LIVERMORE, Calif.--(BUSINESS WIRE)--McGrath RentCorp ("McGrath†or the "Company†) (Nasdaq: MGRC), a leading business-to-business rental company in North America, today announced the Board of Directors' declaration of a quarterly cash dividend of $0.485 per common share for the quarter ended September 30, 2025. The dividend will be payable on October 31, 2025 to all shareholders of record on October 17, 2025. The year 2025 marks 34 consecutive years that McGrath RentCorp has raised its dividend. ...

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Core Viewpoint - McGrath RentCorp reported strong second-quarter 2025 earnings, exceeding expectations in both GAAP earnings per share and revenue, while facing some cost and margin pressures [1][2][5] Financial Performance - GAAP EPS for Q2 2025 was $1.46, surpassing the $1.22 estimate, and up 73.8% from $0.84 in Q2 2024 [2] - GAAP revenue reached $235.6 million, exceeding the $220.71 million estimate and representing a 10.8% increase from $212.6 million in Q2 2024 [2] - Adjusted EBITDA was $86.5 million, a 3.3% increase from $83.7 million in Q2 2024 [2] - Net income was $36.0 million, up 74.7% from $20.6 million in Q2 2024 [2] - Income from operations increased by 5.1% to $57.2 million compared to Q2 2024 [2] Business Overview - McGrath RentCorp operates in four main segments: Mobile Modular, Portable Storage, TRS-RenTelco, and Enviroplex, serving various sectors including education, construction, and technology [3] - The company focuses on maintaining strong cash flow, quick investment recovery, and prudent capital allocation [4] Segment Performance - Mobile Modular segment reported rental revenue of $81.9 million (up 5% year over year) and rental-related services revenue of $32.2 million (up 11%) [5] - Portable Storage segment experienced a 5% decline in rental revenue, with utilization dropping to 61.1% [6] - TRS-RenTelco segment saw rental revenue grow 7% to $27.1 million, with utilization increasing to 64.8% [7] Capital Management - The company emphasized asset management, focusing on refurbishing existing fleet rather than new investments [8] - Capital expenditures for rental equipment in the first half of 2025 totaled $50.2 million, with full-year guidance unchanged at $115–$125 million [8] Dividend Information - McGrath RentCorp declared a quarterly dividend of $0.485 per share, up from $0.475 in Q2 2024, reflecting a steady trend of annual increases [9] Future Guidance - Management raised the lower end of full-year 2025 revenue guidance to a range of $925 million to $960 million [10] - The company remains cautious due to uncertainties in commercial construction and potential softness in utilization rates [11]

Group 1: Earnings Performance - McGrath reported quarterly earnings of $1.46 per share, exceeding the Zacks Consensus Estimate of $1.3 per share, and up from $1.2 per share a year ago, representing an earnings surprise of +12.31% [1] - The company posted revenues of $235.62 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 6.79%, compared to year-ago revenues of $212.61 million [2] - Over the last four quarters, McGrath has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - McGrath shares have increased by about 2.9% since the beginning of the year, while the S&P 500 has gained 8.1% [3] - The company's earnings outlook, including current consensus earnings expectations for upcoming quarters, will be crucial for investors [4] - The current consensus EPS estimate for the coming quarter is $1.99 on revenues of $279.27 million, and for the current fiscal year, it is $6.19 on revenues of $953.21 million [7] Group 3: Industry Context - The Financial - Leasing Companies industry, to which McGrath belongs, is currently in the top 5% of over 250 Zacks industries, indicating strong performance potential [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact McGrath's stock performance [5][6]

Financial Data and Key Metrics Changes - Total revenues increased by 11% to $235.6 million and adjusted EBITDA increased by 3% to $86.5 million [17] - Adjusted EBITDA for Mobile Modular decreased by 1% to $53.1 million despite revenue growth [18] - Net cash provided by operating activities was $110 million compared to $139 million in the prior year [22] - Interest expense decreased by $5.2 million to $7.8 million due to lower average interest rates and debt levels [22] Business Line Data and Key Metrics Changes - Mobile Modular total revenues increased by 8% to $156 million, with rental revenues up by 5% and sales revenues up by 13% [17][18] - Portable Storage total revenue decreased by 3% to $23.3 million, with rental revenues down by 5% year over year but up by 5% sequentially [20] - TRS RenTelco rental revenues grew by 7%, with total revenues increasing by 11% to $36.4 million [21] Market Data and Key Metrics Changes - The Architecture Billings Index (ABI) showed ongoing softness, but quote activity remained healthy [6] - Construction backlogs grew slightly in June, indicating improved activity levels [12] Company Strategy and Development Direction - The company is focused on expanding its modular business and enhancing its modular solutions capabilities [13] - Two tuck-in acquisitions were completed to support modular growth strategy, enhancing fleet and customer relationships [11] - The company is investing in technology upgrades and strategic hiring to support long-term growth [74] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about economic conditions improving in the next two quarters [15] - The uncertain market conditions have not deteriorated significantly, and slight improvements are being observed [12] - The company anticipates a balanced contribution of sales gross profit in the third and fourth quarters [29] Other Important Information - The company expects total revenue for the year to be between $925 million and $960 million, with adjusted EBITDA between $347 million and $356 million [23] - The benefit to free cash flow from new federal tax legislation is estimated to be between $10 million and $15 million [43] Q&A Session Summary Question: Can you provide more detail on the balance of third and fourth quarter EBITDA? - Management expects a more balanced contribution of sales gross profit in the third and fourth quarters compared to the previous year [28] Question: What is the visibility on the Mobile Modular segment? - Visibility is somewhat fluid due to the current demand environment, with potential delays and uncertainties [30] Question: How is the education rental business expected to perform? - Management is optimistic about the education sector, expecting a good year despite orders being realized later than usual [32] Question: What factors could affect the guidance range? - Sales activity can significantly impact the guidance, with a cautious approach taken for the second half of the year [36] Question: What is the impact of new federal tax legislation on free cash flow? - The estimated benefit to free cash flow is between $10 million and $15 million, which is positive but not a major impact [43] Question: Can you provide an update on the pricing gap for modular rentals? - The gap between current spot rates and average rates on existing rentals remains around 39% lower than the last twelve months rate on new shipments [49] Question: How is the demand for portable storage evolving? - There are signs of improvement in portable storage, with increased quote volumes and unit shipments [50] Question: What is the focus of new sales hires? - New hires are aimed at increasing geographic coverage and enhancing sales capabilities in various market verticals [54] Question: How is Enviroplex performing? - Enviroplex is showing strong growth and improved margins, with a balanced contribution expected in the second half of the year [66]

Financial Data and Key Metrics Changes - Total revenues increased by 11% to $235.6 million and adjusted EBITDA increased by 3% to $86.5 million [17] - Adjusted EBITDA for Mobile Modular decreased by 1% to $53.1 million despite revenue growth [17] - Average fleet utilization decreased to 73.7% from 78.4% a year earlier [18] - Interest expense decreased by $5.2 million to $7.8 million due to lower average interest rates and debt levels [22] Business Line Data and Key Metrics Changes - Mobile Modular total revenues increased by 8% to $156 million, with rental revenues up by 5% and sales revenues up by 13% [17] - Portable Storage rental revenues decreased by 5% year over year but improved by 5% sequentially from the first quarter [8][20] - TRS RenTelco rental revenues grew by 7%, with average utilization improving to 64.8% from 56.5% a year ago [21] Market Data and Key Metrics Changes - The Architecture Billings Index (ABI) showed ongoing softness, but quote activity remained healthy [6] - Construction backlogs grew slightly in June, indicating improved activity levels [12] Company Strategy and Development Direction - The company is focused on expanding its modular solutions capabilities and geographic presence [13] - Two tuck-in acquisitions were completed to support modular growth strategy [11] - The company aims to enhance capabilities for larger and more complex modular building rentals and sales [14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about economic conditions improving in the next two quarters [15] - The uncertain market conditions earlier in the year have not deteriorated significantly, with slight improvements observed [12] - The company upwardly adjusted its full-year financial outlook, expecting total revenue between $925 million and $960 million [23] Other Important Information - The company is investing in technology upgrades and strategic hiring to support long-term growth [72] - The benefit to free cash flow from new federal tax legislation is estimated to be between $10 million and $15 million [42] Q&A Session Summary Question: Can you provide more detail on the balance of third and fourth quarter EBITDA? - The company expects adjusted EBITDA to be broadly similar in Q3 and Q4, with a more balanced contribution of sales gross profit [28] Question: What is the visibility on the Mobile Modular segment? - Visibility is somewhat fluid due to current demand environment, with ongoing assessments of the pipeline [29] Question: How is the education business expected to perform this year? - The education business is expected to finish the year strong, with good order volume [31] Question: What factors could affect the current guidance range? - Sales activity can significantly impact the guidance, with a cautious approach taken for the second half of the year [35] Question: What is the impact of new federal tax legislation on free cash flow? - The estimated benefit to free cash flow is between $10 million and $15 million, though not a massive impact [42] Question: Can you provide an update on the pricing gap between current spot rates and existing rates? - The gap remains around 39% lower for existing rates compared to new shipments, with spot rates generally stable [47] Question: What is the outlook for portable storage demand? - There are encouraging signs of improvement, with increased quote volumes and unit shipments [48] Question: Can you discuss the geographical focus of new sales hires? - New hires are aimed at increasing geographic coverage and supporting both commercial and education business [52] Question: How is Enviroplex performing? - Enviroplex is performing well, with strong growth and improved margins, contributing positively to the overall performance [61]

