McGrath RentCorp Announces Results for Third Quarter 2021

McGrath RentCorp (NASDAQ: MGRC) (the “Company”), a diversified business-to-business rental company, today announced total revenues for the quarter ended September 30, 2021 of $173.3 million, an increase of 11%, compared to the third quarter of 2020. The Company reported net income of $23.3 million, or $0.95 per diluted share, for the third quarter of 2021, compared to net income of $28.1 million, or $1.15 per diluted share, for the third quarter of 2020.

THIRD QUARTER 2021 COMPANY HIGHLIGHTS:

  • Rental revenues increased 17% year-over-year to $103.3 million.
  • Total revenues increased 11% year-over-year to $173.3 million.
  • Adjusted EBITDA1 increased 5% to $66.0 million.
  • Dividend rate increased 4% year-over-year to $0.435 per share for the third quarter of 2021. On an annualized basis, this dividend represents a 2.3% yield on the October 27, 2021 close price of $75.24 per share.

Joe Hanna, President and CEO of McGrath RentCorp, made the following comments regarding these results and future expectations:

“Our third quarter results reflect improved end market conditions in each of our three rental business segments. Companywide rental revenues increased 17% year over year. Modular rental revenues grew 26%, with the majority of the growth attributable to our Design Space and Kitchens To Go acquisitions. Rental revenues at TRS and Adler grew 6% and 11%, respectively.

Our teams continued working through the integration of Design Space and Kitchens To Go during the quarter and I am very pleased with their progress. These acquisitions will provide additional long-term growth opportunities, as we expect to deploy more rental equipment capital in our expanded geographic coverage and to expand the breadth of products and services we bring to our customers.

We continued to see some cost pressures from elevated material and labor expenses, and some project delays, reflecting supply chain challenges. As business activity level increased, these factors pressured modular rental and sales margins during the quarter, and pushed completion of some modular sales projects to later in the current year, and in to next year. Partly offsetting these pressures, we are increasing pricing as demand improves.

The overall positive rental demand trends that we have seen in recent months have continued into the fourth quarter. We are fully focused on solid execution for the remainder of the year.”

DIVISION HIGHLIGHTS:

All comparisons presented below are for the quarter ended September 30, 2021 to the quarter ended September 30, 2020 unless otherwise indicated.

MOBILE MODULAR

For the third quarter of 2021, the Company’s Mobile Modular division reported income from operations of $23.5 million, a decrease of $1.4 million, or 5%. Rental revenues increased 26% to $59.2 million, depreciation expense increased 31% to $7.5 million and other direct costs increased 40% to $16.5 million, which resulted in an increase in gross profit on rental revenues of 19% to $35.1 million. The rental revenue increase reflects in part the new Design Space and Kitchens To Go customers that contributed approximately three quarters of the increase. Rental related services revenues increased 31% to $24.5 million, primarily attributable to higher amortization of modular building delivery and return delivery and dismantle revenues, higher site related and other services performed during the lease and increased delivery and return delivery revenues at Portable Storage, with associated gross profit increasing 15% to $6.0 million. Sales revenues decreased 10% to $26.4 million, primarily due to lower new equipment sales. Gross margin on sales was 31% compared to 26% in 2020, resulting in a 9% increase in gross profit on sales revenues to $8.2 million. Selling and administrative expenses increased 47% to $26.1 million, primarily due to increased employee salaries and benefit costs totaling $2.5 million, mostly due to the addition of Design Space and Kitchens To Go employees, $2.4 million higher amortization of intangible assets associated with the Design Space and Kitchens To Go acquisitions and $1.4 million higher allocated corporate expenses.

TRS-RENTELCO

For the third quarter of 2021, the Company’s TRS-RenTelco division reported income from operations of $9.5 million, an increase of $0.5 million, or 5%. Rental revenues increased 6% to $29.2 million, depreciation expense increased 5% to $12.2 million and other direct costs increased 4% to $5.0 million, which resulted in a 7% increase in gross profit on rental revenues to $12.0 million. The rental revenue increase was primarily the result of increased demand for general purpose equipment compared to the prior year. Sales revenues decreased 31% to $4.8 million. Gross margin on sales was 63% in 2021 compared to 44% in 2020, resulting in a 1% decrease in gross profit on sales revenues to $3.0 million. Selling and administrative expenses increased 1% to $6.0 million.

