Livermore, CA - October 23, 2025 – McGrath RentCorp (“McGrath” or the “Company”) (Nasdaq: MGRC), a leading business-to-business rental company in North America, today announced total revenues for the quarter ended September 30, 2025 of $256.4 million, a decrease of 4% compared to the third quarter of 2024. The Company reported net income of $42.3 million, or $1.72 per diluted share, for the third quarter of 2025, compared to net income of $149.3 million, or $6.08 per diluted share, for the third quarter of 2024. Excluding the $180.0 million merger termination payment received from WillScot Mobile Mini during the third quarter 2024 and $39.4 million in transaction costs incurred, net of provision for income taxes, the Company's reported net income decreased $3.6 million, or 8%, and diluted earnings per share decreased $0.15, or 8%.
THIRD QUARTER 2025 YEAR-OVER-YEAR Company HIGHLIGHTS:
•
Rental operations revenues increased 4% to $178.1 million.
•
Sales revenues decreased 18% to $76.1 million.
•
Total revenues decreased 4% to $256.4 million.
•
Income from operations decreased 11% to $66.7 million.
•
Payment on merger termination from WillScot Mobile Mini in the third quarter of 2024 provided for $180 million in proceeds received by the Company, partly offset by $39.4 million in transaction costs and an increase in provision for income taxes, resulted in a $103.5 million net income contribution during the third quarter 2024, or $4.21 per diluted share.
•
Adjusted EBITDA1 decreased 7% to $96.5 million.
•
Dividend rate of $0.485 per share for the third quarter 2025. On an annualized basis, this dividend represents a 1.6% yield on the October 22, 2025 close price of $122.20 per share.
Joe Hanna, President and CEO of McGrath, made the following comments:
“We delivered solid third quarter results, with rental revenue growth in each of our operating segments, despite some challenging market demand conditions. Sales revenues for the quarter were lower than a year ago, but cumulatively higher year to date reflecting a more balanced contribution by quarter than last year.
Modular rental revenues increased 2% compared to last year, with growth from our commercial customer base. Given current utilization levels, we reduced rental equipment capital spending and focused on preparing available fleet to satisfy new shipments which increased operating expenses for the quarter.
Portable Storage rental revenues grew 1%, which was its first year over year growth since the first quarter of 2024. We are encouraged that market conditions for this segment are showing signs of stabilization despite soft commercial construction project activity.
TRS-RenTelco had a strong quarter, with rental revenues up 9% over last year. Consistent with the second quarter, improvement in market demand conditions was broad-based across customer segments.
I am pleased with our year-to-date progress. We have delivered business growth, lowered our capital spending to align with market conditions, increased contributions from our modular services offerings, and broadened our geographic sales coverage. We have good momentum entering the fourth quarter and we remain focused on delivering a strong finish to the year."
Division HIGHLIGHTS:
All comparisons presented below are for the quarter ended September 30, 2025 to the quarter ended September 30, 2024 unless otherwise indicated.
Mobile Modular
For the third quarter of 2025, the Company’s Mobile Modular division reported Adjusted EBITDA of $64.6 million, a decrease of $6.8 million, or 10%, when compared to the same quarter in 2024.
•
Rental revenues increased 2% to $83.2 million, depreciation expense increased 7% to $10.8 million, and other direct costs increased 18% to $24.2 million, which resulted in a decrease in gross profit on rental revenues of 5% to $48.2 million. The increase in other direct costs was primarily due to higher labor and material costs incurred during 2025 to prepare equipment to meet customer rental demand.
•
Rental related services revenues increased 5% to $44.5 million, primarily attributable to higher site related services when compared to 2024, with associated gross profit decreasing 2% to $14.7 million.
•
Sales revenues decreased 21% to $52.3 million, due to lower new equipment sales. Gross margin on sales was 36% in 2025, compared to 34% in 2024, resulting in a 16% decrease in gross profit on sales revenues to $18.8 million. The higher gross margin on sales was primarily attributed to a higher mix of used versus new sales during the quarter.
•
Selling and administrative expenses increased $1.4 million to $35.4 million, primarily due to $1.2 million higher allocated corporate expenses when compared to 2024.
