McGrath Announces Results for Fourth Quarter 2024 and Announces 34th Annual Dividend Increase

LIVERMORE, Calif.--(BUSINESS WIRE)-- McGrath RentCorp (“McGrath” or the “Company”) (Nasdaq: MGRC), a leading business-to-business rental company in North America, today announced total revenues from continuing operations for the quarter ended December 31, 2024 of $243.7 million, an increase of 10% compared to the fourth quarter of 2023. The Company reported net income from continuing operations of $38.9 million, or $1.58 per diluted share, for the fourth quarter of 2024, compared to net income from continuing operations of $32.0 million, or $1.30 per diluted share, for the fourth quarter of 2023.

Total revenues from continuing operations for the full year ended December 31, 2024 increased to $910.9 million, an increase of 10%, from $831.8 million in 2023, with adjusted EBITDA increasing $33.4 million, or 10%, to $351.7 million. Net income from continuing operations for the year ended December 31, 2024 was $231.7 million, or $9.43 per diluted share, compared to $111.9 million, or $4.56 per diluted share, in 2023. Excluding the $180.0 million merger termination payment received from WillScot Mobile Mini and $63.2 million in transaction costs incurred by McGrath during the year, net of provision for income taxes, the Company reported net income from continuing operations of $145.7 million, or $5.93 per diluted share.

The Company also announced that the board of directors declared a cash dividend of $0.485 per share for the upcoming quarter ending March 31, 2025, a quarterly increase of $0.01, or 2%, over the prior year period. The cash dividend will be payable on April 30, 2025 to all shareholders of record on April 16, 2025. This marks 34 consecutive years the Company has increased its annual dividend.

FOURTH QUARTER 2024 YEAR-OVER-YEAR COMPANY HIGHLIGHTS (FROM CONTINUING OPERATIONS):

• Rental revenues increased 1% to $124.2 million.
• Sales revenues increased 37% to $80.3 million.
• Total revenues increased 10% to $243.7 million.
• Adjusted EBITDA¹ increased 5% to $92.0 million.
• Dividend rate of $0.475 per share for the fourth quarter 2024. On an annualized basis, this dividend represents a 1.6% yield on the February 18, 2025 close price of $122.22 per share.

Joe Hanna, President and CEO of McGrath, made the following comments:

“We were pleased with our fourth quarter results. The 10% increase in companywide revenues and 5% increase in Adjusted EBITDA were driven by growth at Mobile Modular.

Our modular business had a good quarter, with 8% rental revenue growth. Rental revenues grew across both commercial and education customer bases. We maintained our focus on pricing optimization, rental fleet utilization, and value-added services for our customers. Growth initiatives for Mobile Modular Plus, Site Related Services and new modular equipment sales all continued to show progress.

Portable Storage weak demand conditions continued, resulting in 15% lower rental revenues for the quarter, compared to a year ago. The weaker demand was broad-based across regions and was primarily a result of lower commercial construction project activity.

TRS-RenTelco experienced continued demand challenges, resulting in 9% lower rental revenues for the quarter, compared to a year ago. During the quarter we maintained discipline with respect to new equipment capital spending and made progress with reducing the fleet size to better align with demand conditions.

I appreciate the strong execution from the McGrath team to deliver solid results for the year despite the demand headwinds at Portable Storage and TRS-RenTelco. I am encouraged by our start to 2025 and confident that our teams are very focused on building on last year’s successes.”

DIVISION HIGHLIGHTS:

All comparisons presented below are for the quarter ended December 31, 2024 to the quarter ended December 31, 2023 unless otherwise indicated.

MOBILE MODULAR

For the fourth quarter of 2024, the Company’s Mobile Modular division reported Adjusted EBITDA of $61.0 million, an increase of $6.9 million, or 13%, when compared to the same quarter in 2023.