Company Overview - McGrath RentCorp's total revenue reached $911 million in 2024[10] - The company's adjusted EBITDA for 2024 was $352 million[10] - McGrath RentCorp has a shareholder return CAGR of 16% based on 1984 IPO through 12/31/24[10, 11] - The company has increased dividends for 34 consecutive years[10, 25, 118] - 99% of total revenues are from North America[10] Business Segment Performance (2024) - Mobile Modular contributed 75% of total revenues and 67% of adjusted EBITDA[13] - Portable Storage accounted for 10% of total revenues and 12% of adjusted EBITDA[13] - TRS-RenTelco represented 15% of total revenues and 21% of adjusted EBITDA[13] Q2 2025 Highlights - Total revenues for Q2 2025 were $2356 million, an increase of 11% year-over-year[33, 34] - Adjusted EBITDA for Q2 2025 was $865 million, a 3% increase year-over-year[33, 34] - Mobile Modular's total revenues increased by 8%[32] - Portable Storage rental revenues increased 5% sequentially, but decreased 5% year-over-year[32, 38] - TRS-RenTelco rental revenues increased 7%[32, 40]

[FORM 10-Q General Information](index=1&type=section&id=FORM%2010-Q%20General%20Information) [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides the basic identification details for McGrath RentCorp's Quarterly Report on Form 10-Q for the period ended June 30, 2025, confirming its status as a large accelerated filer and listing its common stock trading on NASDAQ - McGrath RentCorp (MGRC) filed its Quarterly Report on Form 10-Q for the period ended June 30, 2025[1](index=1&type=chunk)[2](index=2&type=chunk) - The registrant is a large accelerated filer[3](index=3&type=chunk)[4](index=4&type=chunk) Registrant Details | Metric | Value | | :--- | :--- | | Trading Symbol | MGRC | | Exchange | NASDAQ Global Select Market | | Shares Outstanding (as of July 23, 2025) | 24,611,531 | [Forward-Looking Statements](index=2&type=section&id=FORWARD%20LOOKING%20STATEMENTS) This section serves as a standard disclaimer, cautioning readers that statements not based on historical facts are forward-looking and subject to risks and uncertainties that could cause actual results to differ materially from projections. The company explicitly states it is under no duty to update these statements unless required by law - Statements in the Form 10-Q that are not historical facts are forward-looking and subject to risks and uncertainties[7](index=7&type=chunk)[8](index=8&type=chunk) - Management cautions that forward-looking statements are not guarantees of future performance and actual results may differ materially[8](index=8&type=chunk) - The Company is under no duty to update forward-looking statements after the filing date, except as required by law[9](index=9&type=chunk) [Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents McGrath RentCorp's unaudited condensed consolidated financial statements for the three and six months ended June 30, 2025 and 2024, including the statements of income, comprehensive income, balance sheets, shareholders' equity, and cash flows. It also includes the independent auditor's review report and detailed notes explaining significant accounting policies, recent acquisitions, revenue recognition, and segment performance [Report of Independent Registered Public Accounting Firm](index=3&type=section&id=REPORT%20OF%20INDEPENDENT%20REGISTERED%20PUBLIC%20ACCOUNTING%20FIRM) - Grant Thornton LLP reviewed the interim financial statements and found no material modifications needed for conformity with U.S. GAAP[12](index=12&type=chunk) - An unqualified opinion was expressed on the consolidated financial statements as of December 31, 2024[13](index=13&type=chunk) [Condensed Consolidated Statements of Income](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Consolidated Statements of Income (Unaudited) | Metric (in thousands, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Revenues | $235,616 | $212,611 | $431,032 | $400,438 | | Gross Profit | $110,714 | $103,415 | $207,150 | $196,683 | | Income from Operations | $57,171 | $54,412 | $102,738 | $106,497 | | Interest Expense | $7,795 | $13,037 | $15,954 | $25,741 | | WillScot Mobile Mini transaction costs | $— | $12,367 | $— | $21,721 | | Net Income | $35,973 | $20,618 | $64,181 | $43,466 | | Basic EPS | $1.46 | $0.84 | $2.61 | $1.77 | | Diluted EPS | $1.46 | $0.84 | $2.61 | $1.77 | | Cash Dividends Declared per Share | $0.485 | $0.475 | $0.970 | $0.950 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Consolidated Statements of Comprehensive Income (Unaudited) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $35,973 | $20,618 | $64,181 | $43,466 | | Comprehensive Income | $35,973 | $20,629 | $64,181 | $43,544 