Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries McGrath Announces Results for First Quarter 2024 By: McGrath RentCorp via Business Wire April 25, 2024 at 16:01 PM EDT 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 March 31, 2024 of $187.8 million, an increase of 15% compared to the first quarter of 2023. The Company reported net income from continuing operations of $22.8 million, or $0.93 per diluted share, for the first quarter of 2024, compared to net income from continuing operations of $11.5 million, or $0.47 per diluted share, for the first quarter of 2023. FIRST QUARTER 2024 YEAR-OVER-YEAR COMPANY HIGHLIGHTS (FROM CONTINUING OPERATIONS): Rental revenues increased 9% to $120.3 million. Total revenues increased 15% to $187.8 million. Other income, net for the first quarter 2024 included a $9.3 million net gain on sale of a property, which increased earnings per diluted share by $0.28. Adjusted EBITDA increased 17% to $72.1 million. Dividend rate of $0.475 per share for the first quarter 2024. On an annualized basis, this dividend represents a 1.8% yield on the April 24, 2024 close price of $108.53 per share. Joe Hanna, President and CEO of McGrath, made the following comments: “We were pleased with our first quarter results. The 9% increase in companywide rental revenues was driven by strong modular and portable storage performance. Modular rental revenues grew 19% and benefited from a full quarter of Vesta Modular contribution in 2024 compared with two months in 2023. Portable storage rental revenues grew 8%. “Our modular business was a highlight for the quarter, with broad based rental strength across 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. “TRS-RenTelco experienced continued demand challenges, particularly for semiconductor related projects, resulting in 13% lower rental revenues for the quarter, compared to a year ago. During the quarter we reduced 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 as we maintain our independent focus on disciplined execution during the pending WillScot Mobile Mini transaction.” DIVISION HIGHLIGHTS: All comparisons presented below are for the quarter ended March 31, 2024 to the quarter ended March 31, 2023 unless otherwise indicated. MOBILE MODULAR For the first quarter of 2024, the Company’s Mobile Modular division reported Adjusted EBITDA of $43.3 million, an increase of $10.9 million, or 34%, when compared to the same quarter in 2023. Rental revenues increased 19% to $76.5 million, depreciation expense increased 14% to $9.9 million, and other direct costs decreased 6% to $22.7 million, which resulted in an increase in gross profit on rental revenues of 41% to $43.9 million. Rental related services revenues increased 12% to $24.1 million, primarily attributable to higher delivery and pick-up activities and higher site related services, with associated gross profit increasing 14% to $8.4 million. Sales revenues increased 49% to $25.3 million, primarily from higher new equipment sales. Gross margin on sales was 31% in 2024, compared to 37% in 2023, resulting in a 27% increase in gross profit on sales revenues to $7.9 million. The reduction in gross margin on sales was primarily attributed to a higher mix of new versus used sales in 2024. Selling and administrative expenses increased $1.6 million to $40.1 million. Included within selling and administrative expenses was $5.3 million higher allocated corporate costs, which included $6.5 million in allocated transaction costs related to the pending merger with WillScot Mobile Mini. PORTABLE STORAGE For the first quarter of 2024, the Company’s Portable Storage division reported Adjusted EBITDA of $11.5 million, an increase of $1.5 million, or 15%, when compared to the same quarter in 2023. Rental revenues increased 8% to $18.4 million, depreciation expense increased 23% to $1.0 million, and other direct costs decreased 18% to $1.5 million, which resulted in an increase in gross profit on rental revenues of 10% to $16.0 million. Rental related services revenues were $4.7 million and gross profit on rental related services revenues was $0.3 million, which were both comparable to the first quarter of 2023. Sales revenues increased $0.6 million to $1.2 million, primarily from higher used equipment sales. Gross margin on sales was 37% compared to 49% in 2023, resulting in a $0.1 million increase in gross profit on sales revenues to $0.4 million. Selling and administrative expenses increased $1.0 million to $9.0 million, primarily due to higher allocated corporate expenses and marketing and administrative costs. TRS-RENTELCO For the first quarter of 2024, the Company’s TRS-RenTelco division reported Adjusted EBITDA of $18.5 million, a decrease of 10%, when compared to the same quarter in 2023. Rental revenues decreased 13% to $25.4 million, depreciation expense decreased 7%, and other direct costs decreased 7%, resulting in a 22% decrease in gross profit on rental revenues to $9.0 million. The rental revenue decrease was primarily due to weakness in the semiconductor related end markets, resulting in lower average rental equipment on rent compared to the prior year. Sales revenues increased 33% to $6.8 million and gross profit on sales revenues increased 34% to $3.9 million. Selling and administrative expenses decreased 6%, to $8.9 million, primarily due to lower allocated corporate expenses. 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 April 4, 2024, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on April 25, 2024 to discuss the first 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 1-800-723-5782 (in the U.S.), or 1-402-220-2663 (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. MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended March 31, (in thousands, except per share amounts) 2024 2023 Revenues Rental $ 120,332 $ 110,247 Rental related services 29,580 27,132 Rental operations 149,912 137,379 Sales 35,069 23,660 Other 2,846 2,679 Total revenues 187,827 163,718 Costs and Expenses Direct costs of rental operations: Depreciation of rental equipment 22,366 21,833 Rental related services 20,786 19,268 Other 29,010 31,135 Total direct costs of rental operations 72,162 72,236 Costs of sales 22,397 14,115 Total costs of revenues 94,559 86,351 Gross profit 93,268 77,367 Expenses: Selling and administrative expenses 