Portable storage
For the third quarter of 2025, the Company’s Portable Storage division reported Adjusted EBITDA of $9.2 million, a decrease of $1.6 million, or 14%, when compared to the same quarter in 2024.
•
Rental revenues increased 1% to $17.3 million, depreciation expense increased 5% to $1.1 million, and other direct costs increased 65% to $2.2 million, which resulted in a decrease in gross profit on rental revenues of 4% to $14.0 million.
•
Rental related services revenues decreased 5% to $4.2 million and the division reported a gross loss on rental related services revenues of $0.6 million, compared to gross profit of $0.1 million in the third quarter of 2024.
•
Sales revenues increased $1.3 million to $2.7 million, primarily from higher used equipment sales. Gross margin on sales was 40% in 2025, compared to 36% in 2024, resulting in a $0.6 million increase in gross profit on sales revenues to $1.1 million.
•
Selling and administrative expenses increased $1.1 million to $7.9 million in 2025, primarily due to a $0.5 million increase in employee salaries and benefits and $0.3 million higher allocated corporate expenses when compared to 2024.
TRS-RenTelco
For the third quarter of 2025, the Company’s TRS-RenTelco division reported Adjusted EBITDA of $20.2 million, an increase of $1.3 million, or 7%, when compared to the same quarter in 2024.
•
Rental revenues increased 9% to $28.0 million, depreciation expense decreased 8%, and other direct costs increased 10%, resulting in a 28% increase in gross profit on rental revenues to $12.1 million. The rental revenue increase was primarily due to the continued strengthening of end markets, resulting in higher average rental equipment on rent compared to the prior year.
•
Sales revenues decreased 3% to $7.3 million and gross margin on sales was 56% in 2025, compared to 52% in 2024, resulting in a 5% increase in gross profit on sales revenues to $4.1 million.
2
•
Selling and administrative expenses increased $0.5 million to $7.1 million in 2025, as compared to the same period in 2024.
financial outlook:
Based upon the Company's year-to-date results and current outlook for the remainder of the year, the Company is updating its financial outlook. For the full-year 2025, the Company currently expects:
Previous
Current
•
Total revenue:
$925 to $960 million
$935 to $955 million
•
Adjusted EBITDA1, 2:
$347 to $356 million
$350 to $357 million
•
Gross rental equipment capital expenditures:
$115 to $125 million
$120 to $125 million
1.
Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs and non-operating transactions. A reconciliation of actual net income to Adjusted EBITDA and net cash provided by operating activities to Adjusted EBITDA can be found at the end of this release.
2.
Information reconciling forward-looking Adjusted EBITDA to the comparable GAAP financial measures is unavailable to the Company without unreasonable effort because certain items required for such reconciliations are outside of the Company’s control and/or cannot be reasonably predicted, such as the provision for income taxes. Therefore, no reconciliation to the most comparable GAAP measures is provided. The Company provides Adjusted EBITDA guidance because it believes that Adjusted EBITDA, when viewed with the Company’s results under GAAP, provides useful information for the reasons noted in the reconciliation of actual Adjusted EBITDA to the most directly comparable GAAP measures at the end of this release.
ABOUT MCGRATH:
McGrath RentCorp (Nasdaq: MGRC) is a leading business-to-business rental company in North America with a strong record of profitable business growth. Founded in 1979, McGrath’s operations are centered on modular solutions through its Mobile Modular and Mobile Modular Portable Storage businesses. In addition, its TRS-RenTelco business offers electronic test equipment rental solutions. The Company’s rental product offerings and services are part of the circular supply economy, helping customers work more efficiently, and sustainably manage their environmental footprint. With over 40 years of experience, McGrath’s success is driven by a focus on exceptional customer experiences. This focus has underpinned the Company’s long-term financial success and supported over 30 consecutive years of annual dividend increases to shareholders, a rare distinction among publicly listed companies.
McGrath is headquartered in Livermore, California. Additional information about McGrath and its businesses is available at mgrc.com and investors.mgrc.com.
