Financial Performance - Consolidated revenues for the three months ended September 30, 2025, decreased 4% to $256.4 million, down from $266.8 million in the same period in 2024[77]. - Consolidated net income for the three months ended September 30, 2025, decreased 72% to $42.3 million, compared to $149.3 million for the same period in 2024[77]. - Earnings per diluted share for the three months ended September 30, 2025, decreased by $4.36 to $1.72, compared to $6.08 for the same period in 2024[77]. - For the nine months ended September 30, 2025, consolidated revenues increased by 3% to $687.5 million from $667.2 million in 2024[101]. - Consolidated net income for the nine months ended September 30, 2025, decreased by 45% to $106.5 million, primarily due to the terminated Merger Agreement[101]. Revenue Breakdown - Mobile Modular's total revenues decreased $9.9 million, or 5%, to $181.5 million for the three months ended September 30, 2025, primarily due to lower sales revenues[79]. - Total revenues for Mobile Modular decreased by $9.9 million, or 5%, to $181.5 million for the three months ended September 30, 2025, compared to $191.4 million in 2024[81]. - Rental revenues increased by $1.7 million, or 2%, to $83.2 million, while sales revenues decreased by $13.7 million, or 21%, to $52.3 million[85]. - Portable Storage's total revenues increased by $1.4 million, or 6%, to $24.4 million, driven by higher rental and sales revenues[86]. - TRS-RenTelco's total revenues increased by $2.1 million, or 6%, to $36.9 million, primarily due to higher rental revenues[93]. - For the nine months ended September 30, 2025, total revenues increased by $5.8 million, or 1%, to $469.4 million compared to the same period in 2024[105]. - For the nine months ended September 30, 2025, TRS-RenTelco's total revenues increased by $7.1 million, or 7%, to $108.3 million compared to the same period in 2024[115]. Profitability Metrics - Gross profit decreased $4.7 million, or 4%, to $119.3 million in 2025, with Mobile Modular's gross profit decreasing $6.7 million, or 7%[78]. - Gross profit decreased by $6.7 million, or 7%, to $83.1 million, with gross margin percentages for rental revenues dropping to 58% in 2025 from 62% in 2024[84]. - Adjusted EBITDA decreased $7.5 million, or 7%, to $96.5 million in 2025[78]. - Adjusted EBITDA decreased by $6.8 million, or 10%, to $64.6 million for the three months ended September 30, 2025[81]. - Gross profit for the nine months ended September 30, 2025, decreased by $1.1 million, or 1%, to $221.8 million[107]. - Gross profit for the nine months ended September 30, 2025, increased by $7.2 million, or 17%, to $48.1 million[119]. Expenses - Selling and administrative expenses increased $3.2 million to $52.5 million, primarily due to higher marketing and administrative expenses[78]. - Selling and administrative expenses for the nine months ended September 30, 2025, increased by $8.2 million to $157.0 million, mainly due to higher employee costs[102]. - Selling and administrative expenses increased by $5.3 million, or 5%, to $106.2 million, primarily due to higher corporate expenses and employee costs[107]. - Portable Storage's gross profit decreased by $5.2 million, or 11%, to $43.8 million for the nine months ended September 30, 2025[113]. Cash Flow and Financing - For the three months ended September 30, 2025, net cash provided by operating activities was $65.1 million, a decrease from $199.0 million in the same period of 2024, representing a decline of approximately 67.3%[129]. - Cash flows from operating activities for the nine months ended September 30, 2025, were $174.8 million, down $162.8 million from $337.6 million in 2024, primarily due to a gain on merger termination in 2024[131]. - Net cash used in investing activities was $88.1 million in 2025, a decrease of $52.8 million from $140.8 million in 2024, mainly due to $75.8 million lower rental equipment purchases[132]. - Net cash used in financing activities was $80.3 million in 2025, down from $193.6 million in 2024, reflecting a $113.3 million change primarily due to lower net payments under bank lines of credit[133]. Debt and Compliance - As of September 30, 2025, the Company had a Consolidated Fixed Charge Coverage Ratio of 3.69 to 1, exceeding the required minimum of 2.50 to 1[139]. - The Consolidated Leverage Ratio at September 30, 2025, was 1.58 to 1, well below the maximum threshold of 2.75 to 1[139]. - The Company issued $75.0 million of 5.30% Series G Senior Notes on September 8, 2025, to pay down its term loan "A" facility in full[143]. - The Company anticipates no trends indicating non-compliance with financial covenants, although significant deterioration in financial performance could impact compliance[140]. - As of September 30, 2025, the Company was in compliance with all financial covenants outlined in the Note Purchase Agreement[151]. Market and Risk Factors - There have been no material changes in the Company's market risk exposures since the 2024 Annual Report[155]. - Contractual obligations and commitments have not changed materially from those included in the 2024 Annual Report[153]. - There were no material changes in critical accounting estimates during the nine-month period ended September 30, 2025[154].