ADLER TANKS

For the third quarter of 2021, the Company’s Adler Tanks division reported income from operations of $2.8 million, an increase of 4% compared to the prior year. Rental revenues increased 11% to $14.8 million, depreciation expense was comparable to the prior year and other direct costs increased 62% to $3.2 million, which resulted in an increased gross profit on rental revenues of 3%, to $7.6 million. Rental related services revenues increased 14% to $6.3 million, with gross profit on rental related services increasing 2%, to $1.2 million. Selling and administrative expenses increased 9% to $6.3 million primarily due to higher allocated corporate expenses.

FINANCIAL OUTLOOK:

Based upon the Company’s year-to-date results and current outlook for the remainder of the year, the Company is updating its financial outlook.

For the full-year 2021, the Company expects:

 

Previous

Current

  • Total revenue:
  • Adjusted EBITDA:
  • Gross rental equipment capital expenditures:

$610 million to $640 million

$245 million to $260 million

$100 million to $120 million

 

$618 million to $628 million

$245 million to $249 million

$108 million to $118 million

1.

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

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 RENTCORP:

Founded in 1979, McGrath RentCorp (Nasdaq: MGRC) is a diversified business-to-business rental company providing modular buildings, electronic test equipment, portable storage and tank containment solutions across the United States and other select North American regions. The Company’s rental operations consist of four divisions: Mobile Modular rents and sells modular buildings to fulfill customers’ temporary and permanent classroom and office space needs; TRS-RenTelco rents and sells electronic test equipment; Adler Tank Rentals rents and sells containment solutions for hazardous and nonhazardous liquids and solids; and Mobile Modular Portable Storage provides portable storage rental solutions. For more information on McGrath RentCorp and its operating units, please visit our websites:

Corporate – www.mgrc.com

Modular Buildings – www.mobilemodular.com

Electronic Test Equipment – www.trsrentelco.com

Tanks and Boxes – www.adlertankrentals.com

Portable Storage – www.mobilemodularcontainers.com

School Facilities Manufacturing – www.enviroplex.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 October 1, 2021, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on October 28, 2021 to discuss the third quarter 2021 results. To participate in the teleconference, dial 1-844-707-0666 (in the U.S.), or 1-703-639-1220 (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 1-855-859-2056 (in the U.S.), or 1-404-537-3406 (outside the U.S.). The pass code for the conference call replay is 5485029. 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, Mr. Hanna’s statements about the Design Space and Kitchens To Go acquisitions providing additional long-term growth opportunities and the expectation to deploy more rental equipment capital and to expand the breadth of products and services to the Company’s customers, optimism about the overall positive rental demand trends, as well as the statements regarding the full year 2021 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: the duration of the COVID-19 pandemic and its economic impact, the extent and length of the restrictions associated with COVID-19 pandemic, the health of the education and commercial markets in our modular building division; the activity levels in the general purpose and communications test equipment markets at TRS-RenTelco; the ability to obtain the synergies expected from the Design Space and Kitchens To Go acquisitions and the success of integrating such acquisitions; the utilization levels and rental rates of our Adler Tanks liquid and solid containment tank and box rental assets; continued execution of our 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 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)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

103,269

 

 

$

88,138

 

 

$

283,937

 

 

$

263,273

 

Rental related services

 

 

31,513

 

 

 

25,040

 

 

 

73,870

 

 

 

70,026

 

Rental operations

 

 

134,782

 

 

 

113,178

 

 

 

357,807

 

 

 

333,299

 

Sales

 

 

37,636

 

 

 

42,331

 

 

 

80,503

 

 

 

87,366

 

Other

 

 

874

 

 

 

939

 

 

 

2,612

 

 

 

2,909

 

Total revenues

 

 

173,292

 

 

 

156,448

 

 

 

440,922

 

 

 

423,574

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation of rental equipment

 

 

23,802

 

 

 

21,419

 

 

 

68,216

 

 

 

64,640

 

Rental related services

 

 

24,356

 

 

 

18,603

 

 

 

56,236

 

 

 

51,760

 

Other

 

 

24,711

 