You should read this press release in conjunction with the financial statements and notes thereto included in the Company’s latest Forms 10-K, 10-Q and other SEC filings. You can visit the Company’s web site at www.mgrc.com to access information on McGrath RentCorp, including the latest Forms 10-K, 10-Q and other SEC filings.
Conference Call Note:
McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on October 23, 2025 to discuss the third quarter 2025 results. To participate in the teleconference, dial 1-800-245-3047 (in the U.S.), or 1-203-518-9765 (outside the U.S.), or to listen only, access the simultaneous webcast at the investor relations section of the Company’s website at https://investors.mgrc.com/. A replay will be available for 7 days following the call by dialing 1-800-723-0394 (in the U.S.), or 1-402-220-2649 (outside the U.S.). In addition, a live audio webcast and replay of the call may be found in the investor relations section of the Company’s website at https://investors.mgrc.com/events-and-presentations.
FORWARD-LOOKING STATEMENTS:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, regarding McGrath RentCorp’s expectations, strategies, prospects or targets are forward-looking statements. These forward-looking statements also can be identified by the use of forward-looking terminology such as “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plan,” “predict,” “project,” or “will,” or the negative of these terms or other comparable terminology. In particular, the discussion under the heading “Financial Outlook” is forward looking.
These forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties that could cause our actual results to differ materially from those projected including: our expectations around continued business momentum entering the fourth quarter and our ability to deliver a strong finish to the year; the impact of the recent
3
tariff actions and macroeconomic factors, including fiscal policy uncertainty, government budgetary constraints, or other political or regulatory developments; health of the education and commercial markets in our modular building division; competition within the modular business; the activity levels in the semiconductor and general purpose and communications test equipment markets at TRS-RenTelco; the activity levels in commercial construction projects and impact on Portable Storage segment; continued execution of our strategic performance improvement initiatives; our ability to successfully increase prices to offset cost increases; and our ability to effectively manage our rental assets, as well as the other factors disclosed under “Risk Factors” in the Company’s 2024 Form 10-K and other SEC filings.
Forward-looking statements are made only as of the date hereof 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. Except as otherwise required by law, we assume no obligation to update any of the forward-looking statements contained in this press release.
4
MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands, except per share amounts)
2025
2024
2025
2024
Revenues
Rental
$
128,488
$
124,203
$
374,586
$
365,708
Rental related services
49,622
47,701
121,021
111,640
Rental operations
178,110
171,904
495,607
477,349
Sales
76,058
92,508
184,759
181,992
Other
2,275
2,346
7,109
7,855
Total revenues
256,443
266,758
687,475
667,196
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment
21,868
21,981
64,799
66,512
Rental related services
35,422
32,439
85,212
78,215
Other
32,308
27,252
91,479
84,182
Total direct costs of rental operations
89,598
81,672
241,490
228,909
Costs of sales
47,588
61,107
119,578
117,625
Total costs of revenues
137,186
142,779
361,068
346,534
Gross profit
119,257
123,979
326,407
320,661
Expenses:
Selling and administrative expenses
52,540
49,297
156,952
148,764
Other income, net
—
—
—
(9,281
)
Income from operations
66,717
74,682
169,455
181,178
Interest expense
8,177
12,641
24,130
38,383
Foreign currency exchange loss (gain)
32
