McGrath RentCorp Announces Results for Second Quarter 2021

McGrath RentCorp (NASDAQ: MGRC) (the “Company”), a diversified business-to-business rental company, today announced total revenues for the quarter ended June 30, 2021 of $146.4 million, an increase of 6%, compared to the second quarter of 2020. The Company reported net income of $20.6 million, or $0.84 per diluted share, for the second quarter of 2021, compared to net income of $22.5 million, or $0.92 per diluted share, for the second quarter of 2020.

SECOND QUARTER 2021 COMPANY HIGHLIGHTS:

  • Rental revenues increased 10% year-over-year to $94.6 million.
  • Total revenues increased 6% year-over-year to $146.4 million.
  • Excluding $2.6 million Design Space and Kitchens To Go transaction related costs and amortization of newly acquired intangible assets, net income for the second quarter was $22.5 million, or $0.92 per share, which was comparable to second quarter of 2020.
  • Adjusted EBITDA1 increased $0.4 million to $58.5 million.
  • Dividend rate increased 4% year-over-year to $0.435 per share for the second quarter of 2021. On an annualized basis, this dividend represents a 2.2% yield on the August 2, 2021 close price of $78.90 per share.
  • The Company raised full year 2021 guidance for total revenue to $610 million to $640 million and for adjusted EBITDA to $245 million to $260 million.

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

“Our second quarter results reflect improved end market conditions in each of our three business segments. Companywide rental revenues increased 10% year over year. Modular rental revenues grew 14%, with just over half the growth attributable to our Design Space and Kitchens To Go acquisitions during the quarter. Rental revenues at TRS and Adler grew 7% and 4% respectively. Sequential rental revenue growth in each segment reflected improving business conditions as we enter seasonally busier months of the year.

Our teams have been busy working through the integration of Design Space and Kitchens To Go, acquired during the second quarter. I am grateful for their exceptional support and very pleased with their progress. I am excited about the long-term potential from both of these acquisitions. Just in the first few months we have begun to realize opportunities from our combined selling resources and we expect many more opportunities to come.

While business activity levels have increased, we have also seen some impact from current economic realities in the new equipment sales portion of our modular business. Supply chain delays, labor shortages and higher costs for materials and labor are starting to extend project timelines and cause some new sales to push out to later in the year, or into next year. Consequently, our outlook for new modular equipment sales in 2021, while still higher than 2020, is not as strong as it was a few months ago.

The second half of the year is typically the most substantial contributor to our annual results. While the potential for COVID-19 related disruption remains, we will be fully focused on solid execution to make the most of the improved business conditions that we have recently seen.”

DIVISION HIGHLIGHTS:

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

MOBILE MODULAR

For the second quarter of 2021, the Company’s Mobile Modular division reported income from operations of $18.2 million, a decrease of $2.4 million, or 12%. Rental revenues increased 14% to $53.2 million, depreciation expense increased 23% to $7.1 million and other direct costs increased 28% to $15.9 million, which resulted in an increase in gross profit on rental revenues of 6% to $30.3 million. The rental revenue increase was due in part to approximately $4.0 million revenues earned during the quarter from new Design Space and Kitchens To Go customers acquired during the quarter. Rental related services revenues increased 12% to $16.2 million, primarily due to increased delivery and return delivery revenues at Portable Storage and higher amortization of modular building delivery and return delivery and dismantle revenues, with associated gross profit increasing 7% to $4.4 million. Sales revenues decreased 3% to $14.8 million, primarily due to lower new equipment sales. Gross margin on sales was 39% compared to 29% in 2020, resulting in a 29% increase in gross profit on sales revenues to $5.8 million. Selling and administrative expenses increased 34% to $22.6 million, primarily due to increased employee salaries and benefit costs totaling $2.0 million, mostly due to the addition of Design Space and Kitchens To Go employees during the quarter, $1.7 million higher amortization of intangible assets due to the Design Space and Kitchens To Go acquisitions and $0.9 million acquisition related transaction costs in 2021.

