[Executive Summary & Q2 2025 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q2%202025%20Highlights) [Overall Company Performance (Q2 2025 vs Q2 2024)](index=1&type=section&id=Overall%20Company%20Performance) McGrath RentCorp reported an **11% increase** in **total revenues** for Q2 2025, reaching **$235.6 million**, driven by higher rental operations and sales. **Net income** significantly improved by **74.8%** to **$36.0 million**, with **diluted EPS** rising to **$1.46** | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :----------------------- | :----------------- | :----------------- | :--------- | | Total Revenues | $235.6 | $212.6 | 10.87% | | Net Income | $36.0 | $20.6 | 74.76% | | Diluted EPS | $1.46 | $0.84 | 73.81% | [CEO Commentary & Operational Overview](index=1&type=section&id=CEO%20Commentary%20%26%20Operational%20Overview) President and CEO Joe Hanna expressed satisfaction with Q2 results, highlighting company-wide revenue growth from rental operations and sales. Modular rental revenues increased despite softer market demand, while Portable Storage showed sequential improvement. TRS-RenTelco experienced strong, broad-based demand growth. The company reduced new equipment capital spending and focused on preparing existing fleet - Companywide revenues **increased** **11%**, driven by higher rental operations and sales revenues[3](index=3&type=chunk) - Modular rental revenues **increased** **5%** year-over-year, with growth in commercial and education sectors, despite softer market demand. New equipment capital spending was reduced, focusing on preparing available fleet[4](index=4&type=chunk) - Portable Storage rental revenues **grew** **5%** sequentially but were **down** **5%** year-over-year, facing challenges from lower commercial construction activity[5](index=5&type=chunk) - **TRS-RenTelco** reported a strong quarter with rental revenues **up** **7%** year-over-year, benefiting from broad-based market demand improvement[5](index=5&type=chunk) [Key Consolidated Financial Highlights (Q2 2025)](index=1&type=section&id=Key%20Consolidated%20Financial%20Highlights) For the second quarter of 2025, McGrath RentCorp achieved significant growth in rental and sales revenues, leading to an **11% increase** in **total revenues**. **Income from operations** and **Adjusted EBITDA** also saw positive growth, and the company maintained its dividend rate | Metric | Q2 2025 (Millions) | YoY Change (%) | | :-------------------------- | :----------------- | :------------- | | Rental operations revenues | $163.5 | +5% | | Sales revenues | $69.8 | +28% | | Total revenues | $235.6 | +11% | | Income from operations | $57.2 | +5% | | Adjusted EBITDA | $86.5 | +3% | | Dividend rate per share | $0.485 | - | [Division Performance Overview (Q2 2025 vs Q2 2024)](index=2&type=section&id=Division%20Performance%20Overview) [Mobile Modular Division](index=2&type=section&id=Mobile%20Modular%20Division) The **Mobile Modular** division reported a slight **decrease** in **Adjusted EBITDA** for Q2 2025 compared to the prior year, despite increases in rental and rental-related services revenues. **Gross profit on rental revenues** saw a modest increase, while sales revenues and associated gross profit also grew, albeit with a reduced gross margin due to a higher mix of new equipment sales | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | | Adjusted EBITDA | $53,088 | $53,418 | -0.62% | | Rental Revenues | $81,909 | $78,039 | +4.96% | | Rental Related Services Rev | $32,172 | $28,920 | +11.25% | | Sales Revenues | $40,484 | $35,930 | +12.67% | | Gross Profit on Rental Rev | $47,178 | $46,779 | +0.85% | | Gross Profit on Sales Rev | $12,903 | $13,758 | -6.21% | | Gross Margin on Sales | 32% | 38% | -6 ppts | - **Selling and administrative expenses** for **Mobile Modular** **increased** by **$3.5 million** to **$36.8 million**, primarily due to higher employee salaries and benefits, allocated corporate expenses, and marketing costs[11](index=11&type=chunk) [Portable Storage Division](index=2&type=section&id=Portable%20Storage%20Division) The **Portable Storage** division experienced a **decrease** in **Adjusted EBITDA** and rental revenues in Q2 2025 compared to the prior year. While sales revenues increased, the gross margin on sales declined. **Gross profit on rental revenues** also saw a decrease | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | | Adjusted EBITDA | $9,834 | $11,015 | -10.72% | | Rental Revenues | $16,939 | $17,823 | -4.96% | | Rental Related Services Rev | $4,394 | $4,640 | -5.30% | | Sales Revenues | $1,712 | $1,266 | +35.23% | | Gross Profit on Rental Rev | $13,983 | $15,295 | -8.45% | | Gross Profit on Sales Rev | $664 | $550 | +20.73% | | Gross Margin on Sales | 39% | 43% | -4 ppts | - **Selling and administrative expenses** for **Portable Storage** **increased** by **$0.1 million** to **$7.5 million** in Q2 2025[11](index=11&type=chunk) [TRS-RenTelco Division](index=2&type=section&id=TRS-RenTelco%20Division) **TRS-RenTelco** demonstrated strong performance in Q2 2025, with increases across **Adjusted EBITDA**, rental revenues, and sales revenues. The division saw a significant rise in **gross profit on rental revenues**, driven by strengthening end markets and higher average rental equipment on rent, despite a decrease in depreciation expense | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | | Adjusted EBITDA | $19,314 | $18,001 | +7.29% | | Rental Revenues | $27,137 | $25,314 | +7.20% | | Sales Revenues | $7,713 | $5,845 | +32.00% | | Gross Profit on Rental Rev | $11,879 | $9,017 | +31.74% | | Gross Profit on Sales Rev | $3,641 | $3,129 | +16.35% | | Gross Margin on Sales | 47% | 54% | -7 ppts | - **Depreciation expense** for **TRS-RenTelco** **decreased** by **14%** in Q2 2025, contributing to the increase in **gross profit on rental revenues**[11](index=11&type=chunk) - **Selling and administrative expenses** for **TRS-RenTelco** **increased** by **$0.7 million** to **$7.3 million** in Q2 2025[11](index=11&type=chunk) [Enviroplex Division](index=9&type=section&id=Enviroplex%20Division) The **Enviroplex** business had a strong Q2 2025, particularly in new modular sales within the education market. The division significantly increased its sales revenues and gross profit on sales compared to the prior year - **Enviroplex** business had a strong quarter of new modular sales in the education market[4](index=4&type=chunk) | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | Change (%) | | :------------------------ | :------------------ | :------------------ | :--------- | | Sales Revenues | $19,866 | $11,373 | +74.68% | | Gross Profit on Sales Rev | $6,087 | $2,856 | +113.13% | | Adjusted EBITDA | $4,290 | $1,238 | +246.53% | [Financial Outlook](index=2&type=section&id=Financial%20Outlook) [Full-Year 2025 Guidance Update](index=2&type=section&id=Full-Year%202025%20Guidance%20Update) McGrath RentCorp updated its full-year 2025 financial outlook, slightly increasing the lower end of its **total revenue** and **Adjusted EBITDA** guidance ranges, while maintaining gross rental equipment capital expenditures | Metric | Previous Guidance (Millions) | Current Guidance (Millions) | | :-------------------------------- | :--------------------------- | :-------------------------- | | Total revenue | $920 to $960 | $925 to $960 | | Adjusted EBITDA | $343 to $355 | $347 to $356 | | Gross rental equipment capital expenditures | $115 to $125 | $115 to $125 | [Company Information](index=3&type=section&id=Company%20Information) [About McGrath RentCorp](index=3&type=section&id=About%20McGrath%20RentCorp) McGrath RentCorp is a leading North American business-to-business rental company, founded in 1979. Its core operations focus on modular solutions through **Mobile Modular** and **Mobile Modular Portable Storage**, and electronic test equipment rental via **TRS-RenTelco**. The company emphasizes customer experience, profitable growth, and has a history of over 30 consecutive years of annual dividend increases - **McGrath RentCorp** is a leading business-to-business rental company in North America, specializing in modular solutions (**Mobile Modular**, **Mobile Modular Portable Storage**) and electronic test equipment rental (**TRS-RenTelco**)[14](index=14&type=chunk) - The company has a strong record of profitable growth and has **increased** annual dividends to shareholders for over **30 consecutive years**[14](index=14&type=chunk) [Investor Resources & Conference Call](index=3&type=section&id=Investor%20Resources%20%26%20Conference%20Call) Investors can access company information, including SEC filings, on McGrath's website. A conference call was scheduled for July 24, 2025, to discuss the second quarter results, with replay and webcast options available - **McGrath RentCorp** hosted a conference call on July 24, 2025, at 5:00 p.m. ET to discuss Q2 2025 results, with dial-in and webcast options available[16](index=16&type=chunk) - Additional information and SEC filings are available on the company's investor relations website[15](index=15&type=chunk)[16](index=16&type=chunk) [Financial Statements (Unaudited)](index=6&type=section&id=Financial%20Statements%20(Unaudited)) [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The condensed consolidated statements of income show McGrath