 

 

18,553

 

 

 

67,696

 

 

 

56,171

 

Total direct costs of rental operations

 

 

72,869

 

 

 

58,575

 

 

 

192,148

 

 

 

172,571

 

Costs of sales

 

 

24,618

 

 

 

29,669

 

 

 

50,021

 

 

 

57,911

 

Total costs of revenues

 

 

97,487

 

 

 

88,244

 

 

 

242,169

 

 

 

230,482

 

Gross profit

 

 

75,805

 

 

 

68,204

 

 

 

198,753

 

 

 

193,093

 

Selling and administrative expenses

 

 

39,907

 

 

 

30,871

 

 

 

109,305

 

 

 

93,365

 

Income from operations

 

 

35,898

 

 

 

37,333

 

 

 

89,448

 

 

 

99,728

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(3,168

)

 

 

(1,968

)

 

 

(7,208

)

 

 

(6,804

)

Foreign currency exchange (loss) gain

 

 

(128

)

 

 

130

 

 

 

(185

)

 

 

(189

)

Income before provision for income taxes

 

 

32,602

 

 

 

35,495

 

 

 

82,055

 

 

 

92,735

 

Provision for income taxes

 

 

9,350

 

 

 

7,394

 

 

 

20,797

 

 

 

21,926

 

Net income

 

$

23,252

 

 

$

28,101

 

 

$

61,258

 

 

$

70,809

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.96

 

 

$

1.17

 

 

$

2.53

 

 

$

2.93

 

Diluted

 

$

0.95

 

 

$

1.15

 

 

$

2.50

 

 

$

2.88

 

Shares used in per share calculation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

24,245

 

 

 

24,097

 

 

 

24,209

 

 

 

24,170

 

Diluted

 

 

24,507

 

 

 

24,443

 

 

 

24,506

 

 

 

24,558

 

Cash dividends declared per share

 

$

0.435

 

 

$

0.420

 

 

$

1.305

 

 

$

1.260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MCGRATH RENTCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

September 30,

 

 

December 31,

 

(in thousands)

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Cash

 

$

2,380

 

 

$

1,238

 

Accounts receivable, net of allowance for doubtful accounts of $2,225 in 2021

and $2,100 in 2020

 

 

168,831

 

 

 

123,316

 

Rental equipment, at cost:

 

 

 

 

 

 

 

 

Relocatable modular buildings

 

 

1,023,344

 

 

 

882,115

 

Electronic test equipment

 

 

363,799

 

 

 

333,020

 

Liquid and solid containment tanks and boxes

 

 

311,677

 

 

 

315,706

 

 

 

 

1,698,820

 

 

 

1,530,841

 

Less: accumulated depreciation

 

 

(635,358

)

 

 

(592,725

)

Rental equipment, net

 

 

1,063,462

 

 

 

938,116

 

Property, plant and equipment, net

 

 

135,055

 

 

 

136,210

 

Prepaid expenses and other assets

 

 

59,523

 

 

 

41,549

 

Intangible assets, net

 

 

48,715

 

 

 

7,118

 

Goodwill

 

 

132,387

 

 

 

28,197

 

Total assets

 

$

1,610,353

 

 

$

1,275,744

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Notes payable

 

$

459,475

 

 

$

222,754

 

Accounts payable and accrued liabilities

 

 

137,308

 

 

 

108,334

 

Deferred income

 

 

69,634

 

 

 

45,975

 

Deferred income taxes, net

 

 

231,480

 

 

 

216,077

 

Total liabilities

 

 

897,897

 

 

 

593,140

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Issued and outstanding - 24,247 shares as of September 30, 2021 and 24,128 shares as of December 31, 2020

 

 

106,744

 

 

 

106,289

 

Retained earnings

 

 

605,754

 

 

 

576,419

 

Accumulated other comprehensive loss

 

 

(42

)

 

 

(104

)

Total shareholders’ equity

 

 

712,456

 

 

 

682,604

 

Total liabilities and shareholders’ equity

 

$

1,610,353

 

 

$

1,275,744

 

 

 

 

 

 

 

 

 

 

 

MCGRATH RENTCORP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

Nine Months Ended September 30,

 

(in thousands)

 

2021

 

 

