 

 

74,683

 

Interest expense

 

 

 

 

 

 

 

 

(12,641

)

Foreign currency exchange gain

 

 

 

 

 

 

 

 

216

 

Gain on merger termination from WillScot Mobile Mini

 

 

 

 

 

 

 

 

180,000

 

WillScot Mobile Mini transaction costs

 

 

 

 

 

 

 

 

(39,436

)

Provision for income taxes

 

 

 

 

 

 

 

 

(53,504

)

Net income

 

 

 

 

 

 

 

$

149,317

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

Adjusted EBITDA 1

$

71,420

 

$

10,796

 

$

18,945

 

$

2,822

 

$

103,983

 

Average rental equipment 2

$

1,240,950

 

$

229,231

 

$

362,431

 

 

 

 

Average monthly total yield 3

 

2.19

%

 

2.48

%

 

2.36

%

 

 

 

Average utilization 4

 

77.1

%

 

62.8

%

 

57.3

%

 

 

 

Average monthly rental rate 5

 

2.84

%

 

3.94

%

 

4.12

%

 

 

 

1.

Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs and other income, net.

2.

Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.

3.

Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.

4.

Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.

5.

Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

6.

During the period ended September 30, 2024, the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement were significant. Due to this determination, the Company has separately reported these transaction costs in the Company's Corporate segment and excluded such costs from Selling and administrative expenses.

 

MCGRATH RENTCORP

BUSINESS SEGMENT DATA (unaudited)

Three months ended September 30, 2023

 

 

 

 

(dollar amounts in thousands)

Mobile Modular

 

Portable Storage

 

TRS-RenTelco

 

Enviroplex

 

Consolidated

Revenues

 

 

 

 

 

 

 

 

Rental

$

74,796

 

$

19,232

 

$

28,658

 

$

—

 

$

122,686

 

Rental related services

 

34,429

 

 

5,287

 

 

776

 

 

—

 

 

40,492

 

Rental operations

 

109,225

 

 

24,519

 

 

29,434

 

 

—

 

 

163,178

 

Sales

 

57,723

 

 

1,144

 

 

8,733

 

 

9,515

 

 

77,115

 

Other

 

1,908

 

 

363

 

 

942

 

 

—

 

 

3,213

 

Total revenues

 

168,856

 

 

26,026

 

 

39,109

 

 

9,515

 

 

243,506

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

Depreciation

 

9,123

 

 

914

 

 

12,032

 

 

—

 

 

22,069

 

Rental related services

 

23,033

 

 

4,894

 

 

605

 

 

—

 

 

28,532

 

Other

 

21,222

 

 

2,131

 

 

5,140

 

 

—

 

 

28,493

 

Total direct costs of rental operations

 

53,378

 

 

7,939

 

 

17,777

 

 

—

 

 

79,094

 

Costs of sales

 

39,039

 

 

782

 

 

5,651

 

 

7,406

 

 

52,878

 

Total costs of revenues

 

92,417

 

 

8,721

 

 

23,428

 

 

7,406

 

 

131,972

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

Rental

 

44,451

 

 

16,187

 

 

11,486

 

 

—

 

 

72,124

 

Rental related services

 

11,395

 

 

394

 

 

171

 

 

—

 

 

11,960

 

Rental operations

 

55,846

 

 

16,581

 

 

11,657

 

 

—

 

 

84,084

 

Sales

 

18,684

 

 

362

 

 

3,082

 

 

2,109

 

 

24,237

 

Other

 

1,908

 

 

363

 

 

942

 

 

—

 

 

3,213

 

Total gross profit

 

76,438

 

 

17,306

 

 

15,681

 

 

2,109

 

 

111,534

 

Selling and administrative expenses

 

31,813

 

 

8,019

 

 

6,999

 

 

1,677

 

 

48,508

 

Other income

 

(2,290

)

 

(450

)

 

(819

)

 

—

 

 

(3,559

)

Income from operations

$

46,915

 

$

9,737

 

$

9,501

 

$

432

 

 

66,585

 

Interest expense

 

 

 

 

 

 

 

 

(11,025

)

Foreign currency exchange loss

 

 

 

 

 

 

 

 

(42

)

Provision for income taxes

 

 

 

 

 

 

 

 

(15,152

)

Net income

 

 

 

 

 

 

 

$

40,366

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

Adjusted EBITDA 1

$

58,166

 

$

12,047

 

$

21,039

 

$

517

 

$

91,769

 

Average rental equipment 2

$

1,137,675

 

$

212,888

 

$

385,353

 

 

 

 

Average monthly total yield 3

 

2.19

%

 

3.01

%

 

2.46

%

 

 

 

Average utilization 4

 

79.9

%

 

76.5

%

 

59.4

%

 

 

 

Average monthly rental rate 5

 

2.74

%

 

3.94

%

 

4.17

%

 

 

 

1.

Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs and other income, net.

2.

Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.

3.

Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.

4.

Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.

5.

Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

 

MCGRATH RENTCORP

BUSINESS SEGMENT DATA (unaudited)

Nine months ended September 30, 2024

 

 

 

 

(dollar amounts in thousands)

Mobile Modular

Portable Storage

TRS-RenTelco

Enviroplex

Consolidated

Revenues

 

 

 

 

 

 

 

 

Rental

$

236,040

 

$

53,270

 

$

76,398

 

$

—

 

$

365,708

 

Rental related services

 

95,450

 

 

13,768

 

 

2,422

 

 

—

 

 

111,640

 

Rental operations

 

331,490

 

 

67,039

 

 

78,820

 

 

—

 

 

477,349

 

Sales

 

127,251

 

 

3,889

 

 

20,261

 

 

30,591

 

 

181,992

 

Other

 

4,795

 

 

907

 

 

2,153

 

 

—

 

 

7,855

 

Total revenues

 

463,536

 

 

71,835

 

 

101,234

 

 

30,591

 

 

667,196

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

Depreciation

 

29,994

 

 

2,971

 

 

33,547

 

 

—

 

 

66,512

 

Rental related services

 

62,974

 

 

13,212

 

 

2,029

 

 

—

 

 

78,215

 

Other

 

64,487

 

 

4,322

 

 

15,373

 

 

—

 

 

84,182

 

Total direct costs of rental operations

 

157,455

 

 

20,505

 

 

50,949

 

 

—

 

 

228,909

 

Costs of sales

 

83,180

 

 

2,390

 

 

9,346

 

 

22,709

 

 

117,625

 

Total costs of revenues

 

240,635

 

 

22,895

 

 

60,295

 

 

22,709

 

 

346,534

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

Rental

 

141,559

 

 

45,977

 

 

27,478

 

 

—

 

 

215,014

 

Rental related services

 

32,476

 

 

556

 

 

393

 

 

—

 

 

33,425

 

Rental operations

 

174,035

 

 

46,533

 

 

27,871

 

 

—

 

 

248,439

 

Sales

 

44,071

 

 

1,499

 

 

10,915

 

 

7,882

 

 

64,367

 

Other

 

4,795

 

 

907

 

 

2,153

 

 

—

 

 

7,855

 

Total gross profit

 

222,901

 

 

48,939

 

 

40,939

 

 

7,882

 

 

320,661

 

Selling and administrative expenses 6

 

100,882

 

 

22,064

 

 

20,450

 

 

5,368

 

 

148,764

 

Other income

 

(6,220

)

 

(1,319

)

 

(1,742

)

 

—

 

 

(9,281

)

Income from operations

$

128,239

 

$

28,194

 

$

22,231

 

$

2,514

 

 

181,178

 

Interest expense

 

 

 

 

 

 

 

 

(38,383

)

Foreign currency exchange gain

 

 

 

 

 

 

 

 

53

 

Gain on merger termination from WillScot Mobile Mini

 

 

 

 

 

 

 

 

180,000

 

WillScot Mobile Mini transaction costs

 

 

 

 

 

 

 

 

(61,157

)

Provision for income taxes

 

 

 

 

 

 

 

 

(68,913

)

Net income

 

 

 

 

 

 

 

$

192,778

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

Adjusted EBITDA 1

$

168,165

 

$

33,333

 

$

55,426

 

$

2,799

 

$

259,723

 

Average rental equipment 2

$

1,206,361

 

$

226,373

 

$

367,137

 

 

 

 

Average monthly total yield 3

 

2.17

%

 

2.61

%

 

2.31

%

 

 

 

Average utilization 4

 

78.0

%

 

66.1

%

 

56.8

%

 

 

 

Average monthly rental rate 5

 

2.79

%

 

3.95

%

 

4.07

%

 

 

 

1.

Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs and other income, net.

2.

Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.

3.

Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.

4.

Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.

5.

Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

6.

During the period ended September 30, 2024, the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement were significant. Due to this determination, the Company has separately reported these transaction costs in the Company's Corporate segment and excluded such costs from Selling and administrative expenses.