• Rental revenues increased 8% to $82.1 million, depreciation expense increased 7% to $10.4 million, and other direct costs increased 2% to $18.5 million, which resulted in an increase in gross profit on rental revenues of 11% to $53.2 million.
• Rental related services revenues increased 5% to $32.1 million, primarily attributable to higher delivery and pick-up activities and higher site related services, with associated gross profit increasing 5% to $11.6 million.
• Sales revenues increased 32% to $56.0 million, primarily from higher new equipment sales. Gross margin on sales was 26% in 2024 compared to 32% in 2023, resulting in a 5% increase in gross profit on sales revenues to $14.3 million.
• Selling and administrative expenses decreased $1.4 million to $35.8 million, when compared to the prior year.

PORTABLE STORAGE

For the fourth quarter of 2024, the Company’s Portable Storage division reported Adjusted EBITDA of $9.9 million, a decrease of $2.8 million, or 22%, when compared to the same quarter in 2023.

• Rental revenues decreased 15% to $16.7 million, depreciation expense increased 7% to $1.0 million, and other direct costs decreased 12% to $1.5 million, which resulted in a decrease in gross profit on rental revenues of 17% to $14.2 million.
• Rental related services revenues decreased 24% to $3.9 million, primarily attributable to lower delivery and return delivery activities.
• Sales revenues increased $0.1 million to $1.8 million, primarily from higher used equipment sales. Gross margin on sales was 36% compared to 38% in 2023, resulting in a 1% increase in gross profit on sales revenues to $0.6 million.
• Selling and administrative expenses decreased $1.1 million to $7.1 million, when compared to the prior year.

TRS-RENTELCO

For the fourth quarter of 2024, the Company’s TRS-RenTelco division reported Adjusted EBITDA of $19.1 million, a decrease of 8%, when compared to the same quarter in 2023.

• Rental revenues decreased 9% to $25.4 million, depreciation expense decreased 12%, and other direct costs increased 2%, resulting in a 10% decrease in gross profit on rental revenues to $10.2 million. The rental revenue decrease was primarily due to continued weakness in end markets, resulting in lower average rental equipment on rent compared to the prior year.
• Sales revenues increased 26% to $7.3 million and gross profit on sales revenues increased 32% to $4.2 million.
• Selling and administrative expenses decreased 11%, to $6.6 million, when compared to the prior year.

FINANCIAL OUTLOOK:

For the full-year 2025, the Company expects:

		2025 Outlook	2024 Actual
•	Total revenue:	$920 to $970 million	$911 million
•	Adjusted EBITDA1, 2:	$345 to $360 million	$352 million
•	Gross rental equipment capital expenditures:	$120 to $130 million	$191 million

1.		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 and non-operating transactions. A reconciliation of actual net income to Adjusted EBITDA and Adjusted EBITDA to net cash provided by operating activities can be found at the end of this release.
2.		Information reconciling forward-looking Adjusted EBITDA to the comparable GAAP financial measures is unavailable to the Company without unreasonable effort because certain items required for such reconciliations are outside of the Company’s control and/or cannot be reasonably predicted, such as the provision for income taxes. Therefore, no reconciliation to the most comparable GAAP measures is provided. The Company provides Adjusted EBITDA guidance because it believes that Adjusted EBITDA, when viewed with the Company’s results under GAAP, provides useful information for the reasons noted in the reconciliation of actual Adjusted EBITDA to the most directly comparable GAAP measures at the end of this release.

ABOUT MCGRATH:

McGrath RentCorp (Nasdaq: MGRC) is a leading business-to-business rental company in North America with a strong record of profitable business growth. Founded in 1979, McGrath’s operations are centered on modular solutions through its Mobile Modular and Mobile Modular Portable Storage businesses. In addition, its TRS-RenTelco business offers electronic test equipment rental solutions. The Company’s rental product offerings and services are part of the circular supply economy, helping customers work more efficiently, and sustainably manage their environmental footprint. With over 40 years of experience, McGrath’s success is driven by a focus on exceptional customer experiences. This focus has underpinned the Company’s long-term financial success and supported over 30 consecutive years of annual dividend increases to shareholders, a rare distinction among publicly listed companies.