(216
)
(54
)
(53
)
Gain on merger termination from WillScot Mobile Mini
—
(180,000
)
—
(180,000
)
WillScot Mobile Mini transaction costs
—
39,436
—
61,157
Income before provision for income taxes
58,508
202,821
145,379
261,691
Provision for income taxes
16,211
53,504
38,900
68,913
Net income
42,297
149,317
106,479
192,778
Earnings per share:
Basic
$
1.72
$
6.08
$
4.33
$
7.86
Diluted
$
1.72
$
6.08
$
4.32
$
7.85
Shares used in per share calculation:
Basic
24,612
24,551
24,598
24,538
Diluted
24,644
24,567
24,628
24,564
Cash dividends declared per share
$
0.485
$
0.475
$
1.455
$
1.425
5
MCGRATH RENTCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30,
December 31,
(in thousands)
2025
2024
Assets
Cash
$
7,256
$
807
Accounts receivable, net of allowance for credit losses of $2,866 at September 30, 2025 and at December 31, 2024
241,346
219,342
Rental equipment, at cost:
Relocatable modular buildings
1,456,049
1,414,367
Portable storage containers
243,386
240,846
Electronic test equipment
338,397
343,982
2,037,832
1,999,195
Less: accumulated depreciation
(637,863
)
(611,536
)
Rental equipment, net
1,399,969
1,387,659
Property, plant and equipment, net
224,881
197,439
Inventories
13,422
14,304
Prepaid expenses and other assets
82,362
80,477
Intangible assets, net
49,262
54,332
Goodwill
332,373
323,224
Total assets
$
2,350,871
$
2,277,584
Liabilities and Shareholders' Equity
Liabilities:
Notes payable
$
551,800
$
590,208
Accounts payable
55,131
60,082
Accrued liabilities
113,920
113,961
Deferred income
130,767
109,836
Deferred income taxes, net
303,047
280,129
Total liabilities
1,154,665
1,154,216
Shareholders’ equity:
Common stock, no par value - Authorized 40,000 shares
Issued and outstanding - 24,612 shares as of September 30, 2025 and 24,551 shares as of December 31, 2024
118,648
116,253
Retained earnings
1,077,558
1,007,115
Total shareholders’ equity
1,196,206
1,123,368
Total liabilities and shareholders’ equity
$
2,350,871
$
2,277,584
6
MCGRATH RENTCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended September 30,
(in thousands)
2025
2024
Cash Flows from Operating Activities:
Net income
$
106,479
$
192,778
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
79,717
80,824
Deferred income taxes
22,918
31,927
Provision for credit losses
1,266
1,437
Share-based compensation
8,088
6,949
Gain on sale of property, plant and equipment
—
(9,281
)
Gain on sale of used rental equipment
(30,188
)
(25,185
)
Foreign currency exchange gain
(54
)
(53
)
Amortization of debt issuance costs
204
6
Change in:
Accounts receivable
(23,270
)
1,402
Inventories
882
(6,860
)
Prepaid expenses and other assets
(1,884
)
19,988
Accounts payable
(8,041
)
30,562
Accrued liabilities
(1,854
)
605
Deferred income
20,502
12,497
Net cash provided by operating activities
174,765
337,596
Cash Flows from Investing Activities:
Purchases of rental equipment
(91,516
)
(167,269
)
Purchases of property, plant and equipment
(33,235
)
(36,070
)
Cash paid for acquisition of businesses
(21,947
)
—
Proceeds from sales of used rental equipment
58,647
50,270
Proceeds from sales of property, plant and equipment
—
12,251
Net cash used in investing activities
(88,051
)
(140,818
)
Cash Flows from Financing Activities:
Net payments under bank lines of credit
(40,612
)
(154,420
)
Principal payment of term note agreement
(73,000
)
—
Borrowings under Series G senior notes
75,000
—
Taxes paid related to net share settlement of stock awards
(5,693
)
(4,082
)
Payment of dividends
(35,960
)
(35,097
)
Net cash used in financing activities
(80,265
)
(193,599
)
Net increase in cash
6,449
3,179
Cash balance, beginning of period
807
877
Cash balance, end of period
$
7,256
$
4,056
Supplemental Disclosure of Cash Flow Information:
Gain on merger termination, net of transaction costs, presented under net cash provided by operating activities
$
—
$
118,843
Interest paid, during the period
$
24,869
$
40,338
Net income taxes paid (refunded), during the period
$
6,537
$
(3,826
)