59,818 57,498 Other income, net (9,281 ) — Income from operations 42,731 19,869 Interest expense 12,704 7,464 Foreign currency exchange loss (gain) 132 (226 ) Income from continuing operations before provision for income taxes 29,895 12,631 Provision for income taxes from continuing operations 7,047 1,113 Income from continuing operations 22,848 11,518 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 — 58,883 Income from discontinued operations — 60,139 Net income $ 22,848 $ 71,657 Earnings per share from continuing operations: Basic $ 0.93 $ 0.47 Diluted $ 0.93 $ 0.47 Earnings per share from discontinued operations: Basic $ — $ 2.46 Diluted $ — $ 2.45 Earnings per share: Basic $ 0.93 $ 2.93 Diluted $ 0.93 $ 2.92 Shares used in per share calculation: Basic 24,513 24,416 Diluted 24,564 24,542 Cash dividends declared per share $ 0.475 $ 0.465 MCGRATH RENTCORP CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, December 31, (in thousands) 2024 2023 Assets Cash $ 1,912 $ 877 Accounts receivable, net of allowance for credit losses of $2,819 at March 31, 2024 and $2,801 at December 31, 2023 211,950 227,368 Rental equipment, at cost: Relocatable modular buildings 1,345,919 1,291,093 Portable storage containers 240,517 236,123 Electronic test equipment 370,641 377,587 1,957,077 1,904,803 Less: accumulated depreciation (588,535 ) (575,480 ) Rental equipment, net 1,368,542 1,329,323 Property, plant and equipment, net 189,166 169,114 Inventories 24,548 15,425 Prepaid expenses and other assets 82,066 87,364 Intangible assets, net 62,020 64,588 Goodwill 323,224 323,224 Total assets $ 2,263,428 $ 2,217,283 Liabilities and Shareholders' Equity Liabilities: Notes payable $ 798,561 $ 762,975 Accounts payable 57,162 58,760 Accrued liabilities 95,725 108,763 Deferred income 122,696 111,428 Deferred income taxes, net 246,264 241,555 Total liabilities 1,320,408 1,283,481 Shareholders’ equity: Common stock, no par value - Authorized 40,000 shares Issued and outstanding - 24,541 shares as of March 31, 2024 and 24,496 shares as of December 31, 2023 109,249 111,122 Retained earnings 833,820 822,796 Accumulated other comprehensive loss (49 ) (116 ) Total shareholders’ equity 943,020 933,802 Total liabilities and shareholders’ equity $ 2,263,428 $ 2,217,283 MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, (in thousands) 2024 2023 Cash Flows from Operating Activities: Net income $ 22,848 $ 71,657 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 27,187 27,590 Deferred income taxes 4,709 (45,496 ) Provision for credit losses 253 744 Share-based compensation 2,209 1,493 Gain on sale of property, plant and equipment (9,281 ) — Gain on sale of discontinued operations — (58,883 ) Gain on sale of used rental equipment (7,355 ) (3,089 ) Foreign currency exchange loss (gain) 132 (226 ) Amortization of debt issuance costs 2 2 Change in: Accounts receivable 15,165 16,209 Inventories (9,123 ) (5,313 ) Prepaid expenses and other assets 5,298 (2,032 ) Accounts payable 9,145 31,559 Accrued liabilities (13,037 ) (1,722 ) Deferred income 11,268 3,218 Net cash provided by operating activities 59,420 35,711 Cash Flows from Investing Activities: Proceeds from sale of discontinued operations — 262,454 Purchases of rental equipment (78,641 ) (77,731 ) Purchases of property, plant and equipment (25,277 ) (6,857 ) Cash paid for acquisition of businesses — (453,592 ) Proceeds from sales of used rental equipment 13,554 12,197 Proceeds from sales of property, plant and equipment 12,251 — Net cash used in investing activities (78,113 ) (263,529 ) Cash Flows from Financing Activities: Net borrowings under bank lines of credit 35,584 245,033 Taxes paid related to net share settlement of stock awards (4,082 ) (6,086 ) Payment of dividends (11,774 ) (11,400 ) Net cash provided by financing activities 19,728 227,547 Effect of foreign currency exchange rate changes on cash — 4 Net increase (decrease) in cash 1,035 (267 ) Cash balance, beginning of period 877 957 Cash balance, end of period $ 1,912 $ 690 Supplemental Disclosure of Cash Flow Information: Interest paid, during the period $ 14,184 $ 7,817 Net income taxes paid, during the period $ 479 $ 413 Dividends accrued during the period, not yet paid $ 12,060 $ 11,851 Rental equipment acquisitions, not yet paid $ 5,795 $ 5,697 MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Three months ended March 31, 2024 (dollar amounts in thousands) Mobile Modular Portable Storage TRS-RenTelco Enviroplex Consolidated Revenues Rental $ 76,496 $ 18,407 $ 25,429 $ — $ 120,332 Rental related services 24,133 4,723 724 — 29,580 Rental operations 100,629 23,130 26,153 — 149,912 Sales 25,326 1,212 6,812 1,719 35,069 Other 1,630 418 798 — 2,846 Total revenues 127,585 24,760 33,763 1,719 187,827 Costs and Expenses Direct costs of rental operations: Depreciation 9,874 965 11,527 — 22,366 Rental related services 15,780 4,456 550 — 20,786 Other 22,673 1,468 4,869 — 29,010 Total direct costs of rental operations 48,327 6,889 16,946 — 72,162 Costs of sales 17,413 768 2,942 1,274 22,397 Total costs of revenues 65,740 7,657 19,888 1,274 94,559 Gross Profit Rental 43,949 15,974 9,033 — 68,956 Rental related services 8,353 267 174 — 8,794 Rental operations 52,302 16,241 9,207 — 77,750 Sales 7,913 444 3,870 445 12,672 Other 1,630 418 798 — 2,846 Total gross profit 61,845 17,103 13,875 445 93,268 Selling and administrative expenses 40,087 9,010 8,918 1,803 59,818 Other income, net (6,220 ) (1,319 ) (1,742 ) — (9,281 ) Income (loss) from operations $ 27,978 $ 9,412 $ 6,699 $ (1,358 ) $ 42,731 Interest expense 12,704 Foreign currency exchange loss 132 Provision for income taxes 7,047 Net income $ 22,848 Other Information Adjusted EBITDA 1 $ 43,327 $ 11,522 $ 18,480 $ (1,261 ) $ 72,068 Average rental equipment 2 $ 1,174,327 $ 223,285 $ 372,081 Average monthly total yield 3 2.17 % 2.75 % 2.18 % Average utilization 4 78.7 % 69.8 % 56.5 % Average monthly rental rate 5 2.76 % 3.94 % 4.03 % 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. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 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. 