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)

[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]