 

MCGRATH RENTCORP

BUSINESS SEGMENT DATA (unaudited)

Nine months ended September 30, 2023

 

 

 

 

(dollar amounts in thousands)

Mobile Modular

Portable Storage

TRS-RenTelco

Enviroplex

Consolidated

Revenues

 

 

 

 

 

 

 

 

 

 

Rental

$

209,622

 

$

54,776

 

$

86,375

 

$

—

 

$

350,773

 

Rental related services

 

83,799

 

 

15,359

 

 

2,323

 

 

—

 

 

101,481

 

Rental operations

 

293,421

 

 

70,135

 

 

88,698

 

 

—

 

 

452,254

 

Sales

 

112,939

 

 

2,890

 

 

21,368

 

 

11,379

 

 

148,576

 

Other

 

5,249

 

 

1,167

 

 

3,008

 

 

—

 

 

9,424

 

Total revenues

 

411,609

 

 

74,192

 

 

113,074

 

 

11,379

 

 

610,254

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

 

Depreciation

 

27,196

 

 

2,570

 

 

36,733

 

 

—

 

 

66,499

 

Rental related services

 

55,702

 

 

13,916

 

 

2,007

 

 

—

 

 

71,625

 

Other

 

68,726

 

 

5,619

 

 

15,843

 

 

—

 

 

90,188

 

Total direct costs of rental operations

 

151,624

 

 

22,105

 

 

54,583

 

 

—

 

 

228,312

 

Costs of sales

 

76,303

 

 

1,799

 

 

11,307

 

 

9,022

 

 

98,431

 

Total costs of revenues

 

227,927

 

 

23,904

 

 

65,890

 

 

9,022

 

 

326,743

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

 

Rental

 

113,700

 

 

46,587

 

 

33,799

 

 

—

 

 

194,086

 

Rental related services

 

28,097

 

 

1,443

 

 

316

 

 

—

 

 

29,856

 

Rental operations

 

141,797

 

 

48,030

 

 

34,115

 

 

—

 

 

223,942

 

Sales

 

36,636

 

 

1,091

 

 

10,061

 

 

2,357

 

 

50,145

 

Other

 

5,249

 

 

1,167

 

 

3,008

 

 

—

 

 

9,424

 

Total gross profit

 

183,682

 

 

50,288

 

 

47,184

 

 

2,357

 

 

283,511

 

Selling and administrative expenses

 

101,360

 

 

23,282

 

 

23,576

 

 

4,814

 

 

153,032

 

Other income

 

(2,290

)

 

(450

)

 

(819

)

 

—

 

 

(3,559

)

Income (loss) from operations

$

84,612

 

$

27,456

 

$

24,427

 

$

(2,457

)

 

134,038

 

Interest expense

 

 

 

 

 

 

 

 

 

(28,434

)

Foreign currency exchange gain

 

 

 

 

 

 

 

 

 

166

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

(25,934

)

Net income

 

 

 

 

 

 

 

 

$

79,836

 

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA 1

$

135,107

 

$

34,375

 

$

63,212

 

$

(2,207

)

$

230,487

 

Average rental equipment 2

$

1,073,384

 

$

201,946

 

$

391,993

 

 

 

 

 

Average monthly total yield 3

 

2.17

%

 

3.01

%

 

2.43

%

 

 

 

 

Average utilization 4

 

79.7

%

 

78.4

%

 

59.0

%

 

 

 

 

Average monthly rental rate 5

 

2.72

%

 

3.84

%

 

4.15

%

 

 

 

 

1.

Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs and other income, net.

2.

Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.

3.

Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.

4.

Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.

5.

Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

 

Reconciliation of Adjusted EBITDA to the most directly comparable GAAP measures

To supplement the Company’s financial data presented on a basis consistent with accounting principles generally accepted in the United States of America (“GAAP”), the Company presents “Adjusted EBITDA”, which is defined by the Company as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs, gains on property sales and non-operating transactions. The gain on merger termination from WillScot Mobile Mini was considered a non-operating transaction and is excluded from Adjusted EBITDA. The Company presents Adjusted EBITDA as a financial measure as management believes it provides useful information to investors regarding the Company’s liquidity and financial condition and because management, as well as the Company’s lenders, use this measure in evaluating the performance of the Company.

Management uses Adjusted EBITDA as a supplement to GAAP measures to further evaluate period-to-period operating performance, compliance with financial covenants in the Company’s revolving lines of credit and senior notes and the Company’s ability to meet future capital expenditure and working capital requirements. Management believes the exclusion of non-cash charges and non-recurring transactions, including share-based compensation, transaction costs, gains on property sales and non-operating transactions, is useful in measuring the Company’s cash available for operations and performance of the Company. Because management finds Adjusted EBITDA useful, the Company believes its investors will also find Adjusted EBITDA useful in evaluating the Company’s performance.