McGrath is headquartered in Livermore, California. Additional information about McGrath and its businesses is available at mgrc.com and investors.mgrc.com.

You should read this press release in conjunction with the financial statements and notes thereto included in the Company’s latest Forms 10-K, 10-Q and other SEC filings. You can visit the Company’s web site at www.mgrc.com to access information on McGrath RentCorp, including the latest Forms 10-K, 10-Q and other SEC filings.

CONFERENCE CALL NOTE:

As previously announced in its press release of January 30, 2025, McGrath RentCorp will host a conference call at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on February 19, 2025 to discuss the fourth quarter 2024 results. To participate in the teleconference, dial 1-800-445-7795 (in the U.S.), or 1-785-424-1699 (outside the U.S.), or to listen only, access the simultaneous webcast at the investor relations section of the Company’s website at https://investors.mgrc.com/. A replay will be available for 7 days following the call by dialing 1-800-723-7372 (in the U.S.), or 1-402-220-2666 (outside the U.S.). In addition, a live audio webcast and replay of the call may be found in the investor relations section of the Company’s website at https://investors.mgrc.com/events-and-presentations.

MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF INCOME (AUDITED)
		Three Months Ended December 31,								Twelve Months Ended December 31,
(in thousands, except per share amounts)		2024				2023				2024				2023
Revenues
Rental		$	124,220			$	123,563			$	489,929			$	474,336
Rental related services			36,858				36,679				148,498				138,160
Rental operations			161,078				160,242				638,427				612,496
Sales			80,298				58,589				262,290				207,165
Other			2,370				2,757				10,225				12,181
Total revenues			243,746				221,588				910,942				831,842
Costs and Expenses
Direct costs of rental operations:
Depreciation of rental equipment			21,755				22,413				88,267				88,912
Rental related services			25,204				25,003				103,419				96,628
Other			24,931				24,754				109,116				114,942
Total direct costs of rental operations			71,890				72,170				300,802				300,482
Costs of sales			57,099				39,296				174,725				137,727
Total costs of revenues			128,989				111,466				475,527				438,209
Gross profit			114,757				110,122				435,415				393,633
Expenses:
Selling and administrative expenses			51,669				54,506				200,432				207,539
Other income, net			—				(59	)			(9,281	)			(3,618	)
Income from operations			63,088				55,675				244,264				189,712
Interest expense			8,858				12,126				47,241				40,560
Foreign currency exchange loss (gain)			270				144				215				(310	)
Gain on merger termination from WillScot Mobile Mini			—				—				(180,000	)			—
WillScot Mobile Mini transaction costs			2,002				—				63,159				—
Income from continuing operations before provision for income taxes			51,958				43,693				313,649				149,462
Provision for income taxes from continuing operations			13,009				11,676				81,922				37,610
Income from continuing operations			38,949				32,017				231,727				111,852
Discontinued operations:
Income from discontinued operations before provision for income taxes			—				—				—				1,709
Provision for income taxes from discontinued operations			—				—				—				453
Gain on sale of discontinued operations, net of tax			—				—				—				61,513
Income from discontinued operations			—				—				—				62,769
Net income		$	38,949			$	32,017			$	231,727			$	174,621
Earnings per share from continuing operations:
Basic		$	1.59			$	1.31			$	9.44			$	4.57
Diluted		$	1.58			$	1.30			$	9.43			$	4.56
Earnings per share from discontinued operations:
Basic		$	—			$	—			$	—			$	2.57
Diluted		$	—			$	—			$	—			$	2.56
Earnings per share:
Basic		$	1.59			$	1.31			$	9.44			$	7.14
Diluted		$	1.58			$	1.30			$	9.43			$	7.12
Shares used in per share calculation:
Basic			24,551				24,492				24,541				24,469
Diluted			24,587				24,535				24,570				24,529
Cash dividends declared per share		$	0.475			$	0.465			$	1.90			$	1.86

