☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITY AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2025
☐TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITY AND EXCHANGE ACT OF 1934
Commission file number 000-13292
McGRATH RENTCORP
(Exact name of registrant as specified in its Charter)
California
94-2579843
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
5700 Las Positas Road, Livermore, CA94551-7800
(Address of principal executive offices)
Registrant’s telephone number: (925) 606-9200
Securities registered pursuant to Section 12(b) of the Act
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
MGRC
NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period of complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 23, 2025, 24,611,531 shares of Registrant’s Common Stock were outstanding.
FORWARD LOOKING STATEMENTS
Statements contained in this Quarterly Report on Form 10-Q (this “Form 10-Q”) which are not historical facts are 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 (the “Company’s”) expectations, strategies, prospects or targets are forward looking statements, including statements about our belief that we will continue to be able to negotiate general bank lines of credit and issue senior notes adequate to meet capital requirements not otherwise met by operational cash flows and proceeds from sales of rental equipment. 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.
Management cautions that forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause our actual results to differ materially from those projected in such forward-looking statements. Further, our future business, financial condition and results of operations could differ materially from those anticipated by such forward-looking statements and are subject to risks and uncertainties as set forth under “Risk Factors” in this Form 10-Q. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.
Forward-looking statements are made only as of the date of this Form 10-Q and are based on management’s reasonable assumptions, however these assumptions can be wrong or affected by known or unknown risks and uncertainties. No forward-looking statement can be guaranteed and subsequent facts or circumstances may contradict, obviate, undermine or otherwise fail to support or substantiate such statements. Readers should not place undue reliance on these forward-looking statements and are cautioned that any such forward-looking statements are not guarantees of future performance. Except as otherwise required by law, we are under no duty to update any of the forward-looking statements after the date of this Form 10-Q to conform such statements to actual results or to changes in our expectations.
2
Part I - Financial Information
Item 1. Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
McGrath RentCorp
Results of review of interim financial statements
We have reviewed the accompanying condensed consolidatedbalance sheet of McGrath RentCorp (a California Corporation) and subsidiaries(the “Company”) and the related condensed consolidatedstatements of income, comprehensive income, shareholders’ equity, and cash flows as of June 30, 2025 and for the three-month and six-month periods ended June 30, 2025 and 2024 and the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidatedbalance sheet of the Company as of December 31, 2024, and the related consolidatedstatements of income, comprehensive income, shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 19, 2025, we expressed an unqualified opinion on those consolidatedfinancial statements. In our opinion, the information set forth in the accompanying condensed consolidatedbalance sheet as of December 31, 2024, is fairly stated, in all material respects, in relation to the consolidatedbalance sheet from which it has been derived.
Basis for review results
These interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our reviews in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ GRANT THORNTON LLP
San Francisco, California
July 24, 2025
3
MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended June 30,
Six Months Ended June 30,
(in thousands, except per share amounts)
2025
2024
2025
2024
Revenues
Rental
$
125,985
$
121,176
$
246,098
$
241,508
Rental related services
37,483
34,358
71,399
63,938
Rental operations
163,468
155,534
317,497
305,446
Sales
69,775
54,414
108,701
89,483
Other
2,373
2,663
4,834
5,509
Total revenues
235,616
212,611
431,032
400,438
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
21,426
22,165
42,931
44,531
Rental related services
25,477
24,990
49,790
45,776
Other
31,519
27,920
59,171
56,930
Total direct costs of rental operations
78,422
75,075
151,892
147,237
Costs of sales
46,480
34,121
71,990
56,518
Total costs of revenues
124,902
109,196
223,882
203,755
Gross profit
110,714
103,415
207,150
196,683
Expenses:
Selling and administrative expenses
53,543
49,003
104,412
99,467
Other income, net
—
—
—
(9,281
)
Income from operations
57,171
54,412
102,738
106,497
Interest expense
7,795
13,037
15,954
25,741
Foreign currency exchange (gain) loss
(81
)
31
(86
)
163
WillScot Mobile Mini transaction costs (Note 1)
—
12,367
—
21,721
Income before provision for income taxes
49,457
28,977
86,870
58,872
Provision for income taxes
13,484
8,359
22,689
15,406
Net income
35,973
20,618
64,181
43,466
Earnings per share:
Basic
$
1.46
$
0.84
$
2.61
$
1.77
Diluted
$
1.46
$
0.84
$
2.61
$
1.77
Shares used in per share calculation:
Basic
24,611
24,549
24,592
24,531
Diluted
24,618
24,560
24,620
24,562
Cash dividends declared per share
$
0.485
$
0.475
$
0.970
$
0.950
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended June 30,
Six Months Ended June 30,
(in thousands)
2025
2024
2025
2024
Net income
$
35,973
$
20,618
$
64,181
$
43,466
Other comprehensive income:
Foreign currency translation adjustment, net of tax impact
—
11
—
78
Comprehensive income
$
35,973
$
20,629
$
64,181
$
43,544
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
McGrath RentCorp
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30,
December 31,
(in thousands)
2025
2024
Assets
Cash
$
1,469
$
807
Accounts receivable, net of allowance for credit losses of $2,866 at June 30, 2025 and at December 31, 2024
233,801
219,342
Rental equipment, at cost:
Relocatable modular buildings
1,443,314
1,414,367
Portable storage containers
244,261
240,846
Electronic test equipment
333,171
343,982
2,020,746
1,999,195
Less: accumulated depreciation
(627,064
)
(611,536
)
Rental equipment, net
1,393,682
1,387,659
Property, plant and equipment, net
215,720
197,439
Inventories
12,297
14,304
Prepaid expenses and other assets
85,748
80,477
Intangible assets, net
51,919
54,332
Goodwill
332,373
323,224
Total assets
$
2,327,009
$
2,277,584
Liabilities and Shareholders' Equity
Liabilities:
Notes payable
$
572,525
$
590,208
Accounts payable
54,864
60,082
Accrued liabilities
118,177
113,961
Deferred income
125,389
109,836
Deferred income taxes, net
292,893
280,129
Total liabilities
1,163,848
1,154,216
Shareholders’ equity:
Common stock, no par value - Authorized 40,000 shares
Issued and outstanding - 24,612 shares as of June 30, 2025 and 24,551 shares as of December 31, 2024
115,891
116,253
Retained earnings
1,047,270
1,007,115
Total shareholders’ equity
1,163,161
1,123,368
Total liabilities and shareholders’ equity
$
2,327,009
$
2,277,584
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
McGrath RentCorp
CONDENSED Consolidated Statements OF SHAREHOLDERS’ EQUITY
(unaudited)
Common Stock
Retained
Accumulated Other Comprehensive
Total Shareholders’
(in thousands, except per share amounts)
Shares
Amount
Earnings
Income (Loss)
Equity
Balance at December 31, 2024
24,551
$
116,253
$
1,007,115
$
—
$
1,123,368
Net income
—
—
28,209
—
28,209
Share-based compensation
—
2,544
—
—
2,544
Common stock issued under stock plans, net of shares withheld for employee taxes
55
—
—
—
—
Taxes paid related to net share settlement of stock awards
—
(5,616
)
—
—
(5,616
)
Dividends accrued of $0.485 per share
—
—
(12,094
)
—
(12,094
)
Other comprehensive income
—
—
—
—
—
Balance at March 31, 2025
24,606
$
113,181
$
1,023,230
$
—
$
1,136,411
Net income
—
—
35,973
—
35,973
Share-based compensation
—
2,778
—
—
2,778
Common stock issued under stock plans, net of shares withheld for employee taxes
6
—
—
—
—
Taxes paid related to net share settlement of stock awards
—
(68
)
—
—
(68
)
Dividends accrued of $0.485 per share
—
—
(11,933
)
—
(11,933
)
Other comprehensive income
—
—
—
—
—
Balance at June 30, 2025
24,612
$
115,891
$
1,047,270
$
—
$
1,163,161
The accompanying notes are an integral part of these condensed consolidated financial statements.
Common Stock
Retained
Accumulated Other Comprehensive
Total Shareholders’
(in thousands, except per share amounts)
Shares
Amount
Earnings
Income (Loss)
Equity
Balance at December 31, 2023
24,496
$
111,122
$
822,796
$
(116
)
$
933,802
Net income
—
—
22,848
—
22,848
Share-based compensation
—
2,209
—
—
2,209
Common stock issued under stock plans, net of shares withheld for employee taxes
45
—
—
—
—
Taxes paid related to net share settlement of stock awards
—
(4,082
)
—
—
(4,082
)
Dividends accrued of $0.475 per share
—
—
(11,824
)
—
(11,824
)
Other comprehensive income
—
—
—
67
67
Balance at March 31, 2024
24,541
$
109,249
$
833,820
$
(49
)
$
943,020
Net income
—
—
20,618
—
20,618
Share-based compensation
—
2,347
—
—
2,347
Common stock issued under stock plans, net of shares withheld for employee taxes
9
—
—
—
—
Dividends accrued of $0.475 per share
—
—
(11,763
)
—
(11,763
)
Other comprehensive income
—
—
—
11
11
Balance at June 30, 2024
24,550
$
111,596
$
842,675
$
(38
)
$
954,233
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
McGrath RentCorp
CONDENSED Consolidated Statements of Cash Flows
(unaudited)
Six Months Ended June 30,
(in thousands)
2025
2024
Cash Flows from Operating Activities:
Net income
$
64,181
$
43,466
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
52,739
54,131
Deferred income taxes
12,764
11,592
Provision for credit losses
826
873
Share-based compensation
5,322
4,556
Gain on sale of property, plant and equipment
—
(9,281
)
Gain on sale of used rental equipment
(16,674
)
(15,537
)
Foreign currency exchange (gain) loss
(86
)
163
Amortization of debt issuance costs
45
4
Change in:
Accounts receivable
(15,285
)
9,116
Inventories
2,007
(12,788
)
Prepaid expenses and other assets
(5,270
)
5,817
Accounts payable
(8,402
)
23,155
Accrued liabilities
2,403
166
Deferred income
15,124
23,196
Net cash provided by operating activities
109,694
138,629
Cash Flows from Investing Activities:
Purchases of rental equipment
(50,230
)
(145,345
)
Purchases of property, plant and equipment
(21,621
)
(30,125
)
Cash paid for acquisition of businesses
(21,947
)
—
Proceeds from sales of used rental equipment
32,200
29,334
Proceeds from sales of property, plant and equipment
—
12,251
Net cash used in investing activities
(61,598
)
(133,885
)
Cash Flows from Financing Activities:
Net payments under bank lines of credit
(17,730
)
(43,708
)
Borrowings under term note agreement
—
75,000
Taxes paid related to net share settlement of stock awards
(5,684
)
(4,082
)
Payment of dividends
(24,020
)
(23,435
)
Net cash (used in) provided by financing activities
(47,434
)
3,775
Net increase in cash
662
8,519
Cash balance, beginning of period
807
877
Cash balance, end of period
$
1,469
$
9,396
Supplemental Disclosure of Cash Flow Information:
Interest paid, during the period
$
15,982
$
26,394
Net income taxes paid (refunded), during the period
$
5,786
$
(4,599
)
Dividends accrued during the period, not yet paid
$
12,443
$
12,150
Rental equipment acquisitions, not yet paid
$
8,658
$
7,634
Business acquisition payments withheld
$
1,815
$
—
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
MCGRATH RENTCORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2025
NOTE 1. CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The condensed consolidated financial statements for the six months ended June 30, 2025 and 2024 have not been audited, but in the opinion of management, all adjustments (consisting of normal recurring accruals, consolidating and eliminating entries) necessary for the fair presentation of the consolidated financial position, results of operations and cash flows of McGrath RentCorp (the “Company”) have been made. The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to those rules and regulations. The consolidated results for the three and six months ended June 30, 2025, should not be considered as necessarily indicative of the consolidated results for the entire fiscal year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-K, filed with the SEC on February 19, 2025 for the year ended December 31, 2024 (the “2024 Annual Report”).
Mutual decision to terminate Merger Agreement with WillScot Mobile Mini Holdings Corp.
As previously disclosed, on January 28, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), with WillScot Mobile Mini Holdings Corp., a Delaware corporation ("WillScot Mobile Mini”), Brunello Merger Sub I, Inc., a California corporation and a direct wholly owned subsidiary of WillScot Mobile Mini, and Brunello Merger Sub II, LLC, a Delaware limited liability company and direct wholly owned subsidiary of WillScot Mobile Mini. On September 17, 2024, the Company and WillScot Mobile Mini mutually agreed to terminate the Merger Agreement, effective upon WillScot Mobile Mini's cash payment of $180.0 million to the Company, which was received on September 20, 2024.