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Consolidated Balance Sheets (Unaudited) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | **Assets:** | | | | Cash | $1,469 | $807 | | Accounts Receivable, net | $233,801 | $219,342 | | Rental Equipment, net | $1,393,682 | $1,387,659 | | Total Assets | $2,327,009 | $2,277,584 | | **Liabilities:** | | | | Notes Payable | $572,525 | $590,208 | | Total Liabilities | $1,163,848 | $1,154,216 | | **Shareholders' Equity:** | | | | Total Shareholders' Equity | $1,163,161 | $1,123,368 | | Total Liabilities and Shareholders' Equity | $2,327,009 | $2,277,584 | [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20SHAREHOLDERS'%20EQUITY) Consolidated Statements of Shareholders' Equity (Unaudited) | Metric (in thousands) | Balance at Dec 31, 2024 | Net Income (6M 2025) | Dividends Accrued (6M 2025) | Balance at June 30, 2025 | | :-------------------- | :---------------------- | :------------------- | :-------------------------- | :----------------------- | | Common Stock Amount | $116,253 | — | — | $115,891 | | Retained Earnings | $1,007,115 | $64,181 | $(24,027) | $1,047,270 | | Total Shareholders' Equity | $1,123,368 | $64,181 | $(24,027) | $1,163,161 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Consolidated Statements of Cash Flows (Unaudited) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Net Cash Provided by Operating Activities | $109,694 | $138,629 | | Net Cash Used in Investing Activities | $(61,598) | $(133,885) | | Net Cash (Used in) Provided by Financing Activities | $(47,434) | $3,775 | | Net Increase in Cash | $662 | $8,519 | | Cash Balance, End of Period | $1,469 | $9,396 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [NOTE 1. Condensed Consolidated Financial Information & Merger Termination](index=9&type=section&id=NOTE%201.%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20INFORMATION) - The condensed consolidated financial statements are unaudited and prepared in accordance with SEC rules, with certain GAAP disclosures condensed or omitted[27](index=27&type=chunk) - The Merger Agreement with WillScot Mobile Mini Holdings Corp. was mutually terminated on September 17, 2024, with WillScot Mobile Mini making a **$180.0 million cash payment** to the Company[28](index=28&type=chunk) Merger Termination Financial Impact | Metric | Amount (in millions) | | :-------------------- | :------------------- | | Termination Payment Received | $180.0 | | Transaction Costs (6M ended June 30, 2024) | $21.7 | | Net Proceeds Received (Year ended Dec 31, 2024) | $116.8 | [NOTE 2. New Accounting Pronouncements](index=9&type=section&id=NOTE%202.%20NEW%20ACCOUNTING%20PRONOUNCEMENTS) - FASB issued ASU 2023-09 (Income Taxes—Improvements to Income Tax Disclosures), effective for fiscal years beginning after December 15, 2024, requiring enhanced income tax rate reconciliations and disaggregation[30](index=30&type=chunk) - FASB issued ASU 2024-03 (Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures), effective for fiscal years beginning after December 31, 2026, requiring incremental disclosures about specific expense categories[31](index=31&type=chunk) - The Company is evaluating the financial statement impact of both new ASUs[30](index=30&type=chunk)[31](index=31&type=chunk) [NOTE 3. Business Combinations](index=9&type=section&id=NOTE%203.%20BUSINESS%20COMBINATIONS) - During Q2 2025, the Company completed two acquisitions: a regional modular space provider for **$11.8 million** and a regional container solutions provider for **$12.0 million**[32](index=32&type=chunk) - These acquisitions were accounted for as business purchases under ASC 805[33](index=33&type=chunk) Preliminary Purchase Price Allocation (in millions) | Asset Category | Modular Solutions Provider | Container Solutions Provider | | :--------------- | :------------------------- | :--------------------------- | | Rental Equipment | $6.3 | $4.7 | | Property, Plant & Equipment | — | $1.0 | | Intangible Assets | $1.1 | $1.7 | | Goodwill | $4.3 | $4.9 | [NOTE 4. Revenue Recognition](index=11&type=section&id=NOTE%204.%20REVENUE%20RECOGNITION) - Revenue recognition is governed by ASC 842 (Leases) for lease-related revenues and ASC 606 (Revenue from Contracts with Customers) for non-lease related revenues[34](index=34&type=chunk) Consolidated Revenue Disaggregation (in thousands) | Revenue Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Leasing | $154,191 | $146,641 | $302,111 | $286,805 | | Non-lease | $81,425 | $65,970 | $128,921 | $113,633 | | Total Revenues | $235,616 | $212,611 | $431,032 | $400,438 | - Unsatisfied or partially satisfied performance obligations as of June 30, 2025, amount to approximately **$43.8 million**, with about half expected to be recognized in the next twelve months[36](index=36&type=chunk) [NOTE 5. Earnings Per Share](index=16&type=section&id=NOTE%205.%20EARNINGS%20PER%20SHARE) Weighted-Average Shares for EPS Calculation (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic Weighted-Average Shares | 24,611 | 24,549 | 24,592 | 24,531 | | Diluted Weighted-Average Shares | 24,618 | 24,560 | 24,620 | 24,562 | - The Company's Board of Directors increased the share repurchase program capacity by **2,000,000 shares** in September 2024, with **2,000,000 shares** remaining authorized as of June 30, 2025[49](index=49&type=chunk) - No shares were repurchased during the six months ended June 30, 2025 and 2024[49](index=49&type=chunk) [NOTE 6. Inventories](index=16&type=section&id=NOTE%206.