MCGRATH RENTCORP CONDENSED CONSOLIDATED BALANCE SHEETS (AUDITED)
		December 31,
(in thousands)		2024				2023
Assets
Cash		$	807			$	877
Accounts receivable, net of allowance for credit losses of $2,866 at December 31, 2024 and $2,801 at December 31, 2023			219,342				227,368
Rental equipment, at cost:
Relocatable modular buildings			1,414,367				1,291,093
Portable storage containers			240,846				236,123
Electronic test equipment			343,982				377,587
			1,999,195				1,904,803
Less: accumulated depreciation			(611,536	)			(575,480	)
Rental equipment, net			1,387,659				1,329,323
Property, plant and equipment, net			197,439				169,114
Inventories			14,304				15,425
Prepaid expenses and other assets			80,477				87,364
Intangible assets, net			54,332				64,588
Goodwill			323,224				323,224
Total assets		$	2,277,584			$	2,217,283
Liabilities and Shareholders' Equity
Liabilities:
Notes payable		$	590,208			$	762,975
Accounts payable			60,082				58,760
Accrued liabilities			113,961				108,763
Deferred income			109,836				111,428
Deferred income taxes, net			280,129				241,555
Total liabilities			1,154,216				1,283,481
Shareholders’ equity:
Common stock, no par value - Authorized 40,000 shares
Issued and outstanding - 24,551 shares as of December 31, 2024 and 24,496 shares as of December 31, 2023			116,253				111,122
Retained earnings			1,007,115				822,796
Accumulated other comprehensive loss			—				(116	)
Total shareholders’ equity			1,123,368				933,802
Total liabilities and shareholders’ equity		$	2,277,584			$	2,217,283

MCGRATH RENTCORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (AUDITED)
		Twelve Months Ended December 31,
(in thousands)		2024				2023
Cash Flows from Operating Activities:
Net income		$	231,727			$	174,621
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			107,455				109,375
Deferred income taxes (benefits)			38,574				(16,952	)
Provision for credit losses			1,890				2,633
Share-based compensation			9,502				8,275
Gain on sale of property, plant and equipment			(9,281	)			(3,618	)
Gain on sale of discontinued operations			—				(61,513	)
Gain on sale of used rental equipment			(35,085	)			(31,642	)
Foreign currency exchange loss (gain)			215				(310	)
Amortization of debt issuance costs			66				8
Change in:
Accounts receivable			6,136				(37,776	)
Inventories			1,121				(779	)
Prepaid expenses and other assets			6,887				(28,547	)
Accounts payable			11,836				(49,761	)
Accrued liabilities			4,924				17,235
Deferred income			(1,592	)			14,094
Net cash provided by operating activities			374,375				95,343
Cash Flows from Investing Activities:
Proceeds from sale of discontinued operations			—				268,012
Purchases of rental equipment			(191,231	)			(229,679	)
Purchases of property, plant and equipment			(40,228	)			(43,989	)
Cash paid for acquisition of businesses			—				(458,315	)
Cash paid for acquisition of business assets			—				(3,767	)
Proceeds from sales of used rental equipment			68,453				66,168
Proceeds from sales of property, plant and equipment			12,251				9,702
Net cash used in investing activities			(150,755	)			(391,868	)
Cash Flows from Financing Activities:
Net (payments) borrowings under bank lines of credit			(172,560	)			274,225
Borrowings under term note agreement			—				75,000
Taxes paid related to net share settlement of stock awards			(4,371	)			(7,233	)
Payment of dividends			(46,759	)			(45,556	)
Net cash (used in) provided by financing activities			(223,690	)			296,436
Effect of foreign currency exchange rate changes on cash			—				9
Net decrease in cash			(70	)			(80	)
Cash balance, beginning of period			877				957
Cash balance, end of period		$	807			$	877
Supplemental Disclosure of Cash Flow Information:
Gain on merger termination, net of transaction costs, presented under net cash provided by operating activities		$	116,841			$	—
Interest paid, during the period		$	48,324			$	38,603
Net income taxes paid, during the period		$	36,524			$	91,565
Dividends accrued during the period, not yet paid		$	12,482			$	12,010
Rental equipment acquisitions, not yet paid		$	5,393			$	16,653