Adjusted EBITDA should not be considered in isolation or as a substitute for net income, cash flows, or other consolidated income or cash flow data prepared in accordance with GAAP or as a measure of the Company’s profitability or liquidity. Adjusted EBITDA is not in accordance with or an alternative for GAAP and may be different from non−GAAP measures used by other companies. Unlike EBITDA, which may be used by other companies or investors, Adjusted EBITDA does not include share-based compensation charges, transaction costs, gains on property sales and non-operating transactions. The Company believes that Adjusted EBITDA is of limited use in that it does not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and does not accurately reflect real cash flow. In addition, other companies may not use Adjusted EBITDA or may use other non-GAAP measures, limiting the usefulness of Adjusted EBITDA for purposes of comparison. The Company’s presentation of Adjusted EBITDA should not be construed as an inference that the Company will not incur expenses that are the same as or similar to the adjustments in this presentation. Therefore, Adjusted EBITDA should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The Company compensates for the limitations of Adjusted EBITDA by relying upon GAAP results to gain a complete picture of the Company’s performance. Because Adjusted EBITDA is a non-GAAP financial measure, as defined by the SEC, the Company includes in the tables below reconciliations of Adjusted EBITDA to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Reconciliation of Income from Continuing Operations to Adjusted EBITDA

(dollar amounts in thousands)

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

Twelve Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

 

2024

 

2023

Income from continuing operations

$

149,317

 

$

40,366

 

$

192,778

 

$

79,836

 

$

224,799

 

$

114,828

 

Provision for income taxes from continuing operations

 

53,502

 

 

15,152

 

 

68,913

 

 

25,934

 

 

80,586

 

 

35,624

 

Interest expense

 

12,642

 

 

11,025

 

 

38,383

 

 

28,434

 

 

50,509

 

 

32,607

 

Depreciation and amortization

 

26,693

 

 

26,884

 

 

80,824

 

 

80,385

 

 

108,357

 

 

103,893

 

EBITDA

 

242,154

 

 

93,427

 

 

380,898

 

 

214,589

 

 

464,249

 

 

286,952

 

Share-based compensation

 

2,393

 

 

1,891

 

 

6,949

 

 

5,155

 

 

9,951

 

 

7,658

 

Transaction costs 3

 

39,436

 

 

10

 

 

61,157

 

 

14,302

 

 

62,732

 

 

18,188

 

Other income, net 4

 

—

 

 

(3,559

)

 

(9,281

)

 

(3,559

)

 

(9,340

)

 

(3,559

)

Gain on merger termination from WillScot Mobile Mini 5

 

(180,000

)

 

—

 

 

(180,000

)

 

—

 

 

(180,000

)

 

—

 

Adjusted EBITDA 1

$

103,983

 

$

91,769

 

$

259,723

 

$

230,487

 

$

347,592

 

$

309,239

 

Adjusted EBITDA margin 2

 

39

%

 

39

%

 

38

%

 

38

%

 

39

%

 

39

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities

(dollar amounts in thousands)

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

Twelve Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

 

2024

 

2023

Adjusted EBITDA 1

$

103,983

 

$

91,769

 

$

259,723

 

$

234,169

 

$

347,592

 

$

325,138

 

Interest paid

 

(13,944

)

 

(11,016

)

 

(40,338

)

 

(27,818

)

 

(51,123

)

 

(33,611

)

Income taxes paid, net of refunds received

 

(773

)

 

(2,616

)

 

3,826

 

 

(9,547

)

 

(78,192

)

 

(12,024

)

Gain on sale of used rental equipment

 

(9,648

)

 

(8,714

)

 

(25,185

)

 

(22,964

)

 

(33,863

)

 

(34,238

)

Foreign currency exchange loss

 

(216

)

 

42

 

 

(53

)

 

(166

)

 

(197

)

 

(192

)

Amortization of debt issuance costs

 

2

 

 

2

 

 

6

 

 

6

 

 

8

 

 

9

 

Change in certain assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

(7,150

)

 

(26,223

)

 

2,839

 

 

(25,939

)

 

(6,365

)

 

(26,003

)

Prepaid expenses and other assets

 

14,171

 

 

1,114

 

 

19,988

 

 

(7,390

)

 

(1,948

)

 

(6,561

)

Accounts payable and other liabilities

 

123,241

 

 

4,476

 

 

104,293

 

 

(29,356

)

 

119,382

 

 

(30,691

)

Deferred income

 

(10,699

)

 

(1,382

)

 

12,497

 

 

7,908

 

 

18,683

 

 

(1,790

)

Net cash provided by operating activities

$

198,967

 

$

47,452

 

$

337,596

 

$

118,903

 

$

313,977

 

$

180,037

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.

Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, other income, net and non-operating transactions. Adjusted EBITDA for the nine months ended September 30, 2023, excludes the gain on sale of discontinued operations from the divestiture of Adler Tanks. Total Adjusted EBITDA attributed to discontinued operations for the nine month period ended September 30, 2023 was $3,682.

2.

Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues for the period.

3.

Transaction costs include acquisition and divestiture related legal and professional fees and other costs specific to these transactions.

4.

Other income, net consists of net gains on property, plant and equipment sales that are infrequent in nature and excluded from Adjusted EBITDA.

5.

The gain on merger termination from WillScot Mobile Mini was considered a non-operating transaction and is excluded from Adjusted EBITDA.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241023857571/en/

Keith E. Pratt EVP & Chief Financial Officer 925-606-9200