%20INVENTORIES) - Inventories consist of raw materials, supplies, and work-in-process, measured at the lower of actual cost or net realizable value[50](index=50&type=chunk) Inventory Carrying Value (in thousands) | Inventory Type | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Raw Materials | $4,531 | $3,380 | | Work-in-Process | $7,766 | $10,924 | | Total Inventories | $12,297 | $14,304 | [NOTE 7. Goodwill and Intangible Assets](index=17&type=section&id=NOTE%207.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Intangible Assets, Net Book Value (in thousands) | Intangible Asset | June 30, 2025 | December 31, 2024 | | :----------------- | :------------ | :---------------- | | Customer relationships | $46,665 | $48,207 | | Non-compete agreements | $4,520 | $5,317 | | Trade name (amortizing) | $563 | $637 | | Trade name (non-amortizing) | $171 | $171 | | Total Intangible Assets, Net | $51,919 | $54,332 | - Amortization expense for intangible assets was **$5.2 million** for the six months ended June 30, 2025, and is expected to be **$5.3 million** for the remainder of fiscal year 2025[52](index=52&type=chunk) - The Company last conducted a qualitative impairment analysis in Q4 2024 with no indicators of impairment, and no impairment triggering events occurred during the six months ended June 30, 2025[51](index=51&type=chunk) [NOTE 8. Segment Reporting](index=18&type=section&id=NOTE%208.%20SEGMENT%20REPORTING) - The Company operates through four reportable segments: Mobile Modular, Portable Storage, TRS-RenTelco, and Enviroplex[53](index=53&type=chunk) - The Chief Operating Decision Maker (CEO Joe Hanna) evaluates segment performance based on revenue growth, gross profit, income from operations, income before provision for income taxes, rental equipment acquisitions, and utilization[53](index=53&type=chunk)[54](index=54&type=chunk) Segment Financial Information (Six Months Ended June 30, 2025, in thousands) | Metric | Mobile Modular | Portable Storage | TRS-RenTelco | Enviroplex | Consolidated | | :-------------------------- | :------------- | :--------------- | :----------- | :--------- | :----------- | | Total Revenues | $287,906 | $44,612 | $71,435 | $27,079 | $431,032 | | Gross Profit | $138,694 | $28,981 | $31,238 | $8,237 | $207,150 | | Income from Operations | $67,929 | $13,880 | $16,480 | $4,449 | $102,738 | | Income before Provision for Income Taxes | $55,015 | $12,028 | $14,156 | $5,671 | $86,870 | | Rental Equipment Acquisitions | $34,479 | $618 | $18,399 | — | $53,496 | | Period End Utilization | 73.1% | 61.8% | 64.8% | — | — | Segment Financial Information (Six Months Ended June 30, 2024, in thousands) | Metric | Mobile Modular | Portable Storage | TRS-RenTelco | Enviroplex | Consolidated | | :-------------------------- | :------------- | :--------------- | :----------- | :--------- | :----------- | | Total Revenues | $272,131 | $48,782 | $66,433 | $13,092 | $400,438 | | Gross Profit | $133,131 | $33,405 | $26,846 | $3,300 | $196,683 | | Income from Operations | $72,499 | $19,450 | $14,765 | $(215) | $106,497 | | Income before Provision for Income Taxes | $52,528 | $16,583 | $10,481 | $1,003 | $80,593 | | Rental Equipment Acquisitions | $118,300 | $7,403 | $10,623 | — | $136,326 | | Period End Utilization | 78.1% | 64.5% | 55.8% | — | — | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on McGrath RentCorp's financial performance and condition, analyzing results for the three and six months ended June 30, 2025, compared to the prior year. It covers consolidated and segment-specific revenue, gross profit, net income, and EPS changes, highlighting factors like lower interest expense and the absence of prior-year merger transaction costs. The discussion also includes an overview of business segments, recent developments, macroeconomic outlook, and a reconciliation of Adjusted EBITDA [General Business Overview](index=21&type=section&id=General%20Business%20Overview) - McGrath RentCorp is a leading rental provider of relocatable modular buildings and electronic test equipment, with a primary emphasis on equipment rentals[63](index=63&type=chunk) - The Company's four reportable segments are Mobile Modular, Portable Storage, TRS-RenTelco, and Enviroplex[63](index=63&type=chunk) Segment Contribution to Pre-Tax Income (Six Months Ended June 30) | Segment | 2025 | 2024 | | :-------------- | :--- | :--- | | Mobile Modular | 63% | 62% | | Portable Storage | 14% | 24% | | TRS-RenTelco | 16% | 12% | | Enviroplex | 7% | 2% | [Recent Developments & Business Outlook](index=23&type=section&id=Recent%20Developments%20%26%20Business%20Outlook) - The Board of Directors declared a quarterly cash dividend of **$0.485 per common share** for Q2 2025, a **2% increase** over the prior year[71](index=71&type=chunk) - Macroeconomic conditions, including volatile interest rates, inflation, geopolitical landscape, and foreign exchange rate fluctuations, continue to impact the global economy and create uncertainty for forecasting and planning[72](index=72&type=chunk) [Results of Operations - Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=24&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) [Consolidated Overview (3 Months)](index=24&type=section&id=Consolidated%20Overview%20(3%20Months)) Consolidated Financial Highlights (3 Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change ($M) | Change (%) | | :-------------------- | :----------------- | :----------------- | :---------- | :--------- | | Total Revenues | $235.6 | $212.6 | $23.0 | 11% | | Net Income | $36.0 | $20.6 | $15.4 | 74% | | Diluted EPS | $1.46 | $0.84 | $0.62 | 74% | | Gross Profit | $110.7 | $103.4 | $7.3 | 7% | | Selling & Admin Expenses | $53.5 | $49.0 | $4.5 | 9% | | Interest Expense | $7.8 | $13.0 | $(5.2) | (40)% | | WillScot Mobile Mini transaction costs | $— | $12.4 | $(12.4) | (100)% | | Adjusted EBITDA | $86.5 | $83.7 | $2.8 | 3% | - The increase in net income and EPS was primarily driven by higher gross profit from rental operations at Mobile Modular and TRS-RenTelco, increased sales gross profit at Enviroplex, lower interest expense, and the absence of **$12.4 million** in merger transaction costs incurred in 2024[74](index=74&type=chunk) [Mobile Modular (3 Months)](index=25&type=section&id=Mobile%20Modular%20(3%20Months)) Mobile Modular Financial Highlights (3 Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Total Revenues | $155,988 | $144,546 | $11,442 | 8% | | Pre-tax Income | $30,042 | $27,875 | $2,167 | 8% | | Total Gross Profit | $73,226 | $71,286 | $1,940 | 3% | | Rental Revenues | $81,909 | $78,039 | $3,870 | 5% | | Rental Related Services Revenues | $32,172 | $28,920 | $3,252 | 11% | | Sales Revenues | $40,484 | $35,930 | $4,554 | 13% | | Average Utilization | 73.7% | 78.4% | (4.7)% | (6)% | - Rental revenues increased due to **2% higher average rental equipment on rent** and **3% higher average monthly rental rates**[82](index=82&type=chunk) - Sales gross margin decreased to **32%** in 2025 from **38%** in 2024, primarily due to a higher mix of new versus used sales[82](index=82&type=chunk) [Portable Storage (3 Months)](index=28&type=section&id=Portable%20Storage%20(3%20Months)) Portable Storage Financial Highlights (3 Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Total Revenues | $23,346 | $24,022 | $(676) | (3)% | | Pre-tax Income | $6,609 | $7,390 | $(781) | (11)% | | Total Gross Profit | $15,038 | $16,302 | $(1,264) | (8)% | | Rental Revenues | $16,939 | $17,823 | $(884) | (5)% | | Sales Revenues | $1,712 | $1,266 | $446 | 35% | | Average Utilization | 61.1% | 66.1% | (5.0)% | (8)% | - Rental revenues decreased due to **5% lower average rental equipment on rent**[89](index=89&type=chunk) - Rental related services gross profit decreased by **$0.1 million** due to lower revenues and lower gross margins (**2%** in 2025 vs **4%** in 2024)[89](index=89&type=chunk) [TRS-RenTelco (3 Months)](index=30&type=section&id=TRS-RenTelco%20(3%20Months)) TRS-RenTelco Financial Highlights (3 Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Total Revenues | $36,416 | $32,670 | $3,746 | 11% | | Pre-tax Income | $7,991 | $4,296 | $3,695 | 86% | | Total Gross Profit | $16,363 | $12,971 | $3,392 | 26% | | Rental Revenues | $27,137 | $25,314 | $1,823 | 7% | | Sales Revenues | $7,713 | $5,845 | $1,868 | 32% | | Average Utilization | 64.8% | 56.5% | 8.3% | 15% | - Rental revenues increased due to a **3% increase in average rental equipment on rent** and **4% higher average monthly rental rates**, coupled with a **14% decrease in depreciation expense**[98](index=98&type=chunk) - Sales gross margin decreased to **47%** in 2025 from **54%** in 2024[98](index=98&type=chunk) [Results of Operations - Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=32&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) [Consolidated Overview (6 Months)](index=32&type=section&id=Consolidated%20Overview%20(6%20Months)) Consolidated Financial Highlights (6 Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change ($M) | Change (%) | | :-------------------- | :----------------- | :----------------- | :---------- | :--------- | | Total Revenues | $431.0 | $400.4 | $30.6 | 8% | | Net Income | $64.2 | $43.5 | $20.7 | 48% | | Diluted EPS | $2.61 | $1.77 | $0.84 | 48% | | Gross Profit | $207.2 | $196.7 | $10.5 | 5% | | Selling & Admin Expenses | $104.4 | $99.5 | $4.9 | 5% | | Interest Expense | $16.0 | $25.7 | $(9.7) | (38)% | | WillScot Mobile Mini transaction costs | $— | $21.7 | $(21.7) | (100)% | | Other income, net | $— | $9.3 | $(9.3) | (100)% | | Adjusted EBITDA | $161.0 | $155.7 | $5.3 | 3% | - The increase in consolidated net income was primarily due to higher gross profit on rental operations and sales, a **$9.8 million reduction in interest expense**, and the absence of **$21.7 million** in merger transaction costs from 2024, partly offset by the absence of a **$9.3 million gain from property sales** in 2024[100](index=100&type=chunk) [Mobile Modular (6 Months)](index=33&type=section&id=Mobile%20Modular%20(6%20Months)) Mobile Modular Financial Highlights (6 Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Total Revenues | $287,906 | $272,131 | $15,775 | 6% | | Pre-tax Income | $55,015 | $52,528 | $2,487 | 5% | | Total Gross Profit | $138,694 | $133,131 | $5,563 | 4% | | Rental Revenues | $160,404 | $154,535 | $5,869 | 4% | | Rental Related Services Revenues | $61,647 | $53,053 | $8,594 | 16% | | Sales Revenues | $62,974 | $61,256 | $1,718 | 3% | | Average Utilization | 74.2% | 78.6% | (4.4)% | (6)% | - Excluding other income, net (a **$6.2 million gain** in 2024), Mobile Modular's pre-tax income increased by **$8.7 million**, or **19%**[102](index=102&type=chunk) - Sales gross profit decreased by **$1.6 