Financial Performance - Total revenues for Q3 2025 were $256.4 million, a decrease of 4% compared to Q3 2024[1] - Net income for Q3 2025 was $42.3 million, or $1.72 per diluted share, down from $149.3 million, or $6.08 per diluted share in Q3 2024[1] - Total revenues for the three months ended September 30, 2025, were $256,443,000, a decrease of 3.9% compared to $266,758,000 in the same period of 2024[23] - Net income for the three months ended September 30, 2025, was $42,297,000, down 71.7% from $149,317,000 in the same period of 2024[23] - Basic earnings per share for the three months ended September 30, 2025, were $1.72, compared to $6.08 in 2024, indicating a decline of 71.7%[23] - Total revenues for the nine months ended September 30, 2025, reached $687,475,000, an increase from $667,196,000 in the same period of 2024, representing a growth of approximately 3.9%[36] - Net income for the nine months ended September 30, 2025, was $106,479,000, compared to $192,778,000 in the same period of 2024, indicating a decrease of about 44.8%[36] Revenue Breakdown - Rental operations revenues increased 4% to $178.1 million, while sales revenues decreased 18% to $76.1 million[6] - Modular rental revenues grew 2%, and Portable Storage rental revenues increased 1%, marking its first year-over-year growth since Q1 2024[4][5] - TRS-RenTelco reported a 9% increase in rental revenues compared to last year[5] Adjusted EBITDA - Adjusted EBITDA decreased 7% to $96.5 million for Q3 2025[6] - Adjusted EBITDA for Q3 2025 was $96.526 million, up from $103.983 million in Q3 2024, indicating a decline of 7.1%[28][32] - Adjusted EBITDA for the nine months ended September 30, 2025, was $257,567,000, slightly down from $259,723,000 in the same period of 2024, reflecting a decrease of approximately 0.8%[36] - Adjusted EBITDA margin for the twelve months ended September 30, 2025, was 39%, consistent with the previous year, demonstrating effective cost management[47] Cash Flow and Expenses - Cash balance at the end of the period was $7,256,000, significantly up from $807,000 at the beginning of the period[25] - The company reported a net cash provided by operating activities of $174,765,000 for the nine months ended September 30, 2025, down from $337,596,000 in 2024[27] - Net cash provided by operating activities for the three months ended September 30, 2025, was $65,071,000, compared to $198,967,000 in 2024, showing a decline in cash flow[49] - Interest expense for the three months ended September 30, 2025, was $8,177,000, down from $12,641,000 in the same period of 2024[23] - Interest expense for the nine months ended September 30, 2025, totaled $24,130,000, an increase from $12,642,000 in 2024, indicating rising borrowing costs[47] Capital Expenditures and Outlook - The company updated its full-year 2025 revenue outlook to $935 to $955 million, from a previous range of $925 to $960 million[13] - The company expects Adjusted EBITDA for the full year 2025 to be between $350 to $357 million[13] - Gross rental equipment capital expenditures are projected to be $120 to $125 million for the full year 2025[13] Operational Metrics - Average rental equipment cost increased to $1.328 billion in Q3 2025 from $1.241 billion in Q3 2024, representing a 7% increase[28][32] - Average monthly total yield for Q3 2025 was 2.09%, down from 2.19% in Q3 2024, indicating a decrease in rental revenue efficiency[28][32] - Average utilization rate for Q3 2025 was 72.6%, compared to 77.1% in Q3 2024, showing a decline in equipment usage[28][32] - Total direct costs of rental operations for Q3 2025 were $89.598 million, an increase from $81.672 million in Q3 2024, reflecting rising operational costs[28][32] - Selling and administrative expenses for Q3 2025 totaled $52.540 million, compared to $49.296 million in Q3 2024, indicating a rise in administrative costs[28][32] Foreign Currency and Other Gains - The company reported a foreign currency exchange loss of $32, contrasting with a gain of $216 in Q3 2024, highlighting increased currency volatility impacts[28][32] - The company reported a gain on merger termination from WillScot Mobile Mini of $(180,000,000), which was excluded from Adjusted EBITDA as a non-operating transaction[47] - The company experienced a gain on the sale of used rental equipment amounting to $30,188,000 for the nine months ended September 30, 2025, compared to $25,185,000 in 2024, reflecting improved asset management[49] Tax and Compensation - The provision for income taxes for the three months ended September 30, 2025, was $16,211,000, down from $53,502,000 in 2024, suggesting a favorable tax environment[47] - Share-based compensation for the nine months ended September 30, 2025, was $8,088,000, compared to $6,949,000 in 2024, indicating an increase in employee compensation costs[47]

Core Points - McGrath RentCorp announced a quarterly cash dividend of $0.485 per common share for the quarter ended September 30, 2025 [1] - The dividend will be payable on October 31, 2025, to shareholders of record on October 17, 2025 [1] - The year 2025 marks the 34th consecutive year that McGrath RentCorp has raised its dividend [1]

Core Insights - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1][2] - The Zacks Momentum Style Score helps identify stocks with strong momentum, and McGrath (MGRC) currently holds a Momentum Style Score of B, indicating potential for growth [3][4] Price Performance - MGRC shares have increased by 3.45% over the past week, outperforming the Zacks Financial - Leasing Companies industry, which rose by 1.7% during the same period [6] - Over the past month, MGRC's price change is 5.39%, while the industry average is 7.53% [6] - In the last quarter, MGRC shares rose by 10.36%, and over the past year, they increased by 21.04%, compared to the S&P 500's gains of 9.68% and 20% respectively [7] Trading Volume - MGRC's average 20-day trading volume is 111,467 shares, which serves as a baseline for price-to-volume analysis; a rising stock with above-average volume is generally seen as bullish [8] Earnings Outlook - Recent earnings estimate revisions for MGRC show positive momentum, with two estimates moving higher and none lower in the past two months, raising the consensus estimate from $6.19 to $6.25 [10] - For the next fiscal year, one estimate has increased while there have been no downward revisions [10] Conclusion - Given the positive price performance, trading volume, and earnings outlook, MGRC is rated as a 2 (Buy) stock with a Momentum Score of B, making it a strong candidate for near-term investment [12]

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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]