RentCorp's financial performance for the three and six months ended June 30, 2025, compared to the same periods in 2024, detailing revenues, costs, gross profit, operating income, and net income | (in thousands, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **Revenues:** | | | | | | Rental | $125,985 | $121,176 | $246,098 | $241,508 | | Rental related services | $37,483 | $34,358 | $71,399 | $63,938 | | Sales | $69,775 | $54,414 | $108,701 | $89,483 | | 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 | | **Net income:** | $35,973 | $20,618 | $64,181 | $43,466 | | **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 Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets provide a snapshot of McGrath RentCorp's financial position as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and shareholders' equity | (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | **Assets:** | | | | Total assets | $2,327,009 | $2,277,584 | | Rental equipment, net | $1,393,682 | $1,387,659 | | **Liabilities:** | | | | Total liabilities | $1,163,848 | $1,154,216 | | Notes payable | $572,525 | $590,208 | | **Shareholders' Equity:** | | | | Total shareholders' equity | $1,163,161 | $1,123,368 | | Retained earnings | $1,047,270 | $1,007,115 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows outline the cash generated from or used in operating, investing, and financing activities for the six months ended June 30, 2025, and 2024, showing a net increase in cash for the current period | (in thousands) | Six Months Ended June 30, 2025 | Six 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 | - **Purchases of rental equipment** **decreased** significantly from **$145.3 million** in H1 2024 to **$50.2 million** in H1 2025, reflecting a focus on preparing available fleet rather than new capital spending[4](index=4&type=chunk)[26](index=26&type=chunk) [Business Segment Data (Unaudited)](index=9&type=section&id=Business%20Segment%20Data%20(Unaudited)) [Three Months Ended June 30, 2025](index=9&type=section&id=Three%20Months%20Ended%20June%2030,%202025) This section provides detailed unaudited business segment data for the three months ended June 30, 2025, breaking down revenues, costs, gross profit, and **Adjusted EBITDA** by **Mobile Modular**, **Portable Storage**, **TRS-RenTelco**, and **Enviroplex** divisions | (dollar amounts in thousands) | Mobile Modular | Portable Storage | TRS RenTelco | Enviroplex | Consolidated | | :---------------------------- | :------------- | :--------------- | :----------- | :--------- | :----------- | | Total revenues | $155,988 | $23,346 | $36,416 | $19,866 | $235,616 | | Total gross profit | $73,226 | $15,038 | $16,363 | $6,087 | $110,714 | | Income from operations | $36,449 | $7,491 | $9,043 | $4,188 | $57,171 | | Adjusted EBITDA | $53,088 | $9,834 | $19,314 | $4,290 | $86,525 | | Average utilization | 73.7% | 61.1% | 64.8% | - | - | [Three Months Ended June 30, 2024](index=10&type=section&id=Three%20Months%20Ended%20June%2030,%202024) This section presents the unaudited business segment data for the three months ended June 30, 2024, serving as a comparative baseline for the current quarter's performance across the company's divisions | (dollar amounts in thousands) | Mobile Modular | Portable Storage | TRS RenTelco | Enviroplex | Consolidated | | :---------------------------- | :------------- | :--------------- | :----------- | :--------- | :----------- | | Total revenues | $144,546 | $24,022 | $32,670 | $11,373 | $212,611 | | Total gross profit | $71,286 | $16,302 | $12,971 | $2,856 | $103,415 | | Income from operations | $38,047 | $8,837 | $6,386 | $1,142 | $54,412 | | Adjusted EBITDA | $53,418 | $11,015 | $18,001 | $1,238 | $83,672 | | Average utilization | 78.4% | 66.1% | 56.5% | - | - | - Transaction costs of **$12.4 million** related to a terminated merger agreement were reclassified from **Selling and administrative expenses** to a separate non-operating expense under the Corporate segment for Q2 2024[33](index=33&type=chunk) [Six Months Ended June 30, 2025](index=11&type=section&id=Six%20Months%20Ended%20June%2030,%202025) This section details the unaudited business segment data for the six months ended June 30, 2025, providing a year-to-date view of divisional performance in terms of revenues, costs, gross profit, and **Adjusted EBITDA** | (dollar amounts in thousands) | Mobile Modular | Portable Storage | TRS RenTelco | Enviroplex | Consolidated | | :---------------------------- | :------------- | :--------------- | :----------- | :--------- | :----------- | | Total revenues | $287,906 | $44,612 | $71,435 | $27,079 | $431,032 | | Total 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 | | Adjusted EBITDA | $100,719 | $18,421 | $37,248 | $4,653 | $161,041 | | Average utilization | 74.2% | 60.6% | 63.0% | - | - | [Six Months Ended June 30, 2024](index=12&type=section&id=Six%20Months%20Ended%20June%2030,%202024) This section presents the unaudited business segment data for the six months ended June 30, 2024, offering a comparative year-to-date view of divisional performance | (dollar amounts in thousands) | Mobile Modular | Portable Storage | TRS RenTelco | Enviroplex | Consolidated | | :---------------------------- | :------------- | :--------------- | :----------- | :--------- | :----------- | | Total revenues | $272,131 | $48,782 | $66,433 | $13,092 | $400,438 | | Total gross profit | $133,131 | $33,405 | $26,846 | $3,301 | $196,683 | | Income from operations | $72,499 | $19,450 | $14,765 | $(216) | $106,497 | | Adjusted EBITDA | $96,745 | $22,538 | $36,481 | $(24) | $155,740 | | Average utilization | 78.6% | 67.8% | 56.4% | - | - | - Transaction costs of **$21.7 million** related to a terminated merger agreement were reclassified from **Selling and administrative expenses** to a separate non-operating expense under the Corporate segment for H1 2024[40](index=40&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=13&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Adjusted EBITDA Definition and Rationale](index=13&type=section&id=Adjusted%20EBITDA%20Definition%20and%20Rationale) **Adjusted EBITDA** is a non-GAAP financial measure defined as net income before interest expense, income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, transaction costs, gains on property sales, and non-operating transactions. Management uses it to evaluate operating performance, compliance with financial covenants, and liquidity, believing it provides useful information to investors when viewed alongside GAAP results - **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[41](index=41&type=chunk) - Management uses **Adjusted EBITDA** to evaluate period-to-period operating performance, compliance with financial covenants, and the company's ability to meet future capital expenditure and working capital requirements[42](index=42&type=chunk) - **Adjusted EBITDA** is a non-GAAP measure and should not be considered in isolation or as a substitute for GAAP measures, as it does not reflect all amounts associated with operations or accurately reflect real cash flow[43](index=43&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA](index=13&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) This section provides a reconciliation of **net income**, a GAAP measure, to **Adjusted EBITDA** for the three, six, and twelve months ended June 30, 2025, and 2024, illustrating the adjustments made to arrive at the non-GAAP metric | (dollar amounts in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | LTM 2025 | LTM 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 | | Share-based compensation | $2,779 | $2,347 | $5,322 | $4,556 | $10,268 | $9,449 | | Transaction costs | $155 | $12,367 | $155 | $21,721 | $41,593 | $23,306 | | Adjusted EBITDA | $86,525 | $83,672 | $161,041 | $155,740 | $357,028 | $335,378 | | Adjusted EBITDA margin | 37% | 39% | 37% | 38% | 38% | 38% | [Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA](index=14&type=section&id=Reconciliation%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Adjusted%20EBITDA) This section reconciles **net cash provided by operating activities** to **Adjusted EBITDA** for the three, six, and twelve months ended June 30, 2025, and 2024, providing an alternative view of the company's cash-generating performance adjusted for non-operating and non-cash items | (dollar amounts in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | LTM 2025 | LTM 2024 | | :---------------------------- | :------ | :------ | :------ | :------ | :------- | :------- | | Net cash provided by operating activities | $55,812 | $79,209 | $109,694 | $138,629 | $345,440 | $158,903 | | Change in accounts receivable, net | $24,919 | $5,429 | $14,459 | $(9,989) | $16,422 | $25,438 | | 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 | $86,525 | $83,672 | $161,041 | $155,740 | $357,026 | $335,378 | [Additional Information](index=3&type=section&id=Additional%20Information) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding McGrath RentCorp's future expectations, strategies, prospects, or targets. These statements are subject to significant risks and uncertainties, including economic factors, market health, competition, and operational challenges, which could cause actual results to differ materially from projections. The company disclaims any