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Three months ended December 31, 2024
(dollar amounts in thousands)		Mobile Modular				Portable Storage				TRS- RenTelco				Enviroplex				Consolidated
Revenues
Rental			82,108				16,713				25,399				—				124,220
Rental related services			32,140				3,933				785				—				36,858
Rental operations			114,248				20,646				26,184				—				161,078
Sales			55,983				1,806				7,270				15,239				80,298
Other			1,598				211				561				—				2,370
Total revenues			171,829				22,663				34,015				15,239				243,746
Costs and Expenses
Direct costs of rental operations:
Depreciation			10,405				1,011				10,339				—				21,755
Rental related services			20,572				4,056				576				—				25,204
Other			18,534				1,493				4,904				—				24,931
Total direct costs of rental operations			49,511				6,560				15,819				—				71,890
Costs of sales			41,705				1,161				3,080				11,153				57,099
Total costs of revenues			91,216				7,721				18,899				11,153				128,989
Gross Profit (Loss)
Rental			53,169				14,209				10,156				—				77,534
Rental related services			11,568				(123	)			209				—				11,654
Rental operations			64,737				14,086				10,365				—				89,188
Sales			14,278				645				4,190				4,086				23,199
Other			1,598				211				561				—				2,370
Total gross profit			80,613				14,942				15,116				4,086				114,757
Selling and administrative expenses			35,789				7,133				6,550				2,197				51,669
Income from operations		$	44,824			$	7,809			$	8,566			$	1,889			$	63,088
Interest expense																			8,858
Foreign currency exchange loss																			270
Willscot Mobile Mini transaction costs																			2,002
Provision for income taxes																			13,009
Income from continuing operations																		$	38,949
Other Information
Adjusted EBITDA 1		$	60,994			$	9,922			$	19,099			$	1,987			$	92,002
Average rental equipment 2		$	1,270,068			$	231,332			$	349,018
Average monthly total yield 3			2.15	%			2.41	%			2.43	%
Average utilization 4			76.0	%			61.2	%			59.1	%
Average monthly rental rate 5			2.84	%			3.94	%			4.11	%

1.		Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, other income, net and non-operating transactions.
2.		Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
3.		Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
4.		Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
5.		Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Three months ended December 31, 2023
(dollar amounts in thousands)		Mobile Modular				Portable Storage				TRS- RenTelco				Enviroplex				Consolidated
Revenues
Rental		$	75,931			$	19,760			$	27,872			$	—			$	123,563
Rental related services			30,713				5,150				816				—				36,679
Rental operations			106,644				24,910				28,688				—				160,242
Sales			42,329				1,696				5,751				8,813				58,589
Other			1,686				338				733				—				2,875
Total revenues			150,659				26,944				35,172				8,813				221,706
Costs and Expenses
Direct costs of rental operations:
Depreciation			9,725				944				11,744				—				22,413
Rental related services			19,689				4,651				663				—				25,003
Other			18,256				1,699				4,799				—				24,754
Total direct costs of rental operations			47,670				7,294				17,206				—				72,170
Costs of sales			28,718				1,059				2,577				6,942				39,296
Total costs of revenues			76,388				8,353				19,783				6,942				111,466
Gross Profit
Rental			47,950				17,117				11,329				—				76,396
Rental related services			11,024				499				153				—				11,676
Rental operations			58,974				17,616				11,482				—				88,072
Sales			13,611				637				3,174				1,871				19,293
Other			1,686				338				733				—				2,868
Total gross profit			74,271				18,591				15,389				1,871				110,122
Selling and administrative expenses			37,213				8,255				7,386				1,652				54,506
Other income, net			(38	)			(7	)			(14	)			—				(59	)
Income from operations		$	37,096			$	10,343			$	8,017			$	219				55,675
Interest expense																			12,126
Foreign currency exchange gain																			(144	)
Provision for income taxes																			11,676
Income from continuing operations																		$	32,017
Other Information
Adjusted EBITDA 1		$	54,106			$	12,765			$	20,690			$	308			$	87,869
Average rental equipment 2		$	1,155,413			$	218,976			$	379,214
Average monthly total yield 3			2.19	%			3.01	%			2.43	%
Average utilization 4			79.7	%			74.8	%			58.9	%
Average monthly rental rate 5			2.75	%			4.02	%			4.16	%