Transaction costs attributed to the Merger Agreement are reported in the Company's Corporate segment. Expenses recognized as a result of the terminated merger totaled $21.7 million and $63.2 million for the six and twelve month periods ended June 30, 2024 and December 31, 2024, respectively. The termination payment received of $180.0 million, net of transaction costs, resulted in net proceeds received of $116.8 million during the year ended December 31, 2024. The Company determined that the transaction costs incurred on the terminated merger were significant and required separate presentation on the Company's consolidated statements of income for the year ended December 31, 2024. Due to this determination, the Company has excluded such transaction costs from Selling and administrative expenses and reported them separately on the consolidated statements of income as non-operating expenses.
NOTE 2. NEW ACCOUNTING PRONOUNCEMENTS
In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes—Improvements to IncomeTax Disclosures (Topic 740), which will require Companies to disclose annually the specific categories in income tax rate reconciliations, provide additional information for reconciling items which meet a quantitative threshold, and disaggregate domestic and foreign income or loss from continuing operations. Additionally, this ASU will also require the disclosure of income tax expense or benefit from continuing operations disaggregated by federal, state and foreign. This ASU is effective for fiscal years beginning after December 15, 2024, and applied on a prospective basis. The Company is in the process of evaluating the financial statement impact of this ASU.
In November 2024, the FASB issued Accounting Standards Update ("ASU") 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires incremental disclosures about specific expense categories, including but not limited to, employee compensation, depreciation, intangible asset amortization, selling expenses and purchases of inventory. This ASU is effective for fiscal years beginning after December 31, 2026, and interim reporting periods within annual reporting periods beginning after December 31, 2027. Early adoption is permitted and may be applied either prospectively or retrospectively. The Company is in the process of evaluating the financial statement impact of this ASU.
NOTE 3. BUSINESS COMBINATIONS
During the quarter ended June 30, 2025, the Company completed the acquisition of a regional provider of temporary and permanent modular space solutions for $11.8 million and a regional provider of container solutions for $12.0 million, subject to holdback payments of $1.2 million and $0.6 million, respectively. The preliminary purchase price allocation of the modular solutions provider was $6.3 million to the fair value of rental equipment acquired, intangible assets of $1.1 million and $4.3 million to goodwill. The preliminary purchase price allocation to the container solutions provider was $4.7 million to the fair value of rental equipment acquired, $1.0 million to property, plant and equipment, intangible assets of $1.7 million and $4.9 million to goodwill. These acquisitions were
9
accounted for as a purchase of a “business” in accordance with criteria in Accounting Standards Codification ("ASC") 805, Business Combinations, using the purchase method of accounting. Incremental transaction costs totaled $0.2 million for the quarter ended June 30, 2025.
NOTE 4. REVENUE RECOGNITION
The Company’s accounting for revenues is governed by two accounting standards. The majority of the Company’s revenues are considered lease or lease related and are accounted for in accordance with Accounting Standards Codification 842, Leases (Topic 842). Revenues determined to be non-lease related are accounted for in accordance with ASC 606, Revenue from Contracts with Customers (Topic 606). The Company accounts for revenues when approval and commitment from both parties have been obtained, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company typically recognizes non-lease related revenues at a point in time because the customer does not simultaneously consume the benefits of the Company’s promised goods and services, or performance obligations, and obtains control when delivery and installation are complete. For contracts that have multiple performance obligations, the transaction price is allocated to each performance obligation in the contract based on the Company’s best estimate of the standalone selling prices of each distinct performance obligation in the contract. The standalone selling price is typically determined based upon the expected cost plus an estimated margin of each performance obligation.
Revenue from contracts that satisfy the criteria for over-time recognition are recognized as work is performed by using the ratio of costs incurred to estimated total contract costs for each contract. The majority of revenue for these contracts is derived from long-term projects which typically span multiple quarters. The timing of revenue recognition, billings, and cash collections results in billed contract receivables and contract assets on the Company's Consolidated Balance Sheets. In the Company’s contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Billings can occur subsequent to revenue recognition, resulting in contract assets, or in advance, resulting in contract liabilities. These contract assets and liabilities are reported on the condensed consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. The contract liabilities included in Deferred income on the Company’s condensed consolidated balance sheets totaled $54.2 million and $35.4 million at June 30, 2025 and December 31, 2024, respectively. Sales revenues totaling $13.8 million and $28.7 million were recognized during the three and six months ended June 30, 2025, respectively, which were included in the contract liability balance at December 31, 2024. For certain modular building sales, the customer retains a small portion of the contract price until full completion of the contract, or revenue is recognizable prior to customer billing, which results in revenue earned in excess of billings. These unbilled contract assets are included in Accounts receivable on the Company’s condensed consolidated balance sheets and totaled $20.0 million and $13.0 million at June 30, 2025 and December 31, 2024, respectively. The Company did not recognize any material contract asset impairments during the periods ended June 30, 2025 and December 31, 2024, respectively.
The Company's uncompleted contracts with customers which meet the criteria for over-time revenue recognition have unsatisfied or partially satisfied performance obligations. As of June 30, 2025, approximately $43.8 million of revenue is expected to be recognized for unsatisfied or partially satisfied obligations. The Company expects to recognize revenue for approximately one half of these unsatisfied or partially satisfied performance obligations over the next twelve months, with the remaining balance recognized thereafter. For the three and six months ended June 30, 2025, approximately $67.5 million and $104.8 million of revenue was recognized for sales and non-lease services transferred at a point in time, respectively, and approximately $13.9 million and $24.1 million of revenue was recognized for sales and non-lease services transferred over time, respectively.
The Company generally rents and sells to customers on 30 day payment terms. The Company does not typically offer variable payment terms or accept non-monetary consideration. Amounts billed and due from the Company’s customers are classified as Accounts receivable on the Company’s consolidated balance sheet. For certain sales of modular buildings, progress payments from the customer are received during the manufacturing of new equipment, or the preparation of used equipment. The advance payments are not considered a significant financing component because the payments are used to meet working capital needs during the contract and to protect the Company from the customer failing to adequately complete their obligations under the contract.
Lease Revenues
Rental revenues from operating leases are recognized on a straight-line basis over the term of the lease for all operating segments. Rental billings for periods extending beyond period end are recorded as deferred income and are recognized in the period earned. Rental related services revenues are primarily associated with relocatable modular buildings. For modular building leases, rental related services revenues for modifications, delivery, installation, dismantle and return delivery are lease related because the payments are considered minimum lease payments that are an integral part of the negotiated lease agreement with the customer. These revenues are recognized on a straight-line basis over the term of the lease. Certain leases are accounted for as finance leases. For these leases, sales revenue and the related accounts receivable are recognized upon delivery and installation of the equipment and the unearned interest is recognized over the lease term on a basis which results in a constant rate of return on the unrecovered lease investment. As of the six
10
months ended June 30, 2025, the Company’s future minimum lease payments to be received under non-cancelable finance leases were $6.7 million. Of the total investment in sales-type leases, future minimum lease payments are expected to be $1.9 million for the remainder of the current year, $1.8 million in 2026, $1.0 million in 2027, $1.1 million in 2028 and $0.8 million in 2029. The Company’s assessment of current expected losses on these receivables was not material and therefore no credit loss expense was provided as of the six months ended June 30, 2025. Other revenues include interest income on finance leases and rental income on facility leases.
In the three and six months ended June 30, 2025, the Company’s lease revenues were $154.2 million and $302.1 million, respectively, consisting of $152.7million and $299.9 million of operating lease revenues, respectively, and $1.5 million and $2.2 million of finance lease revenues, respectively. The Company has entered into finance leases to finance certain equipment sales to customers. The lease agreements have a bargain purchase option at the end of the lease term. For these leases, sales revenue and the related accounts receivable are recognized upon delivery and installation of the equipment and the unearned interest is recognized over the lease term on a straight-line basis, which results in a constant rate of return on the unrecovered lease investment. The Company’s finance lease revenues for the three and six months ended June 30, 2025, include $1.3 million and $1.8 million of sales revenues, respectively, and $0.2 million and $0.4 million of interest income, respectively.
Non-Lease Revenues
Non-lease revenues are recognized in the period when control of the performance obligation is transferred, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. For portable storage containers and electronic test equipment, rental related services revenues for delivery and return delivery are considered non-lease revenues.
Sales revenues are typically recognized at a point in time, which occurs upon the completion of delivery, installation and acceptance of the equipment by the customer. Sales contracts that satisfy the criteria for over-time recognition are recognized as work is performed by using the ratio of costs incurred to estimated total contract costs for each contract.Accounting for non-lease revenues requires judgment in determining the point in time the customer gains control of the equipment and the appropriate accounting period to recognize revenue.
Sales taxes charged to customers are reported on a net basis and are excluded from revenues and expenses.
11
The following table disaggregates the Company’s revenues by lease (within the scope of Topic 842) and non-lease revenues (within the scope of Topic 606) and the underlying service provided for the three and six months ended June 30, 2025 and 2024:
(in thousands)
Mobile Modular
Portable Storage
TRS- RenTelco
Enviroplex
Consolidated
Three Months Ended June 30,
2025
Leasing
$
107,971
$
17,383
$
28,837
$
—
$
154,191
Non-lease:
Rental related services
7,498
4,123
794
—
12,415
Sales
40,484
1,712
6,444
19,866
68,506
Other
35
128
341
—
504
Total non-lease
48,017
5,963
7,579
19,866
81,425
Total revenues
$
155,988
$
23,346
$
36,416
$
19,866
$
235,616
2024
Leasing
$
101,864
$
18,366
$
26,411
$
—
$
146,641
Non-lease:
Rental related services
6,727
4,347
709
—
11,783
Sales
35,930
1,266
5,218
11,373
53,787
Other
25
43
332
—
400
Total non-lease
42,682
5,656
6,259
11,373
65,970
Total revenues
$
144,546
$
24,022
$
32,670
$
11,373
$
212,611
Six Months Ended June 30,
2025
Leasing
$
212,735
$
33,975
$
55,401
$
—
$
302,111
Non-lease:
Rental related services
12,127
7,512
1,474
—
21,113
Sales
62,974
2,956
13,866
27,079
106,875
Other
70
169
694
—
933
Total non-lease
75,171
10,637
16,034
27,079
128,921
Total revenues
$
287,906
$
44,612
$
71,435
$
27,079
$
431,032
2024
Leasing
$
196,754
$
37,395
$
52,656
$
—
$
286,805
Non-lease:
Rental related services
10,999
8,738
1,332
—
21,069
Sales
61,256
2,478
11,757
13,092
88,583
Other
3,122
171
688
—
3,981
Total non-lease
75,377
11,387
13,777
13,092
113,633
Total revenues
$
272,131
$
48,782
$
66,433
$
13,092
$
400,438
Customer returns of rental equipment prior to the end of the rental contract term are typically billed a cancellation fee, which is recorded as rental revenue in the period billed. Sales of new relocatable modular buildings, portable storage containers and electronic test equipment not manufactured by the Company are typically covered by warranties provided by the manufacturer of the products sold. The Company typically provides limited 90-day warranties for certain sales of used rental equipment and one-year warranties on equipment manufactured by Enviroplex. Although the Company’s policy is to provide reserves for warranties when required for specific circumstances, warranty costs have not been significant to date.
The Company’s incremental cost of obtaining lease contracts, which consists of salesperson commissions, are deferred and amortized over the initial lease term for modular and portable storage leases. Incremental costs for obtaining a contract for TRS-RenTelco are expensed in the period incurred because the lease term is typically less than 12 months.
12
Other Income, net
Other income, net consists of the net gain on sales of property, plant and equipment. These sales are generally recognized at a point in time, with contractually defined performance obligations that are typically transferred upon the closing date of the sale. These types of sales are infrequent in occurrence and reported on the condensed consolidated statements of income within the scope of ASC 610, Other Income. Proceeds to be received from the sale of property, plant and equipment are included in Accounts receivable on the Company's condensed consolidated balance sheets.
13
NOTE 5. EARNINGS PER SHARE
Basic earnings per share (“EPS”) is computed as net income divided by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS is computed assuming conversion of all potentially dilutive securities including the dilutive effect of stock options, unvested restricted stock awards and other potentially dilutive securities. The table below presents the weighted-average number of shares of common stock used to calculate basic and diluted earnings per share:
Three Months Ended June 30,
Six Months Ended June 30,
(in thousands)
2025
2024
2025
2024
Weighted-average number of shares of common stock for calculating basic earnings per share
24,611
24,549
24,592
24,531
Effect of potentially dilutive securities from equity-based compensation
7
11
28
31
Weighted-average number of shares of common stock for calculating diluted earnings per share
24,618
24,560
24,620
24,562
There were 85,512 and 73,190 anti-dilutive securities excluded from the computation of diluted earnings per share for the six months ended June 30, 2025 and 2024, respectively.