million**, or **7%**, due to a lower gross margin percentage (**32%** in 2025 vs **35%** in 2024), primarily from a higher mix of new versus used sales[108](index=108&type=chunk) [Portable Storage (6 Months)](index=36&type=section&id=Portable%20Storage%20(6%20Months)) Portable Storage Financial Highlights (6 Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Total Revenues | $44,612 | $48,782 | $(4,170) | (9)% | | Pre-tax Income | $12,028 | $16,583 | $(4,555) | (27)% | | Total Gross Profit | $28,981 | $33,405 | $(4,424) | (13)% | | Rental Revenues | $33,014 | $36,230 | $(3,216) | (9)% | | Rental Related Services Revenues | $8,025 | $9,363 | $(1,338) | (14)% | | Sales Revenues | $2,956 | $2,478 | $478 | 19% | | Average Utilization | 60.6% | 67.8% | (7.2)% | (11)% | - Excluding other income, net (a **$1.3 million gain** in 2024), Portable Storage's pre-tax income decreased by **$3.2 million**, or **21%**[109](index=109&type=chunk) - Rental related services gross margin was **negative 3%** in 2025, compared to **5%** in 2024, contributing to a **$0.6 million decrease** in gross profit[115](index=115&type=chunk) [TRS-RenTelco (6 Months)](index=39&type=section&id=TRS-RenTelco%20(6%20Months)) TRS-RenTelco Financial Highlights (6 Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :--- | :--- | :--------- | :--------- | | Total Revenues | $71,435 | $66,433 | $5,002 | 8% | | Pre-tax Income | $14,156 | $10,481 | $3,675 | 35% | | Total Gross Profit | $31,238 | $26,846 | $4,392 | 16% | | Rental Revenues | $52,680 | $50,743 | $1,937 | 4% | | Sales Revenues | $15,692 | $12,657 | $3,035 | 24% | | Average Utilization | 63.0% | 56.4% | 6.6% | 12% | - Excluding other income, net (a **$1.7 million gain** in 2024), TRS-RenTelco's pre-tax income increased by **$5.4 million**, or **62%**[116](index=116&type=chunk) - Rental gross profit increased by **23%** due to a **4% increase in rental revenues** and a **14% decrease in depreciation expense**[121](index=121&type=chunk) [Adjusted EBITDA](index=41&type=section&id=Adjusted%20EBITDA) - 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, gains on property sales, and non-operating transactions[122](index=122&type=chunk) - Management uses Adjusted EBITDA to evaluate operating performance, compliance with financial covenants, and ability to meet capital requirements[123](index=123&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $35,973 | $20,618 | $64,182 | $43,466 | | EBITDA | $83,591 | $68,958 | $155,564 | $138,744 | | Adjusted EBITDA | $86,525 | $83,672 | $161,041 | $155,740 | | Adjusted EBITDA Margin | 37% | 39% | 37% | 38% | - The Company was in compliance with its financial covenants at June 30, 2025: Fixed Charge Coverage Ratio was **3.59 to 1** (minimum **2.50 to 1**) and Consolidated Leverage Ratio was **1.60 to 1** (maximum **2.75 to 1**)[130](index=130&type=chunk)[133](index=133&type=chunk)[156](index=156&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) This section details McGrath RentCorp's cash flow activities, debt structure, and compliance with financial covenants. It highlights a decrease in operating cash flow due to changes in accounts payable and receivables, a reduction in cash used for investing activities primarily from lower rental equipment purchases, and a shift from cash provided to cash used in financing activities. The Company maintains significant borrowing capacity through its credit facilities and senior notes, all while remaining in compliance with its debt covenants [Cash Flow Analysis](index=42&type=section&id=Cash%20Flow%20Analysis) Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Type | 2025 | 2024 | Change ($) | | :--------------- | :--- | :--- | :--------- | | Operating Activities | $109,694 | $138,629 | $(28,935) | | Investing Activities | $(61,598) | $(133,885) | $72,287 | | Financing Activities | $(47,434) | $3,775 | $(51,209) | - The decrease in operating cash flow was primarily due to a **$31.6 million decrease in accounts payable** and a **$24.4 million increase in accounts receivable**[131](index=131&type=chunk) - The decrease in cash used in investing activities was mainly due to **$95.1 million lower rental equipment purchases**, partly offset by **$22.0 million in business acquisitions**[132](index=132&type=chunk) [Unsecured Revolving Lines of Credit](index=44&type=section&id=Unsecured%20Revolving%20Lines%20of%20Credit) - The Company has a **$650.0 million unsecured revolving credit facility** (Credit Facility) maturing July 15, 2027, with **$324.7 million outstanding** and **$325.3 million available** at June 30, 2025[136](index=136&type=chunk)[139](index=139&type=chunk) - A **$75.0 million incremental term loan** was entered into on April 23, 2024, with proceeds used for general corporate purposes and to repay revolving loans[138](index=138&type=chunk) - The Company was in compliance with all Credit Facility financial covenants at June 30, 2025, including a Fixed Charge Coverage Ratio of **3.59 to 1** (minimum **2.50 to 1**) and a Consolidated Leverage Ratio of **1.60 to 1** (maximum **2.75 to 1**)[139](index=139&type=chunk)[140](index=140&type=chunk) [Note Purchase and Private Shelf Agreement](index=46&type=section&id=Note%20Purchase%20and%20Private%20Shelf%20Agreement) - The Company entered into a Second Amended and Restated Note Purchase and Private Shelf Agreement on June 8, 2023, with PGIM, Inc., superseding the prior agreement[141](index=141&type=chunk) - This