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) Three months ended March 31, 2023 (dollar amounts in thousands) Mobile Modular Portable Storage TRS-RenTelco Enviroplex Adler Tanks (Discontinued) Consolidated Revenues Rental $ 64,056 $ 17,057 $ 29,134 $ — $ 6,520 $ 116,767 Rental related services 21,534 4,718 880 — 2,584 29,716 Rental operations 85,590 21,775 30,014 — 9,104 146,483 Sales 16,967 638 5,114 941 269 23,929 Other 1,370 317 992 — 65 2,744 Total revenues 103,927 22,730 36,120 941 9,438 173,156 Costs and Expenses Direct costs of rental operations: Depreciation 8,657 787 12,389 — 1,325 23,158 Rental related services 14,226 4,381 661 — 2,020 21,288 Other 24,127 1,783 5,225 — 1,270 32,405 Total direct costs of rental operations 47,009 6,952 18,275 — 4,614 76,850 Costs of sales 10,747 327 2,225 816 159 14,274 Total costs of revenues 57,756 7,279 20,500 816 4,773 91,124 Gross Profit Rental 31,273 14,486 11,520 — 3,926 61,205 Rental related services 7,308 337 219 — 564 8,428 Rental operations 38,581 14,823 11,739 — 4,490 69,633 Sales 6,220 311 2,889 125 110 9,655 Other 1,370 317 992 — 65 2,744 Total gross profit 46,171 15,451 15,620 125 4,665 82,032 Selling and administrative expenses 38,456 8,058 9,451 1,533 2,582 60,080 Other income, net — — — — — — Income (loss) from operations $ 7,715 $ 7,393 $ 6,169 $ (1,408 ) $ 2,083 21,952 Interest expense 7,838 Foreign currency exchange gain (226 ) Provision for income taxes 1,566 Net income $ 12,774 Other Information Adjusted EBITDA 1 $ 32,425 $ 10,020 $ 20,635 $ (1,330 ) $ 3,682 $ 65,432 Average rental equipment 2 $ 987,526 $ 189,348 $ 396,835 Average monthly total yield 3 2.16 % 3.01 % 2.40 % Average utilization 4 79.4 % 80.8 % 59.2 % Average monthly rental rate 5 2.72 % 3.71 % 4.14 % 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. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 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. 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 and gains on property sales. 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 and gains on property sales 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 and gains on property sales. 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 March 31, Twelve Months Ended March 31, 2024 2023 2024 2023 Income from continuing operations $ 22,848 $ 11,518 $ 123,182 $ 97,169 Provision for income taxes from continuing operations 7,047 1,113 43,544 26,981 Interest expense 12,704 7,464 45,800 17,418 Depreciation and amortization 27,187 26,133 108,972 96,489 EBITDA 69,786 46,228 321,498 238,057 Share-based compensation 2,209 1,375 8,991 6,610 Transaction costs 3 9,354 14,147 11,084 18,200 Other income, net 4 (9,281 ) — (12,899 ) — Adjusted EBITDA 1 $ 72,068 $ 61,750 $ 328,674 $ 262,867 Adjusted EBITDA margin 2 37 % 38 % 38 % 39 % Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities (dollar amounts in thousands) Three Months Ended March 31, Twelve Months Ended March 31, 2024 2023 2024 2023 Adjusted EBITDA 1 $ 72,068 $ 65,432 $ 328,674 $ 297,579 Interest paid (14,184 ) (7,817 ) (44,970 ) (20,455 ) Income taxes paid, net of refunds received (479 ) (413 ) (91,631 ) (27,355 ) Gain on sale of used rental equipment (7,355 ) (3,089 ) (35,908 ) (35,704 ) Foreign currency exchange loss 132 (226 ) 48 165 Amortization of debt issuance costs 2 2 8 14 Change in certain assets and liabilities: Accounts receivable, net 15,418 16,953 (36,678 ) (21,506 ) Prepaid expenses and other assets 5,298 (7,345 ) (16,683 ) (28,042 ) Accounts payable and other liabilities (22,748 ) (31,004 ) (9,570 ) (7,992 ) Deferred income 11,268 3,218 �� 22,144 21,696 Net cash provided by operating activities $ 59,420 $ 35,711 $ 115,434 $ 178,400 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. Adjusted EBITDA for the three months ended March 31, 2023, excludes the gain on sale of discontinued operations from the divestiture of Adler Tanks. Total Adjusted EBITDA attributed to discontinued operations for the period ended March 31, 2023 was $3,682. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues for the period. Transaction costs include acquisition and divestiture related legal and professional fees and other costs specific to these transactions. Other income, net consists of net gains on property, plant and equipment sales that are infrequent in nature and excluded from Adjusted EBITDA. View source version on businesswire.com: https://www.businesswire.com/news/home/20240424358321/en/Contacts Keith E. Pratt EVP & Chief Financial Officer 925-606-9200 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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McGrath Announces Results for First Quarter 2024 By: McGrath RentCorp via Business Wire April 25, 2024 at 16:01 PM EDT 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 March 31, 2024 of $187.8 million, an increase of 15% compared to the first quarter of 2023. The Company reported net income from continuing operations of $22.8 million, or $0.93 per diluted share, for the first quarter of 2024, compared to net income from continuing operations of $11.5 million, or $0.47 per diluted share, for the first quarter of 2023. FIRST QUARTER 2024 YEAR-OVER-YEAR COMPANY HIGHLIGHTS (FROM CONTINUING OPERATIONS): Rental revenues increased 9% to $120.3 million. Total revenues increased 15% to $187.8 million. Other income, net for the first quarter 2024 included a $9.3 million net gain on sale of a property, which increased earnings per diluted share by $0.28. Adjusted EBITDA increased 17% to $72.1 million. Dividend rate of $0.475 per share for the first quarter 2024. On an annualized basis, this dividend represents a 1.8% yield on the April 24, 2024 close price of $108.53 per share. Joe Hanna, President and CEO of McGrath, made the following comments: “We were pleased with our first quarter results. The 9% increase in companywide rental revenues was driven by strong modular and portable storage performance. Modular rental revenues grew 19% and benefited from a full quarter of Vesta Modular contribution in 2024 compared with two months in 2023. Portable storage rental revenues grew 8%. “Our modular business was a highlight for the quarter, with broad based rental strength across 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. “TRS-RenTelco experienced continued demand challenges, particularly for semiconductor related projects, resulting in 13% lower rental revenues for the quarter, compared to a year ago. During the quarter we reduced 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 as we maintain our independent focus on