obligation to update these statements - The press release contains forward-looking statements regarding future expectations, strategies, prospects, or targets, particularly in the 'Financial Outlook' section[17](index=17&type=chunk) - These statements are not guarantees of future performance and involve significant risks and uncertainties, such as tariff impacts, market health (education, commercial, semiconductor), competition, and operational execution[18](index=18&type=chunk) - The company assumes no obligation to update any forward-looking statements, which are based on management's reasonable assumptions that can be wrong or affected by known or unknown risks[19](index=19&type=chunk)[20](index=20&type=chunk)

Company Overview - McGrath RentCorp has not met expectations for a considerable period [1] - The company operates as a diversified rental enterprise [1] Industry Insights - Crude Value Insights provides an investment service focused on oil and natural gas [1] - The emphasis is on cash flow and companies that generate it, highlighting value and growth prospects [1]

Summary of McGrath RentCorp (MGRC) FY Conference Call Company Overview - McGrath RentCorp specializes in renting and selling modular offices, classrooms, portable storage containers, and electronic test equipment [2][5] - The company has a 45-year history and is recognized for exemplary service [5] Revenue Breakdown - Approximately 80% of revenues come from modular buildings and portable storage fleets [6] - Modular buildings provide temporary to permanent space for various organizations, allowing quick setup [6] - The remaining 20% of revenues are generated from TRS RenTelco, which offers high-end electronic test equipment for sectors like semiconductor and aerospace [9][10] Market Demand and Trends - The modular building segment serves diverse markets, including commercial, government, and education [11] - There is a consistent demand for modernization projects in education, as many school facilities are outdated [12] - Growth in student populations leads to increased demand for temporary classrooms, particularly in states like Florida and Texas [13] - Modular construction is gaining momentum, although it still represents a small percentage of overall construction projects [14] Business Environment - The company is well-positioned to win both large and small projects due to its scale and geographic reach [19] - Current business conditions are somewhat sluggish, with macroeconomic uncertainties affecting project start dates [20] - Monthly revenue per unit on rent grew 8% year-over-year, with units going out on rent increasing by 12% [21] Pricing and Revenue Growth - Revenue per unit has been a focus area, with technology aiding in appropriate pricing strategies [21] - The increase in operating costs post-pandemic has necessitated higher pricing to protect economics [22] - The average monthly revenue per unit for units going on rent is approximately $1,200, significantly higher than the overall average of $800 [25] Value-Added Services - Initiatives like Mobile Modular Plus and site-related services are aimed at enhancing profitability and customer value [30] - These services include furniture, utilities, and construction activities necessary for site preparation [31] Tariffs and Cost Impact - Tariffs are not expected to significantly impact the company, as most equipment has already been purchased [33] - However, there is uncertainty regarding customer demand due to potential project hesitance in the current economic climate [35] TRS RenTelco Segment - TRS RenTelco has shown a rebound in rental revenues, particularly in the computer and semiconductor markets [40] Acquisition Strategy - McGrath is open to M&A opportunities, actively engaging in discussions for potential acquisitions to enhance growth [42][43] Free Cash Flow Generation - The company has a strong free cash flow generation capability, with significant investments in the asset fleet and a history of returning value to shareholders through dividends [46][48] Capital Allocation Framework - The capital allocation strategy prioritizes organic investments, followed by strategic M&A, dividends, and opportunistic share repurchases [51][54] Construction Spending Insights - There are indications of potential delays in non-residential construction spending due to economic uncertainties, although a solid pipeline of committed projects exists [57][58] Education Funding Dynamics - Funding for educational projects primarily comes from state and local sources, with no significant changes expected in funding dynamics [61][62] Conclusion - McGrath RentCorp is positioned for growth with a strong focus on modular solutions, value-added services, and strategic capital allocation, despite facing some macroeconomic challenges and uncertainties in the construction sector [42][46]