1.		Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, other income, net and non-operating transactions.
2.		Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
3.		Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
4.		Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
5.		Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Twelve months ended December 31, 2024
(dollar amounts in thousands)		Mobile Modular				Portable Storage				TRS- RenTelco				Enviroplex				Consolidated
Revenues
Rental			318,149				69,983				101,797				—				489,929
Rental related services			127,589				17,702				3,207				—				148,498
Rental operations			445,738				87,685				105,004				—				638,427
Sales			183,234				5,695				27,531				45,830				262,290
Other			6,394				1,117				2,714				—				10,225
Total revenues			635,366				94,497				135,249				45,830				910,942
Costs and Expenses
Direct costs of rental operations:
Depreciation			40,399				3,982				43,886				—				88,267
Rental related services			83,547				17,267				2,605				—				103,419
Other			83,023				5,816				20,277				—				109,116
Total direct costs of rental operations			206,969				27,065				66,768				—				300,802
Costs of sales			124,886				3,551				12,426				33,862				174,725
Total costs of revenues			331,855				30,616				79,194				33,862				475,527
Gross Profit
Rental			194,727				60,185				37,634				—				292,546
Rental related services			44,042				435				602				—				45,079
Rental operations			238,769				60,620				38,236				—				337,625
Sales			58,348				2,144				15,105				11,968				87,565
Other			6,394				1,117				2,714				—				10,225
Total gross profit			303,511				63,881				56,055				11,968				435,415
Selling and administrative expenses			136,670				29,197				27,000				7,565				200,432
Other income, net			(6,220	)			(1,319	)			(1,742	)			—				(9,281	)
Income from operations		$	173,061			$	36,003			$	30,797			$	4,403			$	244,264
Interest expense																			47,241
Foreign currency exchange loss																			215
Gain on merger termination from WillScot Mobile Mini																			(180,000	)
Willscot Mobile Mini transaction costs																			63,159
Provision for income taxes																			81,922
Income from continuing operations																		$	231,727
Other Information
Adjusted EBITDA 1		$	229,160			$	43,255			$	74,525			$	4,785			$	351,725
Average rental equipment 2		$	1,221,900			$	227,600			$	362,558
Average monthly total yield 3			2.17	%			2.56	%			2.34	%
Average utilization 4			77.5	%			64.9	%			57.3	%
Average monthly rental rate 5			2.80	%			3.95	%			4.08	%

1.		Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, other income, net and non-operating transactions.
2.		Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
3.		Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
4.		Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
5.		Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