TRS-RENTELCO

For the second quarter of 2021, the Company’s TRS-RenTelco division reported income from operations of $8.5 million, an increase of $0.2 million, or 3%. Rental revenues increased 7% to $27.9 million, depreciation expense increased 1% to $11.9 million and other direct costs increased 32% to $4.7 million, which resulted in a 5% increase in gross profit on rental revenues to $11.2 million. The rental revenue increase was primarily due to increased demand for general purpose equipment compared to the prior year. Sales revenues decreased 20% to $4.8 million. Gross margin on sales was 62% in 2021 compared to 49% in 2020, resulting in a 3% increase in gross profit on sales revenues to $3.0 million. Selling and administrative expenses increased 3% to $6.1 million.

ADLER TANKS

For the second quarter of 2021, the Company’s Adler Tanks division reported income from operations of $1.7 million, which was comparable to the prior year. Rental revenues increased 4% to $13.5 million, depreciation expense increased 2% to $4.2 million and other direct costs increased 19% to $2.7 million, which resulted in a comparable gross profit on rental revenues to $6.7 million in 2021 and 2020. Rental related services revenues increased 8% to $5.8 million, with gross profit on rental related services decreasing $0.3 million, or 21%, to $1.0 million. Selling and administrative expenses decreased 2% to $6.3 million.

FINANCIAL OUTLOOK:

Based upon the Company’s year-to-date results, current outlook for the remainder of the year, and the previously announced acquisition of Design Space, the Company is raising its financial outlook.

For the full-year 2021, the Company expects:

   

 

Previous

Current

 

Total revenue:

$570 million to $610 million

$610 million to $640 million

 

Adjusted EBITDA:

$232 million to $247 million

$245 million to $260 million

 

Gross rental equipment capital expenditures:

$90 million to $110 million

$100 million to $120 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 July 7, 2021, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on August 3, 2021 to discuss the second 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 5573645. 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 being excited about the long-term potential from both of the Design Space and Kitchens To Go acquisitions, the expectation of the realization of more opportunities from the combined selling resources, the impact supply chain delays, labor shortages and higher costs of materials and labor are having on project timelines and the Company’s outlook for new equipment sales in 2021, the potential for COVID-19 related disruption and keeping fully focused on solid execution and improved business conditions, 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 shelter-in and other 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 acquisition, 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; 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 June 30,

 

Six Months Ended June 30,

(in thousands, except per share amounts)

 

2021

 

2020

 

2021

 

2020

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

94,581

 

 

$

85,629

 

 

$

180,668

 

 

$

175,135

 

Rental related services

 

 

22,688

 

 

 

20,475

 

 

 

42,357

 

 

 

44,986

 

Rental operations

 

 

117,269

 

 

 

106,104

 

 

 

223,025

 

 

 

220,121

 

Sales

 

 

28,256

 

 

 

30,669

 

 

 

42,867

 

 

 

45,035

 

Other

 

 

910

 

 

 

900

 

 

 

1,738

 

 

 

1,970

 

Total revenues

 

 

146,435

 

 

 

137,673

 

 

 

267,630

 

 

 

267,126

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation of rental equipment

 

 

23,159

 

 

 

21,583

 

 

 

44,414

 

 

 

43,221

 

Rental related services

 

 

17,276

 

 

 

14,894

 

 

 

31,880

 

 

 

33,157

 

Other

 

 

23,278

 

 

 

18,165

 

 

 

42,985

 

 

 

37,618

 

Total direct costs of rental operations

 

 

63,713

 

 

 

54,642

 

 

 

119,279

 

 

 

113,996

 

Costs of sales

 

 

16,855

 

 

 

19,799

 

 

 

25,403

 

 

 

28,242

 

Total costs of revenues

 

 

80,568

 

 

 

74,441

 

 

 