2020

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

61,258

 

 

$

70,809

 

Adjustments to reconcile net income to net cash provided by

operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

79,047

 

 

 

71,249

 

Provision for doubtful accounts

 

 

193

 

 

 

1,227

 

Share-based compensation

 

 

5,302

 

 

 

4,894

 

Gain on sale of used rental equipment

 

 

(17,788

)

 

 

(14,110

)

Foreign currency exchange loss

 

 

185

 

 

 

189

 

Amortization of debt issuance costs

 

 

11

 

 

 

8

 

Change in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(33,471

)

 

 

(2,561

)

Prepaid expenses and other assets

 

 

(11,409

)

 

 

(1,314

)

Accounts payable and accrued liabilities

 

 

17,428

 

 

 

(582

)

Deferred income

 

 

20,128

 

 

 

3,591

 

Deferred income taxes

 

 

15,403

 

 

 

(1,863

)

Net cash provided by operating activities

 

 

136,287

 

 

 

131,537

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Purchases of rental equipment

 

 

(90,379

)

 

 

(65,661

)

Purchases of property, plant and equipment

 

 

(969

)

 

 

(9,639

)

Cash paid for acquisition of businesses

 

 

(285,624

)

 

 

 

Proceeds from sales of used rental equipment

 

 

41,556

 

 

 

33,837

 

Net cash used in investing activities

 

 

(335,416

)

 

 

(41,463

)

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Net borrowing (repayment) under bank lines of credit

 

 

176,758

 

 

 

(43,460

)

Borrowings under note purchase agreement

 

 

100,000

 

 

 

 

Principal payment of Series B senior notes

 

 

(40,000

)

 

 

 

Repurchase of common stock

 

 

 

 

 

(13,617

)

Taxes paid related to net share settlement of stock awards

 

 

(4,847

)

 

 

(3,930

)

Payment of dividends

 

 

(31,635

)

 

 

(29,642

)

Net cash provided by (used in) financing activities

 

 

200,276

 

 

 

(90,649

)

Effect of foreign currency exchange rate changes on cash

 

 

(5

)

 

 

(224

)

Net increase (decrease) in cash

 

 

1,142

 

 

 

(799

)

Cash balance, beginning of period

 

 

1,238

 

 

 

2,342

 

Cash balance, end of period

 

$

2,380

 

 

$

1,543

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

 

 

Interest paid, during the period

 

$

6,477

 

 

$

6,829

 

Net income taxes paid, during the period

 

$

8,074

 

 

$

24,704

 

Dividends accrued during the period, not yet paid

 

$

10,002

 

 

$

10,355

 

Rental equipment acquisitions, not yet paid

 

$

2,199

 

 

$

5,827

 

 

 

 

 

 

 

 

 

 

1.

Average rental equipment represents the cost of rental equipment, excluding accessory equipment. For Mobile Modular and Adler Tanks, Average rental equipment also excludes new equipment inventory.

2.

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

3.

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.

4.

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 September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollar amounts in thousands)

 

Mobile Modular

 

 

TRS-RenTelco

 

 

Adler Tanks

 

 

Enviroplex

 

 

Consolidated

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

59,223

 

 

$

29,204

 

 

$

14,842

 

 

$

 

 

$

103,269

 

Rental related services

 

 

24,468

 

 

 

699

 

 

 

6,346

 

 

 

 

 

 

31,513

 

Rental operations

 

 

83,691

 

 

 

29,903

 

 

 

21,188

 

 

 

 

 

 

134,782

 

Sales

 

 

26,362

 

 

 

4,773

 

 

 

960

 

 

 

5,541

 

 

 

37,636

 

Other

 

 

341

 

 

 

398

 

 

 

135

 

 

 

 

 

 

874

 

Total revenues

 

 

110,394

 

 

 

35,074

 

 

 

22,283

 

 

 

5,541

 

 

 

173,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

7,544

 

 

 

12,151

 

 

 

4,107

 

 

 

 

 

 

23,802

 

Rental related services

 

 

18,508

 

 

 

663

 

 

 

5,185

 

 

 

 

 

 

24,356

 

Other

 

 

16,533

 

 

 

5,015

 

 

 

3,163

 

 

 

 

 

 

24,711

 

