McGrath Rentp(US:MGRC)2025-10-23 20:00Financial Performance - Consolidated revenues for the three months ended September 30, 2025, decreased 4% to $256.4 million, down from $266.8 million in the same period in 2024[77]. - Consolidated net income for the three months ended September 30, 2025, decreased 72% to $42.3 million, compared to $149.3 million for the same period in 2024[77]. - Earnings per diluted share for the three months ended September 30, 2025, decreased by $4.36 to $1.72, compared to $6.08 for the same period in 2024[77]. - For the nine months ended September 30, 2025, consolidated revenues increased by 3% to $687.5 million from $667.2 million in 2024[101]. - Consolidated net income for the nine months ended September 30, 2025, decreased by 45% to $106.5 million, primarily due to the terminated Merger Agreement[101]. Revenue Breakdown - Mobile Modular's total revenues decreased $9.9 million, or 5%, to $181.5 million for the three months ended September 30, 2025, primarily due to lower sales revenues[79]. - Total revenues for Mobile Modular decreased by $9.9 million, or 5%, to $181.5 million for the three months ended September 30, 2025, compared to $191.4 million in 2024[81]. - Rental revenues increased by $1.7 million, or 2%, to $83.2 million, while sales revenues decreased by $13.7 million, or 21%, to $52.3 million[85]. - Portable Storage's total revenues increased by $1.4 million, or 6%, to $24.4 million, driven by higher rental and sales revenues[86]. - TRS-RenTelco's total revenues increased by $2.1 million, or 6%, to $36.9 million, primarily due to higher rental revenues[93]. - For the nine months ended September 30, 2025, total revenues increased by $5.8 million, or 1%, to $469.4 million compared to the same period in 2024[105]. - For the nine months ended September 30, 2025, TRS-RenTelco's total revenues increased by $7.1 million, or 7%, to $108.3 million compared to the same period in 2024[115]. Profitability Metrics - Gross profit decreased $4.7 million, or 4%, to $119.3 million in 2025, with Mobile Modular's gross profit decreasing $6.7 million, or 7%[78]. - Gross profit decreased by $6.7 million, or 7%, to $83.1 million, with gross margin percentages for rental revenues dropping to 58% in 2025 from 62% in 2024[84]. - Adjusted EBITDA decreased $7.5 million, or 7%, to $96.5 million in 2025[78]. - Adjusted EBITDA decreased by $6.8 million, or 10%, to $64.6 million for the three months ended September 30, 2025[81]. - Gross profit for the nine months ended September 30, 2025, decreased by $1.1 million, or 1%, to $221.8 million[107]. - Gross profit for the nine months ended September 30, 2025, increased by $7.2 million, or 17%, to $48.1 million[119]. Expenses - Selling and administrative expenses increased $3.2 million to $52.5 million, primarily due to higher marketing and administrative expenses[78]. - Selling and administrative expenses for the nine months ended September 30, 2025, increased by $8.2 million to $157.0 million, mainly due to higher employee costs[102]. - Selling and administrative expenses increased by $5.3 million, or 5%, to $106.2 million, primarily due to higher corporate expenses and employee costs[107]. - Portable Storage's gross profit decreased by $5.2 million, or 11%, to $43.8 million for the nine months ended September 30, 2025[113]. Cash Flow and Financing - For the three months ended September 30, 2025, net cash provided by operating activities was $65.1 million, a decrease from $199.0 million in the same period of 2024, representing a decline of approximately 67.3%[129]. - Cash flows from operating activities for the nine months ended September 30, 2025, were $174.8 million, down $162.8 million from $337.6 million in 2024, primarily due to a gain on merger termination in 2024[131]. - Net cash used in investing activities was $88.1 million in 2025, a decrease of $52.8 million from $140.8 million in 2024, mainly due to $75.8 million lower rental equipment purchases[132]. - Net cash used in financing activities was $80.3 million in 2025, down from $193.6 million in 2024, reflecting a $113.3 million change primarily due to lower net payments under bank lines of credit[133]. Debt and Compliance - As of September 30, 2025, the Company had a Consolidated Fixed Charge Coverage Ratio of 3.69 to 1, exceeding the required minimum of 2.50 to 1[139]. - The Consolidated Leverage Ratio at September 30, 2025, was 1.58 to 1, well below the maximum threshold of 2.75 to 1[139]. - The Company issued $75.0 million of 5.30% Series G Senior Notes on September 8, 2025, to pay down its term loan "A" facility in full[143]. - The Company anticipates no trends indicating non-compliance with financial covenants, although significant deterioration in financial performance could impact compliance[140]. - As of September 30, 2025, the Company was in compliance with all financial covenants outlined in the Note Purchase Agreement[151]. Market and Risk Factors - There have been no material changes in the Company's market risk exposures since the 2024 Annual Report[155]. - Contractual obligations and commitments have not changed materially from those included in the 2024 Annual Report[153]. - There were no material changes in critical accounting estimates during the nine-month period ended September 30, 2025[154].