144,682

 

 

 

142,238

 

Gross profit

 

 

65,867

 

 

 

63,232

 

 

 

122,948

 

 

 

124,888

 

Selling and administrative expenses

 

 

36,261

 

 

 

30,540

 

 

 

69,398

 

 

 

62,494

 

Income from operations

 

 

29,606

 

 

 

32,692

 

 

 

53,550

 

 

 

62,394

 

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(2,257

)

 

 

(2,184

)

 

 

(4,040

)

 

 

(4,836

)

Foreign currency exchange (loss) gain

 

 

(2

)

 

 

117

 

 

 

(57

)

 

 

(319

)

Income before provision for income taxes

 

 

27,347

 

 

 

30,625

 

 

 

49,453

 

 

 

57,239

 

Provision for income taxes

 

 

6,739

 

 

 

8,076

 

 

 

11,447

 

 

 

14,531

 

Net income

 

$

20,608

 

 

$

22,549

 

 

$

38,006

 

 

$

42,708

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.85

 

 

$

0.93

 

 

$

1.57

 

 

$

1.76

 

Diluted

 

$

0.84

 

 

$

0.92

 

 

$

1.55

 

 

$

1.74

 

Shares used in per share calculation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

24,229

 

 

 

24,121

 

 

 

24,191

 

 

 

24,207

 

Diluted

 

 

24,494

 

 

 

24,471

 

 

 

24,505

 

 

 

24,612

 

Cash dividends declared per share

 

$

0.435

 

 

$

0.420

 

 

$

0.870

 

 

$

0.840

 

MCGRATH RENTCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

June 30,

 

December 31,

(in thousands)

 

2021

 

2020

Assets

 

 

 

 

 

 

 

 

Cash

 

$

2,412

 

 

$

1,238

 

Accounts receivable, net of allowance for doubtful accounts of $2,225 in 2021 and $2,100 in 2020

 

 

140,909

 

 

 

123,316

 

Rental equipment, at cost:

 

 

 

 

 

 

 

 

Relocatable modular buildings

 

 

1,019,697

 

 

 

882,115

 

Electronic test equipment

 

 

360,720

 

 

 

333,020

 

Liquid and solid containment tanks and boxes

 

 

313,677

 

 

 

315,706

 

 

 

 

1,694,094

 

 

 

1,530,841

 

Less accumulated depreciation

 

 

(621,039

)

 

 

(592,725

)

Rental equipment, net

 

 

1,073,055

 

 

 

938,116

 

Property, plant and equipment, net

 

 

138,590

 

 

 

136,210

 

Prepaid expenses and other assets

 

 

57,499

 

 

 

41,549

 

Intangible assets, net

 

 

51,169

 

 

 

7,118

 

Goodwill

 

 

132,393

 

 

 

28,197

 

Total assets

 

$

1,596,027

 

 

$

1,275,744

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Notes payable

 

$

472,696

 

 

$

222,754

 

Accounts payable and accrued liabilities

 

 

144,901

 

 

 

108,334

 

Deferred income

 

 

56,964

 

 

 

45,975

 

Deferred income taxes, net

 

 

223,345

 

 

 

216,077

 

Total liabilities

 

 

897,906

 

 

 

593,140

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Issued and outstanding - 24,245 shares as of June 30, 2021 and 24,128 shares as of December 31, 2020

 

 

105,058

 

 

 

106,289

 

Retained earnings

 

 

593,132

 

 

 

576,419

 

Accumulated other comprehensive loss

 

 

(69

)

 

 

(104

)

Total shareholders’ equity

 

 

698,121

 

 

 

682,604

 

Total liabilities and shareholders’ equity

 

$

1,596,027

 

 

$

1,275,744

 

 

MCGRATH RENTCORP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Six Months Ended June 30,

(in thousands)

 

2021

 

2020

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

38,006

 

 

$

42,708

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

50,559

 

 

 