disciplined execution during the pending WillScot Mobile Mini transaction.” DIVISION HIGHLIGHTS: All comparisons presented below are for the quarter ended March 31, 2024 to the quarter ended March 31, 2023 unless otherwise indicated. MOBILE MODULAR For the first quarter of 2024, the Company’s Mobile Modular division reported Adjusted EBITDA of $43.3 million, an increase of $10.9 million, or 34%, when compared to the same quarter in 2023. Rental revenues increased 19% to $76.5 million, depreciation expense increased 14% to $9.9 million, and other direct costs decreased 6% to $22.7 million, which resulted in an increase in gross profit on rental revenues of 41% to $43.9 million. Rental related services revenues increased 12% to $24.1 million, primarily attributable to higher delivery and pick-up activities and higher site related services, with associated gross profit increasing 14% to $8.4 million. Sales revenues increased 49% to $25.3 million, primarily from higher new equipment sales. Gross margin on sales was 31% in 2024, compared to 37% in 2023, resulting in a 27% increase in gross profit on sales revenues to $7.9 million. The reduction in gross margin on sales was primarily attributed to a higher mix of new versus used sales in 2024. Selling and administrative expenses increased $1.6 million to $40.1 million. Included within selling and administrative expenses was $5.3 million higher allocated corporate costs, which included $6.5 million in allocated transaction costs related to the pending merger with WillScot Mobile Mini. PORTABLE STORAGE For the first quarter of 2024, the Company’s Portable Storage division reported Adjusted EBITDA of $11.5 million, an increase of $1.5 million, or 15%, when compared to the same quarter in 2023. Rental revenues increased 8% to $18.4 million, depreciation expense increased 23% to $1.0 million, and other direct costs decreased 18% to $1.5 million, which resulted in an increase in gross profit on rental revenues of 10% to $16.0 million. Rental related services revenues were $4.7 million and gross profit on rental related services revenues was $0.3 million, which were both comparable to the first quarter of 2023. Sales revenues increased $0.6 million to $1.2 million, primarily from higher used equipment sales. Gross margin on sales was 37% compared to 49% in 2023, resulting in a $0.1 million increase in gross profit on sales revenues to $0.4 million. Selling and administrative expenses increased $1.0 million to $9.0 million, primarily due to higher allocated corporate expenses and marketing and administrative costs. TRS-RENTELCO For the first quarter of 2024, the Company’s TRS-RenTelco division reported Adjusted EBITDA of $18.5 million, a decrease of 10%, when compared to the same quarter in 2023. Rental revenues decreased 13% to $25.4 million, depreciation expense decreased 7%, and other direct costs decreased 7%, resulting in a 22% decrease in gross profit on rental revenues to $9.0 million. The rental revenue decrease was primarily due to weakness in the semiconductor related end markets, resulting in lower average rental equipment on rent compared to the prior year. Sales revenues increased 33% to $6.8 million and gross profit on sales revenues increased 34% to $3.9 million. Selling and administrative expenses decreased 6%, to $8.9 million, primarily due to lower allocated corporate expenses. 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 April 4, 2024, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on April 25, 2024 to discuss the first 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 1-800-723-5782 (in the U.S.), or 1-402-220-2663 (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. MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended March 31, (in thousands, except per share amounts) 2024 2023 Revenues Rental $ 120,332 $ 110,247 Rental related services 29,580 27,132 Rental operations 149,912 137,379 Sales 35,069 23,660 Other 2,846 2,679 Total revenues 187,827 163,718 Costs and Expenses Direct costs of rental operations: Depreciation of rental equipment 22,366 21,833 Rental related services 20,786 19,268 Other 29,010 31,135 Total direct costs of rental operations 72,162 72,236 Costs of sales 22,397 14,115 Total costs of revenues 94,559 86,351 Gross profit 93,268 77,367 Expenses: Selling and administrative expenses 59,818 57,498 Other income, net (9,281 ) — Income from operations 42,731 19,869 Interest expense 12,704 7,464 Foreign currency exchange loss (gain) 132 (226 ) Income from continuing operations before provision for income taxes 29,895 12,631 Provision for income taxes from continuing operations 7,047 1,113 Income from continuing operations 22,848 11,518 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 — 58,883 Income from discontinued operations — 60,139 Net income $ 22,848 $ 71,657 Earnings per share from continuing operations: Basic $ 0.93 $ 0.47 Diluted $ 0.93 $ 0.47 Earnings per share from discontinued operations: Basic $ — $ 2.46 Diluted $ — $ 2.45 Earnings per share: Basic $ 0.93 $ 2.93 Diluted $ 0.93 $ 2.92 Shares used in per share calculation: Basic 24,513 24,416 Diluted 24,564 24,542 Cash dividends declared per share $ 0.475 $ 0.465 MCGRATH RENTCORP CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, December 31, (in thousands) 2024 2023 Assets Cash $ 1,912 $ 877 Accounts receivable, net of allowance for credit losses of $2,819 at March 31, 2024 and $2,801 at December 31, 2023 211,950 227,368 Rental equipment, at cost: Relocatable modular buildings 1,345,919 1,291,093 Portable storage containers 240,517 236,123 Electronic test equipment 370,641 377,587 1,957,077 1,904,803 Less: accumulated depreciation (588,535 ) (575,480 ) Rental equipment, net 1,368,542 1,329,323 Property, plant and equipment, net 189,166 169,114 Inventories 24,548 15,425 Prepaid expenses and other assets 82,066 87,364 Intangible assets, net 62,020 64,588 Goodwill 323,224 323,224 Total assets $ 2,263,428 $ 2,217,283 Liabilities and Shareholders' Equity Liabilities: Notes payable $ 798,561 $ 762,975 Accounts payable 57,162 58,760 Accrued liabilities 95,725 108,763 Deferred income 122,696 111,428 Deferred income taxes, net 246,264 241,555 Total liabilities 1,320,408 1,283,481 Shareholders’ equity: Common stock, no par value - Authorized 40,000 shares Issued and outstanding - 24,541 shares as of