Total direct costs of rental operations

 

 

42,585

 

 

 

17,829

 

 

 

12,455

 

 

 

 

 

 

72,869

 

Costs of sales

 

 

18,145

 

 

 

1,743

 

 

 

680

 

 

 

4,050

 

 

 

24,618

 

Total costs of revenues

 

 

60,730

 

 

 

19,572

 

 

 

13,135

 

 

 

4,050

 

 

 

97,487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

 

35,146

 

 

 

12,038

 

 

 

7,572

 

 

 

 

 

 

54,756

 

Rental related services

 

 

5,960

 

 

 

36

 

 

 

1,161

 

 

 

 

 

 

7,157

 

Rental operations

 

 

41,106

 

 

 

12,074

 

 

 

8,733

 

 

 

 

 

 

61,913

 

Sales

 

 

8,217

 

 

 

3,030

 

 

 

280

 

 

 

1,491

 

 

 

13,018

 

Other

 

 

341

 

 

 

398

 

 

 

135

 

 

 

 

 

 

874

 

Total gross profit

 

 

49,664

 

 

 

15,502

 

 

 

9,148

 

 

 

1,491

 

 

 

75,805

 

Selling and administrative expenses

 

 

26,138

 

 

 

6,010

 

 

 

6,333

 

 

 

1,426

 

 

 

39,907

 

Income from operations

 

$

23,526

 

 

$

9,492

 

 

$

2,815

 

 

$

65

 

 

 

35,898

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,168

)

Foreign currency exchange loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(128

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,350

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

23,252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average rental equipment 1

 

$

975,119

 

 

$

362,104

 

 

$

311,876

 

 

 

 

 

 

 

 

 

Average monthly total yield 2

 

 

2.02

%

 

 

2.69

%

 

 

1.59

%

 

 

 

 

 

 

 

 

Average utilization 3

 

 

76.5

%

 

 

66.9

%

 

 

48.1

%

 

 

 

 

 

 

 

 

Average monthly rental rate 4

 

 

2.65

%

 

 

4.02

%

 

 

3.30

%

 

 

 

 

 

 

 

 

1.

Average rental equipment represents the cost of rental equipment, excluding accessory equipment. For Mobile Modular and Adler Tanks, Average rental equipment also excludes new equipment inventory.

2.

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

3.

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.

4.

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 September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollar amounts in thousands)

 

Mobile Modular

 

 

TRS-RenTelco

 

 

Adler Tanks

 

 

Enviroplex

 

 

Consolidated

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

47,134

 

 

$

27,619

 

 

$

13,385

 

 

$

 

 

$

88,138

 

Rental related services

 

 

18,684

 

 

 

800

 

 

 

5,556

 

 

 

 

 

 

25,040

 

Rental operations

 

 

65,818

 

 

 

28,419

 

 

 

18,941

 

 

 

 

 

 

113,178

 

Sales

 

 

29,275

 

 

 

6,912

 

 

 

230

 

 

 

5,914

 

 

 

42,331

 

Other

 

 

320

 

 

 

525

 

 

 

94

 

 

 

 

 

 

939

 

Total revenues

 

 

95,413

 

 

 

35,856

 

 

 

19,265

 

 

 

5,914

 

 

 

156,448

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

5,771

 

 

 

11,547

 

 

 

4,101

 

 

 

 

 

 

21,419

 

Rental related services

 

 

13,510

 

 

 

673

 

 

 

4,420

 

 

 

 

 

 

18,603

 

Other

 

 

11,780

 

 

 

4,820

 

 

 

1,953

 

 

 

 

 

 

18,553

 

Total direct costs of rental operations

 

 

31,061

 

 

 

17,040

 

 

 

10,474

 

 

 

 

 

 

58,575

 

Costs of sales

 

 

21,726

 

 

 

3,853

 

 

 

251

 

 

 

3,839

 

 

 

29,669

 

Total costs of revenues

 

 

52,787

 

 

 

20,893

 

 

 

10,725

 

 

 

3,839

 

 

 

88,244

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

 

29,583

 

 

 

11,252

 

 

 

7,331

 

 

 

 

 

 

48,166

 

Rental related services

 

 

5,174

 

 

 

127

 

 

 