47,663

 

Provision for doubtful accounts

 

 

138

 

 

 

833

 

Share-based compensation

 

 

3,597

 

 

 

3,224

 

Gain on sale of used rental equipment

 

 

(11,870

)

 

 

(9,602

)

Foreign currency exchange loss

 

 

57

 

 

 

319

 

Amortization of debt issuance costs

 

 

6

 

 

 

5

 

Change in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(5,494

)

 

 

1,326

 

Prepaid expenses and other assets

 

 

(9,385

)

 

 

(1,641

)

Accounts payable and accrued liabilities

 

 

17,642

 

 

 

6,389

 

Deferred income

 

 

7,458

 

 

 

5,815

 

Deferred income taxes

 

 

7,268

 

 

 

483

 

Net cash provided by operating activities

 

 

97,982

 

 

 

97,522

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Purchases of rental equipment

 

 

(58,902

)

 

 

(57,564

)

Purchases of property, plant and equipment

 

 

(2,272

)

 

 

(6,893

)

Cash paid for acquisition of businesses

 

 

(284,341

)

 

 

 

Proceeds from sales of used rental equipment

 

 

24,674

 

 

 

21,921

 

Net cash used in investing activities

 

 

(320,841

)

 

 

(42,536

)

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Net borrowing (repayment) under bank lines of credit

 

 

189,983

 

 

 

(21,288

)

Borrowing under private placement

 

 

60,000

 

 

 

 

Repurchase of common stock

 

 

 

 

 

(13,501

)

Taxes paid related to net share settlement of stock awards

 

 

(4,828

)

 

 

(2,340

)

Payment of dividends

 

 

(21,089

)

 

 

(19,526

)

Net cash provided by (used in) financing activities

 

 

224,066

 

 

 

(56,655

)

Effect of foreign currency exchange rate changes on cash

 

 

(33

)

 

 

21

 

Net increase (decrease) in cash

 

 

1,174

 

 

 

(1,648

)

Cash balance, beginning of period

 

 

1,238

 

 

 

2,342

 

Cash balance, end of period

 

$

2,412

 

 

$

694

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

 

 

Interest paid, during the period

 

$

3,987

 

 

$

5,031

 

Net income taxes paid, during the period

 

$

6,990

 

 

$

2,153

 

Dividends accrued during the period, not yet paid

 

$

9,918

 

 

$

10,255

 

Rental equipment acquisitions, not yet paid

 

$

8,502

 

 

$

6,654

 

 

MCGRATH RENTCORP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BUSINESS SEGMENT DATA (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollar amounts in thousands)

 

Mobile

Modular

 

TRS-

RenTelco

 

Adler Tanks

 

Enviroplex

 

Consolidated

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

53,238

 

 

$

27,860

 

 

$

13,483

 

 

$

 

 

$

94,581

 

Rental related services

 

 

16,207

 

 

 

710

 

 

 

5,771

 

 

 

 

 

 

22,688

 

Rental operations

 

 

69,445

 

 

 

28,570

 

 

 

19,254

 

 

 

 

 

 

117,269

 

Sales

 

 

14,784

 

 

 

4,757

 

 

 

593

 

 

 

8,122

 

 

 

28,256

 

Other

 

 

343

 

 

 

456

 

 

 

111

 

 

 

 

 

 

910

 

Total revenues

 

 

84,572

 

 

 

33,783

 

 

 

19,958

 

 

 

8,122

 

 

 

146,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

7,074

 

 

 

11,916

 

 

 

4,169

 

 

 

 

 

 

23,159

 

Rental related services

 

 

11,804

 

 

 

745

 

 

 

4,727

 

 

 

 

 

 

17,276

 

Other

 

 

15,901

 

 

 

4,718

 

 

 

2,659

 

 

 

 

 

 

23,278

 

Total direct costs of rental operations

 

 

34,779

 

 

 

17,379

 

 

 

11,555

 