Financial Performance - Total revenues reached $195.4 million, a 4% increase year-over-year[32, 34] - Adjusted EBITDA was $74.5 million, up 3% compared to the previous year[32, 34] - Mobile Modular's Q1 2025 revenues totaled $132 million[16, 59] - Portable Storage generated $21 million in quarterly revenues[19, 91] - TRS-RenTelco's quarterly revenues amounted to $35 million[22] Segment Analysis - Mobile Modular rental revenues increased by 3% in Q1 2025[37] - Portable Storage rental revenues decreased by 13% in Q1 2025[31, 39] - TRS-RenTelco rental revenues remained flat, showing the first increase since Q1 2023[31, 41] Mobile Modular Highlights - Mobile Modular's revenue per unit on rent increased by 8%, and revenue per new unit shipped increased by 12% on an LTM basis[32, 79, 80] - Mobile Modular's adjusted EBITDA increased by 10%[45] Outlook - The company revised its 2025 total revenue outlook to $920 million - $960 million[51] - The company revised its 2025 Adjusted EBITDA outlook to $343 million - $355 million[51]

Financial Data and Key Metrics Changes - Total company revenues increased by 4% to $195.4 million, and adjusted EBITDA increased by 3% to $74.5 million compared to the previous year [23][7]. - Mobile Modular's adjusted EBITDA increased by 10% to $47.6 million, with total revenues rising by 3% to $131.9 million [24][23]. - Rental margins for Mobile Modular improved to 60%, up from 57% a year ago [24]. Business Line Data and Key Metrics Changes - Mobile Modular's rental revenues grew by 3%, while rental-related services revenues increased by 22%, partially offset by an 11% decline in sales revenues [24]. - Portable storage rental revenues declined by 13% to $16.1 million, with rental margins at 84%, down from 87% a year earlier [27]. - TRS RenTelco's total revenues increased by 4% to $35 million, with rental revenues slightly up at $25.5 million, marking the first quarterly increase since Q1 2023 [28]. Market Data and Key Metrics Changes - The architectural billing index and other macro indicators of construction-related demand showed some weakness and project delays [9]. - Average fleet utilization improved to 65%, up from 59% in the previous quarter [13]. Company Strategy and Development Direction - The company remains focused on modular business growth and aims to be a solutions provider to customers [16]. - Expansion into new geographies is a priority, with investments aimed at responsibly growing the top line [18]. - The company has a robust M&A pipeline that is expected to yield results in future quarters [18]. Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about potential delays in new project starts due to economic uncertainty and tariff impacts [16][61]. - The company expects limited impact from tariffs in 2025, as most of its fleet is owned and prior purchases have mitigated exposure [14][33]. - The overall economic uncertainty could lead to slower decision-making from customers, affecting rental and sales projects in the second half of the year [96]. Other Important Information - First-quarter selling and administrative expenses increased by 1% to $50.9 million, while interest expense decreased by $4.5 million due to lower average interest rates [30]. - The company generated $54 million in net cash from operating activities and reduced debt by $31 million [32]. Q&A Session Summary Question: What are the indications for order flow in the education sector? - Management noted that bookings were light in Q1, but April showed an increase in orders, indicating a positive outlook for education [42][43]. Question: How is the sales team adapting to capture opportunities in larger projects? - Management confirmed that the sales team is motivated and actively pursuing both large and small projects, with good activity levels reported [102]. Question: Is the uptick in TRS RenTelco's rental revenue sustainable? - Management expressed cautious optimism, noting that the increase is not seen as a temporary blip, with delayed projects starting to come online [60]. Question: How does the company plan to manage margins in portable storage? - Management indicated that they are looking at operational efficiencies and pricing strategies to protect margins despite current pressures [84]. Question: What is the company's approach to geographic expansion? - Management emphasized that geographic expansion is a priority, with a focus on building infrastructure and sales capabilities for future growth [113].