agreement allows for the issuance and sale of additional senior notes (Shelf Notes) in an aggregate principal amount of up to **$300 million** (minus outstanding notes)[142](index=142&type=chunk) [Senior Notes](index=46&type=section&id=Senior%20Notes) Outstanding Senior Notes (as of June 30, 2025) | Series | Interest Rate | Maturity Date | Principal Balance (in millions) | | :----- | :------------ | :------------ | :------------------------------ | | Series F | 6.25% | Sep 27, 2030 | $75.0 | | Series D | 2.57% | Mar 17, 2028 | $40.0 | | Series E | 2.35% | Jun 16, 2026 | $60.0 | - The Company was in compliance with all financial covenants under the Note Purchase Agreement at June 30, 2025, including a Fixed Charge Coverage Ratio of **3.59 to 1** (minimum **2.50 to 1**) and a Consolidated Leverage Ratio of **1.60 to 1** (maximum **2.75 to 1**)[150](index=150&type=chunk)[156](index=156&type=chunk) [Contractual Obligations and Critical Accounting Estimates](index=48&type=section&id=Contractual%20Obligations%20and%20Critical%20Accounting%20Estimates) - There were no material changes in contractual obligations and commitments from those included in the 2024 Annual Report[152](index=152&type=chunk) - No material changes occurred in judgments and assumptions associated with critical accounting estimates during the six months ended June 30, 2025[153](index=153&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in the Company's market risk exposures since its 2024 Annual Report - No material changes in the Company's market risk exposures were reported from those in the 2024 Annual Report[154](index=154&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that McGrath RentCorp's management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures as of June 30, 2025, concluding they were effective. No material changes to internal control over financial reporting were identified - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[155](index=155&type=chunk) - There were no material changes in the Company's internal control over financial reporting during the period[155](index=155&type=chunk) [Part II - Other Information](index=49&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) This section states that McGrath RentCorp is involved in various legal proceedings in the ordinary course of business, but management does not anticipate a material adverse effect on the Company's financial condition, operating results, or cash flows - The Company is subject to various legal proceedings and claims arising in the ordinary course of business[158](index=158&type=chunk) - Management does not expect the outcome of current proceedings to have a material adverse effect on the Company's financial condition, operating results, or cash flows[158](index=158&type=chunk) [Item 1a. Risk Factors](index=49&type=section&id=Item%201a.%20Risk%20Factors) This section indicates that there have been no material changes to the Company's previously disclosed risk factors, except for the addition of risks related to changes in the U.S. trade environment, global tariffs, and economic uncertainty associated with geopolitics - No material changes from previously disclosed risk factors, except for new risks related to changes in the U.S. trade environment, global tariffs, and economic uncertainty due to geopolitics[159](index=159&type=chunk)[160](index=160&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section outlines the Company's share repurchase program, which was increased in September 2024 to authorize the repurchase of up to 2,000,000 shares. However, no shares were repurchased during the three and six months ended June 30, 2025 - The Board of Directors authorized the repurchase of up to **2,000,000 shares** of common stock under the Repurchase Plan in September 2024[161](index=161&type=chunk) - As of June 30, 2025, **2,000,000 shares** remained authorized for repurchase[161](index=161&type=chunk) - No shares were repurchased during the three and six months ended June 30, 2025[162](index=162&type=chunk) [Item 3. Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[163](index=163&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that there are no mine safety disclosures to report - No mine safety disclosures were reported[164](index=164&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) This section reports that no director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three and six months ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three and six months ended June 30, 2025[166](index=166&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including certifications from the CEO and CFO, and financial statements formatted in iXBRL - The report includes certifications from the Chief Executive Officer and Chief Financial Officer as required by the Sarbanes-Oxley Act of 2002[168](index=168&type=chunk) - Financial statements are provided in iXBRL format[168](index=168&type=chunk) [Signatures](index=52&type=section&id=Signatures) This section contains the duly authorized signatures of McGrath RentCorp's Executive Vice President and Chief Financial Officer, and Senior Vice President and Chief Accounting Officer, affirming the filing of the report - The report is signed by Keith E. Pratt, Executive Vice President and Chief Financial Officer, and David M. Whitney, Senior Vice President and Chief Accounting Officer[171](index=171&type=chunk)