The Company has in the past made purchases of shares of its common stock from time to time in over-the-counter market (NASDAQ) transactions, through privately negotiated, large block transactions and through a share repurchase plan, in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In September 2024, the Company's Board of Directors increased the capacity under the share repurchase program by authorizing the Company to repurchase up to 2,000,000 shares of the Company's outstanding common stock (the "Repurchase Plan"), an increase from the 1,309,805 remaining shares authorized for repurchase under the Repurchase Plan established in August 2015. The amount and time of the specific repurchases are subject to prevailing market conditions, applicable legal requirements and other factors, including management’s discretion. All shares repurchased by the Company are canceled and returned to the status of authorized but unissued shares of common stock. There can be no assurance that any authorized shares will be repurchased, and the Repurchase Plan may be modified, extended or terminated by the Company’s Board of Directors at any time. There were no shares repurchased during the six months ended June 30, 2025 and 2024. As of June 30, 2025, 2,000,000 shares remained authorized for repurchase under the Repurchase Plan.
NOTE 6. INVENTORIES
Inventories consist of raw materials, supplies and work-in-process. Inventories are measured at the lower of actual cost or net realizable value for acquired units and estimated standard costs for manufactured units. The costs include expenditures incurred in acquiring the inventories, manufacturing, production costs, and other costs incurred in bringing them to their existing location and condition. The following table presents the carrying value of inventories:
(dollar amounts in thousands)
June 30,
December 31,
2025
2024
Raw materials
$
4,531
$
3,380
Work-in-process
7,766
10,924
Inventories
$
12,297
$
14,304
14
NOTE 7. GOODWILL AND INTANGIBLE ASSETS
Intangible assets consist of the following:
(dollar amounts in thousands)
Estimated useful life in years
Average remaining life in years
Cost
Accumulated amortization
Net book value
June 30, 2025
Customer relationships
6 to 11
6.5
$75,734
$(29,069)
$46,665
Non-compete agreements
5
2.5
10,806
(6,286)
4,520
Trade name
0.75 to 8
3.8
2,000
(1,437)
563
Total amortizing
88,540
(36,792)
51,748
Trade name - non-amortizing
Indefinite
171
—
171
Total
$88,711
$(36,792)
$51,919
December 31, 2024
Customer relationships
8 to 11
6.9
$73,217
$(25,010)
$48,207
Non-compete agreements
5
2.8
10,556
(5,239)
5,317
Trade name
0.75 to 8
4.3
2,000
(1,363)
637
Total amortizing
85,773
(31,612)
54,161
Trade name - non-amortizing
Indefinite
171
—
171
Total
$85,944
$(31,612)
$54,332
The Company assesses potential impairment of its goodwill and intangible assets when there is evidence that events or circumstances have occurred that would indicate the recovery of an asset’s carrying value is unlikely. The Company also assesses potential impairment of its goodwill and intangible assets with indefinite lives on an annual basis regardless of whether there is evidence of impairment. If indicators of impairment were to be present in intangible assets used in operations and future discounted cash flows were not expected to be sufficient to recover the asset’s carrying amount, an impairment loss would be charged to expense in the period identified. The amount of an impairment loss that would be recognized is the excess of the asset’s carrying value over its fair value. Factors the Company considers important, which may cause impairment include, among others, significant changes in the manner of use of the acquired asset, negative industry or economic trends, and significant underperformance relative to historical or projected operating results. The Company last conducted a qualitative analysis of its goodwill and intangible assets in the fourth quarter 2024, with no indicators of impairment. In addition, no impairment triggering events occurred during the six months ended June 30, 2025, and there were no changes to the carrying value of goodwill during this period. Determining fair value of a reporting unit is judgmental and involves the use of significant estimates and assumptions. The Company bases its fair value estimates on assumptions that it believes are reasonable but are uncertain and subject to changes in market conditions.
Intangible assets with finite useful lives are amortized over their respective useful lives. Amortization expense in the six months ended June 30, 2025 and 2024, was $5.2 million and $5.1 million, respectively. Based on the carrying values at June 30, 2025 and assuming no subsequent impairment of the underlying assets, the amortization expense is expected to be $5.3 million for the remainder of fiscal year 2025, $10.2 million in 2026, $10.0 million in 2027, $8.6 million in 2028, $5.1 million in 2029 and $3.3 million in 2030.
15
NOTE 8. SEGMENT REPORTING
FASB guidelines establish annual and interim reporting standards for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. In accordance with these guidelines, the Company’s four reportable segments are Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex. The Company's Chief Operating Decision Maker ("CODM") Joe Hanna, Chief Executive Officer, and senior management focus on several key measures to evaluate and assess each segment’s performance, including rental, rental related services and sales revenue growth, gross profit, income from operations and income before provision for income taxes. In addition to the evaluation of the aforementioned key measures of each reportable segment, the CODM and senior management evaluate supplemental information by reportable segment, such as rental equipment acquisitions, fleet utilization, and average utilization, to further assess segment performance and the future allocation of Company resources.
The CODM is the primary individual in control of resource allocation, and the allocation determinations are made in consultation with the Company’s senior management team, of which the CODM is a member. The most significant allocation determinations made by the CODM pertain to purchases of rental equipment and employee headcount. These determinations are generally made as part of the annual budgeting process, with regular reviews occurring throughout the year that can result in allocation changes depending upon performance against budget. On a monthly basis, the CODM considers period end and average rental equipment utilization and budget-to-actual variances to gross profit, income from operations and income before provision for income taxes when making decisions about allocating capital and employee resources to the segments. Excluding interest expense, allocations of revenue and expense not directly associated with one of these segments are generally allocated to Mobile Modular, Portable Storage and TRS-RenTelco, based on their pro-rata share of direct revenues. Interest expense is allocated amongst Mobile Modular, Portable Storage and TRS-RenTelco based on their pro-rata share of average rental equipment at cost, goodwill, intangible assets, accounts receivable, deferred income and customer security deposits. The Company does not report total assets by business segment.
Summarized financial information for the six months ended June 30, 2025 and 2024, for the Company’s reportable segments is shown in the following tables:
16
(dollar amounts in thousands)
Mobile Modular
Portable Storage
TRS- RenTelco
Enviroplex1
Consolidated
Six Months Ended June 30,
2025
Revenues
Rental revenues
$
160,404
$
33,014
$
52,680
$
—
$
246,098
Rental related services revenues
61,647
8,025
1,727
—
71,399
Sales
62,974
2,956
15,692
27,079
108,701
Other
2,881
617
1,336
—
4,834
Total revenues
287,906
44,612
71,435
27,079
431,032
Costs of Revenues
Depreciation of rental equipment
21,294
2,070
19,567
—
42,931
Rental related services
40,190
8,237
1,363
—
49,790
Other
44,802
3,445
10,924
—
59,171
Costs of sales
42,926
1,879
8,343
18,842
71,990
Total costs of revenues
149,212
15,631
40,197
18,842
223,882
Gross profit
138,694
28,981
31,238
8,237
207,150
Significant Segment Expenses 3
Wages and benefits
29,734
6,933
5,810
2,411
44,888
Depreciation and amortization
7,101
749
35
204
8,089
Marketing and administrative expenses
9,598
3,352
2,678
1,173
16,801
Allocated corporate services 4
23,949
3,742
6,139
—
33,830
Other segment items 5
383
325
96
—
804
Total expenses
70,765
15,101
14,758
3,788
104,412
Income from operations
67,929
13,880
16,480
4,449
102,738
Interest expense (income) allocation
12,914
1,852
2,410
(1,222
)
15,954
Foreign currency exchange gain
—
—
(86
)
—
(86
)
Income before provision for income taxes
$
55,015
$
12,028
$
14,156
$
5,671
$
86,870
Reconciliation of Segment Profit (Loss)
Total segment gross profit
$
207,150
Segment operating expenses, net
104,412
Interest expense allocation
15,954
Foreign currency exchange gain
(86
)
Income before provision for income taxes
$
86,870
Other Selected Information
Rental equipment acquisitions
$
34,479
$
618
$
18,399
—
$
53,496
Accounts receivable, net (period end)
$
177,549
$
12,857
$
23,085
$
20,310
$
233,801
Rental equipment, at cost (period end)
$
1,443,314
$
244,261
$
333,171
—
$
2,020,746
Rental equipment, net book value (period end)
$
1,071,846
$
220,048
$
101,788
—
$
1,393,682
Utilization (period end) 2
73.1
%
61.8
%
64.8
%
Average utilization 2
74.2
%
60.6
%
63.0
%
17
(dollar amounts in thousands)
Mobile Modular
Portable Storage
TRS- RenTelco
Enviroplex1
Consolidated
Six Months Ended June 30,
2024
Revenues
Rental revenues
$
154,535
$
36,230
$
50,743
$
—
$
241,508
Rental related services revenues
53,053
9,363
1,522
—
63,938
Sales
61,256
2,478
12,657
13,092
89,483
Other
3,287
711
1,511
—
5,509
Total revenues
272,131
48,782
66,433
13,092
400,438
Costs of Revenues
Depreciation of rental equipment
19,870
1,965
22,696
—
44,531
Rental related services
35,608
8,932
1,236
—
45,776
Other
43,938
2,995
9,997
—
56,930
Costs of sales
39,584
1,484
5,658
9,792
56,518
Total costs of revenues
139,000
15,377
39,587
9,792
203,755
Gross profit
133,131
33,405
26,846
3,300
196,683
Significant Segment Expenses 3
Wages and benefits
28,201
7,035
5,210
2,283
42,729
Depreciation and amortization
6,758
801
53
193
7,805
Marketing and administrative expenses
8,829
3,058
2,732
1,038
15,657
Allocated corporate services 4
22,620
4,082
5,796
—
32,498
Other segment items 5
446
299
32
—
777
Total expenses
66,854
15,275
13,823
3,515
99,467
Other income, net
(6,220
)
(1,319
)
(1,742
)
—
(9,281
)
Income from operations
72,499
19,450
14,765
(215
)
106,497
Interest expense (income) allocation
19,971
2,867
4,121
(1,218
)
25,741
Foreign currency exchange loss
—
—
163
—
163
Income before provision for income taxes
$
52,528
$
16,583
$
10,481
$
1,003
$
80,593
Reconciliation of Segment Profit (Loss)
Total segment gross profit
$
196,683
Segment operating expenses, net
99,467
Other income, net
(9,281
)
Interest expense allocation
25,741
Foreign currency exchange loss
163
WillScot Mobile Mini transaction costs 6
21,721
Income before provision for income taxes
$
58,872
Other Selected Information
Rental equipment acquisitions
$
118,300
$
7,403
$
10,623
—
$
136,326
Accounts receivable, net (period end)
$
170,966
$
12,231
$
20,333
$
13,849
$
217,379
Rental equipment, at cost (period end)
$
1,398,475
$
242,107
$
368,324
—
$
2,008,906
Rental equipment, net book value (period end)
$
1,058,041
$
221,486
$
127,795
—
$
1,407,322
Utilization (period end) 2
78.1
%
64.5
%
55.8
%
Average utilization 2
78.6
%
67.8
%
56.4
%
1.
Gross Enviroplex sales revenues were $27,079 and $13,093 for the six months ended June 30, 2025 and 2024, respectively. There were no inter-segment sales to Mobile Modular in the six months ended June 30, 2025 and $2 of inter-segment sales to Mobile Modular in the six months ended June 30, 2024, which required elimination in consolidation.
2.
Utilization is calculated each month by dividing the cost of rental equipment on rent by the total cost of rental equipment excluding new equipment inventory and accessory equipment. The average utilization for the period is calculated using the average costs of rental equipment.
3.
The Significant Segment Expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
4.
Allocated corporate services costs are comprised of expenses incurred by the Company which are not directly incurred by each business segment as a part of their normal operations. These allocated indirect corporate costs primarily include wages and benefits, depreciation of corporate capital assets, information technology, legal, accounting and other administrative expenses.
5.
Other segment items for each reportable segment is primarily comprised of credit losses.
6.
During the six months ended June 30, 2024, the Company incurred $21,721 of transaction costs attributed to the terminated merger with WillScot Mobile Mini.
No single customer accounted for more than 10% of total revenues for the six months ended June 30, 2025 and 2024. Revenues from foreign country customers accounted for 2% of the Company’s total revenues for the same periods, respectively.