Group 1 - McGrath (MGRC) reported quarterly earnings of $1.15 per share, exceeding the Zacks Consensus Estimate of $1.02 per share, and up from $0.93 per share a year ago, representing an earnings surprise of 12.75% [1] - The company posted revenues of $195.42 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.96%, compared to year-ago revenues of $187.83 million [2] - Over the last four quarters, McGrath has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Group 2 - The stock's immediate price movement will depend on management's commentary during the earnings call, with McGrath shares down about 8.4% year-to-date, slightly better than the S&P 500's decline of 8.6% [3] - The current consensus EPS estimate for the coming quarter is $1.31 on revenues of $223.53 million, and for the current fiscal year, it is $6.19 on revenues of $954.05 million [7] - The Zacks Industry Rank for Financial - Leasing Companies is currently in the bottom 13% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Financial Data and Key Metrics Changes - Total company revenues increased by 4% to $195.4 million, and adjusted EBITDA increased by 3% to $74.5 million compared to the previous year [5][14] - Mobile Modular's adjusted EBITDA increased by 10% to $47.6 million, with total revenues rising by 3% to $131.9 million [14] - Average fleet utilization improved to 74.6% from 78.7% a year ago, while first-quarter monthly revenue per unit on rent increased by 8% to $831 [15][18] Business Line Data and Key Metrics Changes - Mobile Modular's rental revenues grew by 3%, with both commercial and education rentals showing positive trends [5] - Portable Storage rental revenues declined by 13% to $16.1 million, reflecting ongoing softness in commercial construction [16] - TRS RenTelco's rental revenues increased slightly to $25.5 million, marking the first quarterly increase since Q1 2023 [17] Market Data and Key Metrics Changes - The Architectural Billing Index and other macro indicators indicate some weakness and project delays in construction-related demand [6] - The company noted that while quote activity was up, new rental bookings were below the prior year due to a softer construction market [6][10] Company Strategy and Development Direction - The company remains focused on modular business growth and aims to be a solutions provider to customers, with ongoing efforts to increase revenue per unit [11][12] - Geographic expansion is a priority, with investments in infrastructure expected to yield results in future years [77] - The company has a robust M&A pipeline, indicating plans for strategic acquisitions to enhance rental revenues and offerings [86] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of the year, citing potential delays in project starts due to economic uncertainty [10][20] - The impact of tariffs is expected to be limited, with most cost increases manageable and prior purchases mitigating exposure [9][21] - Overall, the company anticipates a solid performance in Q2, but acknowledges that economic uncertainty could affect project initiation and rental revenues in H2 [22][45] Other Important Information - Selling and administrative expenses increased by 1% to $50.9 million, while interest expenses decreased by $4.5 million due to lower average interest rates [18] - The company paid $12 million in dividends and reduced debt by $31 million during the quarter [19] Q&A Session Summary Question: What are the order flow indications for education rentals? - Bookings were light in Q1, but April has shown an increase in orders, with expectations for a good year in education [27][28] Question: How are larger and smaller project sizes performing in Mobile Modular? - Larger projects are solid, while smaller projects show more uncertainty, with good activity levels but hesitancy from customers [30][31] Question: What is the outlook for TRS RenTelco's demand trends? - Demand has improved, particularly in the semiconductor and computer sectors, with delayed projects starting to materialize [39][40] Question: Why was guidance slightly trimmed? - The adjustment reflects increased caution regarding customer decision-making and potential project delays due to economic uncertainty [41][45] Question: How is the company managing its portable storage units? - The company has a high-quality fleet and is focused on utilizing existing units rather than urgent sales, with no immediate need for action [55][58] Question: What is the company's approach to M&A and talent acquisition? - The company is actively pursuing M&A opportunities and has successfully resumed hiring, finding quality candidates readily available [86][88]

Financial Performance - Consolidated revenues for Q1 2025 increased by $7.6 million, or 4%, to $195.4 million compared to $187.8 million in Q1 2024[69] - Consolidated net income for Q1 2025 rose by $5.4 million, or 23%, to $28.2 million from $22.8 million in Q1 2024, with earnings per diluted share increasing 23% to $1.15[69] - Gross profit for Q1 2025 increased by $3.2 million, or 3%, to $96.4 million, with Mobile Modular's gross profit rising by $3.6 million, or 6%[70] - Adjusted EBITDA for Q1 2025 increased by $2.4 million, or 3%, to $74.5 million[70] - Total gross profit for the three months ended March 31, 2025, increased by $1.0 million, or 7%, to $14.9 million[94] Revenue Breakdown - Mobile Modular's total revenues increased by $4.3 million, or 3%, to $131.9 million in Q1 2025, primarily due to higher rental-related services and rental revenues[71] - Total revenues for Mobile Modular increased by $4.3 million, or 3%, to $131.9 million for the three months ended March 31, 2025, compared to $127.6 million in 2024[73] - Rental related services revenues rose by $5.3 million, or 22%, primarily due to higher delivery and site related services[78] - Portable