1,136

 

 

 

 

 

 

6,437

 

Rental operations

 

 

34,757

 

 

 

11,379

 

 

 

8,467

 

 

 

 

 

 

54,603

 

Sales

 

 

7,549

 

 

 

3,059

 

 

 

(21

)

 

 

2,075

 

 

 

12,662

 

Other

 

 

320

 

 

 

525

 

 

 

94

 

 

 

 

 

 

939

 

Total gross profit

 

 

42,626

 

 

 

14,963

 

 

 

8,540

 

 

 

2,075

 

 

 

68,204

 

Selling and administrative expenses

 

 

17,739

 

 

 

5,962

 

 

 

5,821

 

 

 

1,349

 

 

 

30,871

 

Income from operations

 

$

24,887

 

 

$

9,001

 

 

$

2,719

 

 

$

726

 

 

 

37,333

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,968

)

Foreign currency exchange income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

130

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,394

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

28,101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average rental equipment 1

 

$

829,460

 

 

$

336,015

 

 

$

314,933

 

 

 

 

 

 

 

 

 

Average monthly total yield 2

 

 

1.89

%

 

 

2.74

%

 

 

1.42

%

 

 

 

 

 

 

 

 

Average utilization 3

 

 

76.3

%

 

 

67.1

%

 

 

44.1

%

 

 

 

 

 

 

 

 

Average monthly rental rate 4

 

 

2.48

%

 

 

4.08

%

 

 

3.21

%

 

 

 

 

 

 

 

 

1.

Average rental equipment represents the cost of rental equipment, excluding accessory equipment. For Mobile Modular and Adler Tanks, Average rental equipment also excludes new equipment inventory.

2.

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

3.

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.

4.

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, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollar amounts in thousands)

 

Mobile Modular

 

 

TRS-RenTelco

 

 

Adler Tanks

 

 

Enviroplex

 

 

Consolidated

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

159,118

 

 

$

84,340

 

 

$

40,479

 

 

$

 

 

$

283,937

 

Rental related services

 

 

54,726

 

 

 

2,149

 

 

 

16,995

 

 

 

 

 

 

73,870

 

Rental operations

 

 

213,844

 

 

 

86,489

 

 

 

57,474

 

 

 

 

 

 

357,807

 

Sales

 

 

48,766

 

 

 

14,679

 

 

 

2,161

 

 

 

14,897

 

 

 

80,503

 

Other

 

 

1,004

 

 

 

1,292

 

 

 

316

 

 

 

 

 

 

2,612

 

Total revenues

 

 

263,614

 

 

 

102,460

 

 

 

59,951

 

 

 

14,897

 

 

 

440,922

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

20,437

 

 

 

35,429

 

 

 

12,350

 

 

 

 

 

 

68,216

 

Rental related services

 

 

40,384

 

 

 

2,061

 

 

 

13,791

 

 

 

 

 

 

56,236

 

Other

 

 

45,309

 

 

 

14,267

 

 

 

8,120

 

 

 

 

 

 

67,696

 

Total direct costs of rental operations

 

 

106,130

 

 

 

51,757

 

 

 

34,261

 

 

 

 

 

 

192,148

 

Costs of sales

 

 

32,127

 

 

 

5,836

 

 

 

1,523

 

 

 

10,535

 

 

 

50,021

 

Total costs of revenues

 

 

138,257

 

 

 

57,593

 

 

 

35,784

 

 

 

10,535

 

 

 

242,169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

 

93,373

 

 

 

34,643

 

 

 

20,009

 

 

 

 

 

 

148,025

 

Rental related services

 

 

14,340

 

 

 

90

 

 

 

3,204

 

 

 

 

 

 

17,634

 

Rental operations

 

 

107,713

 

 

 

34,733

 

 

 

23,213

 

 

 

 

 

 

165,659

 

Sales

 

 

16,640

 

 

 

8,842

 

 

 

638

 

 

 

4,362

 

 

 

30,482

 

Other

 

 

1,004

 

 

 

1,292

 

 

 

316

 

 

 

 

 

 

2,612

 

Total gross profit

 

 

125,357

 

 

 

44,867

 

 

 

24,167

 

 

 

4,362

 

 

 

198,753

 