18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Form 10-Q, including the following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contains forward-looking statements under federal securities laws. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties. Our actual results could differ materially from those indicated by forward-looking statements as a result of various factors. These factors include, but are not limited to, those set forth under this Item, those discussed in Part II—Item 1a, “Risk Factors” and elsewhere in this Form 10-Q and those that may be identified from time to time in our reports and registration statements filed with the SEC.
This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and related Notes included in Part I—Item 1 of this Form 10-Q and the Consolidated Financial Statements and related Notes and the Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 19, 2025 (the “2024 Annual Report”). In preparing the following MD&A, we presume that readers have access to and have read the MD&A in our 2024 Annual Report, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K. We undertake no duty to update any of these forward-looking statements after the date of filing of this Form 10-Q to conform such forward-looking statements to actual results or revised expectations, except as otherwise required by law.
General
The Company, incorporated in 1979, is a leading rental provider of relocatable modular buildings for classroom and office space and electronic test equipment for general purpose and communications needs. The Company’s primary emphasis is on equipment rentals. The Company is comprised of four reportable business segments: (1) its modular building segment (“Mobile Modular”); (2) its portable storage container segment (“Portable Storage”); (3) its electronic test equipment segment (“TRS-RenTelco”); and (4) its classroom manufacturing business selling modular buildings used primarily as classrooms in California (“Enviroplex”).
In the six months ended June 30, 2025, Mobile Modular, Portable Storage, TRS-RenTelco and Enviroplex contributed 63%, 14%, 16% and 7% of the Company’s income before provision for taxes (the equivalent of “pretax income”), respectively, compared to 62%, 24%, 12% and 2% for the same period in 2024.
The Company generates its revenues primarily from the rental of its equipment on operating leases and from sales of equipment occurring in the normal course of business. The Company requires significant capital outlay to purchase its rental inventory and recovers its investment through rental and sales revenues. Rental revenues and certain other service revenues negotiated as part of lease agreements with customers and related costs are recognized on a straight-line basis over the terms of the leases. Sales revenues and related costs are recognized upon delivery and installation of the equipment to customers. Sales revenues are less predictable and can fluctuate from quarter to quarter and year to year depending on customer demands and requirements. Generally, rental revenues less cash operating costs recover the equipment’s capitalized cost in a short period of time relative to the equipment’s potential rental life and when sold, sale proceeds are usually above its net book value.
The Company’s modular revenues (consisting of revenues from Mobile Modular, Kitchens To Go and Enviroplex) are derived from rentals and sales to commercial and education customers. Modular revenues are affected by demand for classrooms, which in turn is affected by shifting and fluctuating school populations, the levels of state funding to public schools, the need for temporary classroom space during reconstruction of older schools and changes in policies regarding class size. As a result of any reduced funding, lower expenditures by these schools may result in certain planned programs to increase the number of classrooms, such as those that the Company provides, to be postponed or terminated. However, reduced expenditures may also result in schools reducing their long-term facility construction projects in favor of using the Company’s modular classroom solutions. At this time, the Company can provide no assurances as to whether public schools will either reduce or increase their demand for the Company's modular classrooms as a result of fluctuations in state funding of public schools. Looking forward, the Company believes that any interruption in the passage of facility bonds or contraction of class size reduction programs by public schools may have a material adverse effect on both rental and sales revenues of the Company. (For more information, see “Item 1. Business – Relocatable Modular Buildings – Classroom Rentals and Sales to Public Schools (K-12)” in the Company’s 2024 Annual Report and “Item 1a. Risk Factors – Significant reductions of, or delays in, funding to public schools have caused the demand and pricing for our modular classroom units to decline, which has in the past caused, and may cause in the future, a reduction in our revenues and profitability” in Part II – Other Information of this Form 10-Q.)
Revenues of Portable Storage consists of the rental and sale of steel containers and ground level offices to provide a temporary storage solution that is delivered to the customer’s location and addresses the need for secure temporary storage with immediate access to the unit. The portable storage container rental market in the U.S. has a large and diverse number of market segments including construction, retail, commercial and industrial, energy and petrochemical, manufacturing, education and healthcare.
19
Revenues of TRS-RenTelco are derived from the rental and sale of general purpose and communications test equipment to a broad range of companies, from Fortune 500 to middle and smaller market companies primarily in the aerospace, defense, communications, manufacturing and semiconductor industries. Electronic test equipment revenues are primarily affected by the business activity within these industries related to research and development, manufacturing, and communication infrastructure installation and maintenance.
The Company’s rental operations include rental and rental related service revenues which comprised approximately 74% and 75% of consolidated revenues in the six months ended June 30, 2025 and 2024, respectively. Of the total rental operations revenues for the six months ended June 30, 2025, Mobile Modular, Portable Storage and TRS-RenTelco comprised 70%, 13% and 17%, respectively, compared to 68%, 15% and 17%, respectively, in the same period of 2024. The Company’s direct costs of rental operations include depreciation of rental equipment, rental related service costs, impairment of rental equipment (if applicable), and other direct costs of rental operations (which include direct labor, supplies, repairs, insurance, property taxes, license fees, cost of sub-rentals and amortization of certain lease costs).
The Company’s Mobile Modular, Portable Storage and TRS-RenTelco business segments sell modular units, storage containers and electronic test equipment, respectively, which are either new or previously rented. In addition, Enviroplex sells new modular buildings used primarily as classrooms in California. For the six months ended June 30, 2025 and 2024, sales and other revenues of modular, container and electronic test equipment comprised approximately 26% and 25% of the Company’s consolidated revenues, respectively. Of the total sales and other revenues from operations for the six months ended June 30, 2025 and 2024, Mobile Modular and Enviroplex together comprised 82% and 81%, respectively, Portable Storage comprised 3% and 4%, respectively, and TRS-RenTelco comprised 15% in both periods. The Company’s cost of sales includes the carrying value of the equipment sold and the direct costs associated with the equipment sold, such as delivery, installation, modifications and related site work.
Selling and administrative expenses primarily include personnel and benefit costs, which include share-based compensation, depreciation and amortization, bad debt expense, advertising costs, and professional service fees. The Company believes that sharing of common facilities, financing, senior management, and operating and accounting systems by all of the Company’s operations results in an efficient use of overhead. Historically, the Company’s operating margins have been impacted favorably to the extent its costs and expenses are leveraged over a large installed customer base. However, there can be no assurances as to the Company’s ability to maintain a large installed customer base or ability to sustain its historical operating margins.
Recent Developments
Dividends
On June 4, 2025, the Company announced that the Board of Directors declared a quarterly cash dividend of $0.485 per common share for the quarter ended June 30, 2025, an increase of 2% over the prior year’s comparable quarter.
Business Outlook
Macroeconomic conditions, such as a volatile interest rate environment, ongoing inflation, the geopolitical landscape, and foreign exchange rate fluctuations, continue to impact the global economy. In addition, recent changes in legislation and regulations, including enacted and proposed tariffs and other trade policies, have introduced additional uncertainty in the global economy. In periods of perceived or actual unfavorable economic conditions, our customers or potential customers could delay or re-evaluate their decisions to initiate various projects which in turn could result in a delay or cessation of engagement or other business activities with us. These factors also make it difficult for us to forecast and plan future budgetary decisions or business activities accurately. Our operating results could be materially impacted by changes in the overall macroeconomic environment and other economic factors.
20
Results of Operations
Three Months Ended June 30, 2025 Compared to
Three Months Ended June 30, 2024
Overview
Consolidated revenues for the three months ended June 30, 2025, increased 11% to $235.6 million, from $212.6 million for the same period in 2024. Consolidated net income for the three months ended June 30, 2025, increased 74% to $36.0 million, from $20.6 million for the same period in 2024. Earnings per diluted share for the three months ended June 30, 2025, increased by $0.62 to $1.46, compared to $0.84 for the same period in 2024. The increase in net income and earnings per diluted share during the quarter was primarily attributed to an increase in gross profit on rental operations revenues at Mobile Modular and TRS-RenTelco, and an increase in gross profit on sales revenues at Enviroplex, lower interest expense incurred on outstanding debt obligations and $12.4 million in transaction costs incurred as a result of the terminated merger with WillScot Mobile Mini in 2024.
For the three months ended June 30, 2025, on a consolidated basis:
•
Gross profit increased $7.3 million, or 7%, to $110.7 million in 2025. Mobile Modular’s gross profit increased $1.9 million, or 3%, largely due to higher gross profit on rental operations revenues. Portable Storage's gross profit decreased $1.3 million, or 8%, primarily due to lower gross profit on rental operations revenues. TRS-RenTelco’s gross profit increased $3.4 million, or 26%, primarily due to higher gross profit on rental and sales revenues. Enviroplex’s gross profit increased $3.2 million, due to higher sales revenue and an increase in sales margins in 2025.
•
Selling and administrative expenses increased $4.5 million to $53.5 million, primarily due to a $2.5 million increase in marketing and administrative expenses and $2.0 million higher employees' salaries and benefit costs during the period.
•
During the three months ended June 30, 2024, the Company incurred $12.4 million in transaction costs related to the Merger Agreement with Willscot Mobile Mini that was terminated September 20, 2024. These significant costs that did not recur during the three months ended June 30, 2025, are reported separately on the Company’s condensed consolidated statements of income.
•
Interest expense decreased $5.2 million to $7.8 million, which was primarily attributed to $232.4 million lower average debt levels of the Company and a lower effective interest rate in 2025 of 5.56%, compared to 6.57% for the same period in 2024. The 29% decrease in average debt when compared to 2024 was primarily attributed to lower rental equipment purchases in 2025 and the proceeds received in 2024 from the terminated merger with WillScot Mobile Mini after transaction costs and income taxes.
•
Pre-tax income contribution by Mobile Modular, Portable Storage and TRS-RenTelco was 61%, 13% and 16%, respectively, compared to 65%, 21% and 8%, respectively, for the comparable 2024 period. These results are discussed on a segment basis below. Enviroplex pre-tax income contribution was 10% and 6% in 2025 and 2024, respectively.
•
The provision for income taxes resulted in an effective tax rate of 27.3% and 28.8%, for the quarters ended June 30, 2025 and 2024, respectively.
•
Adjusted EBITDA increased $2.9 million, or 3%, to $86.5 million in 2025.
21
Mobile Modular
For the three months ended June 30, 2025, Mobile Modular’s total revenues increased $11.4 million, or 8%, to $156.0 million compared to the same period in 2024, primarily due to higher sales and rental operations revenues. The revenue increase, together with higher gross profit on rental and rental related services revenues, partly offset by $3.5 million higher selling and administrative expenses, resulted in a $2.2 million increase in pre-tax income to $30.0 million for the three months ended June 30, 2025, from $27.9 million for the same period in 2024.
The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.
Mobile Modular – Three Months Ended 6/30/25 compared to Three Months Ended 6/30/24 (Unaudited)
(dollar amounts in thousands)
Three Months Ended June 30,
Increase (Decrease)
2025
2024
$
%
Revenues
Rental
$
81,909
$
78,039
$
3,870
5
%
Rental related services
32,172
28,920
3,252
11
%
Rental operations
114,081
106,959
7,122
7
%
Sales
40,484
35,930
4,554
13
%
Other
1,423
1,657
(234
)
(14
)%
Total revenues
155,988
144,546
11,442
8
%
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
10,741
9,995
746
7
%
Rental related services
20,450
19,828
622
3
%
Other
23,990
21,265
2,725
13
%
Total direct costs of rental operations
55,181
51,088
4,093
8
%
Costs of sales
27,581
22,172
5,409
24
%
Total costs of revenues
82,762
73,260
9,502
13
%
Gross Profit
Rental
47,178
46,779
399
1
%
Rental related services
11,722
9,092
2,630
29
%
Rental operations
58,900
55,871
3,029
5
%
Sales
12,903
13,758
(855
)
(6
)%
Other
1,423
1,657
(234
)
(14
)%
Total gross profit
73,226
71,286
1,940
3
%
Expenses:
Selling and administrative expenses 5
36,777
33,239
3,538
11
%
Income from operations
36,449
38,047
(1,598
)
(4
)%
Interest expense allocation
6,407
10,172
(3,765
)
(37
)%
Pre-tax income
$
30,042
$
27,875
$
2,167
8
%
Other Selected Information
Adjusted EBITDA
$
53,088
$
53,418
$
(330
)
(1
)%
Average rental equipment 1
$
1,300,787
$
1,203,415
$
97,372
8
%
Average rental equipment on rent
$
959,077
$
943,270
$
15,807
2
%
Average monthly total yield 2
2.10
%
2.16
%
(3
)%
Average utilization 3
73.7
%
78.4
%
(6
)%
Average monthly rental rate 4
2.85
%
2.76
%
3
%
Period end rental equipment 1
$
1,315,405
$
1,221,992
$
93,413
8
%
Period end utilization 3
73.1
%
78.1
%
(6
)%
1.
Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
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.
Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end 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.
5.
Transaction costs incurred as a result of the terminated merger with WillScot Mobile Mini have been reclassified to the corporate segment and presented separately on the condensed consolidated statements of income for the period ended June 30, 2024.
22
nm = Not meaningful
Mobile Modular’s gross profit for the three months ended June 30, 2025, increased $1.9 million, or 3%, to $73.2 million. For the three months ended June 30, 2025, compared to the same period in 2024:
•
Gross Profit on Rental Revenues – Rental revenues increased $3.9 million, or 5%, due to 2% higher average rental equipment on rent and 3% higher average monthly rental rates in 2025. As a percentage of rental revenues, depreciation was 13% in both 2025 and 2024, and other direct costs were 29% and 27% in 2025 and 2024, respectively, which resulted in gross margin percentages of 58% in 2025, compared to 60% in 2024. The higher rental revenues, partly offset by lower rental margins, resulted in gross profit on rental revenues increasing $0.4 million, or 1%, to $47.2 million in 2025.
•
Gross Profit on Rental Related Services – Rental related services revenues increased $3.3 million, or 11%, compared to 2024. The increase in rental related services revenues was primarily attributable to higher delivery, return delivery and dismantle revenues and higher site related services. The increase in revenues accompanied by higher gross margin percentage of 36% in 2025, compared to 31% in 2024, resulted in rental related services gross profit increasing $2.6 million, or 29%, to $11.7 million in 2025.
•
Gross Profit on Sales – Sales revenues increased $4.6 million, or 13%, compared to 2024, due to higher new and used equipment sales. The lower gross margin percentage of 32% in 2025 compared to 38% in 2024, together with higher sales revenues, resulted in gross profit on sales decreasing $0.9 million, or 6%, to $12.9 million. The lower gross margin on sales in 2025 was primarily due to a higher mix of new versus used sales. Sales occur routinely as a normal part of Mobile Modular’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter and year to year depending on customer requirements, the scope of work to be performed, equipment availability and funding.
For the three months ended June 30, 2025, selling and administrative expenses increased $3.5 million, or 11%, to $36.8 million, primarily due to a $1.7 million increase in employees' salaries and benefit costs, $0.9 million higher allocated corporate expenses and $0.7 million higher marketing and administrative expenses.
23
Portable Storage
For the three months ended June 30, 2025, Portable Storage’s total revenues decreased $0.7 million, or 3%, to $23.3 million compared to the same period in 2024, primarily due to lower rental and rental related services revenues. Lower gross profit on rental and rental related services revenues, partly offset by lower allocated interest expense, resulted in a decrease in pre-tax income of $0.8 million, or 11%, to $6.6 million in 2025.
The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.
Portable Storage – Three Months Ended 6/30/25 compared to Three Months Ended 6/30/24 (Unaudited)
(dollar amounts in thousands)
Three Months Ended June 30,
Increase (Decrease)
2025
2024
$
%
Revenues
Rental
$
16,939
$
17,823
$
(884
)
(5
)%
Rental related services
4,394
4,640
(246
)
(5
)%
Rental operations
21,333
22,463
(1,130
)
(5
)%
Sales
1,712
1,266
446
35
%
Other
301
293
8
3
%
Total revenues
23,346
24,022
(676
)
(3
)%
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
1,038
1,001
37
4
%
Rental related services
4,304
4,476
(172
)
(4
)%
Other
1,918
1,527
391
26
%
Total direct costs of rental operations
7,260
7,004
256
4
%
Costs of sales
1,048
716
332
46
%
Total costs of revenues
8,308
7,720
588
8
%
Gross Profit (Loss)
Rental
13,983
15,295
(1,312
)
(9
)%
Rental related services
90
164
(74
)
(45
)%
Rental operations
14,073
15,459
(1,386
)
(9
)%
Sales
664
550
114
21
%
Other
301
293
8
3
%
Total gross profit
15,038
16,302
(1,264
)
(8
)%
Expenses:
Selling and administrative expenses 5
7,547
7,465
82
1
%
Income from operations
7,491
8,837
(1,346
)
(15
)%
Interest expense allocation
882
1,447
(565
)
(39
)%
Pre-tax income
$
6,609
$
7,390
$
(781
)
(11
)%
Other Selected Information
Adjusted EBITDA
$
9,834
$
11,015
$
(1,181
)
(11
)%
Average rental equipment 1
$
233,742
$
226,754
$
6,988
3
%
Average rental equipment on rent
$
142,896
$
149,906
$
(7,010
)
(5
)%
Average monthly total yield 2
2.42
%
2.62
%
(8
)%
Average utilization 3
61.1
%
66.1
%
(8
)%
Average monthly rental rate 4
3.95
%
3.96
%
nm
Period end rental equipment 1
$
233,850
$
228,368
$
5,482
2
%
Period end utilization 3
61.8
%
64.5
%
(4
)%
1.
Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
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.
Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new rental equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end 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.
5.
Transaction costs incurred as a result of the terminated merger with WillScot Mobile Mini have been reclassified to the corporate segment and presented separately on the condensed consolidated statements of income for the period ended June 30, 2024.
24
nm = Not meaningful
Portable Storage’s gross profit for the three months ended June 30, 2025, decreased $1.3 million, or 8%, to $15.0 million. For the three months ended June 30, 2025, compared to the same period in 2024:
•
Gross Profit on Rental Revenues – Rental revenues decreased $0.9 million, or 5%, due to 5% lower average rental equipment on rent and comparable average monthly rental rates in 2025 as compared to 2024. As a percentage of rental revenues, depreciation was 6% in both 2025 and 2024, and other direct costs were 11% and 9% in 2025 and 2024, respectively, which resulted in gross margin percentage of 83% and 86% in 2025 and in 2024, respectively. The lower rental revenues and rental margins resulted in gross profit on rental revenues decreasing $1.3 million, or 9%, to $14.0 million in 2025.
•
Gross Profit on Rental Related Services – Rental related services revenues was $4.4 million, compared to $4.6 million during the same period in 2024. The gross margin on rental related services revenues was 2% in 2025, compared to 4% in 2024. The lower revenues coupled with lower gross margins in 2025, resulted in rental related services gross profit decreasing $0.1 million, when compared to 2024.
•
Gross Profit on Sales– Sales revenues increased $0.4 million, primarily due to higher used equipment sales. The higher sales revenues and lower gross margins of 39% in 2025, compared to 43% in 2024, resulted in sales gross profit increasing $0.1 million, or 21%, to $0.7 million in 2025. Sales occur routinely as a normal part of Portable Storage’s rental business; however, these sales can fluctuate from period to period depending on customer requirements, equipment availability and funding.
For the three months ended June 30, 2025, Portable Storage’s selling and administrative expenses increased $0.1 million, or 1%, to $7.5 million.
25
TRS-RenTelco
For the three months ended June 30, 2025, TRS-RenTelco’s total revenues increased $3.7 million, or 11%, to $36.4 million, compared to the same period in 2024, primarily due to higher sales and rental revenues. Higher gross profit on rental and sales revenues, coupled with higher selling and administrative expenses and a decrease in allocated interest expense, resulted in an 86% increase in pre-tax income to $8.0 million for the three months ended June 30, 2025, from $4.3 million for the same period in 2024.
The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.
TRS-RenTelco – Three Months Ended 6/30/25 compared to Three Months Ended 6/30/24 (Unaudited)
(dollar amounts in thousands)
Three Months Ended June 30,
Increase (Decrease)
2025
2024
$
%
Revenues
Rental
$
27,137
$
25,314
$
1,823
7
%
Rental related services
917
798
119
15
%
Rental operations
28,054
26,112
1,942
7
%
Sales
7,713
5,845
1,868
32
%
Other
649
713
(64
)
(9
)%
Total revenues
36,416
32,670
3,746
11
%
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
9,647
11,169
(1,522
)
(14
)%
Rental related services
723
686
37
5
%
Other
5,611
5,128
483
9
%
Total direct costs of rental operations
15,981
16,983
(1,002
)
(6
)%
Costs of sales
4,072
2,716
1,356
50
%
Total costs of revenues
20,053
19,699
354
2
%
Gross Profit
Rental
11,879
9,017
2,862
32
%
Rental related services
194
112
82
73
%
Rental operations
12,073
9,129
2,944
32
%
Sales
3,641
3,129
512
16
%
Other
649
713
(64
)
(9
)%
Total gross profit
16,363
12,971
3,392
26
%
Expenses:
Selling and administrative expenses 5
7,320
6,585
735
11
%
Income from operations
9,043
6,386
2,657
42
%
Interest expense allocation
1,133
2,059
(926
)
(45
)%
Foreign currency exchange (gain) loss
(81
)
31
(112
)
nm
Pre-tax income
$
7,991
$
4,296
$
3,695
86
%
Other Selected Information
Adjusted EBITDA
$
19,314
$
18,001
$
1,313
7
%
Average rental equipment 1
$
330,532
$
367,322
$
(36,790
)
(10
)%
Average rental equipment on rent
$
214,318
$
207,342
$
6,976
3
%
Average monthly total yield 2
2.74
%
2.28
%
20
%
Average utilization 3
64.8
%
56.5
%
15
%
Average monthly rental rate 4
4.22
%
4.07
%
4
%
Period end rental equipment 1
$
330,535
$
366,642
$
(36,107
)
(10
)%
Period end utilization 3
64.8
%
55.8
%
16
%
1.
Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
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.
Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new rental equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end 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.
5.
Transaction costs incurred as a result of the terminated merger with WillScot Mobile Mini have been reclassified to the corporate segment and presented separately on the condensed consolidated statements of income for the period ended June 30, 2024.
26
nm = Not meaningful
TRS-RenTelco’s gross profit for the three months ended June 30, 2025 increased $3.4 million, or 26%, to $16.4 million. For the three months ended June 30, 2025 compared to the same period in 2024:
•
Gross Profit on Rental Revenues – Rental revenues increased $1.8 million, or 7%, depreciation expense decreased $1.5 million, or 14%, and other direct costs increased by $0.5 million, or 9%, resulting in a 32% increase in gross profit on rental revenues to $11.9 million. As a percentage of rental revenues, depreciation was 36% and 44% in 2025 and 2024, respectively, and other direct costs were 21% and 20% in 2025 and 2024, respectively, which resulted in a gross margin percentage of 44% and 36% in 2025 and 2024, respectively. The increase in rental revenues was primarily due to a 3% increase in average rental equipment on rent and 4% higher average monthly rental rates in 2025, as compared to 2024.
•
Gross Profit on Sales – Sales revenues increased $1.9 million, or 32%, to $7.7 million in 2025. Gross profit on sales increased $0.5 million, or 16%, to $3.6 million, with gross margin percentages of 47% and 54% in 2025 and 2024, respectively. Sales occur as a normal part of TRS-RenTelco’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter depending on customer requirements and related mix of equipment sold, equipment availability and funding.
For the three months ended June 30, 2025, selling and administrative expenses increased $0.7 million, or 11%, to $7.3 million. The increase was primarily attributed to $0.4 million higher employees' salaries and benefit costs when compared to 2024.
27
Six Months Ended June 30, 2025 Compared to
Six Months Ended June 30, 2024
Overview
Consolidated revenues for the six months ended June 30, 2025, increased 8% to $431.0 million, from $400.4 million for the same period in 2024. Consolidated net income for the six months ended June 30, 2025, increased 48% to $64.2 million, from $43.5 million for the same period in 2024. Earnings per diluted share for the six months ended June 30, 2025, increased $0.84 to $2.61, compared to $1.77 for the same period in 2024. The increase in consolidated net income during the current period was primarily attributed to higher gross profit on rental operations and sales revenues and a $9.8 million reduction in interest expense incurred on outstanding debt obligations, partly offset by $5.0 million higher selling and administrative expenses. In 2024 the Company reported Other income, net of $9.3 million from the sale of a corporate property and incurred $21.7 million in transaction costs attributed to the terminated merger with WillScot Mobile Mini, which further contributed to the current period increases in net income and diluted earnings per share as compared to 2024.
For the six months ended June 30, 2025, on a consolidated basis:
•
Gross profit increased $10.5 million, or 5%, to $207.2 million in 2025. Mobile Modular’s gross profit increased $5.6 million, or 4%, largely due to higher gross profit on rental operations revenues. Portable Storage's gross profit decreased $4.4 million, or 13%, primarily due to lower gross profit on rental operations revenues. TRS-RenTelco’s gross profit increased $4.4 million, or 16%, primarily due to higher gross profit on rental revenues. Enviroplex’s gross profit increased $4.9 million due to higher sales revenue and an increase in sales margins in 2025.