March 31, 2024 and 24,496 shares as of December 31, 2023 109,249 111,122 Retained earnings 833,820 822,796 Accumulated other comprehensive loss (49 ) (116 ) Total shareholders’ equity 943,020 933,802 Total liabilities and shareholders’ equity $ 2,263,428 $ 2,217,283 MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, (in thousands) 2024 2023 Cash Flows from Operating Activities: Net income $ 22,848 $ 71,657 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 27,187 27,590 Deferred income taxes 4,709 (45,496 ) Provision for credit losses 253 744 Share-based compensation 2,209 1,493 Gain on sale of property, plant and equipment (9,281 ) — Gain on sale of discontinued operations — (58,883 ) Gain on sale of used rental equipment (7,355 ) (3,089 ) Foreign currency exchange loss (gain) 132 (226 ) Amortization of debt issuance costs 2 2 Change in: Accounts receivable 15,165 16,209 Inventories (9,123 ) (5,313 ) Prepaid expenses and other assets 5,298 (2,032 ) Accounts payable 9,145 31,559 Accrued liabilities (13,037 ) (1,722 ) Deferred income 11,268 3,218 Net cash provided by operating activities 59,420 35,711 Cash Flows from Investing Activities: Proceeds from sale of discontinued operations — 262,454 Purchases of rental equipment (78,641 ) (77,731 ) Purchases of property, plant and equipment (25,277 ) (6,857 ) Cash paid for acquisition of businesses — (453,592 ) Proceeds from sales of used rental equipment 13,554 12,197 Proceeds from sales of property, plant and equipment 12,251 — Net cash used in investing activities (78,113 ) (263,529 ) Cash Flows from Financing Activities: Net borrowings under bank lines of credit 35,584 245,033 Taxes paid related to net share settlement of stock awards (4,082 ) (6,086 ) Payment of dividends (11,774 ) (11,400 ) Net cash provided by financing activities 19,728 227,547 Effect of foreign currency exchange rate changes on cash — 4 Net increase (decrease) in cash 1,035 (267 ) Cash balance, beginning of period 877 957 Cash balance, end of period $ 1,912 $ 690 Supplemental Disclosure of Cash Flow Information: Interest paid, during the period $ 14,184 $ 7,817 Net income taxes paid, during the period $ 479 $ 413 Dividends accrued during the period, not yet paid $ 12,060 $ 11,851 Rental equipment acquisitions, not yet paid $ 5,795 $ 5,697 MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Three months ended March 31, 2024 (dollar amounts in thousands) Mobile Modular Portable Storage TRS-RenTelco Enviroplex Consolidated Revenues Rental $ 76,496 $ 18,407 $ 25,429 $ — $ 120,332 Rental related services 24,133 4,723 724 — 29,580 Rental operations 100,629 23,130 26,153 — 149,912 Sales 25,326 1,212 6,812 1,719 35,069 Other 1,630 418 798 — 2,846 Total revenues 127,585 24,760 33,763 1,719 187,827 Costs and Expenses Direct costs of rental operations: Depreciation 9,874 965 11,527 — 22,366 Rental related services 15,780 4,456 550 — 20,786 Other 22,673 1,468 4,869 — 29,010 Total direct costs of rental operations 48,327 6,889 16,946 — 72,162 Costs of sales 17,413 768 2,942 1,274 22,397 Total costs of revenues 65,740 7,657 19,888 1,274 94,559 Gross Profit Rental 43,949 15,974 9,033 — 68,956 Rental related services 8,353 267 174 — 8,794 Rental operations 52,302 16,241 9,207 — 77,750 Sales 7,913 444 3,870 445 12,672 Other 1,630 418 798 — 2,846 Total gross profit 61,845 17,103 13,875 445 93,268 Selling and administrative expenses 40,087 9,010 8,918 1,803 59,818 Other income, net (6,220 ) (1,319 ) (1,742 ) — (9,281 ) Income (loss) from operations $ 27,978 $ 9,412 $ 6,699 $ (1,358 ) $ 42,731 Interest expense 12,704 Foreign currency exchange loss 132 Provision for income taxes 7,047 Net income $ 22,848 Other Information Adjusted EBITDA 1 $ 43,327 $ 11,522 $ 18,480 $ (1,261 ) $ 72,068 Average rental equipment 2 $ 1,174,327 $ 223,285 $ 372,081 Average monthly total yield 3 2.17 % 2.75 % 2.18 % Average utilization 4 78.7 % 69.8 % 56.5 % Average monthly rental rate 5 2.76 % 3.94 % 4.03 % 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. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 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. 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) Three months ended March 31, 2023 (dollar amounts in thousands) Mobile Modular Portable Storage TRS-RenTelco Enviroplex Adler Tanks (Discontinued) Consolidated Revenues Rental $ 64,056 $ 17,057 $ 29,134 $ — $ 6,520 $ 116,767 Rental related services 21,534 4,718 880 — 2,584 29,716 Rental operations 85,590 21,775 30,014 — 9,104 146,483 Sales 16,967 638 5,114 941 269 23,929 Other 1,370 317 992 — 65 2,744 Total revenues 103,927 22,730 36,120 941 9,438 173,156 Costs and Expenses Direct costs of rental operations: Depreciation 8,657 787 12,389 — 1,325 23,158 Rental related services 14,226 4,381 661 — 2,020 21,288 Other 24,127 1,783 5,225 — 1,270 32,405 Total direct costs of rental operations 47,009 6,952 18,275 — 4,614 76,850 Costs of sales 10,747 327 2,225 816 159 14,274 Total costs of revenues 57,756 7,279 20,500 816 4,773 91,124 Gross Profit Rental 31,273 14,486 11,520 — 3,926 61,205 Rental related services 7,308 337 219 — 564 8,428 Rental operations 38,581 14,823 11,739 — 4,490 69,633 Sales 6,220 311 2,889 125 110 9,655 Other 1,370 317 992 — 65 2,744 Total gross profit 46,171 15,451 15,620 125 4,665 82,032 Selling and administrative expenses 38,456 8,058 9,451 1,533 2,582 60,080 Other income, net — — — — — — Income (loss) from operations $ 7,715 $ 7,393 $ 6,169 $ (1,408 ) $ 2,083 21,952 Interest expense 7,838 Foreign currency exchange gain (226 ) Provision for income taxes 1,566 Net income $ 12,774 Other Information Adjusted EBITDA 1 $ 32,425 $ 10,020 $ 20,635 $ (1,330 ) $ 3,682 $ 65,432 Average rental equipment 2 $ 987,526 $ 189,348 $ 396,835 Average monthly total yield 3 2.16 % 3.01 % 2.40 % Average utilization 4 79.4 % 80.8 % 59.2 % Average monthly rental rate 5 2.72 % 3.71 % 4.14 % 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. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 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. 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 and gains on property sales. 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 and gains on property sales 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 and gains on property sales. 