Selling and administrative expenses

 

 

67,977

 

 

 

18,381

 

 

 

18,853

 

 

 

4,094

 

 

 

109,305

 

Income from operations

 

$

57,380

 

 

$

26,486

 

 

$

5,314

 

 

$

268

 

 

 

89,448

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,208

)

Foreign currency exchange loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(185

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,797

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

61,258

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average rental equipment 1

 

$

906,633

 

 

$

348,749

 

 

$

312,928

 

 

 

 

 

 

 

 

 

Average monthly total yield 2

 

 

1.95

%

 

 

2.69

%

 

 

1.44

%

 

 

 

 

 

 

 

 

Average utilization 3

 

 

76.0

%

 

 

67.4

%

 

 

44.0

%

 

 

 

 

 

 

 

 

Average monthly rental rate 4

 

 

2.57

%

 

 

3.98

%

 

 

3.26

%

 

 

 

 

 

 

 

 

1.

Average rental equipment represents the cost of rental equipment, excluding accessory equipment. For Mobile Modular and Adler Tanks, Average rental equipment also excludes new equipment inventory.

2.

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

3.

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.

4.

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, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollar amounts in thousands)

 

Mobile Modular

 

 

TRS-RenTelco

 

 

Adler Tanks

 

 

Enviroplex

 

 

Consolidated

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

141,172

 

 

$

81,167

 

 

$

40,934

 

 

$

 

 

$

263,273

 

Rental related services

 

 

51,291

 

 

 

2,296

 

 

 

16,439

 

 

 

 

 

 

70,026

 

Rental operations

 

 

192,463

 

 

 

83,463

 

 

 

57,373

 

 

 

 

 

 

333,299

 

Sales

 

 

51,847

 

 

 

17,943

 

 

 

960

 

 

 

16,616

 

 

 

87,366

 

Other

 

 

1,063

 

 

 

1,592

 

 

 

254

 

 

 

 

 

 

2,909

 

Total revenues

 

 

245,373

 

 

 

102,998

 

 

 

58,587

 

 

 

16,616

 

 

 

423,574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

17,177

 

 

 

35,129

 

 

 

12,334

 

 

 

 

 

 

64,640

 

Rental related services

 

 

37,222

 

 

 

1,836

 

 

 

12,702

 

 

 

 

 

 

51,760

 

Other

 

 

36,773

 

 

 

12,762

 

 

 

6,636

 

 

 

 

 

 

56,171

 

Total direct costs of rental operations

 

 

91,172

 

 

 

49,727

 

 

 

31,672

 

 

 

 

 

 

172,571

 

Costs of sales

 

 

37,274

 

 

 

9,350

 

 

 

799

 

 

 

10,488

 

 

 

57,911

 

Total costs of revenues

 

 

128,446

 

 

 

59,077

 

 

 

32,471

 

 

 

10,488

 

 

 

230,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

 

87,222

 

 

 

33,276

 

 

 

21,964

 

 

 

 

 

 

142,462

 

Rental related services

 

 

14,069

 

 

 

460

 

 

 

3,737

 

 

 

 

 

 

18,266

 

Rental operations

 

 

101,291

 

 

 

33,736

 

 

 

25,701

 

 

 

 

 

 

160,728

 

Sales

 

 

14,573

 

 

 

8,593

 

 

 

161

 

 

 

6,128

 

 

 

29,455

 

Other

 

 

1,064

 

 

 

1,592

 

 

 

254

 

 

 

 

 

 

2,910

 

Total gross profit

 

 

116,928

 

 

 

43,921

 

 

 

26,116

 

 

 

6,128

 

 

 

193,093

 

Selling and administrative expenses

 

 

52,014

 

 

 

18,198

 

 

 

18,998

 

 

 

4,155

 

 

 

93,365

 

Income from operations

 

$

64,914

 

 

$

25,723

 

 

$

7,118

 

 

$

1,973

 

 

 

99,728

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,804

)

Foreign currency exchange loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(189

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,926

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

70,809

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average rental equipment 1

 

$

822,723

 

 

$

337,330

 

 

$

314,859

 

 

 

 

 

 

 

 

 

Average monthly total yield 2

 

 

1.89

%

 

 

2.67

%

 

 

1.44

%

 

 

 

 

 

 

 

 

Average utilization 3

 

 

77.5

%

 

 

65.6

%

 

 

45.5

%

 

 

 

 

 

 

 

 

Average monthly rental rate 4

 

 

2.46

%

 

 

4.08

%

 

 

3.18

%

 

 

 

 

 

 

 

 

1.