•
Selling and administrative expenses increased $4.9 million to $104.4 million, primarily due to $2.5 million higher employees' salaries and benefit costs and $2.3 million higher marketing and administrative expenses.
•
During the six months ended June 30, 2024, the Company incurred $21.7 million in transaction costs related to the Merger Agreement with Willscot Mobile Mini that was terminated on September 20, 2024. These significant costs that did not recur during the six months ended June 30, 2025 are reported separately on the Company’s condensed consolidated statements of income.
•
Interest expense decreased $9.8 million to $16.0 million, which was primarily attributed to $215.2 million lower average debt levels of the Company and a lower effective interest rate in 2025 of 5.63% compared to 6.59% for the same period in 2024. The 28% decrease in average debt when compared to 2024 was primarily the result of lower rental equipment purchases in 2025 and the $180.0 million payment received from the terminated merger with WillScot Mobile Mini, net of transaction costs and income taxes, which was primarily used to pay down existing debt obligations.
•
Pre-tax income contribution by Mobile Modular, Portable Storage and TRS-RenTelco was 63%, 14% and 16%, respectively, compared to 62%, 24% and 12%, respectively, for the comparable 2024 period. These results are discussed on a segment basis below. Enviroplex pre-tax income contribution was 7% and 2% in 2025 and 2024, respectively.
•
The provision for income taxes resulted in an effective tax rate of 26.1% and 26.2%, for the periods ended June 30, 2025 and 2024, respectively.
•
Adjusted EBITDA increased $5.3 million, or 3%, to $161.0 million in 2025.
28
Mobile Modular
For the six months ended June 30, 2025, Mobile Modular’s total revenues increased $15.8 million, or 6%, to $287.9 million compared to the same period in 2024, primarily due to higher rental operations and sales revenues. The revenue increase, together with higher gross profit on rental operations revenues and lower allocated interest expense, partly offset by lower gross profit on sales revenues, resulted in a $2.5 million increase in pre-tax income to $55.0 million for the six months ended June 30, 2025, from $52.5 million for the same period in 2024. Included within pre-tax income for the period ended June 30, 2024, was other income, net of $6.2 million which contributed to the period-over-period change. In 2024, other income, net was comprised of an allocated net gain on sale of a corporate property. Excluding other income, net, the total change in pre-tax income for 2025 was an increase of $8.7 million, or 19%.
The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.
Mobile Modular – Six Months Ended 6/30/25 compared to Six Months Ended 6/30/24 (Unaudited)
(dollar amounts in thousands)
Six Months Ended June 30,
Increase (Decrease)
2025
2024
$
%
Revenues
Rental
$
160,404
$
154,535
$
5,869
4
%
Rental related services
61,647
53,053
8,594
16
%
Rental operations
222,051
207,589
14,462
7
%
Sales
62,974
61,256
1,718
3
%
Other
2,881
3,287
(406
)
(12
)%
Total revenues
287,906
272,131
15,775
6
%
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
21,294
19,870
1,424
7
%
Rental related services
40,190
35,608
4,582
13
%
Other
44,802
43,938
864
2
%
Total direct costs of rental operations
106,286
99,416
6,870
7
%
Costs of sales
42,926
39,584
3,342
8
%
Total costs of revenues
149,212
139,000
10,212
7
%
Gross Profit
Rental
94,308
90,727
3,581
4
%
Rental related services
21,457
17,445
4,012
23
%
Rental operations
115,765
108,172
7,593
7
%
Sales
20,048
21,672
(1,624
)
(7
)%
Other
2,881
3,287
(406
)
(12
)%
Total gross profit
138,694
133,131
5,563
4
%
Expenses:
Selling and administrative expenses 5
70,765
66,854
3,911
6
%
Other income, net
—
(6,220
)
6,220
nm
Income from operations
67,929
72,499
(4,570
)
(6
)%
Interest expense allocation
12,914
19,971
(7,057
)
(35
)%
Pre-tax income
$
55,015
$
52,528
$
2,487
5
%
Other Selected Information
Adjusted EBITDA
$
100,719
$
96,745
$
3,974
4
%
Average rental equipment 1
$
1,292,797
$
1,188,828
$
103,969
9
%
Average rental equipment on rent
$
958,731
$
933,985
$
24,746
3
%
Average monthly total yield 2
2.07
%
2.17
%
(5
)%
Average utilization 3
74.2
%
78.6
%
(6
)%
Average monthly rental rate 4
2.79
%
2.76
%
1
%
Period end rental equipment 1
$
1,315,405
$
1,221,992
$
93,413
8
%
Period end utilization 3
73.1
%
78.1
%
(6
)%
1.
Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
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.
Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new rental equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end 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.
5.
Transaction costs incurred as a result of the terminated merger with WillScot Mobile Mini have been reclassified to the corporate segment and presented separately on the condensed consolidated statements of income for the period ended June 30, 2024.
29
nm = Not meaningful
Mobile Modular’s gross profit for the six months ended June 30, 2025, increased $5.6 million, or 4%, to $138.7 million. For the six months ended June 30, 2025, compared to the same period in 2024:
•
Gross Profit on Rental Revenues – Rental revenues increased $5.9 million, or 4%, due to 3% higher average rental equipment on rent and 1% higher average monthly rental rates in 2025. As a percentage of rental revenues, depreciation was 13% in both 2025 and 2024, and other direct costs were 28% in both 2025 and 2024, which resulted in gross margin percentages of 59% in both periods. The higher rental revenues and comparable rental margins, resulted in gross profit on rental revenues increasing $3.6 million, or 4%, to $94.3 million in 2025.
•
Gross Profit on Rental Related Services – Rental related services revenues increased $8.6 million, or 16%, compared to 2024. The increase in rental related services revenues was primarily attributable to higher delivery, return delivery and dismantle revenues and higher site related services. The increase in revenues accompanied by higher gross margin percentage of 35% in 2025, compared to 33% in 2024, resulted in rental related services gross profit increasing $4.0 million, or 23%, to $21.5 million in 2025.
•
Gross Profit on Sales – Sales revenues increased $1.7 million, or 3%, compared to 2024, due to higher new and used equipment sales. The lower gross margin percentage of 32% in 2025 compared to 35% in 2024, together with higher sales revenue, resulted in gross profit on sales decreasing $1.6 million, or 7%, to $20.0 million. The lower gross margin on sales in 2025 was primarily due to a higher mix of new versus used sales. Sales occur routinely as a normal part of Mobile Modular’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter and year to year depending on customer requirements, the scope of work to be performed, equipment availability and funding.
For the six months ended June 30, 2025, selling and administrative expenses increased $3.9 million, or 6%, to $70.8 million, primarily due to a $1.5 million increase in employees' salaries and benefit costs and $1.3 million higher allocated corporate expenses.
30
Portable Storage
For the six months ended June 30, 2025, Portable Storage’s total revenues decreased $4.2 million, or 9%, to $44.6 million compared to the same period in 2024, primarily due to lower rental operations revenues, partly offset by higher sales revenues. Lower gross profit on rental operations revenues, partly offset by $1.0 million lower allocated interest expense, resulted in a decrease in pre-tax income of $4.6 million, or 27%, to $12.0 million in 2025. Included within pre-tax income for the period ended June 30, 2024, was other income, net of $1.3 million which contributed to the period-over-period change. In 2024, other income, net was comprised of an allocated net gain on sale of a corporate property. Excluding other income, net, the total change in pre-tax income for 2025 was a decrease of $3.2 million, or 21%.
The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.
Portable Storage – Six Months Ended 6/30/25 compared to Six Months Ended 6/30/24 (Unaudited)
(dollar amounts in thousands)
Six Months Ended June 30,
Increase (Decrease)
2025
2024
$
%
Revenues
Rental
$
33,014
$
36,230
$
(3,216
)
(9
)%
Rental related services
8,025
9,363
(1,338
)
(14
)%
Rental operations
41,039
45,593
(4,554
)
(10
)%
Sales
2,956
2,478
478
19
%
Other
617
711
(94
)
(13
)%
Total revenues
44,612
48,782
(4,170
)
(9
)%
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
2,070
1,965
105
5
%
Rental related services
8,237
8,932
(695
)
(8
)%
Other
3,445
2,995
450
15
%
Total direct costs of rental operations
13,752
13,892
(140
)
(1
)%
Costs of sales
1,879
1,484
395
27
%
Total costs of revenues
15,631
15,377
254
2
%
Gross Profit (Loss)
Rental
27,499
31,270
(3,771
)
(12
)%
Rental related services
(212
)
431
(643
)
(149
)%
Rental operations
27,287
31,701
(4,414
)
(14
)%
Sales
1,077
993
84
8
%
Other
617
711
(94
)
(13
)%
Total gross profit
28,981
33,405
(4,424
)
(13
)%
Expenses:
Selling and administrative expenses 5
15,101
15,275
(174
)
(1
)%
Other income, net
—
(1,319
)
1,319
nm
Income from operations
13,880
19,450
(5,570
)
(29
)%
Interest expense allocation
1,852
2,867
(1,015
)
(35
)%
Pre-tax income
$
12,028
$
16,583
$
(4,555
)
(27
)%
Other Selected Information
Adjusted EBITDA
$
18,421
$
22,538
$
(4,117
)
(18
)%
Average rental equipment 1
$
233,501
$
225,025
$
8,476
4
%
Average rental equipment on rent
$
141,528
$
152,609
$
(11,081
)
(7
)%
Average monthly total yield 2
2.36
%
2.68
%
(12
)%
Average utilization 3
60.6
%
67.8
%
(11
)%
Average monthly rental rate 4
3.89
%
3.96
%
(2
)%
Period end rental equipment 1
$
233,850
$
228,368
$
5,482
2
%
Period end utilization 3
61.8
%
64.5
%
(4
)%
1.
Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
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.
Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new rental equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end 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.
5.
Transaction costs incurred as a result of the terminated merger with WillScot Mobile Mini have been reclassified to the corporate segment and presented separately on the condensed consolidated statements of income for the period ended June 30, 2024.
nm = Not meaningful
31
Portable Storage’s gross profit for the six months ended June 30, 2025, decreased $4.4 million, or 13%, to $29.0 million. For the six months ended June 30, 2025, compared to the same period in 2024:
•
Gross Profit on Rental Revenues – Rental revenues decreased $3.2 million, or 9%, due to 2% lower average monthly rental rates and 7% lower average rental equipment on rent in 2025. As a percentage of rental revenues, depreciation was 6% and 5% in 2025 and 2024, respectively, and other direct costs were 10% and 8% in 2025 and 2024, respectively, which resulted in gross margin percentage of 83% and 86% in 2025 and 2024, respectively. The lower rental revenues and lower rental margins resulted in gross profit on rental revenues decreasing $3.8 million, or 12%, to $27.5 million in 2025.
•
Gross Profit on Rental Related Services – Rental related services revenues was $8.0 million, a decrease of $1.3 million compared to 2024. The gross margin on rental related services revenues was negative 3% in 2025, compared to 5% in 2024. The lower revenues coupled with lower gross margins in 2025, resulted in rental related services gross profit decreasing $0.6 million, when compared to 2024.
•
Gross Profit on Sales– Sales revenues increased $0.5 million, primarily due to higher used equipment sales. The higher sales revenues and lower gross margins of 36% in 2025, compared to 40% in 2024, resulted in sales gross profit increasing $0.1 million, or 8%, to $1.1 million in 2025. Sales occur routinely as a normal part of Portable Storage’s rental business; however, these sales can fluctuate from period to period depending on customer requirements, equipment availability and funding.
For the six months ended June 30, 2025, Portable Storage’s selling and administrative expenses decreased $0.2 million, or 1%, to $15.1 million.
32
TRS-RenTelco
For the six months ended June 30, 2025, TRS-RenTelco’s total revenues increased $5.0 million to $71.4 million, compared to the same period in 2024, primarily due to higher sales and rental revenues. Higher gross profit on rental revenues and $1.7 million lower allocated interest expense resulted in a 35% increase in pre-tax income to $14.2 million for the six months ended June 30, 2025, from $10.5 million for the same period in 2024. Included within pre-tax income for the period ended June 30, 2024, was other income, net of $1.7 million which contributed to the period-over-period change. In 2024, other income, net was comprised of an allocated net gain on sale of a corporate property. Excluding other income, net, the total change in pre-tax income for 2025 was an increase of $5.4 million, or 62%.
The following table summarizes results for each revenue and gross profit category, income from operations, pre-tax income and other selected information.