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 March 31, Twelve Months Ended March 31, 2024 2023 2024 2023 Income from continuing operations $ 22,848 $ 11,518 $ 123,182 $ 97,169 Provision for income taxes from continuing operations 7,047 1,113 43,544 26,981 Interest expense 12,704 7,464 45,800 17,418 Depreciation and amortization 27,187 26,133 108,972 96,489 EBITDA 69,786 46,228 321,498 238,057 Share-based compensation 2,209 1,375 8,991 6,610 Transaction costs 3 9,354 14,147 11,084 18,200 Other income, net 4 (9,281 ) — (12,899 ) — Adjusted EBITDA 1 $ 72,068 $ 61,750 $ 328,674 $ 262,867 Adjusted EBITDA margin 2 37 % 38 % 38 % 39 % Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities (dollar amounts in thousands) Three Months Ended March 31, Twelve Months Ended March 31, 2024 2023 2024 2023 Adjusted EBITDA 1 $ 72,068 $ 65,432 $ 328,674 $ 297,579 Interest paid (14,184 ) (7,817 ) (44,970 ) (20,455 ) Income taxes paid, net of refunds received (479 ) (413 ) (91,631 ) (27,355 ) Gain on sale of used rental equipment (7,355 ) (3,089 ) (35,908 ) (35,704 ) Foreign currency exchange loss 132 (226 ) 48 165 Amortization of debt issuance costs 2 2 8 14 Change in certain assets and liabilities: Accounts receivable, net 15,418 16,953 (36,678 ) (21,506 ) Prepaid expenses and other assets 5,298 (7,345 ) (16,683 ) (28,042 ) Accounts payable and other liabilities (22,748 ) (31,004 ) (9,570 ) (7,992 ) Deferred income 11,268 3,218 �� 22,144 21,696 Net cash provided by operating activities $ 59,420 $ 35,711 $ 115,434 $ 178,400 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. Adjusted EBITDA for the three months ended March 31, 2023, excludes the gain on sale of discontinued operations from the divestiture of Adler Tanks. Total Adjusted EBITDA attributed to discontinued operations for the period ended March 31, 2023 was $3,682. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues for the period. Transaction costs include acquisition and divestiture related legal and professional fees and other costs specific to these transactions. Other income, net consists of net gains on property, plant and equipment sales that are infrequent in nature and excluded from Adjusted EBITDA. View source version on businesswire.com: https://www.businesswire.com/news/home/20240424358321/en/Contacts Keith E. Pratt EVP & Chief Financial Officer 925-606-9200
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 March 31, 2024 of $187.8 million, an increase of 15% compared to the first quarter of 2023. The Company reported net income from continuing operations of $22.8 million, or $0.93 per diluted share, for the first quarter of 2024, compared to net income from continuing operations of $11.5 million, or $0.47 per diluted share, for the first quarter of 2023. FIRST QUARTER 2024 YEAR-OVER-YEAR COMPANY HIGHLIGHTS (FROM CONTINUING OPERATIONS): Rental revenues increased 9% to $120.3 million. Total revenues increased 15% to $187.8 million. Other income, net for the first quarter 2024 included a $9.3 million net gain on sale of a property, which increased earnings per diluted share by $0.28. Adjusted EBITDA increased 17% to $72.1 million. Dividend rate of $0.475 per share for the first quarter 2024. On an annualized basis, this dividend represents a 1.8% yield on the April 24, 2024 close price of $108.53 per share. Joe Hanna, President and CEO of McGrath, made the following comments: “We were pleased with our first quarter results. The 9% increase in companywide rental revenues was driven by strong modular and portable storage performance. Modular rental revenues grew 19% and benefited from a full quarter of Vesta Modular contribution in 2024 compared with two months in 2023. Portable storage rental revenues grew 8%. “Our modular business was a highlight for the quarter, with broad based rental strength across 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. “TRS-RenTelco experienced continued demand challenges, particularly for semiconductor related projects, resulting in 13% lower rental revenues for the quarter, compared to a year ago. During the quarter we reduced 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 as we maintain our independent focus on disciplined execution during the pending WillScot Mobile Mini transaction.” DIVISION HIGHLIGHTS: All comparisons presented below are for the quarter ended March 31, 2024 to the quarter ended March 31, 2023 unless otherwise indicated. MOBILE MODULAR For the first quarter of 2024, the Company’s Mobile Modular division reported Adjusted EBITDA of $43.3 million, an increase of $10.9 million, or 34%, when compared to the same quarter in 2023. Rental revenues increased 19% to $76.5 million, depreciation expense increased 14% to $9.9 million, and other direct costs decreased 6% to $22.7 million, which resulted in an increase in gross profit on rental revenues of 41% to $43.9 million. Rental related services revenues increased 12% to $24.1 million, primarily attributable to higher delivery and pick-up activities and higher site related services, with associated gross profit increasing 14% to $8.4 million. Sales revenues increased 49% to $25.3 million, primarily from higher new equipment sales. Gross margin on sales was 31% in 2024, compared to 37% in 2023, resulting in a 27% increase in gross profit on sales revenues to $7.9 million. The reduction in gross margin on sales was primarily attributed to a higher mix of new versus used sales in 2024. Selling and administrative expenses increased $1.6 million to $40.1 million. Included within selling and administrative expenses was $5.3 million higher allocated corporate costs, which included $6.5 million in allocated transaction costs related to the pending merger with WillScot Mobile Mini. PORTABLE STORAGE For the first quarter of 2024, the Company’s Portable Storage division reported Adjusted EBITDA of $11.5 million, an increase of $1.5 million, or 15%, when compared to the same quarter in 2023. Rental revenues increased 8% to $18.4 million, depreciation expense increased 23% to $1.0 million, and other direct costs decreased 18% to $1.5 million, which resulted in an increase in gross profit on rental revenues of 10% to $16.0 million. Rental related services revenues were $4.7 million and gross profit on rental related services revenues was $0.3 million, which were both comparable to the first quarter of 2023. Sales revenues increased $0.6 million to $1.2 