 

 

 

 

 

63,713

 

Costs of sales

 

 

9,034

 

 

 

1,792

 

 

 

427

 

 

 

5,602

 

 

 

16,855

 

Total costs of revenues

 

 

43,813

 

 

 

19,171

 

 

 

11,982

 

 

 

5,602

 

 

 

80,568

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

 

30,264

 

 

 

11,225

 

 

 

6,655

 

 

 

 

 

 

48,144

 

Rental related services

 

 

4,401

 

 

 

(33

)

 

 

1,044

 

 

 

 

 

 

5,412

 

Rental operations

 

 

34,665

 

 

 

11,192

 

 

 

7,699

 

 

 

 

 

 

53,556

 

Sales

 

 

5,751

 

 

 

2,964

 

 

 

166

 

 

 

2,520

 

 

 

11,401

 

Other

 

 

343

 

 

 

456

 

 

 

111

 

 

 

 

 

 

910

 

Total gross profit

 

 

40,759

 

 

 

14,612

 

 

 

7,976

 

 

 

2,520

 

 

 

65,867

 

Selling and administrative expenses

 

 

22,602

 

 

 

6,073

 

 

 

6,253

 

 

 

1,333

 

 

 

36,261

 

Income from operations

 

$

18,157

 

 

$

8,539

 

 

$

1,723

 

 

$

1,187

 

 

 

29,606

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,257

)

Foreign currency exchange gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,739

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

20,608

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average rental equipment 1

 

$

906,653

 

 

$

349,480

 

 

$

313,108

 

 

 

 

 

 

 

 

 

Average monthly total yield 2

 

 

1.96

%

 

 

2.66

%

 

 

1.44

%

 

 

 

 

 

 

 

 

Average utilization 3

 

 

75.5

%

 

 

67.7

%

 

 

44.0

%

 

 

 

 

 

 

 

 

Average monthly rental rate 4

2.59

%

3.93

%

3.27

%

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 June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollar amounts in thousands)

 

Mobile

Modular

 

TRS-

RenTelco

 

Adler Tanks

 

Enviroplex

 

Consolidated

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

46,628

 

 

$

26,012

 

 

$

12,989

 

 

$

 

 

$

85,629

 

Rental related services

 

 

14,463

 

 

 

670

 

 

 

5,342

 

 

 

 

 

 

20,475

 

Rental operations

 

 

61,091

 

 

 

26,682

 

 

 

18,331

 

 

 

 

 

 

106,104

 

Sales

 

 

15,316

 

 

 

5,922

 

 

 

232

 

 

 

9,199

 

 

 

30,669

 

Other

 

 

355

 

 

 

475

 

 

 

70

 

 

 

 

 

 

900

 

Total revenues

 

 

76,762

 

 

 

33,079

 

 

 

18,633

 

 

 

9,199

 

 

 

137,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

5,737

 

 

 

11,750

 

 

 

4,096

 

 

 

 

 

 

21,583

 

Rental related services

 

 

10,362

 

 

 

517

 

 

 

4,015

 

 

 

 

 

 

14,894

 

Other

 

 

12,376

 

 

 

3,562

 

 

 

2,227

 

 

 

 

 

 

18,165

 

Total direct costs of rental operations

 

 

28,475

 

 

 

15,829

 

 

 

10,338

 

 

 

 

 

 

54,642

 

Costs of sales

 

 

10,845

 

 

 

3,049

 

 

 

228

 

 

 

5,677

 

 

 

19,799

 

Total costs of revenues

 

 

39,320

 

 

 

18,878

 

 

 

10,566

 

 

 

5,677

 

 

 

74,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

 

28,514

 

 

 

10,700

 

 

 

6,666

 

 

 

 

 

 

45,880

 

Rental related services

 

 

4,101

 

 

 

153

 

 

 

1,327

 

 

 

 

 

 

5,581

 

Rental operations

 

 

32,615

 