TRS-RenTelco – Six Months Ended 6/30/25 compared to Six Months Ended 6/30/24 (Unaudited)
(dollar amounts in thousands)
Six Months Ended June 30,
Increase (Decrease)
2025
2024
$
%
Revenues
Rental
$
52,680
$
50,743
$
1,937
4
%
Rental related services
1,727
1,522
205
13
%
Rental operations
54,407
52,265
2,142
4
%
Sales
15,692
12,657
3,035
24
%
Other
1,336
1,511
(175
)
(12
)%
Total revenues
71,435
66,433
5,002
8
%
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
19,567
22,696
(3,129
)
(14
)%
Rental related services
1,363
1,236
127
10
%
Other
10,924
9,997
927
9
%
Total direct costs of rental operations
31,854
33,929
(2,075
)
(6
)%
Costs of sales
8,343
5,658
2,685
47
%
Total costs of revenues
40,197
39,587
610
2
%
Gross Profit
Rental
22,189
18,050
4,139
23
%
Rental related services
364
286
78
27
%
Rental operations
22,553
18,336
4,217
23
%
Sales
7,349
6,999
350
5
%
Other
1,336
1,511
(175
)
(12
)%
Total gross profit
31,238
26,846
4,392
16
%
Expenses:
Selling and administrative expenses 5
14,758
13,823
935
7
%
Other income, net
—
(1,742
)
1,742
nm
Income from operations
16,480
14,765
1,715
12
%
Interest expense allocation
2,410
4,121
(1,711
)
(42
)%
Foreign currency exchange (gain) loss
(86
)
163
(249
)
nm
Pre-tax income
$
14,156
$
10,481
$
3,675
35
%
Other Selected Information
Adjusted EBITDA
$
37,248
$
36,481
$
767
2
%
Average rental equipment 1
$
334,607
$
369,756
$
(35,149
)
(10
)%
Average rental equipment on rent
$
210,718
$
208,570
$
2,148
1
%
Average monthly total yield 2
2.62
%
2.27
%
15
%
Average utilization 3
63.0
%
56.4
%
12
%
Average monthly rental rate 4
4.17
%
4.05
%
3
%
Period end rental equipment 1
$
330,535
$
366,642
$
(36,107
)
(10
)%
Period end utilization 3
64.8
%
55.8
%
16
%
1.
Average and Period end rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
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.
Period end utilization is calculated by dividing the cost of rental equipment on rent by the total cost of rental equipment, excluding new rental equipment inventory and accessory equipment. Average utilization for the period is calculated using the average month end costs of rental equipment.
33
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.
5.
Transaction costs incurred as a result of the terminated merger with WillScot Mobile Mini have been reclassified to the corporate segment and presented separately on the condensed consolidated statements of income for the period ended June 30, 2024.
nm = Not meaningful
TRS-RenTelco’s gross profit for the six months ended June 30, 2025 increased $4.4 million, or 16%, to $31.2 million. For the six months ended June 30, 2025 compared to the same period in 2024:
•
Gross Profit on Rental Revenues – Rental revenues increased $1.9 million, or 4%, depreciation expense decreased $3.1 million, or 14%, and other direct costs increased by $0.9 million, or 9%, resulting in a 23% increase in gross profit on rental revenues to $22.2 million. As a percentage of rental revenues, depreciation was 37% and 45% in 2025 and 2024, respectively, and other direct costs were 21% and 20%, in 2025 and 2024, respectively, which resulted in a gross margin percentage of 42% and 36% in 2025 and 2024, respectively. The increase in rental revenues was primarily due to a 1% increase in average rental equipment on rent and 3% higher average monthly rental rates in 2025, as compared to 2024.
•
Gross Profit on Sales – Sales revenues increased $3.0 million, or 24%, to $15.7 million in 2025. Gross profit on sales was $7.3 million, an increase of $0.4 million, or 5%, compared to 2024, with a lower gross margin percentage of 47% in 2025, compared to 55% in 2024. Sales occur as a normal part of TRS-RenTelco’s rental business; however, these sales and related gross margins can fluctuate from quarter to quarter depending on customer requirements and related mix of equipment sold, equipment availability and funding.
For the six months ended June 30, 2025, selling and administrative expenses increased $0.9 million, or 7%, to $14.8 million. The increase was primarily attributed to $0.6 million higher employees' salaries and benefit costs when compared to 2024.
34
Adjusted EBITDA
To supplement the Company’s financial data presented on a basis consistent with accounting principles generally accepted in the United States of America (“GAAP”), the Company presents “Adjusted EBITDA”, which is defined by the Company as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs, gains on property sales and non-operating transactions. The 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, gains on property sales and non-operating transactions. The Company believes that Adjusted EBITDA is of limited use in that it does not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and does not accurately reflect real cash flow. In addition, other companies may not use Adjusted EBITDA or may use other non-GAAP measures, limiting the usefulness of Adjusted EBITDA for purposes of comparison. The Company’s presentation of Adjusted EBITDA should not be construed as an inference that the Company will not incur expenses that are the same as or similar to the adjustments in this presentation. Therefore, Adjusted EBITDA should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The Company compensates for the limitations of Adjusted EBITDA by relying upon GAAP results to gain a complete picture of the Company’s performance. Because Adjusted EBITDA is a non-GAAP financial measure, as defined by the SEC, the Company includes in the tables below reconciliations of Adjusted EBITDA to the most directly comparable financial measures calculated and presented in accordance with GAAP.
Reconciliation of Net Income to Adjusted EBITDA
(dollar amounts in thousands)
Three Months Ended June 30,
Six Months Ended June 30,
Twelve Months Ended June 30,
2025
2024
2025
2024
2025
2024
Net income
$
35,973
$
20,618
$
64,182
$
43,466
$
252,448
$
115,848
Provision for income taxes
13,484
8,359
22,689
15,406
89,202
42,234
Interest expense
7,795
13,037
15,954
25,741
37,454
48,892
Depreciation and amortization
26,339
26,944
52,739
54,131
106,063
108,548
EBITDA
83,591
68,958
155,564
138,744
485,167
315,522
Share-based compensation
2,779
2,347
5,322
4,556
10,268
9,449
Transaction costs 3
155
12,367
155
21,721
41,593
23,306
Other income, net 4
—
—
—
(9,281
)
—
(12,899
)
Gain on merger termination from WillScot Mobile Mini 5
—
—
—
—
(180,000
)
—
Adjusted EBITDA 1
$
86,525
$
83,672
$
161,041
$
155,740
$
357,028
$
335,378
Adjusted EBITDA margin 2
37
%
39
%
37
%
38
%
38
%
38
%
1.
Adjusted EBITDA is defined as income from operations before interest expense, provision for income taxes, depreciation, amortization, share-based compensation, other income, net and non-operating transactions.
2.
Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenues for the period.
3.
Transaction costs include acquisition and divestiture related legal and professional fees and other costs specific to these transactions.
4.
Other income, net consists of net gains on property, plant and equipment sales that are infrequent in nature and excluded from Adjusted EBITDA.
5.
The gain on merger termination from WillScot Mobile Mini was considered a non-operating transaction and is excluded from Adjusted EBITDA.
35
Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA
(dollar amounts in thousands)
Three Months Ended June 30,
Six Months Ended June 30,
Twelve Months Ended June 30,
2025
2024
2025
2024
2025
2024
Net cash provided by operating activities
$
55,812
$
79,209
$
109,694
$
138,629
$
345,440
$
158,903
Change in certain assets and liabilities:
Accounts receivable, net
24,919
5,429
14,459
(9,989
)
16,422
25,438
Inventories, prepaid expenses and other assets
11,427
(519
)
3,263
6,971
2,193
15,005
Accounts payable and accrued liabilities
(20,522
)
(3,800
)
10,266
6,160
(137,663
)
2,942
Deferred income
(8,050
)
(11,928
)
(15,124
)
(23,196
)
9,664
(28,000
)
Amortization of debt issuance costs
(22
)
(2
)
(45
)
(4
)
(107
)
(8
)
Foreign currency exchange (loss) gain
81
(31
)
86
(163
)
34
(61
)
Gain on sale of used rental equipment
10,281
8,182
16,674
15,537
36,222
32,929
Income taxes paid, net of refunds received
5,762
(5,078
)
5,786
(4,599
)
46,909
80,035
Interest paid
6,837
12,210
15,982
26,394
37,912
48,195
Adjusted EBITDA 1
$
86,525
$
83,672
$
161,041
$
155,740
$
357,026
$
335,378
1.
Adjusted EBITDA is defined as income from operations before interest expense, provision for income taxes, depreciation, amortization, share-based compensation, other income, net and non-operating transactions.
Adjusted EBITDA is a component of two restrictive financial covenants for the Company’s unsecured Credit Facility, the Note Purchase Agreement, Series D Senior Notes, Series E Senior Notes and Series F Senior Notes (as defined and more fully described under the heading “Liquidity and Capital Resources” in this MD&A). These instruments contain financial covenants requiring the Company to not:
•
Permit the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Facility and the Note Purchase Agreement (as defined and more fully described under the heading “Liquidity and Capital Resources” in this MD&A)) of Adjusted EBITDA (as defined in the Credit Facility and the Note Purchase Agreement) to fixed charges as of the end of any fiscal quarter to be less than 2.50 to 1. At June 30, 2025, the actual ratio was 3.59 to 1.
•
Permit the Consolidated Leverage Ratio of funded debt (as defined in the Credit Facility and the Note Purchase Agreement) to Adjusted EBITDA at any time during any period of four consecutive quarters to be greater than 2.75 to 1. At June 30, 2025, the actual ratio was 1.60 to 1.
At June 30, 2025, the Company was in compliance with each of the aforementioned covenants. There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, although, significant deterioration in our financial performance could impact the Company’s ability to comply with these covenants.
Liquidity and Capital Resources
The Company’s rental businesses are capital intensive and generate significant cash flows. Cash flows for the Company for the six months ended June 30, 2025 compared to the same period in 2024 are summarized as follows:
Cash Flows from Operating Activities: The Company’s operations provided net cash of $109.7 million in 2025, compared to $138.6 million in 2024. The $28.9 million decrease in net cash provided by operating activities was primarily attributable to a $31.6 million decrease in accounts payable as a result of the payment timing of rental equipment acquisitions and other trade accounts payable. In addition, accounts receivable increased $24.4 million due to higher customer billings compared to related cash payments in 2025. Finally, the Company's inventories provided $14.8 million in operating cash flows during 2025 due to a higher usage of purchased inventories during 2025.
Cash Flows from Investing Activities: Net cash used in investing activities was $61.6 million in 2025, down from $133.9 million in 2024. The $72.3 million decrease in net cash used was primarily due to $95.1 million lower rental equipment purchases when compared to the previous year, due to higher equipment acquisitions during 2024 to meet customer rental demand. This decrease in investing activities was partly offset by a $22.0 million increase in cash paid for the acquisition of businesses during 2025.
Cash Flows from Financing Activities: Net cash used in financing activities was $47.4 million in 2025, compared to $3.8 million of cash provided in 2024. The $51.2 million change was primarily attributable to the $75.0 million of borrowings under term note
36
agreements in 2024 and $26.0 million lower net payments under bank lines of credit in 2025. The $49.0 million lower net borrowings was primarily the result of lower rental equipment purchases during the period, compared to 2024.
Significant capital expenditures are required to maintain and grow the Company’s rental assets. During the last three years, the Company has financed its working capital and capital expenditure requirements through cash flow from operations, proceeds from the sale of rental equipment and from borrowings. Sales occur routinely as a normal part of the Company’s rental business. However, these sales can fluctuate from period to period depending on customer requirements and funding. Although the net proceeds received from sales may fluctuate from period to period, the Company believes its liquidity will not be adversely impacted from lower sales in any given year because it believes it has the ability to increase its bank borrowings and conserve its cash in the future by reducing the amount of cash it uses to purchase rental equipment, pay dividends, or repurchase the Company’s common stock.