million, primarily from higher used equipment sales. Gross margin on sales was 37% compared to 49% in 2023, resulting in a $0.1 million increase in gross profit on sales revenues to $0.4 million. Selling and administrative expenses increased $1.0 million to $9.0 million, primarily due to higher allocated corporate expenses and marketing and administrative costs. TRS-RENTELCO For the first quarter of 2024, the Company’s TRS-RenTelco division reported Adjusted EBITDA of $18.5 million, a decrease of 10%, when compared to the same quarter in 2023. Rental revenues decreased 13% to $25.4 million, depreciation expense decreased 7%, and other direct costs decreased 7%, resulting in a 22% decrease in gross profit on rental revenues to $9.0 million. The rental revenue decrease was primarily due to weakness in the semiconductor related end markets, resulting in lower average rental equipment on rent compared to the prior year. Sales revenues increased 33% to $6.8 million and gross profit on sales revenues increased 34% to $3.9 million. Selling and administrative expenses decreased 6%, to $8.9 million, primarily due to lower allocated corporate expenses. 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 April 4, 2024, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on April 25, 2024 to discuss the first 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 1-800-723-5782 (in the U.S.), or 1-402-220-2663 (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. MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended March 31, (in thousands, except per share amounts) 2024 2023 Revenues Rental $ 120,332 $ 110,247 Rental related services 29,580 27,132 Rental operations 149,912 137,379 Sales 35,069 23,660 Other 2,846 2,679 Total revenues 187,827 163,718 Costs and Expenses Direct costs of rental operations: Depreciation of rental equipment 22,366 21,833 Rental related services 20,786 19,268 Other 29,010 31,135 Total direct costs of rental operations 72,162 72,236 Costs of sales 22,397 14,115 Total costs of revenues 94,559 86,351 Gross profit 93,268 77,367 Expenses: Selling and administrative expenses 59,818 57,498 Other income, net (9,281 ) — Income from operations 42,731 19,869 Interest expense 12,704 7,464 Foreign currency exchange loss (gain) 132 (226 ) Income from continuing operations before provision for income taxes 29,895 12,631 Provision for income taxes from continuing operations 7,047 1,113 Income from continuing operations 22,848 11,518 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 — 58,883 Income from discontinued operations — 60,139 Net income $ 22,848 $ 71,657 Earnings per share from continuing operations: Basic $ 0.93 $ 0.47 Diluted $ 0.93 $ 0.47 Earnings per share from discontinued operations: Basic $ — $ 2.46 Diluted $ — $ 2.45 Earnings per share: Basic $ 0.93 $ 2.93 Diluted $ 0.93 $ 2.92 Shares used in per share calculation: Basic 24,513 24,416 Diluted 24,564 24,542 Cash dividends declared per share $ 0.475 $ 0.465 MCGRATH RENTCORP CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, December 31, (in thousands) 2024 2023 Assets Cash $ 1,912 $ 877 Accounts receivable, net of allowance for credit losses of $2,819 at March 31, 2024 and $2,801 at December 31, 2023 211,950 227,368 Rental equipment, at cost: Relocatable modular buildings 1,345,919 1,291,093 Portable storage containers 240,517 236,123 Electronic test equipment 370,641 377,587 1,957,077 1,904,803 Less: accumulated depreciation (588,535 ) (575,480 ) Rental equipment, net 1,368,542 1,329,323 Property, plant and equipment, net 189,166 169,114 Inventories 24,548 15,425 Prepaid expenses and other assets 82,066 87,364 Intangible assets, net 62,020 64,588 Goodwill 323,224 323,224 Total assets $ 2,263,428 $ 2,217,283 Liabilities and Shareholders' Equity Liabilities: Notes payable $ 798,561 $ 762,975 Accounts payable 57,162 58,760 Accrued liabilities 95,725 108,763 Deferred income 122,696 111,428 Deferred income taxes, net 246,264 241,555 Total liabilities 1,320,408 1,283,481 Shareholders’ equity: Common stock, no par value - Authorized 40,000 shares Issued and outstanding - 24,541 shares as of March 31, 2024 and 24,496 shares as of December 31, 2023 109,249 111,122 Retained earnings 833,820 822,796 Accumulated other comprehensive loss (49 ) (116 ) Total shareholders’ equity 943,020 933,802 Total liabilities and shareholders’ equity $ 2,263,428 $ 2,217,283 MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, (in thousands) 2024 2023 Cash Flows from Operating Activities: Net income $ 22,848 $ 71,657 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 27,187 27,590 Deferred income taxes 4,709 (45,496 ) Provision for credit losses 253 744 Share-based compensation 2,209 1,493 Gain on sale of property, plant and equipment (9,281 ) — Gain on sale of discontinued operations — (58,883 ) Gain on sale of used rental equipment (7,355 ) (3,089 ) Foreign currency exchange loss (gain) 132 (226 ) Amortization of debt issuance costs 2 2 Change in: Accounts receivable 15,165 16,209 Inventories (9,123 ) (5,313 ) Prepaid expenses and other assets 5,298 (2,032 ) Accounts payable 9,145 31,559 Accrued liabilities (13,037 ) (1,722 ) Deferred income 11,268 3,218 Net cash provided by operating activities 59,420 35,711 Cash Flows from Investing Activities: Proceeds from sale of discontinued operations — 262,454 Purchases of rental equipment (78,641 ) (77,731 ) Purchases of property, plant and equipment (25,277 ) (6,857 ) Cash paid for acquisition of businesses — (453,592 ) Proceeds from sales of used rental equipment 13,554 12,197 Proceeds from sales of property, plant and equipment 12,251 — Net cash used in investing activities (78,113 ) (263,529 ) Cash Flows from Financing Activities: Net borrowings under bank lines of credit 35,584 245,033 Taxes paid related to net share settlement of stock awards (4,082 ) (6,086 ) Payment of dividends (11,774 ) (11,400 ) Net cash provided by financing activities 19,728 227,547 Effect of foreign currency exchange rate changes on cash — 4 Net increase (decrease) in cash 1,035 (267 ) Cash balance, beginning of period 877 957 Cash balance, end of period $ 1,912 $ 690 Supplemental Disclosure of Cash Flow Information: Interest paid, during the period $ 14,184 $ 7,817 Net income taxes paid, during the period $ 479 $ 413 Dividends accrued during the period, not yet paid $ 12,060 $ 