 

 

10,853

 

 

 

7,993

 

 

 

 

 

 

51,461

 

Sales

 

 

4,471

 

 

 

2,873

 

 

 

4

 

 

 

3,522

 

 

 

10,870

 

Other

 

 

356

 

 

 

475

 

 

 

70

 

 

 

 

 

 

901

 

Total gross profit

 

 

37,442

 

 

 

14,201

 

 

 

8,067

 

 

 

3,522

 

 

 

63,232

 

Selling and administrative expenses

 

 

16,857

 

 

 

5,875

 

 

 

6,353

 

 

 

1,455

 

 

 

30,540

 

Income from operations

 

$

20,585

 

 

$

8,326

 

 

$

1,714

 

 

$

2,067

 

 

 

32,692

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,184

)

Foreign currency exchange gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

117

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,076

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

22,549

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average rental equipment 1

 

$

822,743

 

 

$

338,919

 

 

$

314,780

 

 

 

 

 

 

 

 

 

Average monthly total yield 2

 

 

1.89

%

 

 

2.56

%

 

 

1.38

%

 

 

 

 

 

 

 

 

Average utilization 3

 

 

77.7

%

 

 

63.9

%

 

 

44.3

%

 

 

 

 

 

 

 

Average monthly rental rate 4

2.43

%

4.00

%

3.10

%

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollar amounts in thousands)

 

Mobile

Modular

 

TRS-

RenTelco

 

Adler Tanks

 

Enviroplex

 

Consolidated

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

99,895

 

 

$

55,136

 

 

$

25,637

 

 

$

 

 

$

180,668

 

Rental related services

 

 

30,258

 

 

 

1,450

 

 

 

10,649

 

 

 

 

 

 

42,357

 

Rental operations

 

 

130,153

 

 

 

56,586

 

 

 

36,286

 

 

 

 

 

 

223,025

 

Sales

 

 

22,404

 

 

 

9,906

 

 

 

1,201

 

 

 

9,356

 

 

 

42,867

 

Other

 

 

663

 

 

 

894

 

 

 

181

 

 

 

 

 

 

1,738

 

Total revenues

 

 

153,220

 

 

 

67,386

 

 

 

37,668

 

 

 

9,356

 

 

 

267,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

12,893

 

 

 

23,278

 

 

 

8,243

 

 

 

 

 

 

44,414

 

Rental related services

 

 

21,876

 

 

 

1,398

 

 

 

8,606

 

 

 

 

 

 

31,880

 

Other

 

 

28,776

 

 

 

9,252

 

 

 

4,957

 

 

 

 

 

 

42,985

 

Total direct costs of rental operations

 

 

63,545

 

 

 

33,928

 

 

 

21,806

 

 

 

 

 

 

119,279

 

Costs of sales

 

 

13,982

 

 

 

4,093

 

 

 

843

 

 

 

6,485

 

 

 

25,403

 

Total costs of revenues

 

 

77,527

 

 

 

38,021

 

 

 

22,649

 

 

 

6,485

 

 

 

144,682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

 

58,227

 

 

 

22,605

 

 

 

12,437

 

 

 

 

 

 

93,269

 

Rental related services

 

 

8,380

 

 

 

54

 

 

 

2,043

 

 

 

 

 

 

10,477

 

Rental operations

 

 

66,607

 

 

 

22,659

 

 

 

14,480

 

 

 

 

 

 

103,746

 

Sales

 

 

8,423

 

 

 

5,812

 

 

 

358

 

 

 

2,871

 

 

 

17,464

 

Other

 

 

663

 

 

 

894

 

 

 

181

 

 

 

 

 

 

1,738

 

Total gross profit

 

 

75,693

 

 

 

29,365

 

 

 

15,019

 

 

 

2,871

 

 

 

122,948

 

Selling and administrative expenses

 

 

41,839

 

 

 

12,371

 

 

 

12,520

 