Unsecured Revolving Lines of Credit
On July 15, 2022, the Company entered into an amended and restated credit agreement with Bank of America, N.A., as Administrative Agent, Swing Line Lender, L/C Issuer and lender, and other lenders named therein (the “Credit Facility”). The Credit Facility provides for a $650.0 million unsecured revolving credit facility (which may be further increased to $950.0 million, of which $75.0 million was utilized through the term loan entered on April 23, 2024, by adding one or more tranches of term loans and/or increasing the aggregate revolving commitments), which includes a $40.0 million sublimit for the issuance of standby letters of credit and a $20.0 million sublimit for swingline loans. The proceeds of the Credit Facility are available to be used for general corporate purposes, including permitted acquisitions. The Credit Facility permits the Company’s existing indebtedness to remain, which includes the Company’s $20.0 million Treasury Sweep Note due July 15, 2027 and the Company’s existing senior notes issued pursuant to the Note Purchase and Private Shelf Agreement with Prudential Investment Management, Inc., dated as of April 21, 2011 (as amended, the "Prior NPA") comprised of (i) the $40.0 million aggregate outstanding principal of notes issued March 17, 2021 and due March 17, 2028, and (ii) the $60.0 million aggregate outstanding principal of notes issued June 16, 2021 and due June 16, 2026. The Prior NPA was amended and restated, and superseded in its entirety, by the Note Purchase Agreement (as defined and more fully described under the heading "Liquidity and Capital Resources - Note Purchase and Private Shelf Agreement" in this MD&A). In addition, the Company may incur additional senior note indebtedness in an aggregate amount not to exceed $250.0 million. The Credit Facility matures on July 15, 2027 and replaced the Company’s prior $420.0 million credit facility dated March 31, 2020 with Bank of America, N.A., as agent, as amended. All obligations outstanding under the prior credit facility as of the date of the Credit Facility were refinanced by the Credit Facility on April 23, 2022.
On August 19, 2022, the Company entered into an amended and restated Credit Facility Letter Agreement and a Credit Line Note in favor of MUFG Union Bank, N.A., which provides for a $20.0 million line of credit facility related to its cash management services (“Sweep Service Facility”). The Sweep Service Facility matures on the earlier of July 15, 2027, or the date the Company ceases to utilize MUFG Union Bank, N.A. for its cash management services. The Sweep Service Facility replaced the Company’s prior $12.0 million sweep service facility, dated as of March 30, 2020.
On April 23, 2024, the Company entered into a first incremental facility amendment with Bank of America, N.A., as Administrative Agent and the first incremental lender (“BoA”) and the guarantors named therein (the “First Incremental Amendment”). The First Incremental Amendment amends the Second Amended and Restated Credit Agreement, dated as of July 15, 2022, as amended, by and among the Company, BoA, the other lenders named therein, and the guarantors named therein (the “Credit Agreement”) to institute an incremental term loan “A” facility in an aggregate principal amount of $75.0 million (the “Incremental Credit Facility”). The proceeds from the Incremental Credit Facility were used for general corporate purposes. Concurrently with entry into the First Incremental Amendment, the Company repaid revolving loans issued under the Credit Agreement in an aggregate amount equal to approximately $75.0 million.
At June 30, 2025, under the Credit Facility and Sweep Service Facility, the Company had unsecured lines of credit that permit it to borrow up to $650.0 million, of which $324.7 million was outstanding and had capacity to borrow up to an additional $325.3 million. The Credit Facility contains financial covenants requiring the Company to not (all defined terms used below not otherwise defined herein have the meaning assigned to such terms in the Credit Facility):
•
Permit the Consolidated Fixed Charge Coverage Ratio as of the end of any fiscal quarter to be less than 2.50 to 1. At June 30, 2025, the actual ratio was 3.59 to 1.
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Permit the Consolidated Leverage Ratio at any time during any period of four consecutive fiscal quarters to be greater than 2.75 to 1. At June 30, 2025, the actual ratio was 1.60 to 1.
At June 30, 2025, the Company was in compliance with each of the aforementioned covenants. There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, although significant deterioration in our financial performance could impact the Company’s ability to comply with these covenants.
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Note Purchase and Private Shelf Agreement
On June 8, 2023, the Company entered into a Second Amended and Restated Note Purchase and Private Shelf Agreement (the “Note Purchase Agreement”) with PGIM, Inc. (“PGIM”) and the holders of Series D and Series E Notes previously issued pursuant to the Prior NPA. The Note Purchase Agreement amended and restated, and superseded in its entirety, the Prior NPA. Pursuant to the Prior NPA, the Company issued (i) $40.0 million aggregate principal amount of its 2.57% Series D Senior Notes, due March 17, 2028, and (ii) $60.0 million aggregate principal amount of its 2.35% Series E Senior Notes, due June 16, 2026, to which the terms of the Note Purchase Agreement shall apply.
In addition, pursuant to the Note Purchase Agreement, the Company may authorize the issuance and sale of additional senior notes (the “Shelf Notes”) in the aggregate principal amount of (x) $300 million minus (y) the amount of other notes (such as the Series D Senior Notes, Series E Senior Notes and Series F Senior Notes, each defined below) then outstanding, to be dated the date of issuance thereof, to mature, in case of each Shelf Note so issued, no more than 15 years after the date of original issuance thereof, to have an average life, in the case of each Shelf Note so issued, of no more than 15 years after the date of original issuance thereof, to bear interest on the unpaid balance thereof from the date thereof at the rate per annum, and to have such other particular terms, as shall be set forth, in the case of each Shelf Note so issued, in accordance with the Note Purchase Agreement. Shelf Notes may be issued and sold from time to time at the discretion of the Company’s Board of Directors and in such amounts as the Board of Directors may determine, subject to prospective purchasers’ agreement to purchase the Shelf Notes. The Company will sell the Shelf Notes directly to such purchasers. The full net proceeds of each Shelf Note will be used in the manner described in the applicable Request for Purchase with respect to such Shelf Note.
6.25% Senior Notes Due in 2030
On September 27, 2023, the Company issued and sold to the purchasers $75.0 million aggregate principal amount of 6.25% Series F Notes (the “Series F Senior Notes”) pursuant to the terms of the Note Purchase Agreement.
The Series F Senior Notes are an unsecured obligation of the Company and bear interest at a rate of 6.25% per annum and mature on September 27, 2030. Interest on the Series F Senior Notes became payable semi-annually beginning on March 27, 2024 and continuing thereafter on September 27 and March 27 of each year until maturity. The principal balance is due when the notes mature on September 27, 2030. The full net proceeds from the Series F Senior Notes will primarily be used to fulfill the income tax obligations incurred from the divestiture of Adler Tanks. At June 30, 2025, the principal balance outstanding under the Series F Senior Notes was $75.0 million.
2.57% Senior Notes Due in 2028
On March 17, 2021, the Company issued and sold to the purchasers $40.0 million aggregate principal amount of 2.57% Series D Notes (the “Series D Senior Notes”) pursuant to the terms of the Prior NPA.
The Series D Senior Notes are an unsecured obligation of the Company and bear interest at a rate of 2.57% per annum and mature on March 17, 2028. Interest on the Series D Senior Notes is payable semi-annually beginning on September 17, 2021 and continuing thereafter on March 17 and September 17 of each year until maturity. The principal balance is due when the notes mature on March 17, 2028. The full net proceeds from the Series D Senior Notes were used to pay off the Company’s $40 million Series B Senior Notes. At June 30, 2025, the principal balance outstanding under the Series D Senior Notes was $40.0 million.
2.35% Senior Notes Due in 2026
On June 16, 2021, the Company issued and sold to the purchasers $60.0 million aggregate principal amount of 2.35% Series E Notes (the "Series E Notes") pursuant to the terms of the Prior NPA.
The Series E Senior Notes are an unsecured obligation of the Company and bear interest at a rate of 2.35% per annum and mature on June 16, 2026. Interest on the Series E Senior Notes is payable semi-annually beginning on December 16, 2021 and continuing thereafter on June 16 and December 16 of each year until maturity. The principal balance is due when the notes mature on June 16, 2026. The full net proceeds from the Series E Senior Notes were used to pay down the Company’s credit facility. At June 30, 2025, the principal balance outstanding under the Series E Senior Notes was $60.0 million.
Among other restrictions, the Note Purchase Agreement, which has superseded in its entirety the Prior NPA, under which the Series D Senior Notes, Series E Senior Notes and Series F Senior Notes were sold, contains financial covenants requiring the Company
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to not (all defined terms used below not otherwise defined herein have the meaning assigned to such terms in the Note Purchase Agreement):
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Permit the Consolidated Fixed Charge Coverage Ratio of EBITDA to fixed charges as of the end of any fiscal quarter to be less than 2.50 to 1. At June 30, 2025, the actual ratio was 3.59 to 1.
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Permit the Consolidated Leverage Ratio of funded debt to EBITDA at any time during any period of four consecutive quarters to be greater than 2.75 to 1. At June 30, 2025, the actual ratio was 1.60 to 1.
At June 30, 2025, the Company was in compliance with each of the aforementioned covenants. There are no anticipated trends that the Company is aware of that would indicate non-compliance with these covenants, although significant deterioration in our financial performance could impact the Company’s ability to comply with these covenants.
Although no assurance can be given, the Company believes it will continue to be able to negotiate general bank lines of credit and issue senior notes adequate to meet capital requirements not otherwise met by operational cash flows and proceeds from sales of rental equipment.
Contractual Obligations and Commitments
We believe that our contractual obligations and commitments have not changed materially from those included in our 2024 Annual Report.
Critical Accounting Estimates
There were no material changes in our judgments and assumptions associated with the development of our critical accounting estimates during the six month period ended June 30, 2025. Refer to our 2024 Annual Report for a discussion of our critical accounting policies and estimates.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the Company’s market risk exposures from those reported in our 2024 Annual Report.
Item 4. Controls and Procedures
The Company’s management, under the supervision and with the participation of the Company’s Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), the Company’s principal executive officer and principal financial officer, respectively, performed an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of June 30, 2025. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of June 30, 2025. There were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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Part II -Other Information
Item 1. Legal Proceedings
The Company is subject to various legal proceedings and claims arising in the ordinary course of business. The Company’s management does not expect that the outcome in the current proceedings, individually or collectively, will have a material adverse effect on the Company’s financial condition, operating results or cash flows.
Item 1a. Risk Factors
There have been no material changes from the risk factors associated with our business previously disclosed in the “Item 1A. Risk Factors” section of our 2024 Annual Report, except as set forth below. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business and the trading price of our common stock.
Changes in the U.S. trade environment, including uncertainty over global tariffs and the financial impact of tariffs, as well as economic uncertainty associated with geopolitics, may negatively affect our business, financial condition and results of operations.
The United States has enacted and proposed to enact significant new tariffs, as well as changes to existing tariffs. Additionally, various federal agencies have been directed to further evaluate key aspects of U.S. trade policy and there has been ongoing discussion regarding potential significant changes to U.S. trade policies, treaties, and tariffs, all of which has resulted and may continue to result in retaliatory tariffs enacted by trading partners in response to such actions. Trade restrictions and rising political tensions could reduce trade volume, investment and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. Any of these factors could negatively impact our customers and suppliers. These developments or a perception of these developments could cause our customers or potential customers to delay or re-evaluate their decisions to initiate various projects which in turn could result in a delay or cessation of engagement or other business activities with us. During challenging times, our customers may tighten their budgets or face constraints in gaining timely access to sufficient funding or other credit, which could result in an impairment of their ability to make timely payments to us. All these developments could negatively impact our business, financial condition and results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Common Stock Purchase
The Company has in the past made purchases of shares of its common stock from time to time in over-the-counter market (NASDAQ) transactions, through privately negotiated, large block transactions and through a share repurchase plan, in accordance with Rule 10b5-1 of the Exchange Act. In September 2024, the Company's Board of Directors increased the capacity under the share repurchase program by authorizing the Company to repurchase up to 2,000,000 shares of the Company's outstanding common stock (the "Repurchase Plan"), an increase from the 1,309,805 remaining shares authorized for repurchase under the Repurchase Plan established in August 2015. The amount and time of the specific repurchases are subject to prevailing market conditions, applicable legal requirements and other factors, including management’s discretion. All shares repurchased by the Company are canceled and returned to the status of authorized but unissued shares of common stock. There can be no assurance that any authorized shares will be repurchased, and the Repurchase Plan may be modified, extended or terminated by the Company’s Board of Directors at any time. As of June 30, 2025, 2,000,000 shares remained authorized for repurchase under the Repurchase Plan.
There were no shares repurchased during the three and six months ended June 30, 2025.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
Securities Trading Plans of Directors and Executive Officers
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During the three and six months ended June 30, 2025, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408 of Regulation S-K.
The following materials from McGrath RentCorp’s Quarterly report on Form 10-Q for the quarter ended June 30, 2025, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Statement of Income, (ii) the Condensed Consolidated Balance Sheet, (iii) the Condensed Consolidated Statement of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements.
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Cover Page Interactive Data File (embedded within the Inline XBRL document).
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: July 24, 2025
McGrath RentCorp
By:
/s/ Keith E. Pratt
Keith E. Pratt
Executive Vice President and Chief Financial Officer
By:
/s/ David M. Whitney
David M. Whitney
Senior Vice President and Chief Accounting Officer