Storage's total revenues decreased by $3.5 million, or 14%, to $21.3 million for the three months ended March 31, 2025[79] Expenses and Profitability - Selling and administrative expenses increased by 1% to $50.9 million in Q1 2025[70] - Selling and administrative expenses for Portable Storage decreased by $0.3 million, or 3%, to $7.6 million[85] - Rental revenues decreased by $2.3 million, or 13%, due to 10% lower average rental equipment on rent and 3% lower average monthly rental rates, resulting in a gross profit decrease of $2.5 million, or 15%, to $13.5 million in 2025[86] - Average monthly total yield for Portable Storage decreased by 16% to 2.30%[81] Cash Flow and Financing - Net cash provided by operating activities was $53.9 million for the three months ended March 31, 2025, down from $59.4 million in the same period of 2024, representing a decrease of approximately 9.2%[106] - Net cash used in investing activities decreased significantly to $2.7 million in 2025 from $78.1 million in 2024, a reduction of approximately 96.5%[107] - Net cash used in financing activities was $48.6 million in 2025, compared to $19.7 million in net cash provided during 2024, indicating a change of $68.3 million[109] Debt and Compliance - The Company had $650.0 million in unsecured revolving credit facilities, with $311.5 million outstanding and an additional borrowing capacity of $338.5 million as of March 31, 2025[114] - The Company issued $75.0 million of 6.25% Series F Senior Notes, maturing on September 27, 2030, to fulfill tax obligations from a divestiture[119] - The principal balance outstanding under the Series E Senior Notes was $60.0 million as of March 31, 2025[123] - The Company was in compliance with all financial covenants as of March 31, 2025, with no anticipated trends indicating non-compliance[125] Market and Risk Factors - There were no material changes in the Company's market risk exposures from those reported in the 2024 Annual Report[129] - There were no material changes in critical accounting estimates during the three-month period ended March 31, 2025[128] - Contractual obligations and commitments have not changed materially from those included in the 2024 Annual Report[127]

Group 1 - McGrath RentCorp operates as a diversified rental company, focusing on renting relocatable modular buildings and portable storage containers [1] - The company has a strong track record in its sector, indicating potential for continued performance [1] Group 2 - Crude Value Insights provides an investment service centered on oil and natural gas, emphasizing cash flow and growth prospects [1] - Subscribers benefit from a stock model account, detailed cash flow analyses of exploration and production firms, and live sector discussions [2]

Financial Data and Key Metrics Changes - Total company revenues increased by 10% to $244 million in Q4 2024, while adjusted EBITDA rose by 5% to $92 million compared to the previous year [28][8] - For the full year 2024, both revenue and adjusted EBITDA grew by 10% [13] Business Line Data and Key Metrics Changes - Mobile Modular experienced a strong quarter with rental revenues growing by 8% and sales revenues increasing by 32% [8][29] - Portable Storage rental revenues declined by 15% to $16.7 million, attributed to lower commercial construction activity [11][32] - TRS-RenTelco rental revenues decreased by 9%, reflecting industry-wide slowdowns in test and measurement equipment markets [12][34] Market Data and Key Metrics Changes - Utilization rates dipped year-over-year, ending the quarter at 75.1% [10] - Average fleet utilization for Mobile Modular was 76%, down from 79.7% a year ago [30] Company Strategy and Development Direction - The company is focusing on long-term growth despite challenges, with a commitment to executing strategic initiatives in the Modular business [7][20] - There is an emphasis on increasing sales team coverage and prudent equipment purchases to meet order volumes [20] - The company plans to invest in growing locations and pursuing tuck-in acquisitions to augment growth [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand conditions in 2025, noting stronger quote activity in January compared to the previous year [16][17] - The company anticipates that the Modular segment will be the primary driver of adjusted EBITDA growth for 2025 [39] - Management acknowledged the challenges in the Portable Storage segment but noted early signs of stabilization [21][42] Other Important Information - The company celebrated its 40th anniversary as a NASDAQ-listed entity and announced a dividend increase for the 34th consecutive year [26] - Phil Hawkins was promoted to Chief Operating Officer to support growth efforts [24] Q&A Session Summary Question: Growth in Modular segment for commercial vs education - Management indicated that both segments grew, with commercial growing by 9% and education by 7% in Q4 [49] Question: Outlook for classroom rentals - Management believes the growth will be balanced and noted improved customer activity compared to the previous year [51][52] Question: Overall business outlook for 2025 - Management expressed a positive outlook for Modular, a challenging position for Portable Storage, and stabilization for TRS [54][55][56] Question: Pricing dynamics in Mobile Modular - Management highlighted a significant gap between average pricing on the fleet and new orders, which is expected to drive margins [60][62] Question: Capital allocation and M&A opportunities - Management remains flexible regarding capital allocation, including potential M&A opportunities and buybacks [78][80] Question: Green shoots for TRS-RenTelco - Management noted consistent bookings outpacing returns, indicating positive momentum in the general purpose and wired communications rentals [112][113]