Dividends accrued during the period, not yet paid
$
12,535
$
12,241
Rental equipment acquisitions, not yet paid
$
8,459
$
3,333
Business acquisition payments withheld
$
1,815
$
—
7
MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Three months ended September 30, 2025
(dollar amounts in thousands)
Mobile Modular
Portable Storage
TRS-RenTelco
Enviroplex
Consolidated
Revenues
Rental
$
83,168
$
17,293
$
28,027
$
—
$
128,488
Rental related services
44,544
4,187
891
—
49,622
Rental operations
127,712
21,480
28,918
—
178,110
Sales
52,334
2,693
7,347
13,684
76,058
Other
1,422
229
624
—
2,275
Total revenues
181,468
24,402
36,889
13,684
256,443
Costs and Expenses
Direct costs of rental operations:
Depreciation
10,810
1,056
10,002
—
21,868
Rental related services
29,809
4,739
874
—
35,422
Other
24,199
2,191
5,918
—
32,308
Total direct costs of rental operations
64,818
7,986
16,794
—
89,598
Costs of sales
33,558
1,629
3,231
9,170
47,588
Total costs of revenues
98,376
9,615
20,025
9,170
137,186
Gross Profit (Loss)
Rental
48,159
14,046
12,107
—
74,312
Rental related services
14,735
(552
)
17
—
14,200
Rental operations
62,894
13,494
12,124
—
88,512
Sales
18,776
1,064
4,116
4,514
28,470
Other
1,422
229
624
—
2,275
Total gross profit
83,092
14,787
16,864
4,514
119,257
Selling and administrative expenses
35,389
7,912
7,113
2,126
52,540
Income from operations
$
47,703
$
6,875
$
9,751
$
2,388
66,717
Interest expense
(8,177
)
Foreign currency exchange loss
(32
)
Provision for income taxes
(16,211
)
Net income
$
42,296
Other Information
Adjusted EBITDA 1
$
64,573
$
9,245
$
20,212
$
2,496
$
96,526
Average rental equipment 2
$
1,328,245
$
237,227
$
333,045
Average monthly total yield 3
2.09
%
2.43
%
2.81
%
Average utilization 4
72.6
%
61.4
%
64.8
%
Average monthly rental rate 5
2.88
%
3.96
%
4.33
%
1. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, other income, net and non-operating transactions.
2. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
3. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
4. Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
5. Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.
8
MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Three months ended September 30, 2024
(dollar amounts in thousands)
Mobile Modular
Portable Storage
TRS-RenTelco
Enviroplex
Consolidated
Revenues
Rental
$
81,508
$
17,040
$
25,655
$
—
$
124,203
Rental related services
42,396
4,405
900
—
47,701
Rental operations
123,904
21,445
26,555
—
171,904
Sales
65,994
1,411
7,604
17,499
92,508
Other
1,509
195
642
—
2,346
Total revenues
191,407
23,051
34,801
17,499
266,758
Costs and Expenses
Direct costs of rental operations:
Depreciation
10,124
1,006
10,851
—
21,981
Rental related services
27,366
4,280
793
—
32,439
Other
20,549
1,327
5,376
—
27,252
Total direct costs of rental operations
58,039
6,613
17,020
—
81,672
Costs of sales
43,595
906
3,688
12,918
61,107
Total costs of revenues
101,634
7,519
20,708
12,918
142,779
Gross Profit
Rental
50,835
14,707
9,428
—
74,970
Rental related services
15,030
125
107
—
15,262
Rental operations
65,865
14,832
9,535
—
90,232
Sales
22,399
505
3,916
4,581
31,401
Other
1,509
195
642
—
2,346
Total gross profit
89,773
15,532
14,093
4,581
123,979
Selling and administrative expenses 6
34,028
6,790
6,627
1,851
49,296
Other income
—
—
—
—
—
Income from operations
$
55,745
$
8,742
$
7,466
$
2,730
74,683
Interest expense
(12,641
)
Foreign currency exchange gain
216
Gain on merger termination from WillScot Mobile Mini
180,000
WillScot Mobile Mini transaction costs
(39,436
)
Provision for income taxes
(53,504
)
Net income
$
149,317
Other Information
Adjusted EBITDA 1
$
71,420
$
10,796
$
18,945
$
2,822
$
103,983
Average rental equipment 2
$
1,240,950
$
229,231
$
362,431
Average monthly total yield 3
2.19
%
2.48
%
2.36
%
Average utilization 4
77.1
%
62.8
%
57.3
%
Average monthly rental rate 5
2.84
%
3.94
%
4.12
%
1. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, other income, net and non-operating transactions.
2. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
3. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
4. Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
5. Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.
6. During the year ended December 31, 2024, the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement were significant. Due to this determination, the Company reclassified $39.4 million in transaction costs from Selling and administrative expenses for the three months ended September 30, 2024, and reported such expenses separately as non-operating expense under the Corporate segment.
9
MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Nine months ended September 30, 2025
(dollar amounts in thousands)
Mobile Modular
Portable Storage
TRS-RenTelco
Enviroplex
Consolidated
Revenues
Rental
$
243,572
$
50,307
$
80,707
$
—
$
374,586
Rental related services
106,191
12,212
2,618
—
121,021
Rental operations
349,763
62,519
83,325
—
495,607
Sales
115,308
5,649
23,039
40,763
184,759
Other
4,303
846
1,960
—
7,109
Total revenues
469,374
69,014
108,324
40,763
687,475
Costs and Expenses
Direct costs of rental operations:
Depreciation
32,105
3,125
29,569
—
64,799
Rental related services
69,999
12,976
2,237
—
85,212
Other
69,001
5,636
16,842
—
91,479
Total direct costs of rental operations
171,105
21,737
48,648
—
241,490
Costs of sales
76,483
3,509
11,574
28,012
119,578
Total costs of revenues
247,588
25,246
60,222
28,012
361,068
Gross Profit (Loss)
Rental
142,466
41,546
34,296
—
218,308
Rental related services
36,192
(764
)
381
—
35,809
Rental operations
178,658
40,782
34,677
—
254,117
Sales
38,825
2,140
11,465
12,751
65,181
Other
4,303
846
1,960
—
7,109
Total gross profit
221,786
43,768
48,102
12,751
326,407
Selling and administrative expenses
106,154
23,014
21,871
5,913
156,952
Other income
—
—
—
—
—
Income from operations
$
115,632
$
20,754
$
26,231
$
6,838
169,455
Interest expense
(24,130
)
Foreign currency exchange gain
54
Provision for income taxes
(38,900
)
Net income
$
106,479
Other Information
Adjusted EBITDA 1
$
165,290
$
27,666
$
57,463
$
7,148
$
257,567
Average rental equipment 2
$
1,304,716
$
234,957
$
334,389
Average monthly total yield 3
2.07
%
2.38
%
2.68
%
Average utilization 4
73.6
%
60.8
%
63.5
%
Average monthly rental rate 5
2.82
%
3.91
%
4.22
%
1. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, other income, net and non-operating transactions.
2. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
3. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
4. Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
5. Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.
10
MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Nine months ended September 30, 2024
(dollar amounts in thousands)
Mobile Modular
Portable Storage
TRS-RenTelco
Enviroplex
Consolidated
Revenues
Rental
$
236,040
$
53,270
$
76,398
$
—
$
365,708
Rental related services
95,450
13,768
2,422
—
111,640
Rental operations
331,490
67,039
78,820
—
477,349
Sales
127,251
3,889
20,261
30,591
181,992
Other
4,795
907
2,153
—
7,855
Total revenues
463,536
71,835
101,234
30,591
667,196
Costs and Expenses
Direct costs of rental operations:
Depreciation
29,994
2,971
33,547
—
66,512
Rental related services
62,974
13,212
2,029
—
78,215
Other
64,487
4,322
15,373
—
84,182
Total direct costs of rental operations
157,455
20,505
50,949
—
228,909
Costs of sales
83,180
2,390
9,346
22,709
117,625
Total costs of revenues
240,635
22,895
60,295
22,709
346,534
Gross Profit
Rental
141,559
45,977
27,478
—
215,014
Rental related services
32,476
556
393
—
33,425
Rental operations
174,035
46,533
27,871
—
248,439
Sales
44,071
1,499
10,915
7,882
64,367
Other
4,795
907
2,153
—
7,855
Total gross profit
222,901
48,939
40,939
7,882
320,661
Selling and administrative expenses 6
100,882
22,064
20,450
5,368
148,764
Other income
(6,220
)
(1,319
)
(1,742
)
—
(9,281
)
Income from operations
$
128,239
$
28,194
$
22,231
$
2,514
181,178
Interest expense
(38,383
)
Foreign currency exchange gain
53
Gain on merger termination from WillScot Mobile Mini
180,000
WillScot Mobile Mini transaction costs
(61,157
)
Provision for income taxes
(68,913
)
Net income
$
192,778
Other Information
Adjusted EBITDA 1
$
168,165
$
33,333
$
55,426
$
2,799
$
259,723
Average rental equipment 2
$
1,206,361
$
226,373
$
367,137
Average monthly total yield 3
2.17
%
2.61
%
2.31
%
Average utilization 4
78.0
%
66.1
%
56.8
%
Average monthly rental rate 5
2.79
%
3.95
%
4.07
%
1. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs and other income, net.
2. Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
3. Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
4. Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
5. Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.
6. During the year ended December 31, 2024, the Company determined that transaction costs incurred by the Company attributed to the terminated Merger Agreement were significant. Due to this determination, the Company reclassified $61.2 million in transaction costs from Selling and administrative expenses for the nine months ended September 30, 2024, and reported such expenses separately as non-operating expense under the Corporate segment.
11
Reconciliation of Adjusted EBITDA to the most directly comparable GAAP measures
To supplement the Company’s financial data presented on a basis consistent with accounting principles generally accepted in the United States of America (“GAAP”), the Company presents “Adjusted EBITDA”, which is defined by the Company as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs, gains on property sales and non-operating transactions. The 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 September 30,
Nine Months Ended September 30,
Twelve Months Ended September 30,
2025
2024
2025
2024
2025
2024
Net income
$
42,297
$
149,317
$
106,479
$
192,778
$
145,428
$
224,799
Provision for income taxes
16,211
53,502
38,900
68,913
51,909
80,586
Interest expense
8,176
12,642
24,130
38,383
32,988
50,509
Depreciation and amortization
26,978
26,693
79,717
80,824
106,348
108,357
EBITDA
93,662
242,154
249,226
380,898
336,673
464,251
Share-based compensation
2,766
2,393
8,088
6,949
10,641
9,951
Transaction costs 3
98
39,436
253
61,157
2,255
62,732
Other income, net 4
—
—
—
(9,281
)
—
(9,340
)
Gain on merger termination from WillScot Mobile Mini 5
—
(180,000
)
—
(180,000
)
—
(180,000
)
Adjusted EBITDA 1
$
96,526
$
103,983
$
257,567
$
259,723
$
349,569
$
347,594
Adjusted EBITDA margin 2
38
%
39
%
37
%
38
%
38
%
39
%
12
Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA
(dollar amounts in thousands)
Three Months Ended September 30,
Nine Months Ended September 30,
Twelve Months Ended September 30,
2025
2024
2025
2024
2025
2024
Net cash provided by operating activities
$
65,071
$
198,967
$
174,765
$
337,596
$
211,544
$
313,977
Change in certain assets and liabilities:
Accounts receivable, net
7,545
7,150
22,004
(2,839
)
16,817
6,365
Inventories, prepaid expenses and other assets
(2,261
)
(14,171
)
1,002
(19,988
)
14,103
1,948
Accounts payable and accrued liabilities
8,588
(123,241
)
18,854
(104,293
)
(5,834
)
(119,382
)
Deferred income
(5,378
)
10,699
(20,502
)
(12,497
)
(6,413
)
(18,681
)
Amortization of debt issuance costs
(159
)
(2
)
(204
)
(6
)
(264
)
(8
)
Foreign currency exchange (loss) gain
(32
)
216
54
53
(214
)
197
Gain on sale of used rental equipment
13,514
9,648
30,188
25,185
40,088
33,863
Income taxes paid, net of refunds received
751
773
6,537
(3,826
)
46,887
78,192
Interest paid
8,887
13,944
24,869
40,338
32,855
51,123
Adjusted EBITDA 1
$
96,526
$
103,983
$
257,567
$
259,723
$
349,569
$
347,594
1. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, other income, net and non-operating transactions.
2. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues for the period.
3. Transaction costs include acquisition 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.