 

 

2,668

 

 

 

69,398

 

Income from operations

 

$

33,854

 

 

$

16,994

 

 

$

2,499

 

 

$

203

 

 

 

53,550

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,040

)

Foreign currency exchange loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(57

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,447

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

38,006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average rental equipment 1

 

$

876,529

 

 

$

342,526

 

 

$

313,498

 

 

 

 

 

 

 

 

 

Average monthly total yield 2

 

 

1.90

%

 

 

2.68

%

 

 

1.36

%

 

 

 

 

 

 

 

 

Average utilization 3

 

 

75.7

%

 

 

67.7

%

 

 

42.1

%

 

 

 

 

 

 

 

 

Average monthly rental rate 4

2.44

%

3.96

%

3.24

%

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollar amounts in thousands)

 

Mobile

Modular

 

TRS-

RenTelco

 

Adler Tanks

 

Enviroplex

 

Consolidated

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

94,038

 

 

$

53,548

 

 

$

27,549

 

 

$

 

 

$

175,135

 

Rental related services

 

 

32,607

 

 

 

1,496

 

 

 

10,883

 

 

 

 

 

 

44,986

 

Rental operations

 

 

126,645

 

 

 

55,044

 

 

 

38,432

 

 

 

 

 

 

220,121

 

Sales

 

 

22,572

 

 

 

11,031

 

 

 

730

 

 

 

10,702

 

 

 

45,035

 

Other

 

 

743

 

 

 

1,067

 

 

 

160

 

 

 

 

 

 

1,970

 

Total revenues

 

 

149,960

 

 

 

67,142

 

 

 

39,322

 

 

 

10,702

 

 

 

267,126

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct costs of rental operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

11,406

 

 

 

23,582

 

 

 

8,233

 

 

 

 

 

 

43,221

 

Rental related services

 

 

23,712

 

 

 

1,163

 

 

 

8,282

 

 

 

 

 

 

33,157

 

Other

 

 

24,993

 

 

 

7,942

 

 

 

4,683

 

 

 

 

 

 

37,618

 

Total direct costs of rental operations

 

 

60,111

 

 

 

32,687

 

 

 

21,198

 

 

 

 

 

 

113,996

 

Costs of sales

 

 

15,548

 

 

 

5,497

 

 

 

548

 

 

 

6,649

 

 

 

28,242

 

Total costs of revenues

 

 

75,659

 

 

 

38,184

 

 

 

21,746

 

 

 

6,649

 

 

 

142,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

 

57,638

 

 

 

22,024

 

 

 

14,633

 

 

 

 

 

 

94,295

 

Rental related services

 

 

8,895

 

 

 

333

 

 

 

2,601

 

 

 

 

 

 

11,829

 

Rental operations

 

 

66,533

 

 

 

22,357

 

 

 

17,234

 

 

 

 

 

 

106,124

 

Sales

 

 

7,024

 

 

 

5,534

 

 

 

182

 

 

 

4,053

 

 

 

16,793

 

Other

 

 

744

 

 

 

1,067

 

 

 

160

 

 

 

 

 

 

1,971

 

Total gross profit

 

 

74,301

 

 

 

28,958

 

 

 

17,576

 

 

 

4,053

 

 

 

124,888

 

Selling and administrative expenses

 

 

34,275

 

 

 

12,236

 

 

 

13,177

 

 

 

2,806

 

 

 

62,494

 

Income from operations

 

$

40,026

 

 

$

16,722

 

 

$

4,399

 

 

$

1,247

 

 

 

62,394

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,836

)

Foreign currency exchange gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(319

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,531

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

42,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average rental equipment 1

 

$

819,212

 

 

$

338,066

 

 

$

314,823

 

 

 

 

 

 

 

 

 

Average monthly total yield 2

 

 

1.90

%

 

 

2.64

%

 

 

1.46

%

 

 

 

 

 

 

 

 