MCGRATH RENTCORP
BUSINESS SEGMENT DATA (unaudited)
Twelve months ended December 31, 2023
(dollar amounts in thousands)		Mobile Modular				Portable Storage				TRS- RenTelco				Enviroplex				Consolidated
Revenues
Rental		$	285,553			$	74,536			$	114,247			$	—			$	474,336
Rental related services			114,511				20,510				3,139				—				138,160
Rental operations			400,064				95,046				117,386				—				612,496
Sales			155,267				4,587				27,119				20,192				207,165
Other			6,905				1,504				3,772				—				12,181
Total revenues			562,236				101,137				148,277				20,192				831,842
Costs and Expenses
Direct costs of rental operations:
Depreciation			36,921				3,514				48,477				—				88,912
Rental related services			75,390				18,568				2,670				—				96,628
Other			86,983				7,317				20,642				—				114,942
Total direct costs of rental operations			199,294				29,399				71,789				—				300,482
Costs of sales			105,021				2,858				13,884				15,964				137,727
Total costs of revenues			304,315				32,257				85,673				15,964				438,209
Gross Profit
Rental			161,649				63,705				45,128				—				270,482
Rental related services			39,121				1,942				469				—				41,532
Rental operations			200,770				65,647				45,597				—				312,014
Sales			50,246				1,729				13,235				4,228				69,438
Other			6,905				1,504				3,772				—				12,181
Total gross profit			257,921				68,880				62,604				4,228				393,633
Selling and administrative expenses			138,574				31,537				30,962				6,466				207,539
Other income, net			(2,329	)			(457	)			(832	)			—				(3,618	)
Income (loss) from operations		$	121,676			$	37,800			$	32,474			$	(2,238	)		$	189,712
Interest expense																			40,560
Foreign currency exchange gain																			(310	)
Provision for income taxes																			37,610
Income from continuing operations																		$	111,852
Other Information
Adjusted EBITDA 1		$	189,661			$	46,690			$	83,903			$	(1,898	)		$	318,356
Average rental equipment 2		$	1,093,086			$	206,095			$	388,679
Average monthly total yield 3			2.18	%			3.01	%			2.43	%
Average utilization 4			79.7	%			77.3	%			58.9	%
Average monthly rental rate 5			2.73	%			3.90	%			4.16	%

1.		Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, other income, net and non-operating transactions. Adjusted EBITDA for the year ended December 31, 2023, excludes the gain on sale of discontinued operations from the divestiture of Adler Tanks.
2.		Average rental equipment represents the cost of rental equipment, excluding new equipment inventory and accessory equipment.
3.		Average monthly total yield is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment for the period.
4.		Average utilization is calculated by dividing the average month end costs of rental equipment on rent by the average month end total costs of rental equipment.
5.		Average monthly rental rate is calculated by dividing the averages of monthly rental revenues by the cost of rental equipment on rent for the period.

Reconciliation of Adjusted EBITDA to the most directly comparable GAAP measures

To supplement the Company’s financial data presented on a basis consistent with accounting principles generally accepted in the United States of America (“GAAP”), the Company presents “Adjusted EBITDA”, which is defined by the Company 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. The gain on merger termination from WillScot Mobile Mini was considered a non-operating transaction and is excluded from Adjusted EBITDA. The Company presents Adjusted EBITDA as a financial measure as management believes it provides useful information to investors regarding the Company’s liquidity and financial condition and because management, as well as the Company’s lenders, use this measure in evaluating the performance of the Company.

Management uses Adjusted EBITDA as a supplement to GAAP measures to further evaluate period-to-period operating performance, compliance with financial covenants in the Company’s revolving lines of credit and senior notes and the Company’s ability to meet future capital expenditure and working capital requirements. Management believes the exclusion of non-cash charges and non-recurring transactions, including share-based compensation, transaction costs, gains on property sales and non-operating transactions, is useful in measuring the Company’s cash available for operations and performance of the Company. Because management finds Adjusted EBITDA useful, the Company believes its investors will also find Adjusted EBITDA useful in evaluating the Company’s performance.

