McGrath Rentp(MGRC) - 2025 Q2 - Quarterly Report

FORM 10-Q General Information Registrant Information 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][2] - The registrant is a large accelerated filer[3][4] 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 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][8] - Management cautions that forward-looking statements are not guarantees of future performance and actual results may differ materially[8] - The Company is under no duty to update forward-looking statements after the filing date, except as required by law[9] Part I - Financial Information Item 1. Financial Statements 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 - Grant Thornton LLP reviewed the interim financial statements and found no material modifications needed for conformity with U.S. GAAP[12] - An unqualified opinion was expressed on the consolidated financial statements as of December 31, 2024[13] Condensed Consolidated Statements of Income 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 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 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 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 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 NOTE 1. Condensed Consolidated Financial Information & Merger Termination - The condensed consolidated financial statements are unaudited and prepared in accordance with SEC rules, with certain GAAP disclosures condensed or omitted[27] - 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] 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 - 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] - 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] - The Company is evaluating the financial statement impact of both new ASUs[30][31] NOTE 3. Business Combinations - 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] - These acquisitions were accounted for as business purchases under ASC 805[33] 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 - 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] 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] NOTE 5. Earnings Per Share 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] - No shares were repurchased during the six months ended June 30, 2025 and 2024[49] NOTE 6. Inventories - Inventories consist of raw materials, supplies, and work-in-process, measured at the lower of actual cost or net realizable value[50] 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 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] - 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] NOTE 8. Segment Reporting - The Company operates through four reportable segments: Mobile Modular, Portable Storage, TRS-RenTelco, and Enviroplex[53] - 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][54] 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 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 - McGrath RentCorp is a leading rental provider of relocatable modular buildings and electronic test equipment, with a primary emphasis on equipment rentals[63] - The Company's four reportable segments are Mobile Modular, Portable Storage, TRS-RenTelco, and Enviroplex[63] 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 - The Board of Directors declared a quarterly cash dividend of $0.485 per common share for Q2 2025, a 2% increase over the prior year[71] - Macroeconomic conditions, including volatile interest rates, inflation, geopolitical landscape, and foreign exchange rate fluctuations, continue to impact the global economy and create uncertainty for forecasting and planning[72] Results of Operations - Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 Consolidated Overview (3 Months) Consolidated Financial Highlights (3 Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change ($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 $12.4 million in merger transaction costs incurred in 2024[74] Mobile Modular (3 Months) Mobile Modular Financial Highlights (3 Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | 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 | $4,554 | 13% | | Average Utilization | 73.7% | 78.4% | (4.7)% | (6)% | - Rental revenues increased due to 2% higher average rental equipment on rent and 3% higher average monthly rental rates[82] - Sales gross margin decreased to 32% in 2025 from 38% in 2024, primarily due to a higher mix of new versus used sales[82] Portable Storage (3 Months) Portable Storage Financial Highlights (3 Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | 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] - Rental related services gross profit decreased by $0.1 million due to lower revenues and lower gross margins (2% in 2025 vs 4% in 2024)[89] TRS-RenTelco (3 Months) TRS-RenTelco Financial Highlights (3 Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | 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 | $1,868 | 32% | | Average Utilization | 64.8% | 56.5% | 8.3% | 15% | - Rental revenues increased due to a 3% increase in average rental equipment on rent and 4% higher average monthly rental rates, coupled with a 14% decrease in depreciation expense[98] - Sales gross margin decreased to 47% in 2025 from 54% in 2024[98] Results of Operations - Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 Consolidated Overview (6 Months) Consolidated Financial Highlights (6 Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change ($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 $9.3 million gain from property sales in 2024[100] Mobile Modular (6 Months) Mobile Modular Financial Highlights (6 Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | 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] - Sales gross profit decreased by $1.6 million, or 7%, due to a lower gross margin percentage (32% in 2025 vs 35% in 2024), primarily from a higher mix of new versus used sales[108] Portable Storage (6 Months) Portable Storage Financial Highlights (6 Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | 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] - Rental related services gross margin was negative 3% in 2025, compared to 5% in 2024, contributing to a $0.6 million decrease in gross profit[115] TRS-RenTelco (6 Months) TRS-RenTelco Financial Highlights (6 Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | Change ($) | 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] - Rental gross profit increased by 23% due to a 4% increase in rental revenues and a 14% decrease in depreciation expense[121] Adjusted EBITDA - 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] - Management uses Adjusted EBITDA to evaluate operating performance, compliance with financial covenants, and ability to meet capital requirements[123] 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 | $155,740 | | Adjusted EBITDA Margin | 37% | 39% | 37% | 38% | - The Company was in compliance with its financial covenants at June 30, 2025: Fixed Charge Coverage Ratio was 3.59 to 1 (minimum 2.50 to 1) and Consolidated Leverage Ratio was 1.60 to 1 (maximum 2.75 to 1)[130][133][156] Liquidity and Capital Resources This section details McGrath RentCorp's cash flow activities, debt structure, and compliance with financial covenants. It highlights a decrease in operating cash flow due to changes in accounts payable and receivables, a reduction in cash used for investing activities primarily from lower rental equipment purchases, and a shift from cash provided to cash used in financing activities. The Company maintains significant borrowing capacity through its credit facilities and senior notes, all while remaining in compliance with its debt covenants Cash Flow Analysis Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Type | 2025 | 2024 | Change ($) | | :--------------- | :--- | :--- | :--------- | | 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] - 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] Unsecured Revolving Lines of Credit - 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][139] - 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] - 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][140] Note Purchase and Private Shelf Agreement - 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] - 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] Senior Notes 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][156] Contractual Obligations and Critical Accounting Estimates - There were no material changes in contractual obligations and commitments from those included in the 2024 Annual Report[152] - No material changes occurred in judgments and assumptions associated with critical accounting estimates during the six months ended June 30, 2025[153] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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] - There were no material changes in the Company's internal control over financial reporting during the period[155] Part II - Other Information Item 1. Legal Proceedings 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] - 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] Item 1a. Risk Factors 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][160] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] - As of June 30, 2025, 2,000,000 shares remained authorized for repurchase[161] - No shares were repurchased during the three and six months ended June 30, 2025[162] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[163] Item 4. Mine Safety Disclosures This section indicates that there are no mine safety disclosures to report - No mine safety disclosures were reported[164] Item 5. Other Information 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] Item 6. Exhibits 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] - Financial statements are provided in iXBRL format[168] 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]