Average utilization 3

 

 

78.2

%

 

 

64.7

%

 

 

45.9

%

 

 

 

 

 

 

 

 

Average monthly rental rate 4

2.45

%

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

June 30,

 

Six Months Ended

June 30,

 

Twelve Months Ended

June 30,

 

 

2021

 

2020

 

2021

 

2020

 

2021

 

2020

Net income

 

$

20,608

 

 

$

22,549

 

 

$

38,006

 

 

$

42,708

 

 

$

97,282

 

 

$

101,577

 

Provision for income taxes

 

 

6,739

 

 

 

8,076

 

 

 

11,447

 

 

 

14,531

 

 

 

26,976

 

 

 

34,571

 

Interest expense

 

 

2,257

 

 

 

2,184

 

 

 

4,040

 

 

 

4,836

 

 

 

7,991

 

 

 

10,921

 

Depreciation and amortization

 

 

27,099

 

 

 

23,801

 

 

 

50,559

 

 

 

47,663

 

 

 

97,539

 

 

 

94,052

 

EBITDA

 

 

56,703

 

 

 

56,610

 

 

 

104,052

 

 

 

109,738

 

 

 

229,788

 

 

 

241,121

 

Share-based compensation

 

 

1,820

 

 

 

1,501

 

 

 

3,597

 

 

 

3,224

 

 

 

5,922

 

 

 

6,370

 

Adjusted EBITDA 1

 

$

58,523

 

 

$

58,111

 

 

$

107,649

 

 

$

112,962

 

 

$

235,710

 

 

$

247,491

 

Adjusted EBITDA margin 2

 

 

40

%

 

 

42

%

 

 

40

%

 

 

42

%

 

 

41

%

 

 

42

%

 

 

Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities

(dollar amounts in thousands)

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

Twelve Months Ended

June 30,

 

 

2021

 

2020

 

2021

 

2020

 

2021

 

2020

Adjusted EBITDA 1

 

$

58,523

 

 

$

58,111

 

 

$

107,649

 

 

$

112,962

 

 

$

235,710

 

 

$

247,491

 

Interest paid

 

 

(2,362

)

 

 

(2,172

)

 

 

(3,987

)

 

 

(5,031

)

 

 

(8,006

)

 

 

(11,296

)

Income taxes paid, net of refunds received

 

 

(6,618

)

 

 

(1,790

)

 

 

(6,990

)

 

 

(2,153

)

 

 

(39,740

)

 

 

(13,508

)

Gain on sale of used rental equipment

 

 

(7,076

)

 

 

(4,814

)

 

 

(11,870

)

 

 

(9,602

)

 

 

(21,597

)

 

 

(21,743

)

Foreign currency exchange loss (gain)

 

 

2

 

 

 

(117

)

 

 

57

 

 

 

319

 

 

 

(340

)

 

 

321

 

Amortization of debt issuance costs

 

 

3

 

 

 

2

 

 

 

6

 

 

 

5

 

 

 

12

 

 

 

11

 

Change in certain assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(6,464

)

 

 

(106

)

 

 

(5,356

)

 

 

2,159

 

 

 

(2,732

)

 

 

(4,149

)

Prepaid expenses and other assets

 

 

(9,291

)

 

 

(2,004

)

 

 

(9,385

)

 

 

(1,641

)

 

 

(3,937

)

 

 

6,075

 

Accounts payable and other liabilities

 

 

30,785

 

 

 

5,858

 

 

 

20,400

 

 

 

(5,311

)

 

 

28,940

 

 

 

(3,717

)

Deferred income

 

 

2,871

 

 

 

(1,128

)

 

 

7,458

 

 

 

5,815

 

 

 

(7,346

)

 

 

(5,956

)

Net cash provided by operating activities

 

$

60,373

 

 

$

51,840

 

 

$

97,982

 

 

$

97,522

 

 

$

180,964

 

 

$

193,529

 

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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