Adjusted EBITDA should not be considered in isolation or as a substitute for net income, cash flows, or other consolidated income or cash flow data prepared in accordance with GAAP or as a measure of the Company’s profitability or liquidity. Adjusted EBITDA is not in accordance with or an alternative for GAAP and may be different from non−GAAP measures used by other companies. Unlike EBITDA, which may be used by other companies or investors, Adjusted EBITDA does not include share-based compensation charges, transaction costs, gains on property sales and non-operating transactions. The Company believes that Adjusted EBITDA is of limited use in that it does not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and does not accurately reflect real cash flow. In addition, other companies may not use Adjusted EBITDA or may use other non-GAAP measures, limiting the usefulness of Adjusted EBITDA for purposes of comparison. The Company’s presentation of Adjusted EBITDA should not be construed as an inference that the Company will not incur expenses that are the same as or similar to the adjustments in this presentation. Therefore, Adjusted EBITDA should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures. The Company compensates for the limitations of Adjusted EBITDA by relying upon GAAP results to gain a complete picture of the Company’s performance. Because Adjusted EBITDA is a non-GAAP financial measure, as defined by the SEC, the Company includes in the tables below reconciliations of Adjusted EBITDA to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Reconciliation of Income from Continuing Operations to Adjusted EBITDA
(dollar amounts in thousands)	Three Months Ended December 31,								Twelve Months Ended December 31,
	2024				2023				2024				2023
Income from continuing operations	$	38,949			$	32,016			$	231,727			$	111,852
Provision for income taxes from continuing operations		13,009				11,676				81,922				37,610
Interest expense		8,858				12,126				47,241				40,560
Depreciation and amortization		26,631				27,533				107,455				107,918
EBITDA		87,447				83,351				468,345				297,940
Share-based compensation		2,553				3,002				9,502				8,157
Transaction costs 3		2,002				1,575				63,159				15,877
Other income, net 4		—				(59	)			(9,281	)			(3,618	)
Gain on merger termination from WillScot Mobile Mini 5		—				—				(180,000	)			—
Adjusted EBITDA 1	$	92,002			$	87,869			$	351,725			$	318,356
Adjusted EBITDA margin 2		38	%			40	%			38	%			39	%

Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities
(dollar amounts in thousands)	Three Months Ended December 31,								Twelve Months Ended December 31,
	2024				2023				2024				2023
Adjusted EBITDA 1	$	92,002			$	87,869			$	351,725			$	322,038
Interest paid		(7,986	)			(10,785	)			(48,324	)			(38,603	)
Income taxes paid, net of refunds received		(40,188	)			(82,018	)			(36,362	)			(91,565	)
Gain on sale of used rental equipment		(9,900	)			(8,678	)			(35,085	)			(31,642	)
Foreign currency exchange loss		270				(144	)			215				(310	)
Amortization of debt issuance costs		60				2				66				8
Change in certain assets and liabilities:
Accounts receivable, net		5,187				(9,204	)			8,026				(35,143	)
Prepaid expenses and other assets		(13,101	)			(21,936	)			6,887				(29,326	)
Accounts payable and other liabilities		24,686				15,148				128,981				(14,208	)
Deferred income		(14,089	)			6,186				(1,592	)			14,094
Net cash provided by (used in) operating activities	$	36,779			$	(23,560	)		$	374,375			$	95,343

1.		Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, amortization, non-cash impairment costs, share-based compensation, other income, net and non-operating transactions. Adjusted EBITDA for the twelve months ended December 31, 2023, excludes the gain on sale of discontinued operations from the divestiture of Adler Tanks.
2.		Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues for the period.
3.		Transaction costs include acquisition and divestiture related legal and professional fees and other costs specific to these transactions.
4.		Other income, net consists of net gains on property, plant and equipment sales that are infrequent in nature and excluded from Adjusted EBITDA.
5.		The gain on merger termination from WillScot Mobile Mini was considered a non-operating transaction and is excluded from Adjusted EBITDA.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250219751172/en/

Keith E. Pratt

EVP & Chief Financial Officer

925-606-9200

Source: McGrath RentCorp