11,851 Rental equipment acquisitions, not yet paid $ 5,795 $ 5,697 MCGRATH RENTCORP BUSINESS SEGMENT DATA (unaudited) Three months ended March 31, 2024 (dollar amounts in thousands) Mobile Modular Portable Storage TRS-RenTelco Enviroplex Consolidated Revenues Rental $ 76,496 $ 18,407 $ 25,429 $ — $ 120,332 Rental related services 24,133 4,723 724 — 29,580 Rental operations 100,629 23,130 26,153 — 149,912 Sales 25,326 1,212 6,812 1,719 35,069 Other 1,630 418 798 — 2,846 Total revenues 127,585 24,760 33,763 1,719 187,827 Costs and Expenses Direct costs of rental operations: Depreciation 9,874 965 11,527 — 22,366 Rental related services 15,780 4,456 550 — 20,786 Other 22,673 1,468 4,869 — 29,010 Total direct costs of rental operations 48,327 6,889 16,946 — 72,162 Costs of sales 17,413 768 2,942 1,274 22,397 Total costs of revenues 65,740 7,657 19,888 1,274 94,559 Gross Profit Rental 43,949 15,974 9,033 — 68,956 Rental related services 8,353 267 174 — 8,794 Rental operations 52,302 16,241 9,207 — 77,750 Sales 7,913 444 3,870 445 12,672 Other 1,630 418 798 — 2,846 Total gross profit 61,845 17,103 13,875 445 93,268 Selling and administrative expenses 40,087 9,010 8,918 1,803 59,818 Other income, net (6,220 ) (1,319 ) (1,742 ) — (9,281 ) Income (loss) from operations $ 27,978 $ 9,412 $ 6,699 $ (1,358 ) $ 42,731 Interest expense 12,704 Foreign currency exchange loss 132 Provision for income taxes 7,047 Net income $ 22,848 Other Information Adjusted EBITDA 1 $ 43,327 $ 11,522 $ 18,480 $ (1,261 ) $ 72,068 Average rental equipment 2 $ 1,174,327 $ 223,285 $ 372,081 Average monthly total yield 3 2.17 % 2.75 % 2.18 % Average utilization 4 78.7 % 69.8 % 56.5 % Average monthly rental rate 5 2.76 % 3.94 % 4.03 % 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. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 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. 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) Three months ended March 31, 2023 (dollar amounts in thousands) Mobile Modular Portable Storage TRS-RenTelco Enviroplex Adler Tanks (Discontinued) Consolidated Revenues Rental $ 64,056 $ 17,057 $ 29,134 $ — $ 6,520 $ 116,767 Rental related services 21,534 4,718 880 — 2,584 29,716 Rental operations 85,590 21,775 30,014 — 9,104 146,483 Sales 16,967 638 5,114 941 269 23,929 Other 1,370 317 992 — 65 2,744 Total revenues 103,927 22,730 36,120 941 9,438 173,156 Costs and Expenses Direct costs of rental operations: Depreciation 8,657 787 12,389 — 1,325 23,158 Rental related services 14,226 4,381 661 — 2,020 21,288 Other 24,127 1,783 5,225 — 1,270 32,405 Total direct costs of rental operations 47,009 6,952 18,275 — 4,614 76,850 Costs of sales 10,747 327 2,225 816 159 14,274 Total costs of revenues 57,756 7,279 20,500 816 4,773 91,124 Gross Profit Rental 31,273 14,486 11,520 — 3,926 61,205 Rental related services 7,308 337 219 — 564 8,428 Rental operations 38,581 14,823 11,739 — 4,490 69,633 Sales 6,220 311 2,889 125 110 9,655 Other 1,370 317 992 — 65 2,744 Total gross profit 46,171 15,451 15,620 125 4,665 82,032 Selling and administrative expenses 38,456 8,058 9,451 1,533 2,582 60,080 Other income, net — — — — — — Income (loss) from operations $ 7,715 $ 7,393 $ 6,169 $ (1,408 ) $ 2,083 21,952 Interest expense 7,838 Foreign currency exchange gain (226 ) Provision for income taxes 1,566 Net income $ 12,774 Other Information Adjusted EBITDA 1 $ 32,425 $ 10,020 $ 20,635 $ (1,330 ) $ 3,682 $ 65,432 Average rental equipment 2 $ 987,526 $ 189,348 $ 396,835 Average monthly total yield 3 2.16 % 3.01 % 2.40 % Average utilization 4 79.4 % 80.8 % 59.2 % Average monthly rental rate 5 2.72 % 3.71 % 4.14 % 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. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period. 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. 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 and gains on property sales. 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 and gains on property sales 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 and gains on property sales. 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 March 31, Twelve Months Ended March 31, 2024 2023 2024 2023 Income from continuing operations $ 22,848 $ 11,518 $ 123,182 $ 97,169 Provision for income taxes from continuing operations 7,047 1,113 43,544 26,981 Interest expense 12,704 7,464 45,800 17,418 Depreciation and amortization 27,187 26,133 108,972 96,489 EBITDA 69,786 46,228 321,498 238,057 Share-based compensation 2,209 1,375 8,991 6,610 Transaction costs 3 9,354 14,147 11,084 18,200 Other income, net 4 (9,281 ) — (12,899 ) — Adjusted EBITDA 1 $ 72,068 $ 61,750 $ 328,674 $ 262,867 Adjusted EBITDA margin 2 37 % 38 % 38 % 39 % Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities (dollar amounts in thousands) Three Months Ended March 31, Twelve Months Ended March 31, 2024 2023 2024 2023 Adjusted EBITDA 1 $ 72,068 $ 65,432 $ 328,674 $ 297,579 Interest paid (14,184 ) (7,817 ) (44,970 ) (20,455 ) Income taxes paid, net of refunds received (479 ) (413 ) (91,631 ) (27,355 ) Gain on sale of used rental equipment (7,355 ) (3,089 ) (35,908 ) (35,704 ) Foreign currency exchange loss 132 (226 ) 48 165 Amortization of debt issuance costs 2 2 8 14 Change in certain assets and liabilities: Accounts receivable, net 15,418 16,953 (36,678 ) (21,506 ) Prepaid expenses and other assets 5,298 (7,345 ) (16,683 ) (28,042 ) Accounts payable and other liabilities (22,748 ) (31,004 ) (9,570 ) (7,992 ) Deferred income 11,268 3,218 �� 22,144 21,696 Net cash provided by operating activities $ 59,420 $ 35,711 $ 115,434 $ 178,400 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. Adjusted EBITDA for the three months ended March 31, 2023, excludes the gain on sale of discontinued operations from the divestiture of Adler Tanks. Total Adjusted EBITDA attributed to discontinued operations for the period ended March 31, 2023 was $3,682. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues for the period. Transaction costs include acquisition and divestiture related legal and professional fees and other costs specific to these transactions. Other income, net consists of net gains on property, plant and equipment sales that are infrequent in nature and excluded from Adjusted EBITDA. View source version on businesswire.com: https://www.businesswire.com/news/home/20240424358321/en/