Average rental equipment represents the cost of rental equipment, excluding accessory equipment. For Mobile Modular and Adler Tanks, Average rental equipment also excludes new equipment inventory.

2.

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

3.

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.

4.

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 and share-based compensation. 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 the Company’s 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, including share-based compensation, 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. 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 Net Income to Adjusted EBITDA

(dollar amounts in thousands)

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

Twelve Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income

 

$

23,252

 

 

$

28,101

 

 

$

61,258

 

 

$

70,809

 

 

$

92,433

 

 

$

97,210

 

Provision for income taxes

 

 

9,350

 

 

 

7,394

 

 

 

20,797

 

 

 

21,926

 

 

 

28,931

 

 

 

30,979

 

Interest expense

 

 

3,168

 

 

 

1,968

 

 

 

7,208

 

 

 

6,804

 

 

 

9,191

 

 

 

9,728

 

Depreciation and amortization

 

 

28,488

 

 

 

23,587

 

 

 

79,047

 

 

 

71,249

 

 

 

102,441

 

 

 

94,765

 

EBITDA

 

 

64,258

 

 

 

61,050

 

 

 

168,310

 

 

 

170,788

 

 

 

232,996

 

 

 

232,682

 

Share-based compensation

 

 

1,705

 

 

 

1,670

 

 

 

5,302

 

 

 

4,894

 

 

 

5,957

 

 

 

6,690

 

Adjusted EBITDA 1

 

$

65,963

 

 

$

62,720

 

 

$

173,612

 

 

$

175,682

 

 

$

238,953

 

 

$

239,372

 

Adjusted EBITDA margin 2

 

 

38

%

 

 

40

%

 

 

39

%

 

 

41

%

 

 

41

%

 

 

42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Adjusted EBITDA 1

 

$

65,963

 

 

$

62,720

 

 

$

173,612

 

 

$

175,682

 

 

$

238,953

 

 

$

239,372

 

Interest paid

 

 

(2,490

)

 

 

(1,798

)

 

 

(6,477

)

 

 

(6,829

)

 

 

(8,698

)

 

 

(9,945

)

Income taxes paid, net of refunds received

 

 

(1,084

)

 

 

(22,551

)

 

 

(8,074

)

 

 

(24,704

)

 

 

(18,273

)

 

 

(32,202

)

Gain on sale of used rental equipment

 

 

(5,918

)

 

 

(4,508

)

 

 

(17,788

)

 

 

(14,110

)

 

 

(23,007

)

 

 

(20,251

)

Foreign currency exchange loss (gain)

 

 

128

 

 

 

(130

)

 

 

185

 

 

 

189

 

 

 

(82

)

 

 

59

 

Amortization of debt issuance costs

 

 

5

 

 

 

3

 

 

 

11

 

 

 

8

 

 

 

14

 

 

 

11

 

Change in certain assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(27,922

)

 

 

(3,493

)

 

 

(33,278

)

 

 

(1,334

)

 

 

(27,161

)

 

 

8,630

 

Prepaid expenses and other assets

 

 

(2,024

)

 

 

327

 

 

 

(11,409

)

 

 

(1,314

)

 

 

(6,288

)

 

 

(3,110

)

Accounts payable and other liabilities

 

 

(1,023

)

 

 

5,669

 

 

 

19,377

 

 

 

358

 

 

 

22,248

 

 

 

2,315

 

Deferred income

 

 

12,670

 

 

 

(2,224

)

 

 

20,128

 

 

 

3,591

 

 

 

7,548

 

 

 

(2,217

)

Net cash provided by operating activities

 

$

38,305

 

 

$

34,015

 

 

$

136,287

 

 

$

131,537

 

 

$

185,254

 

 

$

182,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.

Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization and share-based compensation.

2.

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

 

Contacts

Keith E. Pratt

EVP & Chief Financial Officer

925-606-9200

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